Monday, November 05, 2007

Let them eat bread

Mary Antoinette’s famous words were “let them eat cake”, in response to protests that people had no bread to eat. In Jordan, this has been reformulated by the government, who only think that they should subsidize bread.

If you have ever been to a bakery in Jordan, you probably have noticed people carrying out LARGE bags containing various sweet and salty cookies. It is sad to think that many families actually live on dunking these cookies in sweet tea. A meager diet that nobody should envy.

It turns out that having people eating like this is a luxury the government can’t afford. After lifting subsidies on cattle feed a couple of months ago, the market was in an awkward position where flour is cheaper than animal fodder. Obviously, this was an invitation to feed livestock bread.

So, the government partially lifted subsidies on wheat flour, thus allowing subsidies on the basic large loaves of bread. Other bakery products went up between 20 and 60%. So the alternative for poor people comes from the government “let them eat bread”.

What better timing than when people are immersed in an election campaign that is totally divorced from the needs to people? In any other country, this timing would have been studiously avoided for such a move. Not in Jordan. Here, the disconnect between politics and the welfare of people is too painful to discuss.

Of course, distortions beget distortions, and subsidies cause distortions. I would submit that a teacher working for JD 220 per month is subsidizing the government. When will this subsidy be lifted?

28 Comments:

At 3:44 PM, Anonymous bakkouz said...

Its happening brother, its happening, the gap between the poor and the rich is getting wider and wider by the day and the vanishing of the middle class is becoming more evident. the blessings of globalization and the new world order.

The Jordanian society WILL be split into only 2 separate classes, it is inevitable. we pursued globalization and open market policies like it was the holy grail that will solve all our problems magically, but being a small third world country we have fallen into the spiders web.

Mahathir Mohamad, former primie minister of Malaysia realized that, and refused to be dragged into the whirlpool of western demands of globalization, he knew it would only mean disaster and instead took a different path away from the western way and it eventually proved efficient.

It is going to happen, we are walking down a road that has a dead end, or worse, disaster, we see it and we feel it, yet we keep marching on. and unless we chose a different path we'll never achieve the prosperity that governments always promise us. well, maybe the rich will, but certainly not the middle class or the poor.

 
At 5:20 PM, Blogger joladies said...

It was interesting to read in the Jordan Times today a column by Fahed Fanek that the 'middle class thriving' he goes on to say 'If it is true that the rate of poverty is on the rise, as claimed by some politicised observers, how come we find TV sets in 98.2% of Jordanian houses, refrigerators in 97.1, mobile telephones in 84%, satellite dishes and receivers in 76.3%, fixed telephones in 36.5 %, private cars in 37.1% of families and computers in 32.2% of households.' He goes on to say that 'the false slogan that poverty is spreading is a political tool that creates a positive impression......' Well, I don't know as it is difficult to judge but even though there is certainly poverty and many people find it difficult to cope, but there is absurd wealth in Abdoun (west Amman) which should not be there. T

 
At 5:40 PM, Anonymous Anonymous said...

"we pursued globalization and open market policies like it was the holy grail that will solve all our problems"

it was never the intention to solve jordan's problems. it was a cover story. it's a get rich quick scheme for the regime and its supporters. let jordan and jordanians be damned.

 
At 5:50 PM, Blogger Khalaf said...

Bakkouz: I am not against a free market. I am against wages being lower that what is needed for a reasonable lifestyle. The gap you refer to is between businessmen and wealthy landowners and salaried people who are being cheated out of their labor.

Joladies: Mr. Fanek is not an uninterested party, and is consisently defending the government. Here he is quoting a report I mentioned on this blog. What he does not say is that there is a persistent deficit in the income of Jordanian families that is mostly filled by selling off assets. This is not a sustainable state of affairs.

Anon: That is a cynical outlook. It is hard to tell if it is accurate.

 
At 6:37 PM, Anonymous Made in Jordan said...

Bakkouz, frankly, this isn't about globalization, it's about a government that fails to understand (and work for) the needs of its own people. It's about a government that switched to importing Syrian wheat two months ago, because it's cheaper (and received subsidies for it by the way) and yet charges premium prices on the population.

Khalaf, you forgot to mention the 60 percent hikes in oil prices (and its derivatives of course), conveniently waiting to take place in February; just in time for the Winter season.

Bear with me on this; this is a crazy thought. One of my craziest lately:

I think this has everything to do with the elections.

Who votes for the IAF normally? East Amman and other camps scattered around the kingdom, right? Suffice it to say that these areas are very under serviced, underprivileged and they basically make up Jordan's working class. Your average cynical East Ammani, will lose faith in these elections; why vote if you're starving, and more importantly, why vote for a parliament that does not take into consideration your most basic of instincts, which is the instinct of survival.

So, that way, the government guarantees that there will be a lesser turn-out from these areas, and thus, lesser Jordanians voting for IAF candidates. Which ultimately translates to fewer MPs from the IAF.

But then of course, this could all be wishful thinking.

 
At 6:39 PM, Anonymous bakkouz said...

Khalf, free market economy is fine if and only if it was applied within certain rules, an economy such as ours, in a country with limited resources and little economical and political power to back out whenever it choses, is simply taking a huge risk, which by the current paraments isn't going well, as i said, its a spider web, if you are not strong enough or big enough to break loose of it, you're stuck, and you're doomed.

Unless of course this is what is actually planned to happen.

 
At 6:44 PM, Anonymous bakkouz said...

made in jordan: it has everything to do with globalization, what we're witnessing are all side effects and direct consequences of blindly applying free open market strategies.

 
At 7:32 PM, Anonymous Hamzeh N. said...

"The gap you refer to is between businessmen and wealthy landowners and salaried people who are being cheated out of their labor."

I agree, and it seems that not all people are really in touch with the basis of their needs, given that not many people correctly identify the above problem the way I believe you did here.

 
At 8:08 PM, Blogger Masalha1 said...

Khalaf:
Three years ago our government refused to by wheat from farmers at 120JD because it was cheaper to import wheat from the US at$ 140 per ton, therefore discouraging farmers from growing wheat, now we are importing wheat at about $425 and no farmers are growing it in Jordan,not only this but afew years before that the government BANNED farmers in the DEESA area on the SAUDI boarder from growing livestock feed because it consumes too much water and it was cheaper to import it, so they had to stop growing it.
Some times it makes you wonder about the decision making process and who does the planning?

 
At 9:04 PM, Blogger Globalorama said...

subsidies almost never work. it is the government that needs fixing. When you subsidize wheat and petroleum products, you are creating an efficiency that will most likely help the rich. But without subsidies, but with a government that has the well being of its people in its mind, the money will be redistributed in a way that ensure it is going to the people that need it the most.

 
At 9:14 PM, Anonymous Batir said...

Pheras (made in Jordan), I have been following East Ammani elections and I can tell you two things about the "working class" there.
A certain percentage will vote for the IAF not for economic reason but as they believe they can enter paradise by viting for Hamza Mansour and Azzam Huneidi.
The majority are more attracted to the incentives splashed out by the likes of Khaleel Attiyyeh, Al Heat, Al Kouz and Hasan safi.

 
At 9:40 PM, Blogger Masalha1 said...

If ya'll can spare 10 minutes watch this and you'll see how similar it is in most arab countries.

http://www.youtube.com/watch?v=Yx2CFWUciK0
copy paste into your URL

 
At 10:24 PM, Anonymous Ahmad Al-Sholi said...

Regarding IAF, its no more than a beast. To frighten with, and will be no more than a beast if and when it comes to power.
Salaries, NGOs, Pressure Groups are what Jordan misses. No one is reflecting the bad role of private sectore in the up-bringing of the new Jordan. Banks making Millions in profit with wages to start from JD250.-, a shift in banks alone is enough to drive salaries up in Jordan.

 
At 12:55 AM, Blogger Mohanned said...

I agree with amjad, many companies are posting record profits while paying crumbs to their employees. The government should make them choose between increasing wages or paying more taxes.

If nothing is done fast the drain will become severe.

And subsidies are only bandaids. The government should be able to direct aid to people who deserve it.

 
At 7:18 AM, Blogger Masalha1 said...

Mohanned, Ahmad:
Current minimum wage is 110Jd the government ability to increse it is to 150Jd or even 200Jd at the most, is that enough to live on?
Minimum wage is usually opposed and fought against by the private sector because it applies to non Jordanian work force also, who are happy to work for 110 or 150Jd so why would they pay an egyptian or srilankan more than that?
the issue is some what ETHICAL I agree companies who make too much profit should pay more salaries or be looked into and if their average employee wage is low should be put in a different TAX bracket and make them pay more taxes, it could also be a supply and demand issue we have a large educated work force for a small country with no planners who can anticipate the market needs or the people needs for that matter.

 
At 9:11 AM, Anonymous Ahmad Al-Sholi said...

Its ethical if initiated by private sector solely. What about a law that enforces that??? Private sector is still mainly owned and operated by Jordanians, they should have a social contribution to their country other than charities, orphanges and mosques - as if we do not have enough -, A succsseful Jordanian businessman should contribute by lifting the scale up. In the states for example: all empoyees are paid enough, many are paid well. Individuals and their consumption habbits are a main player in the american national market prices, stocks, taxes,...
As simple as: employees getting higher salaries, more cash will be circulated in various business cycles.. Or maybe they should just fill amman up with indians who are willing to work double the time half the pay !

 
At 9:34 AM, Blogger No_Angel said...

yikes for first i would certainly not want jordan to copy the american consumerism model (oh never mind it already did )
no wonder i have been fairly interested in reading about zimbabwe lately... http://www.iht.com/articles/2007/02/06/news/zim.php

 
At 10:54 AM, Blogger Sam said...

Khalaf,

I really enjoy reading your blog ... I'm an American student studying in Amman, and I'm doing a research project on blogging in Jordan. Would you be willing to send me an email sometime? I'd send you one, but I wasn't able to find your email on your blog. My address is sam_bollier@brown.edu

Thanks!

 
At 1:55 PM, Anonymous Made in Jordan said...

Bakkouz, I know what you mean, but this isn't a direct effect of globalization; because it's the government's decision, and it doesn't have much to do with the WTO and the World Bank's recipes to destroy economies like Jordan's economy. I'm trying to say that it's a decision from the government and not from an international organization.

I agree that subsidies are simply temporary remedies that do not truly bridge the gap between the poor and the rich. I think that the government should give more freedom for labor unions in this regard to draft a better labor law and we should have better laws to protect and promote SMEs and to instill a sense of entrepreneurship in Jordanians. The majority still thinks that a good investment is sticking money into an off-key plot of land, while a small business that has potential to grow could benefit the economy much more.

Batir, you could be right, but would they believe such candidates especially after yet another hike in prices?

And I still insist that there should some form of luxury tax imposed on Hummers and yachts and whatnot. Also the sales tax should be less, it's not fair to impose such a hefty tax where even the middle class citizens have to pay.

 
At 4:14 PM, Blogger Mohanned said...

Masalha,
I think you are talking about the QIZ and let me tell you this: It adds zero to the jordanian economy, all the export are tax exempt, and 60% of the workers are from asia. The other part is that egypt now have QIZs and factories in jordan started to move to egypt.

The other sector you are talking about I think is construction and egyptians now make 300JD a month which translates to more than 2000 pounds.

I totally agree with ahmad, once you pay people more, the economy moves forward, and where did the term social responsibility go? You make your money between us, then you have to pay back, as simple as that!

 
At 6:03 PM, Anonymous Anonymous said...

On Batir's remark: Allow me to disagree with you on the notion that the working class will not vote out of economic reasons. While ideology remains a big factor in the election of IAF candidates, let us not forget that the IAF and the Islamic movement in general runs charities and community service centers that are helping the government cope with offering services to the underprivilied areas. It is based on such services that the Islamist parties everywhere in the Arab world managed to make to the parliaments of their countries. I think raising the bread prices, especially at this time, will be good news for the Islamists, who will seize the opportunity to offer alternatives and promise to ease the burden of citizens.

 
At 8:44 PM, Blogger Nadeem said...

To Mohanned on the QIZs,

I don't think it is fair to say that the QIZ adds zero value to the Jordanian economy. What about the other 40% of Jordanian worker employed within the zones? Jordanian input requirements in the production process? what about the external trade balance as textiles produced within the zones are one of the biggest Jordanian exports today?

You then contradict yourself by your worry about the factories moving to Egypt! If their value added to Jordan is zero, why do you care?

The QIZs have lots of problems in them, but lets not distort the truth

 
At 10:12 PM, Blogger Mohanned said...

Are you serious?How much they get paid?110 JDS?how much tax do they pay-the factories that is? How muc money goes out of jordan through the asian 60%? What jordanian inputs are you talking about?Cotton?Electricity?Made in jordan machines?Gas?

I am not distorting the truth, you are not seeing it..And regarding exports numbers? Is it just by numbers or is it by added value to the overall economy?We have been exportin phosphate for the last 50 years, any added value?

QIZs are just modern slavery..And I am not worrying about them going to egypt, I am giving you facts:Egypt has cotton, cheaper labor, cheaper energy..Who would you choose?

common sense thats all!

 
At 12:03 AM, Blogger Nadeem said...

Yes I am serious.
As of 2006, QIZs employed 21,000 Jordanians. Even if they were paid minimum wage, that is better than being unemployed.
To the best of my knowledge, a minimum of 35% of the inputs have to be Jordanian by law (whatever that is). Exports to the US on its own reached $1.2 bringing in foreign currency to offset some of the deficit in our external balance.

As I said before, there are drawbacks from the zones but deeming them undesirable is not "common sense".

 
At 2:36 AM, Blogger Mohanned said...

"Exports to the US on its own reached $1.2 bringing in foreign currency to offset some of the deficit in our external balance."

???

Foreign currency for who?The investors?And what jordanian inputs are you talking about? Come on! We produce nothing, we just transfrom raw materials to clothes!Even the electricity they get is subsidized!

My friend, the foreign currency that they bring is not 1.2 billion, simple economics. And the QIZa are practically not part of jordan! That why they call them ZONES!

Money from expats which now accounts for almost 20% of the population is our source of hard currency, and they are basically what the country is running on..If lest say UAE and KSA kick them out, jordan will be history!

 
At 8:57 AM, Anonymous Ahmad Al-Sholi said...

Do you have a figure representing what is being transfered from expats in DOLLARS? and how many is transferred in foreign currencies????
Through banks, most transfers received in JOD, SAR, AED, QAR and USD movements. USD mainly moves for transfers within transfer hub services which again are not jordanian company if thats your point.
Denying economic cycle linked woth the QIZ is not common sense, though many newly introduced untested specs that many still differ about.

 
At 2:59 PM, Blogger Mohanned said...

http://www.radionetherlands.nl/specialseries/070707/070707mony

 
At 9:37 PM, Anonymous Ahmad Al-Sholi said...

thanks for the link, it supports your idea of the 25% percent cash flow in, however it does not constitute that 25% are of dollar/euro/GBP value transactions. Western union operates with dollar equivqlent but the main stream is running through banks which by their part holds clearing accounts with their counterparts in the gulf states dominated in Jordanian Dinars or domestic currencies of those states. The Central Bank reserve of foreign currencies grew rapidly in the last three years which is still holds the JD cash value from falling against dollars.

 

Post a Comment

Links to this post:

Create a Link

<< Home