Bolivia: Less poverty and booming economy through nationalisation of mineral resources

Publicerad denFörfattareKontrast.at

Bolivia, a country in the Andes, has developed strongly in recent years. Since the left-wing president Evo Morales took office, poverty in the country has been more than halved, life expectancy has risen by four years and the economy is booming. Bolivia has achieved this through the nationalisation of its mineral resources and an economic policy that takes care of the poorest in the country.
Bolivia was long considered the poorhouse of Latin America. Although the country is rich in raw materials, most of the profits from their extraction went to large corporations from Europe and North America. This changed when the indigenous trade unionist Evo Morales was elected president in 2006. He nationalised the country’s raw materials and introduced far-reaching social programmes to help the impoverished population. As a result, during his time in office, Morales was able to more than halve poverty in Bolivia and the economy grew faster than in almost all other Latin American countries.
From poverty to the presidency
Evo Morales grew up in extreme poverty in the highlands of Bolivia in the 1960s. Four of his brothers died at a young age. He attended school for only six years before helping to feed the family by selling sweets and working in a bakery. As a young adult, he became active in the local coca farmers’ union and took on more and more responsibilities.
The country’s government was controlled by the white upper class, although the population was largely indigenous. The country’s political situation had been marked by wars and coups d’état since independence in 1821. The economy barely moved. Much of the population, especially indigenous peasants in the highlands, lived in abject poverty and had little say in the country’s politics. In addition, the country’s mineral resources were controlled by international corporations. The poor population had hardly anything from the country’s wealth of resources.
The population hardly benefits from the mineral resources of their country. (Foto von Alex Azabache / Unsplash)
Morales wanted to change that. Together with other trade unionists and activists from the indigenous population, he created the Movimento al Socialismo (MAS) party. Their goal was to nationalise the mineral resources, strengthen the rights of the indigenous population and expand the welfare state. Despite opposition from the country’s political elites, Morales was elected the country’s first indigenous president in 2005 with an absolute majority. Under his presidency, which lasted until 2019, the country changed fundamentally.
Nationalisation of mineral resources
One of the first major steps taken by the Morales government was the nationalisation of Bolivia’s oil and gas resources. By law in 2006, the large international corporations that had controlled these mineral resources until then were required to sign new agreements with the state oil and gas company Yacimientos Petroliferos Fiscales Bolivianos (YPFB). In some cases, YPFB took over the extraction of the raw materials completely, in some cases only shares in them. The Morales government took a similar approach when it nationalised the mining industry in 2007. The following year, the Bolivian government also nationalised the largest company in the telecommunications sector.
Through these nationalisations, the government now not only had more control over its own resources, but could also use the profits from their extraction for social and infrastructure projects.
Evo Morales was elected Bolivia’s first indigenous president in 2005. (Foto: Cancillería Ecuador / CC BY-SA 2.0)
The fight against poverty
When the Morales government took office, Bolivia was the poorest state in South America. Morales experienced the bitter poverty of the population himself. His goal and that of the MAS movement was to end this poverty. This was achieved mainly in three ways: strengthening the economy, raising wages and expanding the welfare state.
With the income from the extraction of raw materials, the government modernised the country’s infrastructure. Between 2000 and 2015, public investment doubled. Roads, hospitals, and schools were built. An important focus, however, was the development of rural areas. Through land reform, small farmers gained access to land that was previously in the hands of large landowners. In addition, the government supported food prices to help small farmers and ensure the country’s food security. At the same time, oil and gas refineries were built not only to export raw materials, but to keep value added in the country.
With a stronger economy, higher wages could be paid. A particular focus was on the incomes of the poorest in the country. That is why Bolivia’s minimum wage was quadrupled during Morales’ term in office (2006 to 2019). More money in their pockets meant that Bolivians could now consume more. This further boosted the economy.
Numerous social programmes were created to reduce poverty even further. The universal basic pension Renta Dignidad is particularly central. Many thousands of older Bolivians received a pension for the first time. In addition, poverty-stricken families were supported if they kept their children in school instead of sending them to work. Free meals were also introduced to further increase attendance at school.
Poverty in Bolivia more than halved
Poverty in Bolivia has been more than halved from 47.20 to 15.60 during Morales’ term in office. Life expectancy has also risen from 64 to 68 years during this period. With an average economic growth of 4.7 percent, Bolivia’s economy has grown faster than in almost any other country in Latin America. At the same time, the government has been able to significantly reduce social inequality in the country.
MAS’s reforms mainly help the poorest in the country. (Foto: Lesly Derksen / Unsplash)
More rights for indigenous people
In addition to the social and economic improvements for the broad population of Bolivia, the MAS government was also able to strengthen the political rights of indigenous groups. A new constitution was adopted, making Bolivia a plurinational state. In the course of this, a total of 36 indigenous languages were recognised as official languages. In addition, the indigenous flag Wiphala has since been used on an equal footing with the national flag.
Since the electoral success of MAS, more indigenous people have been elected to the national and regional parliaments or have held ministerial posts. Joshua, a taxi driver in La Paz, explained the political change as follows:
“We used to be governed by the upper class, now our own people govern us. We now live with dignity.”
Morales’ flight from Bolivia and exile
Despite the MAS government’s successes, it has also been heavily criticised. Morales was accused of being too distant from the needs of the indigenous population. In addition, his government was repeatedly accused of a lack of environmental protection. Bolivia’s rainforests are falling victim to slash-and-burn agriculture. The dependence of the Bolivian economy on fossil fuels and raw materials is also repeatedly criticised.
However, Evo Morales received the most criticism for not wanting to leave the presidency. After his first electoral victory, he was elected president in 2009 and again in 2014 with a large majority. In 2018, the Supreme Court overturned a constitutional article that prevented him from running again. When Morales ran for president again the following year, he drew heavy criticism at home and abroad. Irregularities occurred during the election and although Morales clearly won the election, the opposition rejected the result. Riots broke out in many parts of the country. The police and military leadership sided with the opposition. When the military chief asked Morales to resign, he complied and fled Bolivia.
The right-wing opposition then took power and tried to reverse many of the MAS government’s reforms. The welfare state was to be cut back, large corporations were to control the extraction of natural resources again and, above all, the rights and influence of the indigenous population were to be pushed back. The opposition was mainly based on evangelical Christians and the country’s economic elites.
New president continues reform policy
Although it soon became clear that there was no electoral fraud in the 2019 election, the new government repeatedly delayed new elections. Elections were first held in October 2020. These were clearly won by the MAS candidate and former Minister of Economy in the Morales government, Luis Acre. Evo Morales then returned to Bolivia.
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Luis Acre is considered the architect behind Morales’ economic policy and is continuing his reforms. For example, Bolivia managed to keep inflation at the lowest level in Latin America through subsidies for food and energy.
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Nobel Prize Winner Stiglitz wants 70% tax on top incomes

Publicerad denFörfattareKontrast.at

Nobel Prize winner Joseph Stiglitz is concerned about increasing social inequality in the world. The gap between rich and poor is widening. To reverse the trend, he calls for the super-rich to pay a higher income tax and a wealth levy. He says introducing a special global tax rate of 70 percent for top earners “would clearly make sense.”
“People at the top might then work a little less if you tax them more. But on the other hand, our society benefits from a more egalitarian society with greater cohesion,” the former World Bank chief economist explained in Oxfam’s “Equals” podcast, summarized by the British newspaper The Guardian.
Current top tax rates are much lower than what Stiglitz has in mind. A few examples

In the U.S., the top tax rate is 37 percent for incomes above $539,901.
The top tax rate in the U.K. is 45 percent on annual incomes above 150,000 pounds.
In Austria, the rate is 55 percent, but only for annual incomes above one million euros.
In Germany, the top tax rate is paid from an annual income of around 278,000 euros—it is 45 percent.

Only four European Countries have a wealth tax: Spain, Norway, Switzerland, and Belgium.
Joseph Stiglitz: Getting rich is a question of chance—not performance
Stiglitz explained in the podcast that such a new, higher top tax would lead to more redistribution—but at the same time one must also tax wealth fairly. Because that way, the richest people in the world would make a fair contribution, whose wealth has been accumulated over generations. According to Stiglitz, a global wealth tax would have an even greater impact in combating social inequality.
“We should tax wealth more heavily, because a lot of the wealth is now inherited. For example, the young Walmart’s inherited their wealth“, Stiglitz cited as an example.
“One of my friends describes it as winning the sperm lottery. You got the ‘right’ parents. I think we have to realize that most billionaires got a lot of their wealth just by luck.“
The Nobel Prize winner considers U.S. Senator Elizabeth Warren’s proposals for a 2 percent tax on wealth of more than $50 million and a 3 percent tax on wealth of more than $1 billion “very reasonable.” He believes that would “really do a lot to raise revenue that could be used to alleviate some problems our country faces.“
The crisis has made rich even richer
According to Stiglitz, the Corona pandemic has exacerbated social inequality around the world to an “astonishing” degree and “both exposed and exacerbated global inequalities.“
“At a time when so many people’s lives have been so difficult, when they have lost their jobs, when food prices have risen and oil prices have risen, it is shocking how many people and rich companies have made off like bandits,” Stiglitz criticized.
Oxfam study: For the first time in 25 years, extreme wealth and extreme poverty are growing simultaneously
A recent Oxfam study showed that nearly two-thirds of the wealth accumulated since the pandemic began has gone to the richest 1 percent. The charity found that the best-off will have amassed $26 billion in new assets by the end of 2021. That’s 63 percent of all new wealth, with the rest going to the remaining 99 percent of people.
As a result, for the first time in 25 years, the rise in extreme wealth has been accompanied by an increase in extreme poverty. 
The charity said that a tax of up to 5 percent on multimillionaires and billionaires could raise $1.7 trillion a year for the world. That, in turn, would be enough to lift 2 billion people out of poverty and end world hunger.
“While millions of people don’t know how to pay for food and energy, the crises of our time are bringing gigantic increases in wealth for billionaires and billionaires’ wives,” said Oxfam spokesman Manuel Schmitt.
200 super-rich call for global wealth taxes
More than 200 members of the super-rich elite have written to governments around the world in the run-up to the World Economic Forum in Davos calling on them to “tax us, the super-rich, now” to tackle the crisis of inequality. “Patriotic Millionaires”, “Tax me Now” and “Millionaires for Humanity” were behind the campaign.
Among the signatories are Disney heirs Abigail and Tim Disney and “Hulk” actor Mark Ruffalo. Marlene Engelhorn from Austria also participated in the protest—she delivered the letter on site.

Members Phil White and Marlene Engelhorn protest the World Economic Forum in Davos.
It’s time to #TaxTheRich. pic.twitter.com/QwV7aWMPEP
— Patriotic Millionaires (@PatrioticMills) January 17, 2023

This work is licensed under the Creative Common License. It can be republished for free, either translated or in the original language. In both cases, please cite / Kathrin Glösel as the original source/author and set a link to this article on Scoop.me. https://scoop.me/stiglitz-tax-on-top-incomes/
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Rewarding “Good” Companies—How the Economy for the Common Good Wants to Change the World

Publicerad denFörfattareIngo Geiger

The Economy for the Common Good (ECG) is an alternative to the existing economic model of capitalism, including the pursuit of profit and constant growth. The ultimate goal is a good life for all people. The idea: the state supports companies that produce in an environmentally friendly way and pay their employees fairly. Through favorable loans and tax breaks, they receive a clear advantage and can thus operate even more successfully. Piece by piece, this could lead to a sustainable and socially just economic system.

Let’s imagine that a small café, a local carpentry shop and a family bakery are suddenly more successful than the branches of the large global corporations. The reason: the state supports them with favorable loans, investment aid and tax breaks because they operate more sustainably, socially and fairly. The corporations, on the other hand, have to pay higher taxes because they exploit their employees and destroy nature. This deliberately gives small businesses a clear advantage over corporations and enables them to assert themselves on the market with their fair and sustainable products.
A utopia? From today’s perspective, yes. But in the sense of the Economy for the Common Good, this is what our economic reality could look like. 
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Economy for the Common Good Explained: What is it?
The Economy for the Common Good (ECG) is an alternative to the existing economic model of capitalism. The primary goal is a good life for all people, and not the maximum enrichment of a few company owners. It is an ethical market economy based on basic human values. The focus is on human dignity, solidarity and justice, ecological sustainability, transparency and co-determination. Values that are also shared by almost all democratic constitutions. 
One of the strengths of the Economy for the Common Good is that it links to core elements of the capitalist market economy: corporations, credit, trade, markets, property. However, it transforms these elements by consistently placing them at the service of overarching values—human dignity, solidarity, justice, sustainability, democracy. It is therefore transformation and evolution, not “disruption” or “system change.” (Christian Felber, founder of the Economy for the Common Good)
These overarching values are only a proposal. The concept envisages that they will be (further) developed jointly in a democratic process. 
Sustainability for People, Environment, and Economy
The Economy for the Common Good understands sustainability as being, not only the resource-conserving use of nature, but also respect for human dignity as well as free and successful economic activity as part of an ethical market economy. 
The three Pillars of Sustainability

 Upholding human dignity
Respectful treatment of nature
Entrepreneurial freedom and success within the framework of an ethical market economy
ECG leads to more sustainability, as it promotes those companies that operate in an environmentally friendly and socially responsible manner. Through loans, investments and tax breaks, they gain a clear advantage over others and thus prevail with their products on the market.
Following this simple principle, it would simply no longer be worthwhile to disregard human dignity, destroy the environment or drive inequality in society for the profits of a few. Step by step, this could lead to an economic system in which careful use of our finite resources pays off—while reckless and exploitative behavior does not. 
Many people are now looking for meaningful work. Sustainability is particularly important—especially among the younger generation. This is another advantage for companies that focus on the common good: many of their employees feel significantly more satisfied  they see their work as making a contribution to the common good.
The “common good balance sheet” measures exactly how much a company contributes to the common good. 
Common Good Economy Goals: Democratize the economy
Through a new economic order and a fundamentally new way of thinking about business, the common good economy aims to achieve a good life for all. This is its ultimate goal. Everything is to be discussed anew and decided democratically:
ECG Goals: Democratize the Economy

Should a CEO really earn 300 times as much as an employee? Or wouldn’t 10 times be fairer? Of course, there should be more pay for more responsibility. But at the moment there is a lack of proportionality. Because such high salary differences endanger social cohesion.
Shouldn’t toxic sprays be banned altogether, even if a global corporation is resisting one  with all its might? After all, every single person bears the health consequences. Wouldn’t it be fairer if they were the ones to decide?
Eight billionaires own more than the poorer half of the world’s population. Is that still fair? Or do we need a wealth cap, higher inheritance taxes and a fairer distribution of property?
How high should the minimum wage be? Is 12 euros per hour (Germany) enough? Is it okay that there is none at all in Austria?
The Economy for the Common Good wants to put control over our future back into the hands of democracy. An accumulation of capital, money and consequently power should only be possible to a limited extent. Where this limit lies, all people should decide together.
The common good balance sheet: This is how it is assessed
With the common good balance sheet, a company, university, city, or municipality can measure its contribution to the common good.
Contribution to the Common Good

Are the raw materials used mined in an environmentally friendly way?
Are there human rights violations in the supply chains?
Does the customer benefit take precedence over the company’s own sales aspirations?
Are all those involved paid fairly?
Is transparency ensured in dealings with employees?
One of these companies is the sporting goods manufacturer Vaude. Vaude pays attention to the highest ecological standards in textile production. With the Common Good balance sheet, the company can measure the resulting contribution to the common good. 
The Common Good Matrix (graphic: www.ecogood.org/)
The Common Good Balance Sheet is based on the Common Good Matrix and rates companies in 20 categories with + or – points. Plus points are awarded, for example, for resource-conserving and environmentally friendly business practices, fair wages and social working conditions. Minus points, on the other hand, are awarded for environmentally harmful behavior or disregard for human rights. The more plus points a company has, the more it contributes to the common good. 
The Economy of the Common Good advocates that such a balance sheet would be mandatory for companies and, above all, would have legal and economic consequences. Companies with a high score would receive certain advantages, such as lower taxes, more favorable investments, or would be given preference in the awarding of public contracts. This would create concrete incentives to operate and produce in a sustainable and socially responsible manner.
Around 1,000 companies in 35 countries are already drawing up a common good balance sheet and have decided to pursue social goals beyond mere profit maximization. These include well-known companies such as Vaude, Sonnentor, Windkraft Simonsfeld, the Trumer brewery and the Freistadt brewery community.
Pros & cons of the Economy of Common Good: advantages and disadvantages for society
The basic values of the common good economy (human dignity, solidarity, justice, sustainability, and democracy) result in the following benefits: Pros & Cons of the Economy of the Common Good

Sustainability: By committing to sustainable and resource-conserving production, we save our planet. 
Transparency: The common good balance sheet makes the behavior of companies comprehensible and transparent for society. 
Solidarity and justice: Social cohesion and solidarity with one another grow as inequalities and injustices are reduced. 
Equality of opportunity: A wealth cap (for legal entities: e.g., a limited liability company, stock corporations or trade associations) reduces the differences between rich and poor. This leads to greater equality of opportunity. This is because wealth and private ownership contribute significantly to economic, social and also political inequality in a society. Today, the rule is: those who are rich get richer. Those who are poor remain poor. 
More democracy: In Austria, 90 percent want a new economic order—in Germany, the figure is 88 percent (Bertelsmann Foundation survey, 2012). People want change, but in the current model they have no voice. It’s quite different in the common good economy: here, they would vote together on every aspect of the economy. Everything would be up for debate: Is it fair, for example, for a manager to earn 300 times that of a regular employee? Wouldn’t 10 times be enough?     
Less lobbying: Lobbying and corporate influence on political decisions would simply no longer be possible, as the common good would be the ultimate goal. As a result, global corporations and extremely wealthy individuals would lose the basis of their power and influence. 
Human dignity: No more exploitation, as the economic consequences (more taxes and duties) would make it no longer worthwhile.
Disadvantages would arise mainly for those who exploit the current situation and profit from the fact that people and the environment are exploited, that political influence is possible and that there are no real consequences for it (yet).
The Criticism: The Effort and the limited Freedom
The Austrian Chamber of Commerce criticizes the bureaucratic effort that this could create. Not only would one have to draw up a common good balance sheet for every company, but one would also have to define the tax and social advantages and disadvantages that result from this. 
But if you think back, you will see that the introduction of general accounting also involved a lot of effort. So should we really ask ourselves whether it would be too burdensome? Or shouldn’t we better ask: does a company benefit the environment, peace, people? Does it contribute to the general welfare of society, or does it do more harm?
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Of course, a new balance sheet would be a costly undertaking—but one that would be worthwhile for companies and society. It would help them reflect on their own actions, classify them and, if necessary, adjust them to contribute to a better society. Which, at the end of the day, is also in their best interest. 
It is also often criticized that the common good economy would restrict the freedom of companies and individuals too much. However, it is questionable how much of a restriction there can be when entrepreneurial freedom means the exploitation of people and nature. 
Our society is built on restrictions—that’s the only way coexistence and freedom work. For example, we do not race through the inner city at 200 km/h because that would be too dangerous for everyone involved. We also do not solve conflicts with violence, but in court. Restrictions are necessary—but only we as a society should decide on them.
The Economy for the Common Good: Examples
Worldwide, there are nearly 60 practicing cities and communities, 175 active regional groups, and 200 universities committed to the common good economy. These people have chosen it because they no longer want to watch large corporations destroy the environment and erode democracy. They want to see meaning in their work again, and working together for a better society gives them just that. The reasons and the exemples for their commitment are numerous and could not be more different, but they all have one thing in common: dissatisfaction with the current situation and the will to change something. 
Good Practices:

Valencia: Since 2021, the autonomous region has been promoting companies that produce sustainably and that have drawn up a common good balance sheet. A total of 700,000 euros in funding will be awarded.
Hamburg: In the future, public companies will be required to comply with the United Nations’ Sustainable Development Goals. To monitor compliance, they are to draw up a common good balance sheet.
Common good balance sheet in banks: Vorarlberger Landesversicherung, Raiffeisenbank Lech and Dornbirner Sparkasse already prepare common good balance sheets. The pioneer in Germany was Sparda-Bank München. Former Chairman of the Board Günter Grzega: “In the course of our common good reporting, my successor abolished all bonus payments at Sparda-Bank München. As a result, two out of a total of 700 employees left the company. And that was a good thing.”
Common Good account: The “Gemeinwohl Konto” is a cooperative project between the “Genossenschaft für Gemeinwohl” and the environmental center of Raiffeisenbank Gunskirchen. The goal is to use money specifically for undertakings that serve the common good and thereby contribute to a change in the monetary and financial system. This is made possible by a rather simple step: a separate accounting cycle guarantees that money to the value of all deposits in common good accounts is allocated as financing for common good-oriented projects. This way, all account holders know that their money contributes to the common good.
Faced with the climate crisis, the gap between rich and poor, and the crisis of confidence in politics and democracy, transforming the current economic system towards a common good economy could defuse, if not solve, many global problems.
Constraints will result from this. However, these restrictions will not curtail our freedom, but will set in motion a democratic process that can make all our lives better.  Läs mer…