A Tale of Two Economies (Part II): Doing the Arabian Math, Fuzzy Demographics, Subsidizing Polygamy…….
“”Doing the Math: we are about 3 million Saudi families, but Ministry of Social Affairs documents say that about 600 thousand families live on social welfare income (that is 20% of all families)........”
“On Finlandization: Besides, who is going to do all the work once expatriates are gone? Who will build the houses, build the roads, clean the toilets, cook the food, and drive the family? More important, who will keep the petroleum flowing? Most important: who will rent all the apartments the potentates have built, and all the goods their trading businesses import?.......I will not mention the mixed saunas here......”
It ain’t as simple as these writers seem to think. One can get in deep trouble if his proposals look like they can be adopted, which of course they never will. You see, the decision-makers, the potentates and their retainers own all these businesses and apartment buildings: they need all the sweat-shop labor that fills them and pays the rent.
The mechanism is simple: the government gets most (almost all) the foreign exchange and issues riyals to its local contractors and employees. All domestic recipients get riyals, a lot of which they convert to foreign currency through rates controlled by SAMA (central bank), etc........(reread your old Macroecon textbook)
There are not enough Saudis to fill all the apartments and purchase all the imports (I suspect their number is inflated). The same applies to other Gulf states. The prevalent idea in all the GCC (Persian) Gulf states is to encourage growth of the native populations so that they will replace the foreigners some day. But this is a phony argument: each new citizen born will need some more foreign labor to support him or her. This is how it works. The policy-makers must know all that, they can't be that stupid; or can they?
As native populations grow, the expatriate labor force grows even faster, so that the policy of subsidizing new children creates a future problem of higher unemployment. In my home country, some Salafi legislators once even suggested the state should subsidize second, third, and fourth (polygamous) marriages. One stated goal was to encourage native population growth to replace the foreigners (I suspect the real goal was a population race among the tribes plus the Salafi predilection for multiple wives). So both the native population and the expatriates increase in numbers; but the percentages keep tilting toward the expats, they have over the past half century....
As for the lowly plebeians of Arabia, they get the unemployment end of the stick, and they get some cheap household help on whom they, in their turn, can lord it.Sort of like in the USA, in some ways, where the corporations outsource the jobs, but the Plebeians........ad nauseam.
Cheers and Ramadan Kareem
mhg
Mon Email
“On Finlandization: Besides, who is going to do all the work once expatriates are gone? Who will build the houses, build the roads, clean the toilets, cook the food, and drive the family? More important, who will keep the petroleum flowing? Most important: who will rent all the apartments the potentates have built, and all the goods their trading businesses import?.......I will not mention the mixed saunas here......”
It ain’t as simple as these writers seem to think. One can get in deep trouble if his proposals look like they can be adopted, which of course they never will. You see, the decision-makers, the potentates and their retainers own all these businesses and apartment buildings: they need all the sweat-shop labor that fills them and pays the rent.
The mechanism is simple: the government gets most (almost all) the foreign exchange and issues riyals to its local contractors and employees. All domestic recipients get riyals, a lot of which they convert to foreign currency through rates controlled by SAMA (central bank), etc........(reread your old Macroecon textbook)
There are not enough Saudis to fill all the apartments and purchase all the imports (I suspect their number is inflated). The same applies to other Gulf states. The prevalent idea in all the GCC (Persian) Gulf states is to encourage growth of the native populations so that they will replace the foreigners some day. But this is a phony argument: each new citizen born will need some more foreign labor to support him or her. This is how it works. The policy-makers must know all that, they can't be that stupid; or can they?
As native populations grow, the expatriate labor force grows even faster, so that the policy of subsidizing new children creates a future problem of higher unemployment. In my home country, some Salafi legislators once even suggested the state should subsidize second, third, and fourth (polygamous) marriages. One stated goal was to encourage native population growth to replace the foreigners (I suspect the real goal was a population race among the tribes plus the Salafi predilection for multiple wives). So both the native population and the expatriates increase in numbers; but the percentages keep tilting toward the expats, they have over the past half century....
As for the lowly plebeians of Arabia, they get the unemployment end of the stick, and they get some cheap household help on whom they, in their turn, can lord it.Sort of like in the USA, in some ways, where the corporations outsource the jobs, but the Plebeians........ad nauseam.
Cheers and Ramadan Kareem
mhg
Mon Email
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