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I'm curious if the house of Saud could survive Aramco collapsing though. For everything terrible you feel about them - they are constantly shoveling a whole bo

by munk-a 5y ago

I'm curious if the house of Saud could survive Aramco collapsing though. For everything terrible you feel about them - they are constantly shoveling a whole boatload of value into a decent chunk of their population. If Aramco falls I think Saudi Arabia might find a lot of people that were happy to look the other way while they were being paid suddenly asking a lot of questions about national policies.

fakedang 5y ago
The average Saudi does not live as comfortable a life compared to the 100k or so members of the Al Saud family and their cronies. You're right about the latter part though. An Aramco failure is going to be a significant dent on MBS' domestic perception.
- munk-a 5y ago
  Yea, I agree. I'd clarify that "A decent chunk" above is meant to specifically refer to the politically powerful part of Saudi Arabia. Basically, the keys to power - so very few women and none of the poor folk.
  - martinald 5y ago
    Actually, I don't know how true this is. Saudi Arabia has an enormous welfare state - both officially with many subsidies, and and hoc "grants" that you can get off your local royal family representative for one off emergency expenses etc. In many ways this is what is bankrupting the country, much more than the rampant corruption (which is still enormous, but pales into comparison with public spending). The population of Saudi is absolutely exploding - nearly doubling every 20 years. It has a very young population with poor job opportunities, in a very energy intensive place to house people (AC demands and lack of fresh water). This had led to completely unsustainable public spending. The revenue from oil is enormous but it's not growing in line with population and welfare spending. And the Saudi royal family know the people will turn quickly against them if the welfare tap is turned off. They are in a really tricky position. While the royal family is outrageously wealthy, the country itself over the past decade is getting pretty broke. And with such population growth every year it becomes harder and harder to keep up. I imagine this is why MBS is trying to push economic reform so much, almost at all costs, because he knows the game is up. But it is going to be very difficult to turn this quite literal oil tanker around.
    - jimmySixDOF 5y ago
      You are correct. I always thought that the Saudis were practicing a form of UBI, just without the lable. They only added a 5% VAT in 2018 and just this year bumped it to 15% on a "temporary" basis. Both fuel and electricity costs have increased and new payments exist for government services. Saudi is trying to regear the economy and social safety nets away from oil dependency while they still have the income from oil dependency and that is the mission statement of Saudi Aramco today. Looking at actions of the company or the country any other way will cause distortions.
- whimsicalism 5y ago
  > The average Saudi does not live as comfortable a life compared to the 100k or so members of the Al Saud family and their cronies. Sure, but even the average Saudi has a substantially higher QOL due to Aramco than their peers in most other nations. Nowhere else in the region has a comparable HDI.
  - Marsymars 5y ago
    > Sure, but even the average Saudi has a substantially higher QOL due to Aramco than their peers in most other nations. Nowhere else in the region has a comparable HDI. Looking at the list of countries in the Middle East, it looks like Oman, Bahrain, Cyprus, Kuwait, UAE, Israel and Qatar have a similar or greater HDI than the KSA. (Though combined, they have about a similar population as KSA alone.)
    - 35fbe7d3d5b9 5y ago
      If you're worried as the original poster was about the impact of inevitable global decarbonization on national economies, I have bad news for you about Oman, Bahrain, Kuwait, the UAE, and Qatar.
      - fakedang 5y ago
        The UAE and Qatar seem fine, although their sovereign fund will be in stagnation and will be under pressure to maintain their returns. Bahrain, Oman and Kuwait are whole different problems altogether. Bahrain is Sunni-ruled with Shia majority population, so once KSA weakens, expect to see some revolts soon. On the other hand, the UAE will step up its game and intervene in Bahrain should such a situation arise (ironically, Bahrain was going to join the UAE back in 1971, but backed away because they were richer and wanted to be the capital). Kuwait and Oman are already falling to xenophobic pressure. They have begun expelling expats from jobs and looking for inward hiring, but this has had a net negative effect on their economies.
    - munk-a 5y ago
      Considering Cyprus has a gigantic DMZ down the middle of it (in several places) I'm quite surprised it made that list.
- chucksmash 5y ago
  You're comparing against a pretty gilded group there. Perusing wiki, it looks like Saudi Arabia is a G20 economy with a population of 34 million people, yet only 3.1 million native Saudis are members of the labor force, the private sector labor force is 90% non-Saudi, and still only 12% of Saudis live below the local poverty line. If I'm reading that right, 88% being above the threshold for poverty with only 9% workforce participation for native Saudis seems pretty noteworthy.
  - Gibbon1 5y ago
    Last time I read anything about that from a heretic economist it sounded like the oil industry has priced out most other core businesses. Difficulty their population has also grown 5X in 50 years. Which is not good considering they have little else going on economic other than oil.
worker767424 5y ago
It's not Saudi Arabia, but the quote from another Arab state, > My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel
- rlonn 5y ago
  I think this about sums it up. Seems SA has spent its money instead of investing it wisely, and the next generations will be worse off because of it. Norway serves as a counter example of what they could have done instead, but maybe the Norwegians had the luxury of being a democracy that didn't have a need to bribe the citizens to stave off revolution. Being a dictatorship is always a hard place to be.
clomond 5y ago
It would definitely be challenging. This situation is not unique to Saudi and has actually been defined in political theory as the situation of being a “Rentier state”: https://en.m.wikipedia.org/wiki/Rentier_state https://en.m.wikipedia.org/wiki/Rentier_state

by munk-a 5y ago

fakedang 5y ago

The average Saudi does not live as comfortable a life compared to the 100k or so members of the Al Saud family and their cronies. You're right about the latter part though. An Aramco failure is going to be a significant dent on MBS' domestic perception.

munk-a 5y ago
Yea, I agree. I'd clarify that "A decent chunk" above is meant to specifically refer to the politically powerful part of Saudi Arabia. Basically, the keys to power - so very few women and none of the poor folk.
- martinald 5y ago
  Actually, I don't know how true this is. Saudi Arabia has an enormous welfare state - both officially with many subsidies, and and hoc "grants" that you can get off your local royal family representative for one off emergency expenses etc. In many ways this is what is bankrupting the country, much more than the rampant corruption (which is still enormous, but pales into comparison with public spending). The population of Saudi is absolutely exploding - nearly doubling every 20 years. It has a very young population with poor job opportunities, in a very energy intensive place to house people (AC demands and lack of fresh water). This had led to completely unsustainable public spending. The revenue from oil is enormous but it's not growing in line with population and welfare spending. And the Saudi royal family know the people will turn quickly against them if the welfare tap is turned off. They are in a really tricky position. While the royal family is outrageously wealthy, the country itself over the past decade is getting pretty broke. And with such population growth every year it becomes harder and harder to keep up. I imagine this is why MBS is trying to push economic reform so much, almost at all costs, because he knows the game is up. But it is going to be very difficult to turn this quite literal oil tanker around.
  - jimmySixDOF 5y ago
    You are correct. I always thought that the Saudis were practicing a form of UBI, just without the lable. They only added a 5% VAT in 2018 and just this year bumped it to 15% on a "temporary" basis. Both fuel and electricity costs have increased and new payments exist for government services. Saudi is trying to regear the economy and social safety nets away from oil dependency while they still have the income from oil dependency and that is the mission statement of Saudi Aramco today. Looking at actions of the company or the country any other way will cause distortions.
whimsicalism 5y ago
> The average Saudi does not live as comfortable a life compared to the 100k or so members of the Al Saud family and their cronies. Sure, but even the average Saudi has a substantially higher QOL due to Aramco than their peers in most other nations. Nowhere else in the region has a comparable HDI.
- Marsymars 5y ago
  > Sure, but even the average Saudi has a substantially higher QOL due to Aramco than their peers in most other nations. Nowhere else in the region has a comparable HDI. Looking at the list of countries in the Middle East, it looks like Oman, Bahrain, Cyprus, Kuwait, UAE, Israel and Qatar have a similar or greater HDI than the KSA. (Though combined, they have about a similar population as KSA alone.)
  - 35fbe7d3d5b9 5y ago
    If you're worried as the original poster was about the impact of inevitable global decarbonization on national economies, I have bad news for you about Oman, Bahrain, Kuwait, the UAE, and Qatar.
    - fakedang 5y ago
      The UAE and Qatar seem fine, although their sovereign fund will be in stagnation and will be under pressure to maintain their returns. Bahrain, Oman and Kuwait are whole different problems altogether. Bahrain is Sunni-ruled with Shia majority population, so once KSA weakens, expect to see some revolts soon. On the other hand, the UAE will step up its game and intervene in Bahrain should such a situation arise (ironically, Bahrain was going to join the UAE back in 1971, but backed away because they were richer and wanted to be the capital). Kuwait and Oman are already falling to xenophobic pressure. They have begun expelling expats from jobs and looking for inward hiring, but this has had a net negative effect on their economies.
  - munk-a 5y ago
    Considering Cyprus has a gigantic DMZ down the middle of it (in several places) I'm quite surprised it made that list.
chucksmash 5y ago
You're comparing against a pretty gilded group there. Perusing wiki, it looks like Saudi Arabia is a G20 economy with a population of 34 million people, yet only 3.1 million native Saudis are members of the labor force, the private sector labor force is 90% non-Saudi, and still only 12% of Saudis live below the local poverty line. If I'm reading that right, 88% being above the threshold for poverty with only 9% workforce participation for native Saudis seems pretty noteworthy.
- Gibbon1 5y ago
  Last time I read anything about that from a heretic economist it sounded like the oil industry has priced out most other core businesses. Difficulty their population has also grown 5X in 50 years. Which is not good considering they have little else going on economic other than oil.

worker767424 5y ago

It's not Saudi Arabia, but the quote from another Arab state, > My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel

rlonn 5y ago
I think this about sums it up. Seems SA has spent its money instead of investing it wisely, and the next generations will be worse off because of it. Norway serves as a counter example of what they could have done instead, but maybe the Norwegians had the luxury of being a democracy that didn't have a need to bribe the citizens to stave off revolution. Being a dictatorship is always a hard place to be.

clomond 5y ago

It would definitely be challenging. This situation is not unique to Saudi and has actually been defined in political theory as the situation of being a “Rentier state”: https://en.m.wikipedia.org/wiki/Rentier_state https://en.m.wikipedia.org/wiki/Rentier_state