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Fiddling, while Kenya burns

8 min read.

The Jubilee administration gambled on mega-infrastructure projects to expand the economy. It has borrowed heavily to finance them. Over the past five years, it has conjured up a misleading set of economic data that paints a rosier picture than the grim reality now confronting the country. What is this fantasy in aid of? By DAVID NDII

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Fiddling, While Kenya Burns
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After all the hullaballoo, and the brazen manipulation of the vote on Uhuru Kenyatta’s presidential veto of parliaments proposal to defer VAT on fuel for another two years, you would be forgiven to think that the government scored big in the battle to shore up its terrible and rapidly deteriorating finances. It did not. Much to the contrary, the melodrama was an inconsequential sideshow.

Alongside the president’s memorandum, the Treasury tabled a supplementary (i.e. revised) budget that which elicited screaming headlines: the government had “slashed” by a whopping 55 billion shillings from Sh. 3.026 trillion to 2.971 trillion. A critical reader would immediately have noticed that a 1.8 percent reduction hardly qualifies to be a “slashing” — trimming would have been accurate. Of note, the supplementary budget the Treasury did not provide a complete budget revision, but only a high level expenditure summary with five budget lines.

But the Treasury also published its regular Budget Review and Outlook (BROP) paper that contains the detailed budget data. As is customary with our National Treasury, the numbers in the two tables are not identical. Even the numbers in different tables of the BROP are not identical, although the differences are not material— it’s mostly sloppiness, and occasionally, sleight of hand. I follow the BROP figures (See table below) as they are more comprehensive and also the more up to date of the two, if only by two days. Two things to note.

First, the expenditure cuts are less than the revenue forecast which is revised downwards by Sh. 96 billion, while expenditure is revised downwards by Sh. 83 billion. Even though the 10 billion difference is not such a big sum, it’s unclear why the government would go to such lengths to table an austerity budget that increases the deficit.

More significantly, the revenue forecast is still unrealistic. The budget was based on revenue growth of 31 percent, comprising of 30 percent and 36 percent increase in tax and non-tax revenues respectively, which has now been scaled down to 25 percent, with tax and non-tax revenue forecast down to 24 and 28 percent respectively. These forecasts are out of touch with reality. Tax revenues increased only three percent and non-tax by 12 percent for a total revenue increase of four percent. This, as we will see shortly, is not an anomaly—it is a significant trend.

The budget was based on revenue growth of 31 percent, comprising 30 percent and 36 percent increase in tax and non-tax revenues respectively, which has now been scaled down to 25 percent, with tax and non tax revenue forecast down to 24 and 28 percent respectively. These forecasts are out of touch with reality.

In its current financial circumstances, it is not just sensible that the government be prudent, it is imperative. There will be no harm done if revenue exceeds target, but unrealistic revenue forecasts result in government spending money it does not have. This is how the government ends up accumulating pending bills, which, according to the private sector lobby KEPSA, are now in the order of Sh. 200 billion.

Trend growth gives you a revenue forecast of Sh. 1.55 billion. An optimistic one, assuming a most favorable economy and factoring in tax rises, would double the growth rate to 8 percent, still comes to Sh. 1.62 trillion. I would work with Sh.1.6 trillion.

In its current financial circumstances, it is not just sensible that the government be prudent, it is imperative…Unrealistic revenue forecasts result in government spending money it does not have…The government ends up accumulating pending bills… now in the order of KSh 200 billion.

Herein lies the problem. The Sh.1.6 trillion revenue forecast is Sh. 250 billion short of the revised recurrent budget. Interest cost (Sh. 400 billion), pensions (Sh. 90 billion) are non-discretionary (i.e. mandatory) and the wage bill (Sh. 444 billion) which does not give you much room to manoeuvre already add up to Sh. 930 billion. This leaves a balance of Ksh. 660 billion to fund counties (Sh. 367) and the national government’s operations and maintenance (O&M) outlays (Sh. 530 billion) totaling Ksh. 960 billion.

The only question here should be where the axe falls. There are only two options either the axe falls on the national government, or to share the cuts with the counties. The latter is obviously more sensible than the former. The equitable way of doing this is to net out the counties wage bill which is about Sh.140 billion, and share the balance proportionately. This math works out to 33 percent of the national governments O&M budget and the transfer to counties net of wage bill which translates to national government O&M budget of Sh. 202 and counties Sh.78 which means that the transfers to counties reduce from Sh. 376 to Sh. 218 billion. This is the reality that the government has refused to face. It should also be readily apparent that the tax measures that the government rigged through parliament are not a solution to its financial woes.

The Jubilee administration bet the farm on mega-infrastructure projects to expand the economy and has borrowed heavily to finance them. Infrastructure investments are supposed to crowd in productive private investment which in turn expands the tax base, which in turn generates the revenue to pay the debts. But far from increasing, the tax take is falling. The preliminary data treasury has published shows a sharp decline to 15.4 percent last financial year, down from 17 percent in the previous one. A 1.6 percentage-point decline in a year looks improbable— it is more likely that they have over-estimated GDP. This and the reason why, will be confirmed shortly. Still even the one percentage-point decline from 18 to 17 percent in five years is itself a serious problem. It translates to a forgone revenue of Sh. 77 billion in FY16/17 (see chart below). If we assume that the 15.4 figure is an underestimate and instead apply a revenue yield of 17 percent last year, the revenue yield gap drops to a more plausible Sh. 80 billion. Why?

Revenue to GDP ratio, % (LHS) and implied revenue gap Sh. billion (RHS)

First, a lot of the borrowed money was stolen outright and many, perhaps all the projects have been done at highly inflated costs. We still do not have any physical evidence of what we spent the proceeds of the first eurobond, Sh.190 billion (US$ 2.2 billion) proceeds of the first eurobond issue on. Government claims that the money was channeled into the development budget and absorbed in one financial year. Not only is it simply not possible to build things at that rate, the funding for all the projects done for that year is accounted for without the eurobond money. This is the reason that the special audit of the eurobond has never come out.

A lot of the borrowed money was stolen outright and many, perhaps all, of the projects have been done at highly inflated costs. We still do not have any physical evidence of what we spent the proceeds of the first Eurobond on…

The national investment rate has remained stagnant at about 18 percent of GDP, against a requirement of 25-30 percent of GDP. We also know that credit to the private sector collapsed suddenly three years ago, and has been comatose since. The credit market has become a pyramid scheme, where interest on government securities is re-invested in government securities. As with all pyramid schemes, this one too will come to grief.

In short, the reason why the revenue yield has declined is because the productive base of the economy has not expanded. The Jubilee administration bet the farm on a state of the art milking machine, even built a brand new shed to go with it, and now expects the cows to produce more milk. It is the same cows. And now the debt repayments and electricity bills are eating into the working capital forcing the farmer to cut back on feed. They now lament that the milkman (KRA) has a new machine but is still unable to produce more milk.

But the National Treasury’s growth projections are as panglossian as ever. In the original budget forecast, the nominal GDP expands from 7.7 trillion in FY16/17 (the latest actual data) to Sh. 12.6 trillion in FY20/21 a growth of 64 percent or 17 percent per year. Nominal GDP is the denominator used to calculate budget financial ratios. This translates to a real economic growth rate of 7.4 percent per year (this is obtained by applying an inflation adjustment known as GDP deflator. I have applied the average deflator for the last five years). Average growth rate for the last five years—5.56 percent. Growth has topped seven percent only once in the last thirty years— 2007. Now comes the remarkable part. In the revised projections, nominal GDP has been adjusted upwards to just under Sh. 13 trillion in FY20/21. It is conceivable that the mandarins are factoring higher inflation— one hopes so because otherwise it translates to a delusional eight percent per year growth rate. The reason for the sharp fall in the revenue ratio last year is now clear— GDP has been inflated on purpose.

What is this fantasy in aid of? Their purpose is to reduce the budget financial ratios without budget cuts. This way, they are able to “get away” with fiddling with the actual budget figures and still achieve “fiscal consolidation.” This year, the deficit in the revised budget is adjusted upwards by 14b from 603 to 622 billion but it as a ratio to GDP it declines from 6.3 to 6.1 percent on account of GDP being adjusted upwards by 321 billion. In FY21/22 the nominal GDP projection is jerked up 17 percent which excluding an inflation surge, brings the real growth rate for the period to 8.4 percent. This enables the mandarin to “bring down” the budget deficit 3.4 percent, even as expenditure grows by Sh.750 billion. A serious sensible projection would have projected 5 percent real growth. A 3.4 percent of GDP deficit based on this would have required expenditure to be adjusted downwards by Sh. 400 billion, or revenue to rise by similar amount or a combination of the two.

The budget, both the original and supplementary one, is best summed as “do nothing” strategy. If you are not up to changing reality, change the numbers.

We are compelled to wonder who this tomfoolery is meant for? It is not the public, they don’t get to see these numbers, let alone read and understand them. It cannot possibly be the IMF, the credit rating agencies or the markets. If anything, this is nothing short of showing the markets a middle finger. That to my mind, leaves only one constituency— their political bosses. The mandarins are telling them what they, the political bosses, want to hear.

My first column calling out the Jubilee’s administration fiscal recklessness, published in August 2014 was subtitled “Lessons from Ghana”.

Three days ago, the Ghanaian government announced that it was planning to issue $50 billion “century bonds” over the next few years, starting with a five to ten billion issue by the end of the year. A “century bond” is a bond with a hundred year maturity. Only three developing countries—China, Mexico and Argentina_ have sold century bonds. Ghana’s issue will be the biggest. A 10 billion dollar issue is a fifth of Ghana’s GDP and would cost a billion dollars in interest a year. The markets did not like the news. Immediately, the yields on Ghana’s eurobond yields shot up (which is another way of saying the value of its bonds fell) and the Cedi fell 2.6 percent. The Financial Times summed it up thus: “In capital market terms, this is no this is not just a moon shot, it’s a mission to Mars.” The FT story was headlined, “Someone tell Ghana this it isn’t 2017 anymore.”

If you are not up to changing reality, change the numbers. We are compelled to wonder who this tomfoolery is meant for? It is not the public, they don’t get to see these numbers, let alone read and understand them. It cannot possibly be the IMF, the credit rating agencies or the markets. If anything, this is nothing short of showing the markets the middle finger. That to my mind, leaves only one constituency— their political bosses. The mandarins are telling them what they, the political bosses, want to hear.

Argentina issued its century bond last May. The issue was oversubscribed four times. A year down the road, Argentina is in the grip of another financial meltdown. Inflation is raging at 3.5 percent a month, the Central Bank has raised the benchmark interest rate to 60 percent and the Peso, down 52 percent on the dollar this year, is still falling. What changed? In 2015 Argentina elected a new president who promised to impose macroeconomic discipline. Argentina’s legendary fiscal laxity has led to eight debt defaults, including the biggest sovereign default in history in 2002. The markets took the new president seriously. Earlier this year, he showed signs of backtracking — revising inflation target upwards and lowering interest rates. Market sentiment turned. Argentina had plenty of foreign exchange reserves, but within weeks it was looking for lifelines everywhere including its perpetual nemesis the IMF which it has approached for a US$ 50 billion bailout.

Someone needs to tell Jubilee this isn’t 2017 anymore.

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David Ndii is a leading Kenyan economist and public intellectual.

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Education in Rwanda: A Long Walk to the Knowledge Economy

If Rwanda is to attain its stated ambition to become of a middle-income country by 2035 driven by the knowledge economy, then it must inject significant investments in the education and related sectors.

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Rwanda has shown commitment to bring improvements to its education sector. The development of Human capital that involves the enhancement of the education and health sectors was one of the main pillars of Rwanda’s development programme launched in 2000 to transform the country into a middle income state driven by the knowledge economy by 2020. Many developed countries joined in to financially support Rwanda to fulfil its development ambitions.

But while Rwanda did not meet its target to transform into a middle-income state by 2020, it has nevertheless made progress in the education sector that should be recognised. The country has now near-universal access to primary education with net enrolment rates of 98 per cent. There are also roughly equal numbers of boys and girls in pre-primary, primary and secondary schools in Rwanda. Compared to other sub-Saharan African countries, Rwanda has made great improvements in the education sector based on the gains made in primary school gross enrolment, out-of-school and retention rates and considering that the country came out of a genocidal civil war in the 1990s. Those of us living and travelling across the country can also see that the government of Rwanda has built more schools across the country to address congestion in classrooms.

However, education in Rwanda is faced with serious challenges which, if not addressed, the country will not attain its ambition to become a middle-income by 2035 and a high-income by 2050. The World Bank’s comparison with middle- and high-income countries, to whose ranks Rwanda aspires to join, shows that Rwanda lags far behind in primary and lower secondary school completion levels.

The gains made in education are not equally distributed across Rwanda. There are, for instance, wide disparities in lower secondary education by income and urban–rural residence. Whereas lower secondary school gross enrolment ratio level is 82 per cent in urban areas, it is only 44 per cent in rural areas. Moreover, transition rates between primary and lower secondary education are 53 per cent in urban areas, and 33 per cent in rural areas. School completion is 52 per cent among the richest quintile while it is 26 per cent among the poorest. Any future development strategy is unlikely to succeed if it does not provide basic equality of opportunity for all in Rwanda.

The standard of education in Rwanda is another major challenge. At the end of Grade 3, 85 per cent of Rwandan students were rated “below comprehension” in a recent reading test, and one in six could not answer any reading comprehension question. In my view, the quality of education has been partly affected by the abrupt changes in the language of instruction that have taken place without much planning since 2008.

Any future development strategy is unlikely to succeed if it does not provide basic equality of opportunity for all in Rwanda.

Learning levels in basic education remain low in Rwanda.  Children in the country can expect to complete 6.5 years of pre-primary and basic education by the age of 18 years. However, when this is adjusted for learning it translates to only about 3.8 years, implying that children in Rwanda have a learning gap of 2.7 years. This is a concern.

Education in Rwanda is also impended by high levels of malnutrition for children under 5 years. Although there have been improvements over time, malnutrition levels remain significantly high at 33 per cent. Malnutrition impedes cognitive development, educational attainment, and lifetime earnings. It also deprives the economy of quality human capital that is critical to Rwanda attaining its economic goals and sustaining its economic gains. In 2012, Rwanda lost 11.5 per cent of GDP as a result of child undernutrition.

Because of low learning levels and high levels of malnutrition in children under 5 years, Rwanda has consistently ranked below average on the World Bank’s Human Capital index since 2018, the year the index was first published. HCI measures which countries are best at mobilising the economic and professional potential of their citizens.

If Rwanda is to develop the competent workforce needed to transform the country into a knowledge-based economy and bring it into the ranks of middle-income states, the government must put significant public spending in basic education. This has not been the case over the past decades. According to the World Bank, Rwanda’s public spending on primary education has been significantly lower than the average for sub-Saharan African countries with similar coverage of primary school level as Rwanda. This low spending on primary education has translated into relatively modest pay for teachers and low investment in their professional development which in turn affects the provision of quality education in Rwanda. The government recently increased teachers’ salary but the increment is being eroded by, among other things, food price inflation in Rwanda.

Malnutrition impedes cognitive development, educational attainment, and lifetime earnings.

Going forward, Rwanda’s spending on education needs to be increased and allocated to improving standards. Considering that the underlying cause of the high rate of malnourishment in children is food insecurity, the government needs to spend more on the agriculture sector. This sector employs 70 per cent of the labour force but has received only 10 per cent of total public investment. Public investment in Rwanda has in the past gone to the development of the Meetings, Incentives, Conferences and Exhibitions sector rather than towards addressing pressing scarcities. This approach must be reviewed.

Increasing public expenditure in education and connected sectors should also be combined with strengthening accountability in the government institutions responsible for promoting the quality of education in basic schools and in promoting food security and livelihoods in Rwanda. This is because not a year goes by without the office of the Rwanda auditor general reporting dire inefficiencies in these institutions.

Strengthening institutional accountability can be achieved if the country adapts its consensual democracy by opening up the political space to dissenting voices. Doing so would surely enhance the effectiveness of checks and balances across institutions in Rwanda, including in the education sector, and would enable the country to efficiently reach its development targets.

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No Imperialist Peoples, Only Imperialist States

Adam Mayer praises a new collection, Liberated Texts, which includes rediscovered books on Africa’s socialist intellectual history and political economy, looking at the startling, and frequently long ignored work of Walter Rodney, Karim Hirji, Issa Shivji, Dani Wadada Nabudere, A. M. Babu and Makhan Singh.

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No Imperialist Peoples, Only Imperialist States
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Liberated Texts is a magnificent, essential, exciting tome that feels like a bombshell. This incredibly rich collection is a selection that is deep, wide, as well as entertaining. The book focuses on twenty-one volumes from the previous one hundred years, with a geographical range from the UK, the US, Vietnam, Korea, the Peoples Republic of China, the Middle East, Ireland, Malaysia, Africa (especially East Africa), Europe, Latin America, and the former Soviet Union, focusing on books that are without exception, foundational.

The collection is nothing less than a truth pill: in composite form, the volume corrects world history that Howard Zinn’s The People’s History of the United States offered for the sterile, historical curriculum on domestic (US) history. The volume consists of relatively short reviews (written by a wide collection of young and old academics and activists from every corner of the globe) but together they reflect such a unified vision that I would recommend Liberated Texts as compulsory reading for undergraduate students (as well as graduates!) Although the text is a broad canvas it speaks to our age (despite some of the reviewed book having been written in the 1920s).

Each review is by default, a buried tresure. The writer of this very review is a middle-aged Hungarian, which means that some of the works and authors discussed were more familiar to me than they would be to others. For example, Anton Makarenko’s name was, when the author grew up in the People’s Republic of Hungary, a household word. Makarenko’s continued relevance for South America and the oppressed everywhere, as well as his rootedness in the revolutionary transformations of the Soviet experiment, are dealt with here marvellosly by Alex Turrall (p. 289). In loving detail Turrall also  discusses his hero the pedagogue Sukhomlinsky’s love for Stalinist reforms of Soviet education (p. 334).

There is one locus, and one locus only, where death is given reign, perhaps even celebrated: in a Palestinian case (p. 133) the revolutionary horizons are firmly focused on the past, not on any kind of future. The entire problematic of Israeli society’s recent ultra right-wing turn (a terrible outcome from the left’s point of view) is altogther missing here. Yet it is difficult to fault the authors or editors with this (after all, they painstakingly included an exemplary anti-Nazi Palestinian fighter in the text, p. 152) but it might be in order to challenge a fascination with martyrdom as a revolutionary option on the radical left.

In every other aspect, Liberated Texts enlightens without embarrassment, and affirms life itself. Imperialism is taken on in the form of unresolved murders of Chinese researchers in the United States as a focus (p. 307), and in uncovering the diabolical machinations of the peer-review system – racist, classist, prestige-driven as it is (p. 305).

The bravery of this collection is such that we find few authors within academia’s tenure track: authors are either emeriti, tenured, very young academics, or those dedicated to political work: actual grassroots organizers, comrades at high schools, or as language teachers. This has a very beneficial effect on the edited volume as an enterprise at the forefront of knowledge, indeed of creating new knowledge. Career considerations are absent entirely from this volume, in which thankfully even the whiff of mainstream liberalism is anathema.

I can say with certainty regarding the collection’s Africanist chapters that certain specialists globally, on African radical intellectual history, have been included: Leo Zeilig, Zeyad el-Nabolsy, Paul O’Connell, Noosim Naimasiah and Corinna Mullin all shed light on East African (as well as Caribbean) socialist intellectual history in ways that clear new paths in a sub-discipline that is underfunded, purposely confined to obscurity, and which lacks standard go-to syntheses especially in the English language (Hakim Adi’s celebrated history on pan-Africanism and communism stops with the 1950s, and other works are in the making).

Walter Rodney, Karim Hirji, Issa Shivji, Dani Wadada Nabudere, A. M. Babu, Makhan Singh are the central authors dealt with here. Rodney is enjoying a magnificent and much deserved renaissance (but this collection deals with a lost collection of Rodney’s 1978 Hamburg lectures by Zeilig!) Nabolsy shows us how Nyerere’s Marxist opposition experienced Ujamaa, and Tanzanian ’socialism’. Nabudere – a quintessential organic intellectual as much as Rodney –  is encountered in praxis as well as through his thought and academic achievements in a chapter by Corinna Mullin. Nabudere emerges as a towering figure whose renaissance might be in the making right at this juncture. Singh makes us face the real essence of British imperialism. Nabudere, Babu and even Hirji’s achievements in analysing imperialism and its political economy are all celebrated in the collection.

Where Shivji focuses on empire in its less violent aspect (notably NGOs and human rights discourse) powerfully described by Paul O’Connell, Naimasiah reminds us that violence had been as constitutive to Britain’s empire, as it has been to the Unites States (in Vietnam or in Korea). An fascinating chapter in the collection is provided by Marion Ettinger’s review of Richard Boyle’s Mutiny in Vietnam, an account based entirely on journalism, indeed impromptu testimony, of mutinous US soldiers tired of fighting for Vietnam’s landlord class.

Many readers of this anthology will identify with those veterans (since the collection appears in the English language) perhaps more than with East Asia’s magnificent, conscious fighters also written about in the book. Even in armies of the imperialist core, humanity shines through. Simply put, there are no imperialist peoples, only imperialist states.

Zeilig’s nuanced take on this important matter is revealed in Rodney’s rediscovered lectures. Also, the subtlety of class analysis in relation to workers versus peasants, and the bureacratic bourgeoisie profiting from this constellation (p. 219) brings to mind the contradiction that had arguably brought down Thomas Sankara, Burkina Faso’s anti-imperialist president who nevertheless found himself opposing working class demands. Rodney’s politics in Guyana invited the same fate as Sankara, as we know.

Nabolsy’s review on Hirji’s The Travails of a Tanzanian Teacher touches on very interesting issues of Rodney’s role especially in the context of Ujamaa and Nyerere’s idiosyncratic version of African socialism. Nabolsy appreciates Nyerere efforts but analyses his politics with great candour: Ujamaa provided national unification, but failed to undermine Tanzania’s dependency in any real sense. The sad realization of the failure of Tanzania’s experience startles the reader with its implications for the history of African socialism.

On an emotional and personal level, I remain most endeared by the Soviet authors celebrated in this text. So Makarenko and Sukhomlinsky are both Soviet success stories and they demonstrate that this combination of words in no oxymoron, and neither is it necessarily, revisionist mumbo-jumbo. Their artificial removal from their historical context (which had happened many times over in Makarenko’s case, and in one particular account when it comes to Sukhomlinsky) are fought against by the author with Leninist gusto.

Sukhomlinsky had not fought against a supposedly Stalinist education reform: he built it, and it became one of the most important achievements of the country by the 1960s due partly to his efforts. The former educational pioneer did not harm children: he gave them purpose, responsibility, self-respect, and self-esteem. The implication of Sukhomlinsky and Makarenko is that true freedom constructs its own order, and that freedom ultimately thrives on responsibility, and revolutionary freedom.

As this collection is subtitled Volume One, it is my hope and expectation that this shall be the beginning of a series of books, dealing with other foundational texts, and even become a revolutionary alternative to The London Review of Books and the New York Review of Books, both of which still demonstrate how much readers crave review collections. Volumes like Liberated Texts might be the very future of book review magazines in changed form. A luta continua!

This article was first published by ROAPE.

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We Must Democratize the Economy

In the UK, prices for basic goods are soaring while corporations rake in ever-bigger profits. The solution, Jeremy Corbyn argues, is to bring basic resources like energy, water, railways, and the postal service into democratic public ownership.

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Jeremy Corbyn: We Must Democratize the Economy
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On Thursday, December 15, the Royal College of Nursing went on strike for the first time in their 106-year history. Understaffed, underpaid, and overworked, tens of thousands of National Health Service (NHS) nurses walked out after being denied decent, livable pay rises. Hailed as heroes one year, forced to use food banks the next, nurses’ wages have fallen more than £3,000 in real terms since 2010; three in four now say they work overtime to meet rising energy bills.

People will remember 2022 as the year that the Conservative Party plunged this country into political turmoil. However, behind the melodrama is a cost-of-living crisis that has pushed desperate people into destitution and the so-called middle classes to the brink. We should remember 2022 as the year in which relative child poverty reached its highest levels since 2007 and real wage growth reached its lowest levels in half a century. (Average earnings have shrunk by £80 a month and a staggering £180 a month for public sector workers.) These are the real scandals.

For some MPs, this was the year they kick-started their reality TV careers. For others, this was the year they told their children they couldn’t afford any Christmas presents. For energy companies, it was the year they laughed all the way to the bank; in the same amount of time it took for Rishi Sunak to both lose and then win a leadership contest, Shell returned £8.2 billion in profit. SSE, a multinational energy company headquartered in Scotland, saw their profits triple in just one year. Profits across the world’s seven biggest oil firms rose to almost £150 billion.

Tackling the cost-of-living crisis means offering an alternative to our existing economic model — a model that empowers unaccountable companies to profit off the misery of consumers and the destruction of our earth. And that means defending a value, a doctrine, and a tradition that unites us all: democracy.

Labour recently announced “the biggest ever transfer of power from Westminster to the British people.” I welcomed the renewal of many of the policies from the manifesto in 2019: abolishing the House of Lords and handing powers to devolved governments, local authorities, and mayors. These plans should work hand in hand, to ensure any second chamber reflects the geographical diversity of the country. If implemented, this would decentralize a Whitehall-centric model of governance that wastes so much of this country’s regional talent, energy, and creativity.

However, devolution, decentralization, and democracy are not just matters for the constitution. They should characterize our economy too. Regional governments are demanding greater powers for the same reason an unelected second chamber is patently arcane: we want a say over the things that affect our everyday lives. This, surely, includes the way in which our basic resources are produced and distributed.

From energy to water and from rail to mail, a small number of companies monopolize the production of basic resources to the detriment of the workers they exploit and the customers they fleece. We rely on these services, and workers keep them running, but it is remote chief executive officers and unaccountable shareholders who decide how they are run and profit off their provision. Would it not make more sense for workers and consumers to decide how to run the services they provide and consume?

As prices and profits soar, it’s time to put basic resources like energy, water, rail, and mail back where they belong: in public hands. Crucially, this mold of public ownership would not be a return to 1940s-style patronage-appointed boards but a restoration of civic accountability. Water, for example, should be a regional entity controlled by consumers, workers, and local authorities, and work closely with environmental agencies on water conservation, sewage discharges, the preservation of coastlines, and the protection of our natural world. This democratic body would be answerable to the public, and the public alone, rather than to the dividends of distant hedge funds.

Bringing energy, water, rail, and mail into democratic public ownership is about giving local people agency over the resources they use. It’s about making sure these resources are sustainably produced and universally distributed in the interests of workers, communities, and the planet.

Beyond key utilities, a whole host of services and resources require investment, investment that local communities should control. That’s why, in 2019, we pledged to establish regional investment banks across the country, run by local stakeholders who can decide — collectively — how best to direct public investment. Those seeking this investment would not make their case with reference to how much profit they could make in private but how much they could benefit the public as a whole.

To democratize our economy, we need to democratize workplaces too. We can end workplace hierarchies and wage inequalities by giving workers the right to decide, together, how their team operates and how their pay structures are organized. If we want to kick-start a mass transfer of power, we need to redistribute wealth from those who hoard it to those who create it.

Local people know the issues facing them, and they know how to meet them better than anyone else. If we want to practice what we preach, then the same principles of democracy, devolution, and decentralization must apply to our own parties as well. Local party members, not party leaders, should choose their candidates, create policy, and decide what their movement stands for.

Only a democratic party can provide the necessary space for creative and transformative solutions to the crises facing us all. In a world where the division between rich and poor is greater than ever before, our aim should be to unite the country around a more hopeful alternative — an alternative that recognizes how we all rely on each other to survive and thrive.

This alternative is not some abstract ideal to be imagined. It is an alternative that workers are fighting for on the picket line. Even before the nurses went on strike, 2022 was a record-breaking year for industrial action. Striking workers are not just fighting for pay, essential as these demands are. They are fighting for a society without poverty, hunger, and inequality. They are fighting for a future that puts the interests of the community ahead of the greed of energy companies. They are fighting for us all.

Their collective struggle teaches us that democracy exists — it thrives — outside of Westminster. The government is trying its best to turn dedicated postal workers and railway workers into enemies of the general public — a general public that apparently also excludes university staff, bus drivers, barristers, baggage handlers, civil servants, ambulance drivers, firefighters, and charity workers. As the enormous scale of industrial action shows, striking workers are the general public. The year 2022 will go down in history, not as the year the Tories took the public for fools, but as the year the public fought back. United in their thousands, they are sending a clear message: this is what democracy looks like.

This article was first published by Progressive International

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