Star economist Isabella Weber: “Companies use inflation as excuse to raise prices”

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She is currently one of the most sought-after economists in the world: Isabella Weber is an expert on price trends and inflation – and is considered the “inventor” of the gas price cap. She has been awarded the Kurt Rothschild Prize for her work. We had the pleasure of meeting Isabella Weber for an interview and spoke to her about the consequences of price shocks, companies’ scope for action and the failings of politicians. As well as how we can better manage the next price shocks that are coming.

Kontrast.at: Ms. Weber, Austria has been the sad leader in inflation in Western Europe for months. We feel the high prices very strongly when shopping in supermarkets. If you compare the prices of the same products with those in Germany, your jaw drops. Where does that come from? Do the supermarkets in our country inflate prices excessively, or what is the cause?
Isabella Weber: It’s not that companies – such as supermarket chains – have become greedier overnight or anything like that. These price increases are simply part of a capitalist market economy in which companies want to make a profit. And that also means that these companies take every opportunity they can to achieve this goal. In this respect, we are not dealing with a sudden change in mindset or anything similar. Instead, we have experienced external shocks, price shocks, caused by the pandemic and the energy crisis.
1. IT WAS THE PRICE SHOCKS IN SYSTEMICALLY IMPORTANT AREAS THAT FUELED INFLATION IN GENERAL
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Kontrast.at: Now you could say that there were crises in one form or another in previous years as well. Why has inflation now skyrocketed – especially in our country – and remained so high?
Isabella Weber: We experienced high price stability for around 20 years. That was almost exceptional. It was a time that coincided with the financial crisis of 2008/09. There were large economic stimulus packages and a loose monetary policy. Despite this, prices remained relatively stable, and now we suddenly have this high inflation. Why is that? My finding is that there were major price shocks in systemically important areas that had an impact on other areas. So of course the energy sector is very important, but also areas such as raw materials, transportation, etc. At the same time, we have to ask of who is going to pay for these costs or the cost shocks.
In general, the corporate sector in most countries has managed to pass on this cost shock. In short, they have passed on the higher producer and supplier prices. As a rule, profit margins have been kept constant. This means that when energy prices soar – and with them the costs on the business side – and the profit margin remains constant, profits also go up.
Let’s take a refinery as an example: the refinery does the same thing it always does. It processes crude oil into a form so that it can be used. If the price of crude oil goes up, the cost of a ton of oil is still the same. But if the margin remains constant, then profits skyrocket. I would say that is the most general phenomenon.
But of course there were also supply chain bottlenecks that led to a kind of temporary monopoly. All companies in a sector knew, so to speak, that the competition had the same supply problems, and they reacted by raising prices – because they knew that the competition couldn’t undercut them.
2. COMPANIES WERE ABLE TO PASS ON COSTS – IN THE END, EMPLOYEES AND CONSUMERS ARE LEFT TO BEAR THE COST OF INFLATION
Kontrast.at: If companies have been able to protect their profits by and large, who are the losers?
Isabella Weber: If you consider that the corporate sector has protected its margins and at the same time wages have not kept pace with inflation, then the situation is that it is the employees as a whole who are bearing this cost shock. The latter are experiencing a crisis in which they are finding it increasingly difficult to cover the increased cost of living. This is particularly dramatic for the lower income groups.

By and large, the corporate sector has managed to pass on the higher costs and keep profits constant. In the end, consumers pay the price, argues economist Isabella Weber. (Foto: Melissa Mumic)
The German government has opted for measures such as one-off payments, i.e. it has left the price trend itself untouched. A few months ago, the European Central Bank (ECB) took action and raised the key interest rate. How do you assess this measure? What consequences did it have?
Isabella Weber: First, I think you have to realize that the interest rate hikes were a massive intervention. So there is a very massive political intervention in the economy – but through interest rates, not through price regulation. If I raise interest rates at this record speed, as has now been done, then on the one hand this creates a situation where the banks have opportunities to make excess profits. This is because the interest rate increases were not immediately passed on to savers, but were very quickly passed on to borrowers. This has created great profit opportunities. It is said that this is to combat inflation, but in fact such an interest rate hike is aimed at increasing unemployment. This is because higher interest rates affect the economy: investments and purchases become more difficult.
In the end, this also means redundancies. Higher unemployment in turn weakens the position of the employee side in wage negotiations. There is talk, quite euphemistically, of a “cooling off” on the labor market. This is supposed to sound like a spring breeze, but what they really want is for people to lose their jobs so that they have less leeway to demand higher wages. In my opinion, this is an extremely problematic way of doing politics. Because it fuels recessionary tendencies that are already visible in Austria, for example.
The price shocks and interest rate policy have exacerbated inequality in the corporate sector. Because when consumers have to spend all their money on covering basic needs, there is not much left to spend on other things. Companies are noticing this – especially smaller ones that cannot finance themselves on the financial market and are reliant on bank loans. Falling demand is having a massive impact on them.
3. PRICE BRAKES AND EXCESS PROFIT TAXES WOULD (HAVE BEEN) EFFECTIVE MEANS OF COMBATING THE PRICE SHOCK
Kontrast.at: In your opinion, what would have been a better alternative to intervene in the economy in this crisis?
Isabella Weber: I think that it would first have been important to stabilize these central prices or what I also called systemically relevant prices in my research. So that these price shocks don’t rattle through the whole system and have all these knock-on effects. That means, for example: Taxing excess profits. But it can also mean introducing a price cap to cushion the shock and prevent all these second-round effects from being triggered in the first place.
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Of course, in the energy sector in particular, we are talking about prices that hit both companies and households very hard. If it is a situation, as I have tried to explain, in which companies are able to react to these energy price shocks in such a way that their profit volumes increase, then this means that at the same time this energy price shock indirectly exacerbates inflation for households.
In this respect, I think the approach of energy price cap is definitely a good one. Because it protects basic needs. Because part of the energy consumption of households falls into the area of existential needs. I can try to heat less, but there are limits to the potential savings that can be made.
4. “WE NEED A NEW FORM OF STABILIZATION POLICY – ONE THAT AIMS TO SECURE BASIC NEEDS”
Kontrast.at: Do you think that these crises and shocks now have an expiration date? Or will they keep us busy for longer?
Isabella Weber: We are living in very crisis-ridden times. You could say we are living in a time of multiple crises. Climate change is a reality. Extreme weather events are already a reality. The situation in the Middle East is extremely precarious. There is a risk of a regional expansion of the conflict. In this respect, it is very likely that there will be further shocks. It is therefore also necessary to rethink the financial and economic situation. We need to find a different way of reacting to these shocks. We see this with interest rate hikes. They sometimes lead to recession. Then comes the next shock – what then? Interest rate hikes again, more unemployment?
We have to break out of this logic. We need to think about a new type of stabilization policy that aims to protect basic needs against these price shocks.
5. POLITICIANS MUST NOT JUST WATCH AND WAIT FOR THE MARKET – THEY MUST INTERVENE IF IT DOESN’T WORK
Kontrast.at: How does this “breaking out” work? Where should the big change take place?
Isabella Weber: For example, we need a different structure for the energy supply itself – then we won’t be so vulnerable when it comes to price shocks for oil and gas. At the same time, I think we also need ways of reacting to extreme price increases at short notice. For example, by having monitoring processes.
If you look at what has happened to gas prices: Prices have already risen dramatically in the winter of 2021. Sebastian Dullien and I published articles on the topic of gas price caps back in February 2022. Because even then – before the war against Ukraine – it was clear that these gas prices alone could trigger 2.5% inflation. But politicians didn’t say “gas is a systemically relevant price, we have to monitor it and react with measures”. They simply waited. In the case of Germany, until the fall. In the end, people’s basic needs were not protected. There really needs to be a rethink.
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Of course, you can’t always predict everything in advance, but there are prices that you know will have serious consequences if they skyrocket – and you have to react immediately. In this respect, you need a mandate to act.
What we are seeing now is that people are continuing to do their jobs and work – and yet are afraid that they will no longer be able to afford their basic needs. That’s breaking a social contract. The foundation on which a market economy is built is being shaken.
6. THIS INFLATION IS NOT ONLY SHAKING THE ENTIRE ECONOMY, BUT ALSO DEMOCRACY
Kontrast.at: What other dangers do these existential fears pose?
Isabella Weber: Well, if I can no longer be sure that I can meet my basic needs, if I have existential fears, then I become sensitive to angry and sometimes extreme ideas. We can see that in many European countries, radical right-wing or extreme right-wing parties are experiencing an upswing that should give us pause for thought. In the end, democracy is also being shaken.
That is why we need an alternative. The alternative means intervening and rethinking the state and the economy in such a way that they are attractive to the many and secure basic needs.
Who is Isabella Weber?
Isabella Weber is Professor of Economics at the University of Massachusetts, Amherst. Together with Sebastian Dullien (Scientific Director of the Institute for Macroeconomics and Business Cycle Research (IMK) at the Hans Böckler Foundation), she was awarded the Kurt Rothschild Prize this year for her research on the gas price cap to combat inflation.
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Brazil: Deforestation of Amazon reduce by more than 30 Percent

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For years, the Amazon rainforest was cut down. The concern: the unique ecosystem could collapse. The deforestation in Brazil is a huge environmental problem. But the election of Lula da Silva as president gave hope. He announced that he would end the deforestation of the Amazon. In fact, the first steps followed a few days after taking office. The encouraging result: in comparison to the previous year, deforestation was reduced by more than a third.
“Brazil is ready to resume its role i the fight against the climate crisis and protect all ecosystems, especially the Amazon. Our government once managed to reduce forest destruction by 80%. Now lets all fight together for zero deforestation!” says Lula da Silva, President of Brazil.
The BBC reports first successes in the fight against rainforest deforestation. Compared to the first half of the previous year, deforestation was reduced by 33.6%. In June 2023, as much as 41% less forest was destroyed than the previous year. Brazilian Environment Minister Marina Silva attributes this to Lula’s successful environmental policy.
Lulas potential to reduce deforestation by 89 percent
Lula’s goal of ending deforestation by 2030 is a major challenge. Under his predecessor, Jair Bolsonaro, deforestation took on alarming dimensions. The new conservation plan, which President Lula published at the beginning of June 2023, aims to achieve this goal. Among other things, it provides for the confiscation of half of all illegally used land within protected areas, as well as higher penalties for illegal logging.
Furthermore, the Brazilian president calls on other countries, especially the rich West, to contribute financially to saving the “green lungs of the earth” in order to combat the climate crisis globally.
A study confirms that Lula’s plans actually have the potential to reduce deforestation in the Amazon by 89 percent. In any case, Lula will not have it easy: The left-wing president still faces a conservative majority in parliament.
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Under Bolsonaro, the Amazon shrank by more than twice the area of Vienna – per month
This is sorely needed, because the Amazon has been badly affected in recent years. When Lula first moved into the presidential palace in 2003, he launched an ambitious program to save the rainforest. He and his successor Dilma Rousseff, who like Lula comes from Brazil’s leftist Workers’ Party, succeeded in reducing deforestation by 80 percent to a historic low. But when Bolsonaro came to power in 2019, Brazil did an about-face on environmental policy.
Bolsonaro readily awarded concessions to allow corporations to clear rainforest for soy and palm oil farming, as well as cattle ranching and mining. Illegally cleared areas were legalized by Bolsonaro, and forest fires were fought only half-heartedly. Clearing jumped by 70 percent under his government.
For the first time, the Amazon emits more CO2 than it can absorb
Under Bolsonaro, the Amazon’s climate balance had turned around: For the first time, it emits more CO2 than it can absorb. This was shown in a study by researchers from the French National Institute for Agronomic Research. The scientists mainly analysed satellite data documenting the plant biomass in the rainforest and its deforestation. The result: the Amazon basin released about 16.6 billion tons of CO2 into the environment, but only absorbed about 13.9 tons. This 2.7 billion ton difference is roughly Austria’s consumption for 35 years.
Without well-maintained Amazon rainforest, the whole ecosystem could topple over
Currently, the Amazon has a perfectly functioning water cycle: regions inland actually have too little rainfall for a tropical rainforest. But the trees suck the groundwater upwards, it evaporates and rains down again over the huge forest area. This cycle could be permanently disrupted by further deforestation. The rainforest would slowly die, turning into savannah and changing the climate around the world.
This process would release as much CO2 as the entire world consumes in seven years. The unique ecosystem that is home to 10 percent of all species would be irretrievably lost, and with it the CO2-binding effect of the rainforest. Scientists assume that this tipping point is reached at a deforestation rate of 20 to 25 percent. Currently, we are at 18 percent.
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Deforestation in Brazil: Raids after taking office
Within days of taking office, Lula’s government took action, conducting checks in the rainforest against illegal logging. As reuters reports, controls were carried out in areas all within the Cachoeira Seca indigenous reserve, where deforestation is strictly prohibited.
While deforestation is decreasing, the number of fires continues to increase, satellite monitoring shows. Whether due to natural causes or arson cannot be determined.
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Portugal launches a 4-day week field trial

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Last week sees the launch of a pilot trial of the 4-day week in Portugal. Thirty-nine companies are taking part, including 12 that have previous experience with shorter working hours. The aim of the project is to measure the impact of the 4-day week on employees’ physical and mental health, as well as the economic impact on companies. 
The companies have committed to reducing weekly working hours while maintaining full pay. Specifically, the 100-80-100 model will be used: Employees receive 100% of pay if they work 80% of the time and perform 100% of the time in return. Companies have volunteered for the program without receiving financial compensation. They can also reverse the measure at any time if they wish.
Participation was open to all private companies in Portugal. The project is now being carried out in collaboration with the non-profit organization 4-Day-Week-Global, which is contributing its expertise and supporting implementation.
Companies from production, trade, research – including daycare center and nursing home
The participating companies come from various industries. They include companies from the manufacturing sector, the retail trade and non-profit organizations. A daycare center, a nursing home, a research and development center and a stem cell bank are also part of the pilot project.
The main reasons for participating were to reduce stress and burnout risks among employees and improve employee retention.
The project is coordinated and supervised by Dr. Pedro Gomes, professor of economics, and Dr. Rita Fontinha, professor of strategic management. They will follow the companies’ experiences during the test to determine the economic, social and environmental impact of the four-day week.
“The future belongs to those who can attract the best workforce”
“So much has changed in society in the last 30 years: the technology we use, the speed at which we communicate, the types of jobs we do, the length of our lives or the role of women in society. But we still organize work in exactly the same way. We believe that the four-day week is a more efficient and sustainable way to organize work in the 21st century, and that it brings mutual benefits for workers, companies and the economy,” the project’s coordinators, Dr. Pedro Gomes and Dr. Rita Fontinha, explain the field trial.
“Portugal is taking another step into the future of work. The four-day workweek pilot project is based on the premise that work-life balance is crucial to attracting employees and improving productivity and innovation. The best companies are those that guarantee to provide space for talent and fulfillment for workers. This is just the beginning – a promising start – of one of the many changes we are implementing in the labor market of a country that has historically high employment levels and strives to attract and retain talent. The future belongs to those who can attract the best workers with strong skills and higher levels of satisfaction in a globally competitive marketplace where talent and people are the best resources.”

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“Creating Prosperity Together”: How the social economy model saved the English city of Preston

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For a long time, Preston was the centre of industry in England. But when the city’s big companies decided to move production to low-wage countries, the economy collapsed and Preston plunged into a deep crisis. The people of Preston didn’t let it get them down, however, and together they rebuilt their economy. Instead of international corporations and low wages, they relied on local production and co-determination. Thanks to the “communal prosperity” model, Preston is booming again today.
Preston was the economic engine of England for a long time. In the city in the northwestern county of Lancashire, the textile industry boomed in the 19th century. Products from Preston were exported all over the world, and the city grew rapidly. The boom did not last forever, however. After the Second World War, large parts of English industry migrated to low-wage countries. The economy crumbled and with it the city. Just a few years ago, Preston was considered one of the poorest areas in England.
But then came the turnaround starting in 2012. The city reorganized itself to boost its own economy. It was understood that no help would come from big investors or the government in London. The results of their effort can be seen: Unemployment is falling, the city is growing, and the economy is booming. And how did the people of Preston do all this? With an idea called Community Wealth Building.
Community Wealth Building: Business for the People, Not the Corporations
But what is community wealth building? Broadly speaking, it’s an approach that shapes the economy to serve local people, not managers in corporate headquarters or investors in tax swamps. Preston achieves this primarily through four principles:

Working with what’s there
Producing and buying locally
creating good working conditions
Shaping the economy

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Preston’s “Communal Prosperity”: Working with what’s there
Preston knew that no outside savior would come to help the city. If they wanted to change their lot, the people of Preston would have to tackle it themselves. So the first step was to look at how the city’s economy was set up at the time.
While many businesses had left Preston, there were also institutions that were still in town and would remain. These included the local university, a housing cooperative, the pension fund, the town hospital, and the local government. These institutions were called anchor institutions because they were firmly anchored in the city and would not leave.
The anchor institutions spent many millions annually. The hospital needs fresh food and laundry every day, the housing cooperative needs materials and people to maintain the houses, and the local administration needs stationery and furniture. The list goes on and on. These expenses were looked at by the city government. The result: these institutions hardly ever shopped in Preston. Only about 5 percent of the spending was done in their own town. The rest of the money went to other parts of the country and the world.
Produce locally, buy locally
To boost Preston’s economy with the “communal Prosperity” concept, these anchor institutions had to be persuaded to spend more money in their own city. Since they all had a vested interest in seeing the city do well, all institutions were willing to buy more locally. The result of this was that the order books of local businesses filled up. This allowed those businesses to hire new people. Now, more people had jobs and more money in their pockets to spend again. That further boosted the local economy.
Where the increased demand from anchor institutions could not be met by existing businesses, new ones were started. Preston University assisted the start-ups with its expertise. 
By having anchor institutions, such as local government, buy more from their own city, more jobs could be created in Preston. (Foto: pixabay/PaulCosmin)
Co-determining the economy
There was also a plan for when new companies were founded. What should not happen is that all the profits end up in the boss’s pocket and the workers have no say. The people of Preston should decide for themselves how they want to shape the economy of their city and also reap the fruits of their own labour. The solution to this: cooperatives!
The university supported the people of Preston in setting up cooperatives, in which they themselves can determine how work is done and what is done with the profits. This, it said, strengthened co-determination in the city and meant that the profits generated ended up in the workers’ pockets rather than in investors’ accounts in tax swamps. The cooperatives also had another positive effect. Because the workers themselves determine their company policy, their jobs are not outsourced to low-wage countries.
A wage you can live on
It was also important to the people in Preston and its “communal prosperity” concept that everyone should be able to live on their wages. What is the point of working in a cooperative or one of the anchor institutions if the money is not enough to live on? That’s why most local institutions, businesses and cooperatives decided to pay a wage that is above the minimum wage and that people can live well on. Now that people have more money in their pockets, they were able to consume more, and the local economy continued to grow.
At the same time, however, a lot of money was put into providing a good education for the city’s workers. The city’s university provided training and counselling, and other anchor institutions such as the local government and the housing cooperative also invested more in the education and training of the local workforce.
Preston’s “Communal Prosperity” Model as a model for success
Preston’s four principles worked strongly together. Anchor institutions looked to their purchasing not only to ensure that local production took place, but also that companies paid their workers well and gave them a say. While not everything could be produced and sourced locally, the percentage of anchor institutions’ spending in their own cities increased sharply. When the Community Wealth Building project started in 2012, it was 5 percent. In 2016, it was more than three times that, at 18 percent!
That wasn’t the only thing that had improved in Preston. From 2014 to 2017, unemployment was cut in half. At 3.1 percent, it was below the statewide average of 4.6 percent. The city’s economic development was so successful that it became the most up-and-coming city in the country, overtaking the capital London in quality of life.
Mondragón is the largest cooperative in the world. For Preston and Cleveland, Mondragón is a source of inspiration. Mondragón workers built the roof of the famous Guggenheim Museum in Bilbao, for example.(Foto: Unsplash/Jorge Fernández Salas)
Social business: Global trend
Preston’s success has created a buzz and encouraged imitation. Today, there are 20 other cities and communities that also use the Community Wealth Building approach. This approach did not come out of nowhere, however, but has its roots in the U.S., in the former industrial metropolis of Cleveland. Similar to Preston, industrial companies in Cleveland migrated to low-wage countries. The result was a fallow economy and a decaying city. However, through a regional economic plan and the formation of cooperatives, Cleveland achieved economic recovery.
Cleveland, in turn, got its inspiration from the small Basque town of Mondragón. There, the Spanish Civil War had devastated the local economy. Under the guidance of the left-wing priest José María Arizmendiarrieta, a technical college and several cooperatives were founded in the small town. Today, Mondragón is the largest cooperative in the world, with branches in 31 different countries and over 80,000 employees. The entire cooperative federation is democratically run and owned by the workers. Läs mer…

Less hustle and bustle and loneliness: supermarket in the Netherlands has “chatting checkouts

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The Dutch supermarket chain Jumbo has introduced slower checkouts for the first time in 2019. The idea is to give customers more time not only to pay and pack, but also to talk to the cashiers. The aim is to counteract the rampant loneliness, especially in old age. In the meantime, 200 of the 700 “Jumbo” stores in the Netherlands have such chatting checkouts.
One problem faced by older people worldwide is loneliness. Family members have moved away, friends have died or fallen ill. In addition, hectic schedules and unfamiliar techniques and processes make everyday life more difficult. In urban areas, this is compounded by anonymity. Going to the supermarket means getting out of one’s own four walls. At the same time, everything has to happen quickly at the checkout. A quick greeting, then you have to quickly throw all the groceries into the shopping bag and pay – that’s stress.
Jumbo stores have “chatting Checkouts to fight loneliness in the Netherlands
In 2019, the Dutch grocery chain “Jumbo” tried something new. As part of a campaign against loneliness by the Dutch government, they installed slower checkouts.
According to a survey, one in ten people in the Netherlands feel lonely. Of the 1.3 million adults over 75, as many as one in three say so.
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The government’s campaign addressed older people on the one hand, encouraging them to get out and do something. On the other hand, it appealed to everyone in the population to take a look at their own elderly relatives and neighbors in the house.
The supermarket chain has addressed the issue in its own way. The chain has over 700 stores in the country and has set up a “Kletskassa,” or “chit-chat checkout,” to take the stress out of paying and give people a chance to talk. The first of these cash registers was installed in the town of Vlijmen. The idea was so well received that the company has introduced chattering tills in 200 stores nationwide. In addition, chatting corners have been set up where customers can meet for coffee. The supermarket chain’s employees are also trained to recognize when someone is not feeling well – and to talk to them.
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 Klösel as the original source/author and set a link to this article on Scoop.me. https://scoop.me/netherlands-chatting-checkout/
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Bolivia: Less poverty and booming economy through nationalisation of mineral resources

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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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Peace, environmental protection, integration – Costa Rica a model State?

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Costa Rica went its own way: without an army, but with investments in education and health, a sustainable economy and an open society, Costa Rica became a model state in Latin America.
Costa Rica is one of the most prosperous, peaceful and sustainable countries in Latin America. Although the Central American country is located in one of the most insecure and unstable regions of the world, the small country has managed to protect its peace and democracy. At the same time, the Ticos (the common name for people from Costa Rica) have made it prosperous. The country has become one of the most popular tourist destinations in the world. All this despite the fact that before independence, Costa Rica was one of the most insignificant and underdeveloped parts of the Spanish colonial empire.
But how did the small Central American country manage to develop so much? And what can other countries learn from Costa Rica? Here are three of the most important points.
Schoolbooks instead of Firearms
Costa Rica won its independence without violence in 1821. However, the country was not spared conflicts thereafter. Repeated wars and civil wars broke out. For example, the American William Walker tried to conquer all of Central America and establish a slave state there under the influence of the USA. Under the leadership of Costa Rica, however, the states of Central America were able to defeat William Walker.
The turnaround came with Costa Rica’s last civil war in 1948. At the end of the war, the army was abolished and since then Costa Rica has lived in unarmed neutrality. This makes Costa Rica one of the few countries in the world without an army.
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Instead of spending money on weapons, Costa Rica invested in education and the health system. The result is impressive: Today, the Ticos have the highest life expectancy in Latin America and even do better than the USA. In education, Costa Rica has one of the highest literacy rates and one of the highest percentages of university graduates in Latin America. This has led to a strong civil society and a successful economy.
Costa Rica has not only promoted peace in its own country, but has also worked for the peaceful resolution of conflicts throughout the region. The country successfully acted as a mediator in the civil wars in Nicaragua, Guatemala, Honduras, and El Salvador. For this commitment, the then Costa Rican President Oscar Arias Sánchez was awarded the Nobel Peace Prize.
Costa Rica is a Role Model in Environmental Protection
Costa Rica is one of the most sustainable countries in the world and a model of nature conservation. The country obtains almost 100 percent of its electricity from renewable energy and is a global pioneer together with countries such as Iceland and Norway. In 2017, the country went a full 300 days without fossil energy in its electricity generation. Costa Rica is so successful with its sustainable energy that it can even export electricity to neighbouring countries.
The country also has one of the largest biodiversities in the world. More than 5 percent of all known animal and plant species are native to Costa Rica, and this despite the fact that tiny Costa Rica makes up only 0.03 percent of the land area of our planet. By comparison, Austria is home to only about 0.53 percent of the world’s biodiversity, even though the country is almost twice the size of the Central American nation.
This is not by chance. Costa Rica has made great efforts to protect its nature. Until the 1980s, the country was affected by heavy deforestation and only about 30 percent of the land was covered by forest. Costa Rica then launched a massive campaign to reforest the country. Today, almost 60 percent of the country’s territory is covered with forest again.
Hardly any other country in the world has been as successful in reforesting its forests as Costa Rica. (Foto: Waren Brasse / Unsplash)
To protect nature in the long term, Costa Rica has created numerous protected areas, including 26 national parks. The national parks alone account for over 12 percent of the country’s surface area. To put that in perspective: Austria has six national parks, which together make up less than 3 percent of the national territory.
This is not only good for animals and plants, but also for people. Besides being green lungs, the national parks are also tourist magnets. Around 2.5 million tourists from abroad visit Costa Rica’s national parks every year. This makes the country a pioneer in sustainable tourism.
Openness and Integration
Costa Rica is very open and welcoming to people from other countries. That is why the number of people living in Costa Rica but born in other countries has increased a lot in the last decades. People come from different countries and for different reasons. Costa Rica has a long tradition of welcoming refugees. Especially when many countries in Central America were affected by civil wars, Costa Rica took in refugees. In recent decades, however, there has also been an increased migration of workers from Nicaragua to Costa Rica to fill labour shortages in tourism and agriculture. Equally, many people from North America and Europe come to live in Costa Rica because of the natural beauty and pleasant climate.
Costa Rica is comparatively successful in integrating these different groups into society. Besides the openness of the population, this is mainly due to two reasons: the legal regulations in this area and the national understanding of the Ticos.
The biggest legal difference between Costa Rica and many European countries is that all people born in Costa Rica are automatically entitled to Costa Rican citizenship. Children of Ticos born abroad are of course also entitled to citizenship. In addition, it is easier for people with foreign passports to obtain Costa Rican citizenship than in Austria, for example. In Costa Rica you only have to live in the country for five years, in Austria for ten.
Costa Rica’s national identity also makes it much easier for people from abroad to integrate. Being Ticos has to do with language and values. Anyone who speaks Spanish and uses typical Costa Rican expressions (such as tuanis for “cool”, mae for “Oida” or pura vida for everything from “thank you”, “please” to “all is well”) is quickly seen as a Tico. Values that are highly rated in Costa Rican society are pacifism, environmental protection, but especially cosiness and conviviality. The focus of the national understanding on language and values rather than skin colour or origin of the parents makes it simple to integrate into Costa Rican society.
Ticos love nature, tranquillity and cosiness. So it is not surprising that they have made the sloth one of their national symbols. (Foto: Adrián Valverde / Unsplash)
Role model but not without flaws
This is not to say that Costa Rica is a paradise that is flawless. The country has many problems to overcome. Although corruption in Costa Rica is low compared to other Latin American countries, it still leads to large infrastructure projects often not being realised, being delayed or costs exploding. However, it is precisely these projects that would be necessary for the continued fight against climate change. For example, the expansion of public transport in Costa Rica is lagging behind. Therefore, most people still depend on the car, even in urban areas. In addition, social inequality and crime have grown in recent years. The public health and education systems are also under increasing financial pressure.
Nevertheless, the example of Costa Rica shows that a country with peaceful, social and sustainable development can be successful and countries like Austria can also learn a lot from this example.
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Rent cap in Denmark: rents may increase by a maximum of 4 percent

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Denmark introduced a rent cap. The rents were set to rise by 10 percent because they are linked to inflation—as they are in Austria. But the Danish government has removed this link in order to ease the burden on households: rents may increase by a maximum of 4 percent until 2024, and increases that have already been made must even be reversed. 
In January, a letter arrived with the new rent—and it wasn’t a nasty surprise: For his 42-square-meter apartment in the middle of Copenhagen, the Dane will pay only 534 euros per month for 2023 instead of 623. The posting of the user “Piitaa-Pain” spread quickly on the Internet. The reason behind this is a rent cap introduced by the Danish government, which applies from January 2023. Denmark is governed by a coalition of social democrats, liberal conservatives and liberal moderates.
Rents to rise by 4 percent instead of 10 percent
In 2023 and 2024, rents in Denmark may rise by a maximum of 4 percent. Actually, rents in Denmark are linked to inflation, just like in Austria. So without government intervention, Danish property owners would have been allowed to raise rents by almost 10 percent. The 4 percent maximum cap applies to existing and new leases, but also to rents that have been increased above the 4 percent in recent months—those must be reduced again.
“It is crucial for the Danish government to take care of Danish tenants. They should not be forced out of their homes and apartments because of rampant inflation,” Interior and Housing Minister Christian Rabjerg Madsen said in a statement.
Madsen’s ministry presented the law limiting rent increases in September. The Danish government is also working on a new law on rent adjustment from 2025, because even then rents will no longer be able to be increased automatically by inflation.
Rents rise by 8.6 percent in Austria
In Austria, too, there is a discussion about a cap on rent increases: for almost 400,000 leases, rents will rise by 8.6 percent in April 2023 – after rent increases last year of over 6 percent. The reason is the automatic increase in rent by inflation (the “consumer price index”) stipulated in the law. In January, the Social Democrats in the National Council propose that the rent increase be completely suspended until 2025 and then capped at two percent.
Property owners are naturally opposed to this, saying that they would then lack the money to maintain the buildings. The Danish government met this objection: If property owners can prove large investments that are not covered by current rents, they can raise rents above 4 percent in exceptional cases. Landlords are not happy about this either and complain about the bureaucratic effort. Experts assume that this very rarely apply to any case.
All in all, according to the government’s calculations, Danes will save 2.7 billion Danish kroner (about 360 million euros) in additional rental costs. Denmark’s inflation rate reached 10.1% in October, its highest level in four decades, but has since fallen to 8.7%. Rent caps also exist in Spain, Portugal, Scotland, and France.
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Nobel Prize Winner Stiglitz wants 70% tax on top incomes

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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

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EU to severely restrict export of waste to third countries

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The European Parliament voted in favor of a law that restricts the export of waste. Waste from the EU should be processed in an environmentally friendly way—and no longer exported on a large scale to third countries in the EU. There, it often pollutes entire regions via landfills or is incinerated and damages the environment.
On January 17, 2023, the European Parliament voted in Strasbourg in favor of a law that restricts the export of waste from the EU to countries outside the Union. The goal is to reduce pollution and ensure that materials like plastic are reused and recycled instead of thrown away. The whole thing is part of the European Green Deal.
In the future, waste is to be exported only to certain countries outside the OECD area—and they must prove that they process the waste in an environmentally friendly way. For hazardous waste, exports are to be banned altogether. Overall, less waste is to be shipped around the world and less processed in a way that is harmful to the climate, for example incinerated.
“Out of sight, out of mind: this is how we in the EU currently deal with our mountains of waste. In doing so, we not only export our problem, but also leave the task of fair disposal to countries outside the EU. The consequences of this are often illegal landfills, the price of which is paid by the environment and local people,” criticizes Delara Burkhardt, environmental policy spokeswoman for the Socialist S&D Group in the EU Parliament. So now that is to change.
The Parliament’s report on the EU Waste Shipment Regulation was adopted by a large majority: 594 votes in favor, 5 against and 43 abstentions. Talks between the European Parliament and EU member states are to take place this year to finalize the text. Only then can the law come into force.
Most EU waste ends up in Turkey
The amount of waste exchanged around the world is steadily increasing, with 182 million tons traded in 2018, according to the OECD. The European Union plays a central role in this: according to Eurostat, the European Union exported 33 million tons of waste to non-EU countries in 2021. That’s a 77 percent increase over 2004, and Turkey was the main destination for EU waste last year, with about 14.7 million tons—three times as much as in 2004.
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The second-highest amount of EU waste was exported to India this year—about 2.4 million tons. The countries behind are Egypt and Switzerland, with 1.9 and 1.7 million tons, respectively. Eurostat reports that the amount of waste shipped from the EU to China has decreased significantly in recent years. Namely, from a peak of 10.1 million tons in 2009 to 0.4 million tons in 2021.
The EU-Parliament also agreed on a new directive to give platform workers more rights. Including minimum wage, social security and paid vacation. As well as on a new pay transparency directive to end the pay gap between men and women.
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