Too Many Fingers, Not Enough Pie
Sadhika Mani
SY Bsc
Reading time: 8-9 minutes
For decades, the Gulf has been a land of promise to the classical South-Asian household. Promises of hefty paycheques and secured futures whisper in every third-removed uncle’s ears and BAM, one day when you ask for his whereabouts you find that he’s moved to Dubai – it’s the shinier counterpart to the American Dream, searching for a land of opportunities amidst the glittering sands.
There does exist a split in the wave of migration though; some arrive of their own volition, lured in by the prospects of a tax-free future, others come by force of circumstance. The absolute canyon of difference between voluntary ambition and economic exile makes all the difference.
The Line is one such location in the Middle East where families will eventually migrate to in the future. Right now it’s still a looming chunk of land that’s bulldozed several of the desert-dwelling communities in Saudi Arabia, suctioning off the life force of the hands that are building it up to pose as the picture-perfect, modernistic utopia for the wealth of the future. So that’s TWO things The Line has in common with Edward Cullen now, they both glitter in the sun and are blood sucking leeches.
Just for context’s sake, The Line is described to supposedly be a linear ‘smart’ city, spanning a whopping 170km length-wise and 500 meters in height but only 200 meters wide, like a sardine can propped up against a wall, but it’s much more evil and definitely a lot more expensive. The intent is to have it powered by renewable energy, be car-free and also carbon-neutral and house a round figure of 9 million people by 2045 (though this estimate has been reducing by the day).
It’s a part of a larger project called NEOM, a planned city that encompasses other projects within itself, working towards a larger goal laid out by the Crown Prince of the country – Mohammed bin Salman Al Saud – the Saudi Vision 2030, aimed at reducing the nation’s dependency on its oil exports, and a general diversification economically, culturally and socially.
Work on The Line began early in October 2021, with the current number of laborers averaging around 140000. If I bet that 80% of them are migrants, I’d be right on the money — and maybe already halfway to a gambling problem (exact numbers remain undisclosed but I’m going to consider this a very disheartening win).
It does have to be addressed however, that the not-so-very baffling conundrum centred around the exploitation of migrant laborers has grown stale and hackneyed over the decades. While the matter itself remains just as grave as it has always been, discussions seem to halt to some extent at suffrages and data consolidations of how many people are stuck in that vicious cycle but never a little more. Any pieces that delve into tracing back the path of blame seem to stick to the safer and more common narrative of lumping all the blame with the Crown Prince, which while is the easier path to take, doesn’t satisfy the question in its entirety.
To get things started, Daron Acemoglu and James. A Robinson in their highly influential synthesis ‘Institutions as a Fundamental Cause of Long Run Growth’ discussed several key concerns that will stand as support to most of my arguments against the country’s institutional framework. So, here are 3 of my biggest bones to pick with the Saudi’s economic institutions:
1. No property rights for Giacomo?
Acemoglu and Robinson in a key point of the article argued that differences in income-per-capita were caused by the economic institutions of a country, and not its geography and culture. This implies that countries with structurally sound institutions normally sport extremely well-secured property rights (a safeguard against expropriation risks), which in turn assure a higher overall level of prosperity through capital accumulation, as a result of encouraged investment security against investment risks.
The pair delve into a deeper analysis of the relationship between these two factors, questioning the validity in describing their connection to be causal. Some points of contention were that:
- It could possibly be a case of reverse causation – that only wealthy countries could afford good property rights or,
- That geography played a bigger role in influencing income-per-capita, where they then proceeded to bring up Montesquieu’s climate theory. For context, in this theory, the French political philosopher argued that people in warmer climates were lazy and unproductive and hence lacked the economic prosperity that people in colder regions enjoyed, a result of their more vigorous styles of working. He even went so far as to say that the people in warmer climates were unfit to be governed by democratic systems, but we’re not going there today for the sake of simplicity.
They did eventually arrive at the conclusion that economic institutions did have a causal relationship with income-per-capita using a multitude of methods, but I’d say the one that stood out to me the most was the instrument variable strategy – a method to prove exclusivity of the effect of a singular factor on an event. In this, they proceeded to bring up the settler’s mortality theory. A very shortened summary of this is that when people moved to settle in foreign lands, their survival and settlement implied the existence of good institutions because it provided them with proper protection of rights.
So this meant,
If settlers survived: They built strong institutions with secure property rights, courts and protections because they intended to own land and then pass it down to their kids and so on. Example: The British in Australia.
If settlers were likely to die quickly: They weren’t intending to stick around for long and hence formed institutions that reflected their motives for even coming to this foreign land, which was just extraction and exploitation of the natural resources and the locals. Example: The British in Africa!
What I’m essentially getting at is that the reason Saudi Arabia has such terrible regulations to safeguard the rights of the working class and migrant laborers is because there is a lack of intent behind it. While this might seem like speculation, Saudi Arabia actually has a pretty dismal property rights score according to the Index of Economic Freedom:
Which also in some part implies that a huge reason behind the weakness of laws protecting migrant laborers, is because their intent is to just extract the labor they are offering to the country, but not to actually keep them around or ensure their welfare in any sort of way, because to them – a singular migrant is just an expendable resource. Extractive institutions will actively avoid building inclusive systems for groups they don’t view as a part of their political community.
2. King Giacomo is scared of revolt
Economic institutions are often chosen based on their distributional consequence – it arises based on who’s in power. Examples include the peasants forming strong local political alliances following the Black Plague in England to put an end to feudal regulations, and in perfect contrast, further over in Eastern Europe the lords were able to strengthen the influence of feudal power over their lands following the same demographic shock. Where am I going with this?
It all comes back down to the power of intent. Saudi’s political landscape and economic institutions both pool power in the hands of a class of individuals who, despite establishing policies that outwardly claim to work towards the prosperity of the general public, seem to conveniently leave out the community of migrant laborers who serve no real purpose to the class outside of the expendable source of manpower that they add to. Saudi Arabia’s monarchy is hereditary in nature, and the next in line to the throne is the current de facto ruler of the country and the holder of the prime minister position – Mohammed bin Salman Al Saud. The king functions as the head of state, government and a religious leader with a wing of ministerial positions under his hand – all of whom are handpicked by the ruler and mostly consist of members of the royal family. The council does hold some amount of executive and legislative power but most of the power is heavily tied to the King and Islamic law.
If the migrants were to have better rights, not just in terms of property, but also just in general welfare, easier mobility, higher and more stable wages – this shifts the bargaining power to their hands – the same way freeing serfs transferred power over to the peasants.
Of course, there’s been several laws passed to “ensure” that expatriate laborers have fixed contracts and have ensured pay, boarding, and sufficient benefits but these regulations somehow always seem to miss the mark by just a smidge and with law enforcement in Saudi Arabia being low enough as it is, it need not be mentioned that they would only further turn a blind eye to a community they couldn’t bother protecting. It’s a very evident and rather flagrant display of ‘legitimacy seeking regulation’, as if their government is collectively signalling to the world that they harbor no intent to change the situation, but are willing to play along with everyone else’s little fits if it means people will stop questioning their actions.
An apt example would be the Braceros Program, the consequences of which is exactly what Saudi fears will happen if they allow the migrant laborers even 5% of the rights they should be guaranteed:
a. When the Mexican laborers managed to wrangle better wages and housing due to pushback
from Mexican/American labor laws, the American growers began to gripe about labor becoming too expensive or the workers being too flaky or undependable.
b. Employers began to push for the end of the program, changing their incentives because it was easier to take advantage of undocumented workers, and they happened to be a lot cheaper too.
Heavy resentment for the program pushed for its end in 1964 with employers reverting back to their older practice of targeting marginalized workers who were ready to work for the least going wage, which validates Saudi’s fear of a much more potent and vigorous reaction if they began to hand out better rights to their own migrant workers.
3. No home-grown, all organic institutional framework for Giacomo?
While most of Saudi’s institutional structure was built from the ground up, many of its key administrative frameworks were borrowed from countries that liked to colonize the odd island country from time to time – it got a lot of its labour laws from colonial Britain (surprise-surprise), commercial regulations from Egyptian and French civil law, and administrative guidelines from Ottoman precedents.
Once again, we use Messrs Acemoglu and Robinson’s work to back me up here when I say, that once again, Saudi’s adoption of the colonial Kafala System from Britain to form its labour laws was an intentional choice, because most British policies back in the day (haha) were extractive and exploitative.
The Kafala system, which bound a migrant worker to their employer through the period of their residence in the foreign country, was originally formed for ill-defined practices like pearl diving and oil ventures. Legal origins matter for important institutional outcomes, especially when only part of it is borrowed to fit a narrative that favors only one part of the balancing scale.
Acemoglu and Robinson argued that once the system was established, they continued to persist long after the initial rationale vanished – which is the case of the Kafala system. It might be undergoing reforms at the moment, apparently exit-visa laws have been announced and workers can demand minimum-wages, but in practice remains to be just as inefficient as when the reforms didn’t exist.
The Kafala system may be outlawed soon too, but this will remain to be seen only on paper, because the institutional DNA that’s been embedded into the country will continue to thrive as long as “rational” employers give preference to cheap labour and which implies that workers will continue to remain tethered to their suffering.
Intent is everything. As long as Saudi continues to view the migrant laborers to be nothing more than an expendable resource, no amount of policy reform is going to be anything more than a cosmetic change and a shiny bit of paper – Saudi’s still a leech and speaking of leeches, this just sucked the everloving soul out of my body. I’m going to lie down now.