TRADE AND DEVELOPMENT REPORT 2017; 2016, 2021 Annual Forecast, etc

 

       

These publications demonstrate the need to transform the existing market economy and outline ways to optimize it in order to ultimately develop and create a model of a fair social order:

2020-12-08 09:00

Saxo Bank 2021 Outrageous Predictions: The Future is Now

Saxo Bank has today released its 10 Outrageous Predictions for 2021. The predictions focus on a series of unlikely but underappreciated events which, if they were to occur, could send shockwaves across financial markets:

1.     Amazon “buys” Cyprus

2.     Germany bails out France

3.     Blockchain tech kills fake news 

4.     China’s new digital currency inspires tectonic shift in capital flows

5.     Revolutionary fusion design catapults humanity into energy abundance

6.     Universal basic income decimates big cities 

7.     Disruption dividend creates Citizens Technology Fund

8.     A successful Covid-19 vaccine kills companies

9.     Sun shines on silver, which sizzles on solar panel demand

10.                        Next-generation tech supercharges frontier and emerging markets

While these predictions do not constitute Saxo’s official market forecasts for 2021, they represent a warning against the potential misallocation of risk among investors who might typically assign just a one percent chance of these events materialising.  It’s an exercise in considering the full extent of what is possible, even if not necessarily probable, and particularly relevant in the context of this year’s unexpected Covid-19 crisis. Inevitably the outcomes that prove the most disruptive (and therefore outrageous) are those that are a surprise to consensus.

Commenting on this year’s Outrageous Predictions, Chief Investment Officer at Saxo Bank, Steen Jakobsen said:  

“For the 2021 batch of Outrageous Predictions, the Covid-19 pandemic and the painful US Election cycle have brought what might have seemed a distant future a quantum leap closer, accelerating nearly every underlying social and technological super-trend. Simply put, the traumas of 2020 mean that in 2021, the future is now.

“We’ve seen the fastest bear market and recovery in history, as well as central bank balance sheets and fiscal deficits exploding at an unprecedented pace. So our not-so-outrageous prediction is that 2021 will bring the beginning of a reality check to the idea that “extend and pretend” can stretch to infinity and beyond, even as markets have been pricing in that very expectation.

“Covid-19 has accelerated all major super-trends. A structural shift in the labour market is at the top of the list but at the same time, the total economic pie will be even larger – even per capita. Universal Basic Income is coming, and this will lead to a new way of living and new priorities. It will also require a new way to redistribute the economic pie, without which we would see a self-limiting vicious concentration of all resources into the hands of monopoly and rentier incumbents. One key enabler of that future is a rise in energy available per capita, with almost no negative impact on our natural resources, and with sufficient extra output available to power the high-end technology systems like advanced AI and quantum computing. This would bring us close to ending cancer, preventing the fall-out from future pandemic risks, and dealing with fake news through super-charged blockchain technology.”

The Outrageous Predictions 2021 publication is available here with headline summaries below:

 

1. Amazon “buys” Cyprus

2021 sees Amazon and other online monopoly and infotech giants casting an increasingly wary eye on governments looking to take them down a notch for having become too powerful, and for paying very low tax rates.

These companies have long employed an army of lobbyists, with some of them even taking up quasi-governmental approaches to the situation. Take Microsoft, which has launched a United Nations representation office in New York and hired a diplomat to run European government affairs. At the same time, Facebook has even established a “Supreme Court” to oversee user complaints and other issues.

In 2021, as the heat from official quarters rises, Amazon makes its move, redomiciling its EU headquarters to Cyprus. The country welcomes the giant corporation and the tax revenue that will help it reduce its debt-to-GDP ratio of nearly 100%, having chafed at the heavy-handed treatment by the EU during the 2010-12 EU sovereign debt crisis.

Amazon consultants “help” Cyprus to rewrite its tax code to mimic Ireland’s, but with even lower levels of corporate and other taxes, with the country’s leaders and its population happily in its thrall from the financial windfall and lower tax rates.

But EU regulators quickly get wise to what is going on and move against Amazon, forcing the company to change its practices, and forcing Cyprus and other EU countries to harmonise tax rules. The US and other countries also move against monopolies in 2021, as these companies are punished for their hubris.

Trade: Short monopoly tech companies, especially AMZN.

2. Germany bails out France

France is one of the European countries facing the highest wall of debt in the coming years. Before the Covid-19 pandemic outbreak, public debt was flirting with the 100% of GDP threshold and private debt was skyrocketing, reaching nearly 140% of GDP – far more than that of Italy (106%) or Spain (119%). And the emergency pandemic response has only accelerated the piling on of debt, with the level of public debt expected to rise above 120% of GDP in 2021. 

Despite a massive stimulus package of €100bn and a loan scheme in which the state has guaranteed up to 90% of the loans for companies, France is unable to avoid a wave of bankruptcies as many companies in the services sector are unable to cope with the series of “stop and go” lockdowns. Investors are getting increasingly gloomy about the future return on equity, which triggers massive selling of French megabanks. Net revenue drops and loan provisions are on the rise, sending French banks’ market capitalisation and price-to-tangible book ratio to unprecedentedly low levels. Given the poor state of public finances and the already extraordinarily high level of debt, France has no other choice but to come begging cap in hand to Germany, in order to allow the ECB to print enough euros to enable a massive bailout of its banking system, to prevent a systemic collapse.

Trade: probably safer to buy the French banks after the bailout than selling them before, but both might be possible.

3. Blockchain tech kills fake news 

In 2021, the mounting threat of disinformation and the erosion of trust in even well-established news providers reaches a critical level, demanding an industry response. Major media companies and social platforms are forced to impose new countermeasures against fabricated and misleading news. The enabling technology is a massive shared blockchain network for news content, which allows distribution of news in an immutable way with a validity check of both the content and the source. With a shared ledger structure, any content alterations would immediately be visible to everyone, and every news item is always traceable to its original source, suppressing misinformation that other sources can’t verify. 

Companies like Twitter and Facebook invest heavily in this blockchain tech, motivated first and foremost by self-preservation as the threats of regulatory oversight we’ve seen in recent years become white hot. Alternative news sites peddling conspiracy theories like QAnon, disinformation about the coronavirus pandemic, falsified evidence of election fraud and more will suddenly become

unavailable on major platforms. Reality wins, and echo chambers lose. 

Trade: Buy Verizon, IBM, and social media companies.

4. China’s new digital currency inspires tectonic shift in capital flows

The Digital Currency Electronic Payment (DCEP) will be a blockchain-based digital version of the Yuan (CNY) and in 2019, 80% of all payments in China were via WeChat Pay and AliPay. The PBOC wants to take this one step further and in the process improve the efficacy of monetary and fiscal policy through an increasingly cashless society and with a goal of enhancing financial inclusiveness.

Allowing full access for foreigners into Chinese capital markets will reduce the main barrier of concern for foreign investors for using the CNY in trade and investment: its liquidity and direct access to their investments inside China. Meanwhile, the stability of the Chinese currency and the built-in traceability and oversight that blockchain tech enables would virtually eliminate the risk of capital flight or illegal transfers out of China.

This idea sits well inside China’s Dual Circulation framework, improving transparency within China, while growing the CNY’s use externally as a compelling alternative to the US dollar in transactions. As a government-sponsored centralised currency, it will still be viewed as “fiat currency” but from China’s perspective this is a feature of the digital Yuan as it allows negative rates for “cash” and nominal GDP targeting is far easier to achieve as well.

Opening up China’s capital account and creating a currency that rivals the US dollar for reserve status will help boost Chinese consumption, fund an entirely new Chinese pension system and deepen the country’s capital markets.

Trade: Short the US dollar and overweight Chinese government bonds and equities versus the rest of the world.

5. Revolutionary fusion design catapults humanity into energy abundance

he world will need much more energy if our economy is to continue growing at anything approaching historical rates. New alternative and green energy technologies are for the most part not the answer. The world urgently needs a disruption in energy technology.

Enter 2021, in which an advanced AI algorithm solves the super non-linear complexities of plasma physics, clearing the way for commercial fusion energy. The SPARC fusion reactor design from MIT, which has been validated in 2020 as a viable path to less costly fusion energy, is massively improved by this new AI model. Engineers adjust the SPARC design, with new models pointing to an energy gain factor of 20, creating the biggest paradigm shift in energy technology since nuclear power. Even more importantly, a massive investment from public and private sectors would allow the implementation of the new fusion design within a few short years. 

The mastery of fusion energy opens up the prospect of a world no longer held back by water or food scarcity, thanks to desalination and vertical farming. It’s a world with cheap transportation, fully unleashed robotics and automation tech, making the current young generation the last required to “work” by necessity. Best of all, fusion energy allows nearly every country to become food- and energy-independent and sees the most rapid and largest upgrade in living standards ever witnessed.

Trade: The political and investment winds favouring “traditional” green energy stop blowing, and the wind energy ETF FAN falls by 50% in 2021.

6. Universal basic income decimates big cities 

The Covid-19 pandemic has only accelerated the K-shaped recovery that was driving inequality and tearing at the social fabric before the outbreak. Financialisaton of the economy has meant that a single income is not nearly enough to support a family and technology is another driver, with the growing, wage-deflationary forces of software, AI and automation eroding a widening swath of jobs across industries. The risk that societies are entirely torn apart results in the realisation that the Covid-19 measures weren’t a mere panic response, but the start of a permanent new universal basic income (UBI) reality. 

n the new era of UBI, tech-driven job redundancies, and frequent work from home jaunts made more normal by Covid-19, city office real estate is suddenly faced with 100% or worse overcapacity. Commercial office property values are crushed, together with the commercial real estate containing restaurants and shops aimed at servicing commuting worker drones. 

The new UBI also drives changes in the attitude toward work and life balance, allowing many young people to stay in the communities where they grew up. Meanwhile, the professionals and the marginal workers in big cities also begin to leave, as job opportunities dry up and the quality of life in small, over-priced apartments in higher crime neighbourhoods loses its appeal.

Trade: Short big city REITs, for example SL Realty Trust (SLG), which exclusively invests in Manhattan, NY office buildings, or Vornado Realty Trust (VNO), which invests in Chicago, San Francisco and NYC.

7. Disruption dividend creates Citizens Technology Fund

The march of technology, combined with reliance on the legacy principles of the free market economy, is already undermining the social contract and even tearing at the very social fabric; Covid-19 has only accelerated these trends. In 2021 and beyond, our society will have to find a new policy path if we are to avoid deepening injustice, but also political upheavals, social unrest and systemic risk. 

In 2021, policy comes in for a major overhaul, with a whole new approach to reducing inequality that has little to do with adjustments to the tax code.

A Citizens Technology Fund is created that transfers a portion of asset ownership of capital assets to everyone, with an extra portion going to displaced workers, allowing them and everyone else to participate in the productivity gains of the digital era. The policy is spun as a ‘Disruption Dividend’ and goes a long way to relieving the economic and social anxieties for those who have been losing out on the share of economic output in recent years. The Disruption Dividend frees up enormous entrepreneurial energy at the individual and community scale as millions have more time and energy on their hands away from repetitive and stressful jobs. 

Trade: Long companies in education, art, crafts, and hobbies. But also in the digital spectrum, virtual reality, gaming and E-sports.

8. A successful Covid-19 vaccine kills companies

The Covid-19 pandemic viciously accelerated the dangerous levering up of the global economy that unfolded during the 2008-09 financial crisis. The policy of near infinite liquidity provision and easing financial conditions at all costs has pushed global sovereign and investment-grade corporate yields to historical lows and forced investors to take positions in riskier assets.

The investors’ risky stance is justified by the prospect of an effective vaccine bringing a new boom in economic growth. In perfect hindsight it turns out the economy was vastly over-stimulated during the pandemic, and the ripping post-vaccine recovery rapidly overheats the economy. Inflation rises and unemployment falls so rapidly that the Fed allows long treasury yields to spike higher, taking the yield on riskier debt with it. 

The Fed ends up making a policy mistake by allowing financial conditions to tighten too rapidly via higher longer rates, having never implemented yield curve control as they were too distracted by the sudden spectre of 4-5% annualised inflation and 6-8% annualised wage gains by Q3. Corporate defaults rise to their highest in years, with the first to go the most over-levered companies in the physical retail space that were already struggling in the solid, pre-Covid economy.

Trade: Short HYG and JNK High Yield corporate ETFs.

9. Sun shines on silver, which sizzles on solar panel demand

2021 brings the usual suspects that power silver higher on its hard asset/precious metal side as the US dollar weakens, and as investors are faced with the harsh reality of no relief in sight from negative real interest rates. This is exacerbated as inflation suddenly jolts higher in 2021 and policymakers are slow to respond, wanting to offer maximum support for their still-recovering economies. With a Covid-19 vaccine in rapid rollout by the middle of the year, the excessive liquidity and over-easy policy drives a powerful bid into any hard asset.

Turbocharging the rise in the silver price in 2021, even relative to gold, is the rapidly rising demand

for silver in industrial applications. In fact, a real silver supply crunch is on the cards in 2021, and it frustrates the full throttle political support for solar energy investments under a Biden presidency, the European Green Deal, and China’s 2060 carbon neutral goal, among other initiatives. 

Another challenge on the supply side for silver is that more than half of mined silver supply is a by-product of zinc, lead and copper mining, making it tough for miners to meet the surging excess proportional demand for silver. 

Trade: Long silver as the price races to an all-time high of $50 per ounce in 2021.

10. Next-generation tech supercharges frontier and emerging markets

In 2021, economists discover that the growth rates in many frontiers and emerging markets have been woefully underestimated in recent years. Closer analysis reveals that key technologies may lie at the root of an acceleration in private sector productivity growth far beyond anything seen in the developed markets in recent decades. 

The first is the arrival of satellite-based internet delivery systems, which are set to crush the price of internet provisioning and importantly delivering an order of magnitude increase in download speeds. SpaceX’s Starlink will be the first on the scene there, with as many as 1,500 operational by the end of 2021. In emerging and frontier markets, education and business productivity will reap the benefits. Second is the ongoing revolution in fintech payment and banking systems which have already given billions of people access to the digital economy via their mobile devices. 

Finally, drone technology is set to revolutionise delivery systems and reduce the disadvantages and costs of living away from the largest cities and towns. Drone technology combined with automation also has applications in agriculture, where practices in many under-developed rural areas across the world stand to gain the most from productivity upgrades.

Trade: Long emerging market currencies on superior growth outlook.

https://www.home.saxo/campaigns/pr/2020-h2/saxo-bank-2021-outrageous-predictions-the-future-is-now

TRADE AND DEVELOPMENT REPORT 2017:  http://unctad.org/en/PublicationsLibrary/tdr2017_en.pdf

Trade and Development Report, 2016

Contents

Page

Explanatory notes  .................................................................................................................................... xiii Abbreviations  .............................................................................................................................................xv

OVERVIEW   .......................................................................................................................................... I–XV

Chapter I

CURRENT TRENDS AND CHALLENGES IN THE WORLD ECONOMY ......................................1

A.    A year of living dangerously ................................................................................................................1

B.    

Recent trends in the world economy ...................................................................................................4

1.                  Growth performance ..........................................................................................................................4        2. International trade ..............................................................................................................................8    3. Recent developments in commodity markets .................................................................................. 11          4. International capital flows to developing economies ......................................................................15

C.    The slowdown of global trade ............................................................................................................17

1.                  Preliminary observations on the causes of the trade slowdown ......................................................18              2. Global trade in the context of international production networks ...................................................20              3. Summing up and implications for the global outlook .....................................................................24

Notes ...........................................................................................................................................................27

References ..................................................................................................................................................29

Chapter II

GLOBALIZATION, CONVERGENCE AND STRUCTURAL TRANSFORMATION....................31

A.    Introduction .........................................................................................................................................31

B.     Globalization and convergence  .........................................................................................................33

C.    Structural transformation: The missing link(s) ...............................................................................43

D.    A global enabling environment? ........................................................................................................47

E.     Conclusions ..........................................................................................................................................51

Notes ...........................................................................................................................................................52

References ..................................................................................................................................................53              Page

Chapter III

THE CATCH-UP CHALLENGE: INDUSTRIALIZATION AND STRUCTURAL CHANGE .......57

A.    Introduction .........................................................................................................................................57

B.     The case for developing manufacturing industries ..........................................................................58

1.                  The virtues of manufacturing ..........................................................................................................58          2. Knowledge linkages and productivity growth .................................................................................60

C.    Trends in structural change since 1970 .............................................................................................61

1.                  Long-term trends .............................................................................................................................61   2. Impact of structural change and investment on aggregate productivity ..........................................67

D.    Successful and stalled industrialization and premature deindustrialization ................................76

1.                  Catch-up industrialization ................................................................................................................76  2. Stalled industrialization ...................................................................................................................78

  3. Premature deindustrialization ..........................................................................................................82

E.     Making the primary and tertiary sectors work for structural transformation ............................83

1.                  The role of the primary sector in structural change .........................................................................83       2. Making commodity export revenues work for structural transformation ........................................84            3. The role of services in structural transformation .............................................................................86

F.     Conclusions ..........................................................................................................................................89

Notes ...........................................................................................................................................................90

References ..................................................................................................................................................92

Chapter IV

REVISITING THE ROLE OF TRADE IN MANUFACTURES IN INDUSTRIALIZATION .........97

A.    Introduction .........................................................................................................................................97

B.     A preliminary framework ..................................................................................................................98

C.    Trends in international trade by region ..........................................................................................101

1.    General trends ................................................................................................................................101

2.    Trade in manufactures ...................................................................................................................106

D.    Structural transformation, productivity growth and trade .......................................................... 110

1.    Trade in manufactures, value added and structural transformation ............................................... 110      2. Growth in labour productivity and trade in manufactures ............................................................. 113

  3. Export sophistication and diversification ...................................................................................... 115

E.     Global value chains, industrial upgrading and structural transformation ................................. 118    Page

F.     Gender, industrialization, trade and employment .........................................................................122

1.    Export orientation and women’s employment ...............................................................................122       2. Employment elasticity of export-oriented manufacturing .............................................................124

G.    The past and future of pricing power .............................................................................................128

H.    Conclusions ........................................................................................................................................131

Notes .........................................................................................................................................................133

References ................................................................................................................................................134

Chapter V

PROFITS, INVESTMENT AND STRUCTURAL CHANGE ............................................................139

A.    Introduction .......................................................................................................................................139

B.     The            profit-investment        nexus   revisited .............................................................................................141

C.    Corporate strategies:       Refocusing      and      financialization .................................................................146

D.    The corporate investment environment in developing countries .................................................149

1.                  Challenging macroeconomic conditions for private investment ...................................................151   2. Microeconomic trends: Incipient corporate financialization in developing countries? .................155              3. Structural transformation and finance for investment: Sectoral patterns of

(financialized) investment ..............................................................................................................160

E.     Reinvigorating investment in developing countries .......................................................................162

1.                  Tackling global financial instability and corporate financialization ..............................................162        2. Establishing a functioning profit-investment nexus in the context of catch-up development .......164

  3. Combating tax avoidance, evasion and capital flight ....................................................................166

F.     Conclusions ........................................................................................................................................168

Notes .........................................................................................................................................................169

References ................................................................................................................................................171

Chapter VI

INDUSTRIAL POLICY REDUX  .........................................................................................................175

A.    Introduction .......................................................................................................................................175

B.     Reassessing the scope of industrial policy  .....................................................................................176

1.    The long history of State-sponsored structural transformation .....................................................176

2.    Learning from successes and failures ............................................................................................177         Page

C.    The varying geometry of State-business relations .........................................................................179

1.    Institutions of the developmental State  ........................................................................................179         2. Government-business relations  .....................................................................................................181        3. Support, performance and discipline  ............................................................................................182

D.    Reassessing the tools of industrial policy ........................................................................................185

1.    Targeting active and passive industrial policies ............................................................................185         2. Managing rents ..............................................................................................................................188       3. Strengthening learning capabilities ...............................................................................................188

E.     Integrating trade, macroeconomic and structural policies ...........................................................191

1.    A strategic approach to the role of international trade ...................................................................191         2. Macroeconomic matters ................................................................................................................193         3. Reviving the profit-investment nexus ............................................................................................196   4. Policies to better integrate the primary sector ...............................................................................197

F.     Conclusions ........................................................................................................................................198

Notes .........................................................................................................................................................199

References ................................................................................................................................................201

Annex to chapter VI

Growth and Structural Change: An Updated Assessment of the Role of 

the       Real     Exchange        Rate    .........................................................................................................................205

List of tables

Table                                                                                                                                             Page

 1.1 World output growth, 2008–2016 ...................................................................................................5

 1.2 Export and import volumes of goods, selected regions and countries, 2012–2015 .......................9

 1.3 World primary commodity prices, 2010–2016 .............................................................................12

 1.4 Commodity consumption in China, selected commodities, 2002–2015 ......................................14

 1.5 Average levels of tariffs between country groups in 2014 and changes between 2008 and 2014  ....19

 2.1 Industrial growth rates, selected countries and regions, 1870–2014 ............................................32

 2.2    Growth of real GDP per capita at purchasing power parity, selected regions  

and economies, 1951–2015 ..........................................................................................................38

 2.3 Probability of catch-up with the United States, by income group, 1950–1980 and 1981–2010  ......42

 3.1    Share of industry in total value added and employment, selected groups  

and economies, 1970–2014 ..........................................................................................................63

 3.2   Share of manufacturing in total value added and employment, selected groups and  

economies, 1970–2014  ................................................................................................................65

 3.3    Average annual growth rates of total value added, value added in industry and  

total employment, selected groups and economies, 1970−2014 ..................................................68

 3.4       Average annual growth rates of investment, total labour productivity and  labour productivity in industry, selected groups and economies, 1970−2014 .............................69

 3.5 Average annual productivity growth in selected regions by driving factor, various years ...........72

 3.6    Per capita investment and investment-to-GDP ratio, selected groups and  

economies, 1970–2014 .................................................................................................................74

 3.7   Ratio of manufacturing productivity to selected services productivity, selected economies,

2000−2010 ....................................................................................................................................88

 4.1 Share of exports of goods and services in GDP, by country group, 1970–2014 ........................102

 4.2 Exports of manufactures as a share of GDP, by country group, 1980–2013 ..............................107

 4.3 Imports of manufactures as a share of GDP, by country group, 1980–2013 ..............................108

 4.4   Shares of exports of high- and medium-skill and technology-intensive manufactures  

in total exports of manufactures, by country group, 1980–2013 ................................................109

 4.5   Responsiveness of employment to exports of manufactures and industrial growth,  

by gender, 1991–2014  ...............................................................................................................126

 4.6    Elasticity of labour share in total income vis-à-vis the women-to-men employment ratio 

and the share of manufactures in GDP, 1991–2014 ...................................................................127

 4.7 Annual growth in the terms of trade, by country group, 1980–2014  ........................................130

 5.1       Firms’ sources of investment finance and constraints on their access to external finance,  by size of firm, selected country groups, 2008–2015   ...............................................................145

 5.2 Size of the financial system, selected indicators and economies ................................................152

 5.3 Non-financial corporations: Investment and selected financial indicators, 1995–2014 .............156

 5.4 Non-financial corporations: Debt indicators and leverage ratios, 1995–2014 ...........................157

 6.A.1 Regression of economic growth on undervaluation measure, 1950–2014 .................................206

List of charts

Chart                                                                                                                                       Page

 1.1 Import volume, selected country groups, January 2004–April 2016 .............................................9

 1.2 Monthly commodity price indices by commodity group, January 2002–June 2016 ...................13

 1.3 Net capital flows for selected country groups, 2000–2016 ..........................................................15

 1.4 Average global tariffs, 1995–2014 ...............................................................................................18

 1.5 Degree of import dependency of exporting industries in selected countries, 2002–2014 ............20

 1.6 Manufacturing exports, wage earnings and GDP of selected countries relative to those  

of the world, 1985–2014 ...............................................................................................................22

 1.7 Global wage share, 1985–2014 ....................................................................................................23

 1.8 Global trade growth, credit expansion and fiscal deficits in the main current account deficit

countries, 1986–2015 ...................................................................................................................24

 1.9 Conditional projections of global trade growth and related variables in the main  

current account deficit countries, 2005–2020 ...............................................................................26

 2.1 Trade and financial openness, selected country groups ................................................................34

 2.2 Global exports as a share of world output, 1960–2014 ................................................................35

 2.3 Global current account surpluses and deficits as a share of world output, 1980–2014 ................35

 2.4 Stocks and flows of inward foreign direct investment as a share of global output  

by country group, 1970–2014 .......................................................................................................35

 2.5 World output growth rate, 1951–2015  .........................................................................................37

 2.6   Ratio of GDP per capita of selected countries and country groups to GDP per capita  

of the United States, 1950–2015 ..................................................................................................39

 2.7   GDP per capita gap between developing countries and the United States, 1990 and 2014 .........39

 2.8  Real GDP growth in selected country groups, 1971–2014 ..........................................................43

 2.9 Labour productivity in the manufacturing sector and in the overall economy in selected

developing regions, 1960–2010 ....................................................................................................44

 2.10 Fixed investment in selected rapidly growing countries, 1860–2015 ..........................................45

 2.11 Share in global merchandise exports, selected economies, 1950–2015 .......................................46

 2.12 Number of systemic banking crises by country group, 1970–2012  ............................................48

 2.13 International capital flows and fixed investment as a proportion of world output, 1980–2014 .....49

 3.1 Share of economic sectors in total value added, by country group, 1970−2014 ..........................62

 3.2  Share of manufacturing in total value added, by country group, 1970−2014 ..............................64

 3.3 Employment, value added and productivity by economic sector in selected country groups,

various years .................................................................................................................................71

 3.4 Average annual growth rates of employment and productivity in manufacturing,  

selected countries and regions, various years ...............................................................................79

 4.1 Developing and developed countries’ share in world exports in manufactures and  

selected commodities, 1995 and 2014 ........................................................................................103

 4.2 Composition and direction of exports, selected regions/groups, 2000–2014 .............................104

 4.3 Changes in the shares of exports of manufactures and manufacturing value added in GDP

between 1991–1994 and 2011–2014, selected countries by region ............................................111

Chart                                                                                                                                            Page

 4.4       Changes in domestic value added in exports of manufactures and in the share  of manufacturing in total value added, selected economies, 1995–2011 ................................... 112

 4.5 Labour productivity growth and exports of manufactures as a share of GDP............................ 114

 4.6    Relationship between export sophistication and per capita income growth,  

selected developing economies .................................................................................................. 116

 4.7    Changes in the shares of foreign value added in manufacturing exports and  

of manufacturing value added in GDP, 1995–2011 ....................................................................120

 5.1   Profits, investments and dividend distribution of non-financial corporations,  

selected countries, 1960–2015 ....................................................................................................142

 5.2 Corporate profits and investment (excl. construction), 1980–2015 ...........................................143

 5.3 Investment in selected economies and country groups, 1970–2014 ..........................................150

 5.4 Gross operating surplus, by region/subregion, 1980–2015 ........................................................151

 5.5   Debt service-to-income ratio of the private non-financial sector of developing and  

developed countries, 2007–2015 ................................................................................................154

 5.6    Investment as a proportion of total capital stock of non-financial and  

manufacturing firms in Brazil and South Africa, 2000–2014 .....................................................160

 5.7       Sectoral contribution to the increase in the nominal value of total debt and  capital stock between 2010 and 2014 .........................................................................................161

List of boxes

Box                                                                                                                                              Page

 2.1 Middle-income troubles ................................................................................................................40

 4.1 Gendered patterns in industrial employment ..............................................................................124

 5.1 Chinese non-financial corporate debt on the rise .......................................................................158

 5.2    Creating a development-oriented financial system: The role of the central bank  

of the Republic of Korea ............................................................................................................165

 6.1 Industrial policy and the role of “intermediary institutions”: The Ethiopian experience  ..........182

 6.2 Government procurement and industrial policy .........................................................................186

 6.3 Industrial councils in Uruguay ...................................................................................................190

 6.4 Services and diversification: A role for industrial policy? ..........................................................194 

Turp.: sk. http://unctad.org/en/PublicationsLibrary/tdr2016_en.pdf

World Economic Outlook Reports

https://www.imf.org/en/Publications/WEO

Перспективы развития мировой экономики (ПРМЭ)

https://www.imf.org/ru/publications/weo

Human Development Report 2016 :

http://hdr.undp.org/sites/default/files/2016_human_development_report.pdf 

Global Economic Prospects

The Turning of the Tide?

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After reaching 3.1 percent in both 2017 and 2018, global growth is expected to decelerate over the next two years as global slack dissipates, major central banks remove policy accommodation, and the recovery in commodity exporters matures. Amid moderating international trade and tightening global financing conditions, growth in emerging and developing economies (EMDEs) is projected to plateau, reaching 4.7 percent in 2019 and 2020, up from 4.5 percent in 2018.

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Global growth is expected to edge down over the next two years, as global slack dissipates, trade and investment moderate, and financing conditions tighten. In EMDEs, growth in commodity importers is expected to remain robust, while the rebound in commodity exporters is projected to mature. Risks to the outlook are tilted to the downside, including the possibility of disorderly financial market movements, escalating trade protectionism, heightened policy uncertainty, and rising geopolitical tensions. EMDE policymakers need to rebuild monetary and fiscal policy buffers and boost potential growth by promoting competitiveness, adaptability to technological change, and trade openness.

 Regional Outlooks

Growth in EMDEs is projected to reach 4.5 percent in 2018, before stabilizing at 4.7 percent in 2019-20. The ongoing cyclical recovery in most EMDE regions with a substantial number of commodity exporters is expected to continue in the near term, but mature thereafter as commodity prices level off. Robust growth in EMDE regions with large numbers of commodity importers is projected to continue. A close look at the economic outlook for each region follows.

Long-term Growth Prospects: Downgraded No More?

A prolonged period of weaker growth expectations, characterized by the systematic downgrading of long-term forecasts, seems to have come to an end. For the first time since 2010, the 10-year-ahead consensus forecast for global growth appears to have stabilized, as long-term growth expectations improved from 2017 in more than half of countries. Although this development could be another encouraging sign the global economy is finally enjoying a healthy expansion, long-term forecasts are often overly optimistic. While well below levels expected a ...See More 

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The Role of Major Emerging Markets in Global Commodity Demand

Rapid growth among the major emerging markets over the past 20 years has boosted global demand for commodities. The seven largest emerging markets (EM7) accounted for almost all the increase in global consumption of metals, and two-thirds of the increase in energy consumption over this period. As these economies mature and shift towards less commodity-intensive activities, their demand for most commodities may plateau. While global energy consumption growth may remain broadly steady, growth in global demand for metals and food could slow by one... See More 

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Three Topical Issues

Corporate Debt: Financial Stability and Investment Implications

Average corporate debt in emerging market and developing economies (EMDEs) has risen over the past decade. This trend raises concerns for their financial stability and growth prospects. Debt service costs of EMDE firms are expected to rise as advanced economies normalize monetary policy, and debt is increasingly held by firms with riskier balance sheets. Firm-level empirical analysis also suggests that debt overhang may be associated with weak investment, especially in large or highly leveraged firms. Countercyclical and macroprudential policie... See More 

DOWNLOAD CHAPTER DOWNLOAD HIGHLIGHTS

Long-term Growth Prospects: Downgraded No More?

A prolonged period of weaker growth expectations, characterized by the systematic downgrading of long-term forecasts, seems to have come to an end. For the first time since 2010, the 10-year-ahead consensus forecast for global growth appears to have stabilized, as long-term growth expectations improved from 2017 in more than half of countries. Although this development could be another encouraging sign the global economy is finally enjoying a healthy expansion, long-term forecasts are often overly optimistic. While well below levels expected a ...See More 

DOWNLOAD BOX DOWNLOAD HIGHLIGHTS

The Role of Major Emerging Markets in Global Commodity Demand

Rapid growth among the major emerging markets over the past 20 years has boosted global demand for commodities. The seven largest emerging markets (EM7) accounted for almost all the increase in global consumption of metals, and two-thirds of the increase in energy consumption over this period. As these economies mature and shift towards less commodity-intensive activities, their demand for most commodities may plateau. While global energy consumption growth may remain broadly steady, growth in global demand for metals and food could slow by one... See More 

Data

Global growth is projected to hold steady at 3.1 percent in 2018 and ease slightly in 2019-20. Click on button to download the data into Excel. Download the report's statistical appendix in PDF format. Charts can be generated by visiting the World Bank's DataBank website.

http://www.worldbank.org/en/publication/global-economic-prospects

В четвёртой колонке (2011 — 2020) показаны цифры, которые мои коллеги и я спрогнозировали ещё в 2001 году, когда мы придумали аббревиатуру БРИК. Можно увидеть разницу между тем, что мы прогнозировали, и тем, что реально происходило в нынешнем десятилетии (2011 — 2017*). На эти десять лет мы прогнозировали общемировой рост экономики на уровне чуть более 4% в год, учитывая подъём Китая и других крупных стран группы БРИК. Именно этим фактором объясняется то, что в 2001-2010 годах темпы экономического роста оказались выше, чем в предыдущие десятилетия, когда постоянство темпов роста на уровне 3,3% в год привело некоторых экономистов к выводу, что мировая экономика достигла своего полного потенциала.

https://inosmi.ru/economic/20190417/244954718.html

Communiqué of the Thirty-Seven Meeting of the International Monetary and Financial Committee

April 21, 2018

Chaired by Mr. Lesetja Kganyago, Governor of the South African Reserve Bank

The Committee expresses its deep gratitude to its former Chair, Mr. Agustín Carstens, for his invaluable contribution to the work of the Committee during 2015-17, and extends its best wishes to him as the General Manager of the Bank for International Settlements. The Committee welcomes Governor Lesetja Kganyago as its new Chairman.

Global outlook and policy priorities

Global growth has further strengthened and is increasingly broad-based, driven by a strong rebound in investment and trade. Risks are broadly balanced in the near term, but remain skewed to the downside beyond the next several quarters. Rising financial vulnerabilities, increasing trade and geopolitical tensions, and historically high global debt threaten global growth prospects. Demographic headwinds and subdued productivity growth may reduce the potential for higher and more inclusive growth going forward.

The window of opportunity remains open and should be used expeditiously to advance policies and reforms that sustain the current upswing, enhance resilience, and raise medium-term growth for the benefit of all. We will continue to use all policy tools to achieve strong, sustainable, balanced, inclusive, and job-rich growth. In line with central bank mandates and mindful of financial stability risks, monetary accommodation should continue where inflation remains weak and be gradually withdrawn where inflation looks set to return to central bank targets. Fiscal policy should be flexible and growth-friendly, rebuild buffers where needed, avoid procyclicality, create space to invest in infrastructure and workforce skills, and ensure that public debt as a share of GDP is on a sustainable path.

Structural reforms should aim to lift productivity, potential growth, and employment, while effectively assisting those bearing the cost of adjustment. We stress the importance of timely, full, and consistent implementation and finalization of the financial sector reform agenda as soon as possible to further strengthen financial sector resilience. We will continue to monitor and, if necessary, address emerging risks and vulnerabilities in the financial system. Policies should also enhance inclusion to widely share the gains from technology and economic integration and manage associated risks. We will work together to reduce excessive global imbalances in a way that supports global growth by pursuing appropriate and sustainable policies.

Strong fundamentals, sound policies, and a resilient international monetary system (IMS) are essential to the stability of exchange rates, contributing to strong and sustainable growth and investment. Flexible exchange rates, where feasible, can serve as a shock absorber. We recognize that excessive volatility or disorderly movements in exchange rates can have adverse implications for economic and financial stability. We will refrain from competitive devaluations, and will not target our exchange rates for competitive purposes.

We will cooperate to tackle shared challenges. We reaffirm the importance of implementing the conclusions of the G-20 Hamburg Summit on trade and recognize the need for further dialogue and actions. We are working to strengthen the contribution of trade to our economies. We will continue to work for a globally fair and modern international tax system, address tax and competition challenges, including from digitalization, as appropriate; and tackle the sources and channels of money laundering and terrorism financing, proliferation financing, corruption, and other illicit finance.

We support efforts toward reaching the 2030 Sustainable Development Goals (SDGs). We will work toward enhancing debt transparency and sustainable financing practices by both debtors and creditors and addressing debt vulnerabilities in low-income countries (LICs). We will support countries dealing with the macroeconomic consequences of pandemics, cyber risks, climate change and natural disasters, energy scarcity, conflicts, migration, and refugee and other humanitarian crises.

IMF operations

We welcome the Managing Director’s Global Policy Agenda Update. In line with its mandate, the IMF will continue to support its members and collaborate with others to:

• Promote a stable international monetary and financial system. We welcome efforts to conduct a rigorous, evenhanded, candid, and transparent assessment of excessive global imbalances and exchange rates in the 2018 External Sector Report. We look forward to the stock-take on capital flow management measures based on the Institutional View.
• Help members tackle shared challenges. We support the IMF’s collaboration with      relevant stakeholders on financial technology, crypto assets, and cyber security. We support the IMF’s continued role in international tax issues and domestic resource mobilization, including through the Platform for Collaboration on Tax. We call on the IMF to set out a clear process for supporting country authorities in developing their medium-term revenue strategies. We support further efforts to address the withdrawal of correspondent banking relationships and its adverse consequences, including on remittances, trade flows, and financial inclusion. We reaffirm our support for the IMF’s work to help countries achieve the 2030 SDGs. We support the IMF’s continued efforts to assist countries in dealing with the macroeconomic consequences of large refugee inflows.
• Safeguard debt sustainability. Debt vulnerabilities are rising in many countries, particularly in LICs. We call on the IMF and the World Bank Group to work together on a multi-pronged work program to enhance debt transparency and sustainability and address LIC debt vulnerabilities. We urge the IMF to work closely with members to strengthen fiscal frameworks and improve debt management capacity, and to work with debtors and creditors on promoting sustainable lending practices and tackling data gaps.
• Enhance resilience and raise medium-term prospects. We welcome the IMF’s enhanced engagement on governance issues, including corruption, as well as efforts to establish a framework to guide its involvement in social protection issues. We agree that the IMF will need to consider the effects of technology and digitalization in its macroeconomic analysis, including on inequality, productivity, labor and financial markets, fiscal policy, monetary policy, and measurement of the digital economy. We also welcome work on youth unemployment and the impact of gender inclusion and labor force participation on growth. We look forward to the IMF’s management implementation plan in response to the IEO Evaluation—The IMF and Fragile States.
• Upgrade policy tools to develop tailored policy solutions to members. We welcome the findings of the Interim Surveillance Review and look forward to further improvements in surveillance practices to ensure evenhandedness, enhance traction and effectiveness for crisis prevention, improve the coverage of spillovers, and adapt to evolving macro-critical challenges. We support work on the reviews of the AML/CFT program, the Financial Sector Assessment Program, the capacity development strategy, and the debt sustainability framework for countries with market access.
• Strengthen the IMS. We continue to support work toward further strengthening the global financial safety net (GFSN) and collaboration with regional financing arrangements. We support the IMF’s contributions to the G-20 Data Gaps Initiative. We look forward to the reviews of LIC facilities, including with regard to small and fragile states, and of conditionality and design of IMF-supported programs. We appreciate continued efforts to strengthen the effectiveness and accountability of capacity development and assist countries in implementing the updated LIC debt sustainability framework.

IMF resources and governance

We reaffirm our commitment to a strong, quota-based, and adequately resourced IMF to preserve its role at the center of the GFSN. We are committed to concluding the 15^th General Review of Quotas and agreeing on a new quota formula as a basis for a realignment of quota shares to result in increased shares for dynamic economies in line with their relative positions in the world economy and hence likely in the share of emerging market and developing countries as a whole, while protecting the voice and representation of the poorest members. We call on the Executive Board to work expeditiously toward the completion of the 15^th General Review of Quotas in line with the above goals by the Spring Meetings of 2019 and no later than the Annual Meetings of 2019. We note the progress report to the Board of Governors and look forward to further progress by the time of our next meeting. We welcome the progress made in securing commitments under the 2016 Bilateral Borrowing Agreements. We call for full implementation of the 2010 governance reforms.

We reiterate the importance of maintaining the IMF’s high-quality staff and strengthening efforts to meet the 2020 diversity targets. We support promoting gender diversity in the Executive Board.

Our next meeting will be held in Bali, Indonesia, on October 13, 2018.

Attendance can be found at:

http://www.imf.org/en/News/Articles/2018/04/20/april-2018-imfc-attendance-list

             Global Economic Prospects

                                  The Turning of the Tide?

Overview

After reaching 3.1 percent in both 2017 and 2018, global growth is expected to decelerate over the next two years as global slack dissipates, major central banks remove policy accommodation, and the recovery in commodity exporters matures. Amid moderating international trade and tightening global financing conditions, growth in emerging market and developing economies (EMDEs) is projected to plateau, reaching 4.7 percent in 2019 and 2020, up from 4.5 percent in 2018.

http://www.worldbank.org/en/publication/global-economic-prospects

https://www.bloomberg.com/news/articles/2018-07-03/bank-of-america-sees-replay-of-1998-script-in-summer-pain-trades

Future Politics

Living Together in a World Transformed by Tech

Jamie Susskind

Description

Future Politics confronts one of the most important questions of our time: how will digital technology transform politics and society? The great political debate of the last century was about how much of our collective life should be determined by the state and what should be left to the market and civil society. In the future, the question will be how far our lives should be directed and controlled by powerful digital systems - and on what terms?

Introduction
Part I. THE DIGITAL LIFEWORLD
1: Increasingly Capable Systems
2: Increasingly Integrated Technology
3: Increasingly Quantified Society
4: Thinking Like a Theorist
Part II. FUTURE POWER
5: Code is Power
6: Force
7: Scrutiny
8: Perception-Control
9: Public and Private Power
Part III. FUTURE LIBERTY
10: Freedom and the Supercharged State
11: Freedom and the Tech Firm
Part IV. FUTURE DEMOCRACY
12: The Dream of Democracy
13: Democracy in the Future
Part V. FUTURE JUSTICE
14: Algorithms of Distribution
15: Algorithms of Recognition
16: Algorithmic Injustice
17: Technological Unemployment
18: The Wealth Cyclone
Part VI. FUTURE POLITICS
19: Transparency and the New Separation of Powers
20: Post-Politics

https://www.goodreads.com/book/show/38819346-future-politics

Global Wealth Report 2018

The ninth edition of the Global Wealth Report published by the Credit Suisse Research Institute provides the most comprehensive and up-to-date source of information available on global household wealth. During the twelve months to mid-2018, aggregate global wealth rose by $14.0 trillion (4.6%) to a combined total of $317 trillion, outpacing population growth. Wealth per adult grew by 3.2%, raising global mean wealth to a record high of $63,100 per adult. The US contributed most to global wealth adding $6.3 trillion and taking its total to $98 trillion. This continues its unbroken run of growth in both total wealth and wealth per adult every year since 2008. Unsurprisingly, China is now clearly established in second place of the world wealth hierarchy. The country overtook Japan with respect to the number of ultra-high net worth (UHNW) individuals in 2009, total wealth in 2011 and the number of millionaires in 2014.

This year's report also provides new insights on female wealth holdings. Women now account for an estimated 40% of global wealth overall and their share of wealth has grown considerably throughout the 20th century. The report explores global variations in female wealth accumulation, along with differences in portfolio composition, risk aversion and the impact on female Millennials.

Interesting Facts & Figures

317

trillion USD global wealth in 2018

42

million millionaires worldwide

 63100

USD average 2018 wealth per adult

 399

trillion USD global wealth by 2023

…: https://www.credit-suisse.com/corporate/en/research/research-institute/global-wealth-report.html

2019 Annual Forecast

https://worldview.stratfor.com/article/2019-annual-forecast-geopolitics-intelligence-global-risk

Top 10: robo-advisor products in the fin-tech landscape

Popular smart software to manage your investment portfolio.

January 20, 2019

Mid-way between hiring a financial advisor and do-it-yourself investing are robo-advisors. These user-friendly, automatic investing services are trendy, efficient, and easy-to-use. They provide digital financial advice for investing. A robo-advisor monitors + automatically re-balances your investments to help keep your portfolio on track. You can track your progress on the web or with a smart-phone app.

Here’s a list of some best-known robo-advisors in the fin-tech landscape to fit your needs. Although robo-advisors were basically non-existent 5 years ago, today they’re gaining fast in popularity — and expected to keep growing.

So robo-advisors are automated investment portfolios that use computer software algorithms to consider your unique goals + requirements in the context of outside factors — and then automatically adjust your portfolio to help you earn.

he Digital Market Outlook

year: 2016 — $ 126.5 billion
year: 2018 — $ 401.9 billion
year: 2021 — $ 1,152 billion • predicted

….: http://www.kurzweilai.net/resource-top-10-robo-advisor-products-in-the-fin-tech-landscape

The Future of Jobs Report 2018

Centre for the New Economy and Society World Economic Forum

 Contents

Preface vii Key Findings

1 PART 1:

PREPARING THE FUTURE WORKFORCE 3

 Introduction 6

Strategic Drivers of New Business Models 7

Workforce Trends and Strategies for the Fourth Industrial Revolution 15

 The Future of Jobs across Industries 17

The Future of Jobs across Regions 19

A Look to the Recent Past (in Collaboration with LinkedIn) 22

 Conclusions 25

References and Further Reading 27

Appendix A: Report Methodology 31

Appendix B: Industry and Regional Classifications 33

PART 2:

INDUSTRY AND COUNTRY/REGION PROFILES 35

 User’s Guide: How to Read the Industr y and Country/Region Profiles 41

Industry Profiles 67

 Country/Region Profiles 127

Contributors 129

System Initiative Partners 131

 Survey Partners 133

Acknowledgements C

http://www3.weforum.org/docs/WEF_Future_of_Jobs_2018.pdf

2018 FORD TRENDS REPORT UNDERSCORES HOW CONSUMERS AND BRANDS ARE PUSHING THROUGH IN UNCERTAIN, INTERESTING TIMES

DEC 6, 2017 | NEW YORK

• 2018 Looking Further with Ford Trends Report highlights how global societal changes are impacting new consumer behaviors and attitudes; shifts toward activism, compassion and self-expression will shape the new year
• Sixth annual report shows that while two-thirds of adults globally say they are overwhelmed by changes taking place around them, three-quarters believe they can influence positive change; nearly half say they expect brands to take a stand on social issues
• Consumers are focused on world suffering, the widening gap between rich and poor, and emotional well-being, and while many express skepticism about artificial intelligence, more are hopeful about the future of autonomous vehicles

NEW YORK, Dec. 6, 2017 – People feel increasingly polarized by unrest, upheaval and other changes taking place in the world, and more than 60 percent of adults globally say they feel overwhelmed by things happening around them. Ford’s 2018 Looking Further with Ford Trends Report examines not only the issues dividing the world, but also the coping mechanisms that are emerging as a result.

“We’re clearly living in interesting times,” said Sheryl Connelly, Ford global consumer trends and futuring manager. “Shifting global priorities, rampant political upheaval, and a spotlight on social inequity have upended the status quo and left many disoriented. But out of the chaos and conflict, a new energy and creativity is motivating people like never before. From compassion and guilt to heightened activism, most adults believe their actions have the power to influence positive change.”

As societies cope with the rising demands of urbanization, serious threats to the environment and economic instability, Ford continues its work as a trusted mobility company developing smart transportation solutions for all. Amid concern for world suffering, a widening gap between rich and poor, and worries that  artificial intelligence will do more harm than good, Ford remains committed to the belief that freedom of movement drives human progress—and is designing sustainable, meaningful technologies to help make people’s lives better.

Each year, the company focuses on global trends to understand how consumers are changing, and how companies must respond.

Key insights from Ford’s sixth annual report include:

• 39 percent of adults say they do not mind sharing their personal information with companies, but 60 percent say they are frustrated by how much of their information has become public
• 76 percent of adults around the world say they find it creepy when companies know too much about them
• 52 percent of adults say they believe artificial intelligence will do more harm than good, but 61 percent say they are hopeful about a future of autonomous vehicles
• 68 percent of adults say they are overwhelmed by suffering in the world today, and 51 percent say they feel guilty for not doing more to make the world better
• 81 percent of adults say they are concerned about the widening gap between the rich and the poor
• 73 percent of adults say they should take better care of their emotional well-being
• 54 percent of adults globally say they feel more stressed out than they did a year ago, and among 18- to 29-year-olds, that number is even higher, at 65 percent

What all this means for 2018 and beyond
This report serves as a blueprint for understanding how key trends are expected to influence consumers and brands in 2018 and beyond. Ford has identified and explored these 10 trends:

1.    The Edge of Reason: Global upheaval is evident in everything from politics to pop culture, and people are responding to these changes in polarized fashion. As divisiveness grows, a sense of being overwhelmed intensifies. Consumers are hungry for inventive ways to cope and adapt.

2.    The Activist Awakening: This culture of polarization means consumers are being jolted out of complacency. Conventional wisdom and expectations are being toppled as individuals debate the change we need.  

3.    Minding the Gap: Worldwide, the spotlight is on inequality. Activists and entrepreneurs are experimenting with new ways to improve access to quality education, increase productive employment, close wage gaps, and provide everyone with affordable access to basic living standards and infrastructure. 

4.    The Compassionate Conscience: With an omnipresent news cycle, we are more aware than ever of the challenges consumers face around the world. People are becoming more reflective of their roles in society and more focused on how they can be more engaged.

5.    Mending the Mind: Consumers and institutions are realizing that you cannot have a healthy body unless you have a healthy mind. As such, mental health and well-being are moving to the forefront for individuals, governments and companies to address.

6.    Retail Therapy: Many consumers are on an endless hunt for something new and different – seeking material goods or experiences that bring happiness. As services aiming to provide efficiency experiences proliferate, consumers now find they can buy the one thing that was never for sale – time.

7.    Helplessly Exposed: Big Data claims to be able to interpret our behaviors, which in theory should help consumers. But with Big Data can come Big Bias, and once personal information is relinquished, all consumers can do is hope companies use it responsibly.  

8.    Technology’s Tipping Point: Virtual reality, artificial intelligence and autonomous technology – long far-fetched notions – are now being incorporated into our daily lives. Worldwide, humans are wondering what the onslaught of intelligent technology will mean for society.

9.    Singled Out: Are marriage and parenthood still the desired norms for happy living? Couples today – with more choices and longer life spans to consider – are rethinking commitment and fulfillment. 

10.  Big Plans for Big Cities: By 2050, nearly 75 percent of the world’s population is expected to live in urban areas. To capitalize on the full potential of cities – ensuring they are happy and healthy places in which to thrive – we must smartly plan for transportation, employment, housing, wellness initiatives and an infrastructure that can accommodate booming populations.

Building a smarter future

With an astounding 87 percent of consumers agreeing cities need better transportation options, Ford is uniquely positioned to provide meaningful solutions for consumers everywhere. As connected, sustainable and autonomous technologies rapidly transform transportation, Ford is committed driving progress that consumers can trust.

“In today’s fast-moving world, consumers have less patience for the frivolous, and they demand greater emphasis on what’s meaningful and impactful,” said Connelly. “This ethos is reflected in the work we do at Ford, and our relentless focus on providing trustworthy solutions that make consumers’ lives better.”

For the full Looking Further with Ford 2018 Trends Report, please visit www.fordtrends.com.: https://media.ford.com/content/dam/fordmedia/Europe/en/2016/12/Ford_Trends-Report-2017.pdf

GDP Is Not a Measure of Human Well-Being

• Amit Kapoor, Bibek Debroy

OCTOBER 04, 2019

Economic growth has raised living standards around the world. However, modern economies have lost sight of the fact that the standard metric of economic growth, gross domestic product (GDP), merely measures the size of a nation’s economy and doesn’t reflect a nation’s welfare. Yet policymakers and economists often treat GDP, or GDP per capita in some cases, as an all-encompassing unit to signify a nation’s development, combining its economic prosperity and societal well-being. As a result, policies that result in economic growth are seen to be beneficial for society.

We know now that the story is not so simple – that focusing exclusively on GDP and economic gain to measure development ignores the negative effects of economic growth on society, such as climate change and income inequality. It’s time to acknowledge the limitations of GDP and expand our measure development so that it takes into account a society’s quality of life.

A number of countries are starting to do this. India, for instance, where we both work advising the government, is developing an Ease of Living Index, which measures quality of life, economic ability and sustainability.

When our measures of development go beyond an inimical fixation towards higher production, our policy interventions will become more aligned with the aspects of life that citizens truly value, and society will be better served. But before we attempt to improve upon the concept of GDP, it is instructive to understand its roots.

The origins of GDP

Like many of the ubiquitous inventions that surround us, the modern conception of GDP was a product of war. While Simon Kuznets is often credited with the invention of GDP (since he attempted to estimate the national income of the United States in 1932 to understand the full extent of the Great Depression), the modern definition of GDP was developed by John Maynard Keynes during the second world war.

In 1940, one year into the war with Germany, Keynes, who was working in the UK Treasury, published an essay complaining about the inadequacy of economic statistics to calculate what the British economy could produce with the available resources. He argued that such data paucity made it difficult to estimate Britain’s capacity for mobilization and conflict.

According to him, the estimate of national income should be the sum of private consumption, investment and government spending. He rejected Kuznets’ version, which included government income, but not spending, in his calculation. Keynes realized that if the government’s wartime procurement was not considered as demand in calculating national income, GDP would fall despite actual economic growth taking place. His method of calculating GDP, including government spending into a country’s income, which was driven by wartime necessities, soon found acceptance around the world even after the war was over. It continues to this day.

How GDP falls short

But a measure created to assess wartime production capabilities of a nation has obvious drawbacks in peacetime. For one, GDP by definition is an aggregate measure that includes the value of goods and services produced in an economy over a certain period of time. There is no scope for the positive or negative effects created in the process of production and development.

For example, GDP takes a positive count of the cars we produce but does not account for the emissions they generate; it adds the value of the sugar-laced beverages we sell but fails to subtract the health problems they cause; it includes the value of building new cities but does not discount for the vital forests they replace. As Robert Kennedy put it in his famous election speech in 1968, “it [GDP] measures everything in short, except that which makes life worthwhile.”

Environmental degradation is a significant externality that the measure of GDP has failed to reflect. The production of more goods adds to an economy’s GDP irrespective of the environmental damage suffered because of it. So, according to GDP, a country like India is considered to be on the growth path, even though Delhi’s winters are increasingly filled with smog and Bengaluru’s lakes are more prone to fires. Modern economies need a better measure of welfare that takes these externalities into account to obtain a truer reflection of development. Broadening the scope of assessment to include externalities would help in creating a policy focus on addressing them.

GDP also fails to capture the distribution of income across society – something that is becoming more pertinent in today’s world with rising inequality levels in the developed and developing world alike. It cannot differentiate between an unequal and an egalitarian society if they have similar economic sizes. As rising inequality is resulting in a rise in societal discontentment and increased polarization, policymakers will need to account for these issues when assessing development.

Another aspect of modern economies that makes GDP anachronistic is its disproportionate focus on what is produced. Today’s societies are increasingly driven by the growing service economy – from the grocery shopping on Amazon to the cabs booked on Uber. As the quality of experience is superseding relentless production, the notion of GDP is quickly falling out of place. We live in a world where social media delivers troves of information and entertainment at no price at all, the value for which cannot be encapsulated by simplistic figures. Our measure of economic growth and development also needs to adapt to these changes in order to give a more accurate picture of the modern economy.

How we’re redefining development in India

We need alternative metrics to complement GDP in order to get a more comprehensive view of development and ensure informed policy making that doesn’t exclusively prioritize economic growth. We’re seeing some efforts already, such as Bhutan’s attempt to measure Gross National Happiness, which considers factors like equitable socio-economic development and good governance, and UNDP’s Human Development Index (HDI), which encapsulates health and knowledge apart from economic prosperity.

As a step in this direction, India is also beginning to focus on the ease of living of its citizens. Ease of living is the next step in the development strategy for India, following the push towards ease of doing business that the country has achieved over the last few years. The Ministry of Housing and Urban Affairs has developed the Ease of Living Index to measuring quality of life of its citizens across Indian cities, as well as economic ability and sustainability. It is as well expected to evolve into a measurement tool to be adopted across districts. We believe that this more holistic measure will provide more accurate insights into the state of development of the Indian economy.

The end goal is to have a more just and equitable society that is economically thriving and offering citizens a meaningful quality of life. With a change in what we measure and perceive as a barometer of development, how we frame our policies will also catch up. In an economy with well-being at its heart, economic growth will simply be another tool to guide it in the direction that the society chooses. In such an economy, the percentage points of GDP, which are rarely connected with the lives of average citizens, will cease to take the center stage. The focus would instead shift towards more desirable and actual determinants of welfare.

https://hbr.org/2019/10/gdp-is-not-a-measure-of-human-well-being?utm

GDP Is the Wrong Tool for Measuring What Matters

It’s time to replace gross domestic product with real metrics of well-being and sustainability

August 1, 2020

AUTHOR Joseph E. Stiglitz 

IN BRIEF

• Gross domestic product (GDP) is almost universally used to gauge how well a society is doing. In fact, it is a measure of market activity—no more.
• The Great Recession of 2008–2009 highlighted the need for better ways to measure the well-being of an economy and society, as well as its sustainability—whether or not good times can last.
• Over the past decade leading scholars have devised a broad set of measures to help steer societies toward the futures their citizens desire. Several countries are embedding these “dashboard” indicators into their decision-making processes.

Since World War II, most countries around the world have come to use gross domestic product, or GDP, as the core metric for prosperity. The GDP measures market output: the monetary value of all the goods and services produced in an economy during a given period, usually a year. Governments can fail if this number falls—and so, not surprisingly, governments strive to make it climb. But striving to grow GDP is not the same as ensuring the well-being of a society.

In truth, “GDP measures everything,” as Senator Robert Kennedy famously said, “except that which makes life worthwhile.” The number does not measure health, education, equality of opportunity, the state of the environment or many other indicators of the quality of life. It does not even measure crucial aspects of the economy such as its sustainability: whether or not it is headed for a crash. What we measure matters, though, because it guides what we do. Americans got an inkling of this causal connection during the Vietnam War, with the military's emphasis on “body counts”: the weekly tabulation of the number of enemy soldiers killed. Reliance on this morbid metric led U.S. forces to undertake operations that had no purpose except to raise the body count. Like a drunk looking for his keys under the lamppost (because that is where the light is), the emphasis on body counts kept us from understanding the bigger picture: the slaughter was inducing more Vietnamese people to join the Viet Cong than U.S. forces were killing.

Now a different body count—that from COVID-19—is proving to be a horribly good measure of societal performance. It has little correlation with GDP. The U.S. is the richest country in the world, with a GDP of more than $20 trillion in 2019, a figure that suggested we had a highly efficient economic engine, a racing car that could outperform any other. But the U.S. recorded upward of 100,000 deaths by June, whereas Vietnam, with a GDP of $262 billion (and a mere 4 percent of U.S. GDP per capita) had zero. In the race to save lives, this less prosperous country has beaten us handily.

In fact, the American economy is more like an ordinary car whose owner saved on gas by removing the spare tire, which was fine until he got a flat. And what I call “GDP thinking”—seeking to boost GDP in the misplaced expectation that that alone would enhance well-being—led us to this predicament. An economy that uses its resources more efficiently in the short term has higher GDP in that quarter or year. Seeking to maximize that macroeconomic measure translates, at a microeconomic level, to each business cutting costs to achieve the highest possible short-term profits. But such a myopic focus necessarily compromises the performance of the economy and society in the long term.

The U.S. health care sector, for example, took pride in using hospital beds efficiently: no bed was left unused. In consequence, when SARS-CoV-2 reached America there were only 2.8 hospital beds per 1,000 people—far fewer than in other advanced countries—and the system could not absorb the sudden surge in patients. Doing without paid sick leave in meat-packing plants increased profits in the short run, which also increased GDP. But workers could not afford to stay home when sick; instead they came to work and spread the infection. Similarly, China made protective masks cheaper than the U.S. could, so importing them increased economic efficiency and GDP. That meant, however, that when the pandemic hit and China needed far more masks than usual, hospital staff in the U.S. could not get enough. In sum, the relentless drive to maximize short-term GDP worsened health care, caused financial and physical insecurity, and reduced economic sustainability and resilience, leaving Americans more vulnerable to shocks than the citizens of other countries.

The shallowness of GDP thinking had already become evident in the 2000s. In preceding decades, European economists, seeing the success of the U.S. in increasing GDP, had encouraged their leaders to follow American-style economic policies. But as signs of distress in the U.S. banking system mounted in 2007, France's President Nicolas Sarkozy realized that any politician who single-mindedly sought to push up GDP to the neglect of other indicators of the quality of life risked losing the confidence of the public. In January 2008 he asked me to chair an international commission on the Measurement of Economic Performance and Social Progress. A panel of experts was to answer the question: How can nations improve their metrics? Measuring that which makes life worthwhile, Sarkozy reasoned, was an essential first step toward enhancing it.

Coincidentally, our initial report in 2009, provocatively entitled Mismeasuring Our Lives: Why GDP Doesn't Add Up, was published right after the global financial crisis had demonstrated the necessity of revisiting the core tenets of economic orthodoxy. It met with such positive resonance that the Organization for Economic Co-operation and Development (OECD)—a think tank that serves 37 advanced countries—decided to follow up with an expert group. After six years of consultation and deliberation, we reinforced and amplified our earlier conclusion: GDP should be dethroned. In its place, each nation should select a “dashboard”—a limited set of metrics that would help steer it toward the future its citizens desired. In addition to GDP itself, as a measure for market activity (and no more) the dashboard would include metrics for health, sustainability and any other values that the people of a nation aspired to, as well as for inequality, insecurity and other harms that they sought to diminish.

These documents have helped crystallize a global movement toward improved measures of social and economic health. The OECD has adopted the approach in its Better Life Initiative, which recommends 11 indicators—and provides citizens with a way to weigh these for their own country, relative to others, to generate an index that measures their performance on the things they care about. The World Bank and the International Monetary Fund (IMF), traditionally strong advocates of GDP thinking, are now also paying attention to environment, inequality and sustainability of the economy.

A few countries have even incorporated this approach into their policy-making frameworks. New Zealand, for instance, embedded “well-being” indicators in the country's budgetary process in 2019. As the country's finance minister, Grant Robertson, put it: “Success is about making New Zealand both a great place to make a living and a great place to make a life.” This emphasis on well-being may partly explain the nation's triumph over COVID-19, which appears to have been eliminated after roughly 1,500 confirmed cases and 20 deaths in a total population of nearly five million.

APPLES AND ARMAMENTS

Necessity is the mother of invention. Just as the dashboard emerged from a dire need—the inadequacy of the GDP as an indicator of well-being, as revealed by the Great Recession of 2008—so did the GDP. During the Great Depression, U.S. officials could barely quantify the problem. The government did not collect statistics on either inflation or unemployment, which would have helped them steer the economy. So the Department of Commerce charged economist Simon Kuznets of the National Bureau of Economic Research with creating a set of national statistics on income. Kuznets went on to construct the GDP in the 1940s as a simple metric that could be calculated from the exceedingly limited market data then available. An aggregate of (the dollar value of) the goods and services produced in the country, it was equivalent to the sum of everyone's income—wages, profits, rents and taxes. For this and other work, he received the Nobel Memorial Prize in Economic Sciences in 1971. (Economist Richard Stone, who created similar statistical systems for the U.K., received the prize in 1984.)

Kuznets repeatedly warned, however, that the GDP only measured market activity and should not be mistaken for a metric of social or even economic well-being. The figure included many goods and services that were harmful (including, he believed, armaments) or useless (financial speculation) and excluded many essential ones that were free (such as caregiving by homemakers). A core difficulty with constructing such an aggregate is that there is no natural unit for adding the value of even apples and oranges, let alone of such disparate things as armaments, financial speculation and caregiving. Thus, economists use their prices as a proxy for value—in the belief that, in a competitive market, prices reflect how much people value apples, oranges, armaments, speculation or caregiving relative to one another.

This profoundly problematic assumption—that price measures relative value—made the GDP quite easy to calculate. As the U.S. recovered from the Depression by ramping up the production and consumption of material goods (in particular, armaments during World War II), GDP grew rapidly. The World Bank and the IMF began to fund development programs in former colonies around the world, gauging their success almost exclusively in terms of GDP growth.

Over time, as economists focused on the intricacies of comparing GDP in different eras and across diverse countries and constructing complex economic models that predicted and explained changes in GDP, they lost sight of the metric's shaky foundations. Students seldom studied the assumptions that went into constructing the measure—and what these assumptions meant for the reliability of any inferences they made. Instead the objective of economic analysis became to explain the movements of this artificial entity. GDP became hegemonic across the globe: good economic policy was taken to be whatever increased GDP the most.

In 1980, following a period of seemingly poor economic performance—stagflation, marked by slow growth and rising prices—President Ronald Reagan assumed office on the promise of ramping up the economy. He deregulated the financial sector and cut taxes for the better-off, arguing that the benefits would “trickle down” to those less fortunate. Although GDP grew somewhat (albeit at a rate markedly lower than in the decades after World War II), inequality rose precipitously. Well aware that metrics matter, some members of the administration reportedly argued for stopping the collection of statistics on inequality. If Americans did not know how bad inequality was, presumably we would not worry about it.

The Reagan administration also unleashed unprecedented assaults on the environment, issuing leases for fossil-fuel extraction on millions of acres of public lands, for example. In 1995 I joined the Council of Economic Advisers for President Bill Clinton. Worrying that our metrics paid too little attention to resource depletion and environmental degradation, we worked with the Department of Commerce to develop a measure of “green” GDP, which would take such losses into account. When the congressional representatives from the coal states got wind of this, however, they threatened to cut off our funding unless we stopped our work, which we were obliged to.

The politicians knew that if Americans understood how bad coal was for our economy correctly measured, then they would seek the elimination of the hidden subsidies that the coal industry receives. And they might even seek to move more quickly to renewables. Although our efforts to broaden our metrics were stymied, the fact that these representatives were willing to spend so much political capital on stopping us convinced me that we were on to something really important. (And it also meant that when, a decade later, Sarkozy approached me about heading an international panel to examine better ways of measuring “economic performance and social progress,” I leaped at the chance.)

I left the Council of Economic Advisers in 1997, and in the ensuing years the deregulatory fervor of the Reagan era came to grip the Clinton administration. The financial sector of the U.S. economy was ballooning, driving up GDP. As it turned out, many of the profits that gave that sector such heft were, in a sense, phony. Bankers' lending practices had generated a real-estate bubble that had artificially enhanced profits—and, with their pay being linked to profits, had increased their bonuses. In the ideal free-market economy, an increase in profits is supposed to reflect an increase in societal well-being, but the bankers' takings put the lie to that notion. Much of their profits resulted from making others worse off, such as when they engaged in abusive credit-card practices or manipulated LIBOR (for London Interbank Offered Rate of interest for international banks lending to one another) to enhance their earnings.

But GDP figures took these inflated figures at face value, convincing policy makers that the best way to grow the economy was to remove any remaining regulations that constrained the finance sector. Long-standing prohibitions on usury—charging outrageous interest rates to take advantage of the unwary—were stripped away. In 2000 the so-called Commodity Modernization Act was passed. It was designed to ensure that derivatives (risky financial products that played a big role in bringing down the financial system just eight years later) would never be regulated. In 2005 a bankruptcy law made it more difficult for those having trouble paying their bills to discharge their debts—making it almost impossible for those with student loans to do so.

By the early 2000s two fifths of corporate profits came from the financial sector. That fraction should have signaled that something was wrong: an efficient financial sector should entail low costs for engaging in financial transactions and therefore should be small. Ours was huge. Untethering the market had inflated profits, driving up GDP—and, as it turned out, instability.

OPIOIDS, HURRICANES

The bubble burst in 2008. Banks had been issuing mortgages indiscriminately, on the assumption that real-estate prices would continue to rise. When the housing bubble broke, so did the economy, falling more than it had since the immediate aftermath of World War II. After the U.S. government rescued the banks (just one firm, AIG, received a government bailout of $130 billion), GDP improved, persuading President Barack Obama and the Federal Reserve to announce that we were well on the way to recovery. But with 91 percent of the gains in income in 2009 to 2012 going to the top 1 percent, the majority of Americans experienced none.

As the country slowly emerged from the financial crisis, others commanded attention: the inequality crisis, the climate crisis and an opioid crisis. Even as GDP continued to rise, life expectancy and other broader measures of health worsened. Food companies were developing and marketing, with great ingenuity, addictive sugar-rich foods, augmenting GDP but precipitating an epidemic of childhood diabetes. Addictive opioids led to an epidemic of drug deaths, but the profits of Purdue Pharma and the other villains in that drama added to GDP. Indeed, the medical expenditures resulting from these health crises also boosted GDP. Americans were spending twice as much per person on health care than the French but had lower life expectancy. So, too, coal mining seemingly boosted the economy, and although it helped to drive climate change, worsening the impact of hurricanes such as Harvey, the efforts to rebuild again added to GDP. The GDP number provided an optimistic gloss to the worst of events.

These examples illustrate the disjuncture between GDP and societal well-being and the many ways that GDP fails to be a good measure of economic performance. The growth in GDP before 2008 was not sustainable, and it was not sustained. The increase in bank profits that seemed to fuel GDP in the years before the crisis were not only at the expense of the well-being of the many people whom the financial sector exploited but also at the expense of GDP in later years. The increase in inequality was by any measure hurting our society, but GDP was celebrating the banks' successes. If there ever was an event that drove home the need for new ways of measuring economic performance and societal progress, the 2008 crisis was it.

THE DASHBOARD

The commission, led by three economists (Amartya Sen of Harvard University, Jean-Paul Fitoussi of the Paris Institute of Political Studies and me), published its first report in 2009, just after the U.S. financial system imploded. We pointed out that measuring something as simple as the fraction of Americans who might have difficulty refinancing their mortgages would have illuminated the smoke and mirrors underpinning the heady economic growth preceding the crisis and possibly enabled policy makers to fend it off. More important, building and paying attention to a broad set of metrics for present-day well-being and its sustainability—whether good times are durable—would help buffer societies against future shocks.

We need to know whether, when GDP is going up, indebtedness is increasing or natural resources are being depleted; these may indicate that the economic growth is not sustainable. If pollution is rising along with GDP, growth is not environmentally sustainable. A good indicator of the true health of an economy is the health of its citizens, and if, as in the U.S., life expectancy has been going down—as it was even before the pandemic—that should be worrying, no matter what is happening to GDP. If median income (that of the families in the middle) is stagnating even as GDP rises, that means the fruits of economic growth are not being shared.

It would have been nice, of course, if we could have come up with a single measure that would summarize how well a society or even an economy is doing—a GDP plus number, say. But as with the GDP itself, too much valuable information is lost when we form an aggregate. Say, you are driving your car. You want to know how fast you are going and glance at the speedometer. It reads 70 miles an hour. And you want to know how far you can go without refilling your tank, which turns out to be 200 miles. Both those numbers are valuable, conveying information that could affect your behavior. But now assume you form a simple aggregate by adding up the two numbers, with or without “weights.” What would a number like 270 tell you? Absolutely nothing. It would not tell you whether you are driving recklessly or how worried you should be about running out of fuel.

That was why we concluded that each nation needs a dashboard—a set of numbers that would convey essential diagnostics of its society and economy and help steer them. Policy makers and civil-society groups should pay attention not only to material wealth but also to health, education, leisure, environment, equality, governance, political voice, social connectedness, physical and economic security, and other indicators of the quality of life. Just as important, societies must ensure that these “goods” are not bought at the expense of the future. To that end, they should focus on maintaining and augmenting, to the extent possible, their stocks of natural, human, social and physical capital. We also laid out a research agenda for exploring links between the different components of well-being and sustainability and developing good ways to measure them.

Concern about climate change and rising inequality had already been fueling a global demand for better measures, and our report crystallized that trend. In 2015 a contentious political process culminated in the United Nations establishing a set of 17 Sustainable Development Goals. Progress toward them is to be measured by 232 indicators, reflecting the manifold concerns of governments and civil societies from around the world. So many numbers are unhelpful, in our view: one can lose sight of the forest for the trees. Instead another group of experts, chaired by Fitoussi, Martine Durand (chief statistician of the OECD) and me, recommended that each country institute a robust democratic dialogue to discover what issues its citizens most care about.

Such a conversation would almost certainly show that most of us who live in highly developed economies care about our material well-being, our health, the environment around us and our relations with others. We want to do well today but also in the future. We care about how the fruits of our economy are shared: we do not want a society in which a few at the top grab everything for themselves and the rest live in poverty.

A good indicator of the true health of an economy is the health of its citizens. A decline in life expectancy, even for a part of the population, should be worrying, whatever is happening to GDP. And it is important to know if, even as GDP is going up, so, too, is pollution—whether it is emissions of greenhouse gases or particulates in the air. That means growth is not environmentally sustainable.

The choice of indicators may vary across time and among countries. Countries with high unemployment will want to track what is happening to that variable; those with high inequality will want to monitor that. Still, because people generally want to know how they are doing in comparison with others, we recommended that the advanced countries, at least, share some five to 10 common indicators.

GDP would be among them. So would a measure of inequality or some pointer toward how the typical individual or household is doing. Over the years economists have formulated a rash of indicators of inequality, each reflecting a different dimension of the phenomenon. It may well be that societies where inequality has become particularly problematic may need to have metrics reflecting the depth of the poverty at the bottom and the excesses of riches at the top. To me, knowing what is happening to median income is of particular importance; in the U.S., median income has barely changed for decades, even as GDP has grown.

Employment is often used as an indicator of macroeconomic performance—an economy with a high unemployment rate clearly is not using all of its resources well. But in societies where paid work is associated with dignity, employment is a value in its own right. Other elements of the dashboard would include indicators for environmental degradation (say, air or water quality), economic sustainability (indebtedness), health (life expectancy) and insecurity.

Insecurity has both subjective and objective dimensions. We can survey how insecure people feel: how worried they are about adverse effects or how prepared they feel to cope with a shock. But we can also predict the likelihood that someone falls below the poverty line in any given year. And some elements of the dashboard are “intermediate” variables—things that we may (or may not) value in themselves but that provide an inkling of how a society will function in the future. One of these is trust. Societies in which citizens trust their governments and one another to “do the right thing” tend to perform better. In fact, societies in which people have higher levels of trust, such as Vietnam and New Zealand, have dealt far more effectively with the pandemic than the U.S., for instance, where trust levels have declined since the Reagan era.

Policy makers need to use such indicators much as physicians use their diagnostic tools. When some indicator is flashing yellow or red, it is time to look deeper. If inequality is high or increasing, it is important to know more: What aspects of inequality are getting worse?

STEERING THROUGH STORMS

Since we began our work on well-being indicators some dozen years ago, I have been amazed at the resonance that it has achieved. A focus on many of the elements of the dashboard has permeated policy making everywhere. Every three years the OECD hosts an international conference of nongovernmental organizations, national statisticians, government officials and academics furthering the “well-being” agenda, the most recent being in Korea in November 2018, with thousands of participants.

Whenever the conference next convenes, the global crisis in human societies that a microscopic virus has precipitated will surely be on the agenda. The full dimensions of it could take years or decades to become clear. Recovering from this calamity and steering complex societies through the even more devastating crises that loom—catastrophic climate change and biodiversity collapse—will require, at the very least, an excellent navigational system. To paraphrase the OECD: We have been developing the tools to help us drive better. It is time to use them.

https://www.scientificamerican.com/article/gdp-is-the-wrong-tool-for-measuring-what-matters/

The Doomsday Clock is now two minutes before midnight

Scientists move clock ahead 30 seconds, closest to midnight since 1953

January 25, 2018

Citing growing nuclear risks and unchecked climate dangers, the Doomsday Clock — the symbolic point of annihilation — is now two minutes to midnight, the closest the Clock has been since 1953 at the height of the Cold War, according to a statement today (Jan. 25) by the Bulletin of the Atomic Scientists.

“In 2017, world leaders failed to respond effectively to the looming threats of nuclear war and climate change, making the world security situation more dangerous than it was a year ago — and as dangerous as it has been since World War II,” according to the Atomic Scientists’ Science and Security Board in consultation with the Board of Sponsors, which includes 15 Nobel Laureates.

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“This is a dangerous time, but the danger is of our own making. Humankind has invented the implements of apocalypse; so can it invent the methods of controlling and eventually eliminating them. This year, leaders and citizens of the world can move the Doomsday Clock and the world away from the metaphorical midnight of global catastrophe by taking common-sense action.” — Lawrence Krauss, director of the Origins Project at Arizona State University, Foundation Professor at School of Earth and Space Exploration and Physics Department, Arizona State University, and chair, Bulletin of the Atomic Scientists’ Board of Sponsors.

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The increased risks driving the decision to move the clock include:

Nuclear. Hyperbolic rhetoric and provocative actions from North Korea and the U.S. have increased the possibility of nuclear war by accident or miscalculation. These include U.S.-Russian military entanglements, South China Sea tensions, escalating rhetoric between Pakistan and India,  uncertainty about continued U.S. support for the Iran nuclear deal.

Decline of U.S. leadership and a related demise of diplomacy under the Trump Administration. “In 2017, the United States backed away from its longstanding leadership role in the world, reducing its commitment to seek common ground and undermining the overall effort toward solving pressing global governance challenges. Neither allies nor adversaries have been able to reliably predict U.S. actions or understand when U.S. pronouncements are real and when they are mere rhetoric. International diplomacy has been reduced to name-calling, giving it a surrealistic sense of unreality that makes the world security situation ever more threatening.”

Climate change. “The nations of the world will have to significantly decrease their greenhouse gas emissions to keep climate risks manageable, and so far, the global response has fallen far short of meeting this challenge.”

How to #RewindtheDoomsdayClock

According to Bulletin of the Atomic Scientists:

* U.S. President Donald Trump should refrain from provocative rhetoric regarding North Korea, recognizing the impossibility of predicting North Korean reactions. The U.S. and North Korean governments should open multiple channels of communication.

* The world community should pursue, as a short-term goal, the cessation of North Korea’s nuclear weapon and ballistic missile tests. North Korea is the only country to violate the norm against nuclear testing in 20 years.

* The Trump administration should abide by the terms of the Joint Comprehensive Plan of Action for Iran’s nuclear program unless credible evidence emerges that Iran is not complying with the agreement or Iran agrees to an alternative approach that meets U.S. national security needs.

* The United States and Russia should discuss and adopt measures to prevent peacetime military incidents along the borders of NATO.

* U.S. and Russian leaders should return to the negotiating table to resolve differences over the INF treaty, to seek further reductions in nuclear arms, to discuss a lowering of the alert status of the nuclear arsenals of both countries, to limit nuclear modernization programs that threaten to create a new nuclear arms race, and to ensure that new tactical or low-yield nuclear weapons are not built, and existing tactical weapons are never used on the battlefield.

* U.S. citizens should demand, in all legal ways, climate action from their government. Climate change is a real and serious threat to humanity.

* Governments around the world should redouble their efforts to reduce greenhouse gas emissions so they go well beyond the initial, inadequate pledges under the Paris Agreement.

* The international community should establish new protocols to discourage and penalize the misuse of information technology to undermine public trust in political institutions, in the media, in science, and in the existence of objective reality itself.

Worldwide deployments of nuclear weapons, 2017

“As of mid-2017, there are nearly 15,000 nuclear weapons in the world, located at some 107 sites in 14 countries. Roughly, 9400 of these weapons are in military arsenals; the remaining weapons are retired and awaiting dismantlement. Nearly 4000 are operationally available, and some 1800 are on high alert and ready for use on short notice.

“By far, the largest concentrations of nuclear weapons reside in Russia and the United States, which possess 93 percent of the total global inventory. In addition to the seven other countries with nuclear weapon stockpiles (Britain, France, China, Israel, India, Pakistan, and North Korea), five nonnuclear NATO allies (Belgium, Germany, Italy, the Netherlands, and Turkey) host about 150 US nuclear bombs at six air bases.”

— Hans M. Kristensen & Robert S. Norris, Worldwide deployments of nuclear weapons, Bulletin of the Atomic Scientists 2017. Pages 289-297 | Published online: 31 Aug 2017.

Misbehaving: The Making of Behavioral Economics by Richard H. Thaler  

 

Economics -- Psychological aspects; Consumer Behavior.

Traditional economics assumes rational actors. Early in his research, Thaler realized these Spock-like automatons were nothing like real people. Whether buying a clock radio, selling basketball tickets, or applying for a mortgage, we all succumb to biases and make decisions that deviate from the standards of rationality assumed by economists. In other words, we misbehave.

 http://www.worldcat.org/title/misbehaving- the-making-of-behavioral-economics/oclc/891611164

The Value of Everything: Making and Taking in the Global Economy

by Mariana Mazzucato

Modern economies reward activities that extract value rather than create it. This must change to insure a capitalism that works for us all.

In this scathing indictment of our current global financial system, The Value of Everything rigorously scrutinizes the way in which economic value has been determined and reveals how the difference between value creation and value extraction has become increasingly blurry. Mariana Mazzucato argues that this blurriness allowed certain actors in the economy to portray themselves as value creators, while in reality they were just moving existing value around or, even worse, destroying it.

The book uses case studies - from Silicon Valley to the financial sector to big pharma - to show how the foggy notions of value create confusion between rents and profits, a difference that distorts the measurements of growth and GDP.

The lesson here is urgent and sobering: to rescue our economy from the next, inevitable crisis and to foster long-term economic growth, we will need to rethink capitalism, rethink the role of public policy and the importance of the public sector, and redefine how we measure value in our society.

https://www.goodreads.com/book/show/29502362-the-value-of-everything

• 06-11-20  THE SHAPE OF TOMORROW

6 experts on how capitalism will emerge after COVID-19

We have an unprecedented opportunity to rein in capitalism’s excesses and reshape our democracy. Here’s how experts from MIT, Harvard, and more would tackle the biggest problems.

BY TALIB VISRAM

For Fast Company’s Shape of Tomorrow series, we’re asking business leaders to share their inside perspective on how the COVID-19 era is transforming their industries. Here’s what’s been lost—and what could be gained—in the new world order.

Sarah Miller is the executive director of the American Economic Liberties Project, which advocates for antitrust regulation and corporate accountability. She’s the former deputy director of the Open Markets Institute, another prominent anti-monopoly group, and was a policy adviser at the U.S. Treasury during the Obama administration.

One of the biggest challenges—which we have seen exacerbated by the pandemic—is the question of Amazon: just the sheer amount of economic and political power that it has generated for Jeff Bezos. We also do a lot of work on Facebook and Google. These three [companies] are some of the most dangerous monopolies from a societal and democratic perspective. Our regulators—our government—have allowed them to monopolize advertising markets.

You’ve seen the sheer power of Amazon as an intermediary in the economy between businesses and consumers. You’ve seen them make decisions on who can sell and who can’t sell, on what’s essential and what’s not essential. You’ve seen them leverage their political power to abuse workers and prevent them from working safely. Most recently, you saw Amazon tell the House Judiciary Committee [which requested testimony from Bezos on Amazon’s anticompetitive business practices], essentially, to go to hell. That just shows the culture of disrespect for democracy that monopolists tend to carry along with them. And then you top it off with stories that Bezos might become a trillionaire in seven years. Is that really the kind of economic and political power that we want our economy to generate for a single person?

WHETHER WE LIKE IT OR NOT, THE ECONOMY IS GETTING RESTRUCTURED, AND OUR DEMOCRATIC INSTITUTIONS HAVE A ROLE TO PLAY.”

SARAH MILLER, AMERICAN ECONOMIC LIBERTIES PROJECT

At the same time, there’s more awareness across the board that [concentrating power in the private sector] is a problem, that this crisis is going to make it worse, and that government has a role to play. [There’s awareness] that we’re going to probably come out on the other side of this with a decimated small-business sector and more power in the largest corporations.

Whether we like it or not, the economy is getting restructured, and our democratic institutions have a role to play. There’s not any single-bullet solution to it: There’s no Dodd-Frank Act to deal with concentrated private power. It really is about a reorientation of priorities and relearning how to use and create new tools in government to address it. And that’s going to take a lot of research, a lot of investigations, and a confrontational approach to monopolies. This broadly shared ideology of “Uh, we shouldn’t punish success”—that huge, powerful companies bestow great benefits, or that we can keep them under control through various checks on their power—just isn’t a sustainable or safe path.

The first thing and most easy thing to do is pause mergers during the crisis. We saw legislation that would do that: Amy Klobuchar and Elizabeth Warren and David Cicilline sent a letter to the Fed asking for that to be a condition on access to any bailout money. [We also need to look] at trade agreements and see how they benefit the largest corporations and how that entrenches their power. We need to look into a lot of specific corporate actors, and revitalize the FTC and have commissioners in place who will use that authority. Same with the Department of Justice. Same with the Department of Defense.

We’d like Democrats to see this as both a humanitarian crisis and a moment when we are making decisions about who is going to have power in the economy and who is going to lose power.

Demond Drummer is the executive director and cofounder of New Consensus, an organization that promotes a vision of a robust public sector that actively shapes the economy and markets. The group is particularly focused on how the government and public institutions should make investments to create and support a sustainable economy in the form of a Green New Deal.

We had outlined a set of national projects [tied to the Green New Deal] to update this country’s energy system and the way it consumes energy and the way we grow food. But back in February, it was hard to make the case that we needed a jobs program in this country, because people said, “Unemployment is so low.” Well, people had shit jobs—and several jobs, in some cases. And they were gig workers. It was a terrible situation for most people.

Now we don’t have to make the case that we need robust public investments to create and stimulate great jobs, because it’s clear: 40 million people are unemployed, and increasing numbers of people who were employed are now underemployed. Now we can have that jobs conversation.

WE BUILT THE WHITE MIDDLE CLASS—WE CAN BUILD THE MIDDLE CLASS THAT INCLUDES BLACK PEOPLE AND BROWN PEOPLE.”

DEMOND DRUMMER, NEW CONSENSUS

What else happens? You lose your job, you lose your healthcare. Now there’s a stronger case for some form of universal healthcare. And the federal government picks up the tab, because that can unleash industry to do what it needs to do to advance.

Everything that I would call the Green New Deal package is very much on the table right now, and much more urgent, not only from an economic stimulus standpoint, but from a sustainability standpoint.

This is a beautiful moment to onshore [manufacturing] in a sustainable manner. I think that this a build-it-here, make-it-here, grow-it-here [moment]—and not in some weird, nationalist kind of frame, but in the sense that we need to be able to build the things we need, in case these types of things happen again. And they will. We’ve got to have a more resilient way of getting [manufacturing] done. And if that creates jobs, all the better.

We will be laying out a package of proposals from energy all the way to manufacturing and food that can advance this country to an era of strength and vitality. The tools are there. We built the white middle class—we can build the middle class that includes Black people and brown people.

I’m not optimistic that we’re going to see some natural kind of shift in political thinking and vision, because look what got us into this crisis. I do think we have urgency and a set of immediate data and lived experience that can be exploited to explain to folks and communicate what needs to be done and how we can do it. People may be open to alternative solutions.

David Autor, Ford Professor of Economics at MIT, is a leading labor economist who focuses on inequality and the opportunities facing people without high levels of education, especially in an economy that’s being rapidly altered by technology and automation.

There are two aspects of [the COVID-19 crisis]. One is in the short term: Who’s bearing the burden, and how can it possibly be reduced to some degree? The second is in the long run: What does this mean for the structure of earnings and employment and opportunity for those same groups of workers? Unfortunately, the longer-term prospects are also adverse.

In the long run, my concern is it’s going to change patterns of consumption. One [example] is in business travel, which drives a lot of the money in the hospitality industry because business travelers pay full freight on the airplane. They pay full fare at hotels on weeknights. They may expense-account meals. It’s hard to believe that there won’t be a big reduction in business travel over the long term because people have realized that it’s just not as necessary as they’d thought.

Similarly, people will be going less to offices, which means less cleaning services, less people going out for lunch, less location services, less Uber. That will also affect the demand for services. And, finally, I think that employers are learning, very rapidly, which workers they can do without. And there’s no reason to think that employers would unlearn that as soon as this is over.

[This crisis] will speed up the process of automation. In the long run, that has some benefits: We can raise productivity; technologies that we were only beginning to use before, now we will realize how well we can make them work. But it also means that even though the labor market is slack—with millions of people ready to go back to their jobs—many firms may say, “Actually, we’ve figured out how to do that one without people.” There’s also going to be a shift in the distribution of business activity from small- and medium-sized firms to larger firms, and those larger firms are less labor-intensive. That’s also going to exacerbate exactly the same phenomenon.

The government is the only actor that really has the capacity to act on the scale that’s needed. We just spent 10% of GDP on a bailout; why don’t we spend another 10% on investment? Let’s create a Marshall Plan for the U.S.: Rebuild American infrastructure, invest in schools, and remake ourselves. The U.S. has essentially unlimited borrowing capacity and interest rates are essentially zero. This is the moment to use that.

We have done something quite radical with the social safety net in the last couple months: We decided a bunch of people who weren’t part of the unemployment insurance system should get unemployment insurance benefits. We could do that more broadly: Make the unemployment insurance system more comprehensive. Let’s now formalize that. And then [use the crisis as] an opportunity for skills investment. There are many things that we’ve been doing extensively in the form of in-person education that can potentially be done less expensively and still efficiently. [Let’s] capitalize on that.

Rebecca Henderson, an economics professor at Harvard Business School, is the author of Reimagining Capitalism in a World on Fire, which explores how a democratically accountable government and a strong civil society can rein in capitalism’s excesses. 

Before the pandemic, a lot of businesspeople would say, “I care about inequality and it’s important, but I have a business to run.” It was not so clear that [inequality is] an immediate business problem. Now, it’s much clearer. Businesses can’t just say, “Someone else will deal with this.”

Look at the states bidding against each other for vital medical equipment. Where is the federal task force [putting] the might of America to work? The political system is broken, and the idea that government should take a central role has been delegitimized. We can disagree about how big government should be, and what exactly the edges should be. But the idea that government is a good thing and is fundamental to the health of the society—that, we should not be disagreeing about.

What can businesses do to help? Businesses can stop demonizing the government. Business [leaders have] a role to play in moving our society: First, by doing what you can in your own business to address social and environmental problems, then by cooperating with other firms to address problems like environmental damage and inequality in your industry. But of course we’re not going to solve [an issue like] climate change without appropriate regulation and support for the transition. We’re not going to solve inequality without new labor market policies, without investments in education and health. Government is the answer—government in partnership with business.

I think the pandemic may hopefully have a silver lining. [Historically] major shifts in political systems tend to come at times of crisis. This crisis might be that kind of crisis. But it might be like 2008, where we papered over, and somehow chugged on.

Tom Steyer, a former 2020 Democratic presidential candidate, is the founder of NextGen America, an organization that’s dedicated to mobilizing voters under the age of 35, and co-chair of California’s economic recovery task force.

What does rebooting California look like? We don’t want to go back to January 2020. We want something better, more just, more equitable, more sustainable. And we want to make sure that we have the underresourced communities, the black and brown communities who’ve borne the brunt of the COVID pandemic and the economic freefall, in the front of our minds as we take action in the short run and make policy in the long run.

There’s going to be a big building program. Exactly how that takes place is unclear, but we know doing it in a sustainable fashion is the better way to invest. It creates more jobs in the short run and creates an infrastructure that will sustain us in the long run, in terms of preserving the natural world, but also in terms of having costs be much lower for Americans.

One of the things that’s true in the very near term, but also going forward, is that not having equal access to high-speed internet is a profound source of inequality. If you can’t receive [your education both] online and offline, you’re at a severe disadvantage. As telemedicine becomes more relevant, if you’re unable to access high-speed internet, you’re going to be at a disadvantage. With high unemployment, [we] want to retrain and rescale workers. [But] if you can’t participate online, that’s going to be a severe disadvantage.

Stephanie Kelton, professor of economics and public policy at Stony Brook University, is a leading proponent of Modern Monetary Theory, which posits that the U.S. government can and should spend and invest without having to balance a budget like a private business. She was the chief economist for the Democratic Minority Staff of the U.S. Senate Budget Committee, and was an economic adviser for Bernie Sanders during his 2016 presidential campaign.

People say, We just want to return to normal; we just want to get back to the way things were. Hang on: The way things were is why we’re where we are today.

Look at the inequality. Why are black and brown people bearing a disproportionate amount of pain, both physical and economic, in the coronavirus crisis? Why is it that 30 million people just lost their employer-sponsored health insurance, and [around 40] million lost jobs? Well, we tied healthcare to employment. And now you’ve got people who can’t afford housing and student debt.

THE ONLY WAY WE’RE GOING TO GET SUSTAINED COMMITMENT [TO FISCAL POLICY] IS IF EVERYBODY CAN BREATHE THROUGH IT, LIKE A LAMAZE CLASS FOR DEFICIT SPENDING.”

STEPHANIE KELTON, ECONOMIST

These are more than imperfections—they’re deeply rooted flaws in the design. The way that we have constructed our economy over the last almost 40 years has left us vulnerable in many respects. Recent events bring such things into sharper focus for people, but hopefully also, there’s that backdrop that says the way out of this is not through the Federal Reserve. [It’s] going to have to be through sustained commitment to fiscal policy.

And the only way we’re going to get sustained commitment [to fiscal policy] is if everybody can breathe through it, like a Lamaze class for deficit spending. So that we can take a deep breath, exhale, breathe through it, and let the deficit get as big as it needs to get to heal and repair and allow us to rebuild the type of economy that will, to the extent we can, deal with and eliminate those vulnerabilities.

Many of us thought that after the [2008] financial crisis [there was] an opportunity, but this one is bigger. So much is driven by the virus: We could possibly have three or four years with no vaccine. And so, as this thing possibly pops back up periodically and we’re dealing with hotspots and closures, we’ll have a situation where a lot of industries are going to be shadows of their former selves, and some won’t survive at all. Many of the jobs that have been lost will never come back. The economy is going to change, the way we work, how the consumer wants to spend—a lot of things are going to change.

The last thing I want to do is watch everything come apart, and then pick up the pieces and try to reassemble them exactly the way they were assembled before. You want to put it together differently: You want to build better, build smarter, build safer, build stronger, build more resilient.

https://www.fastcompany.com/90506269/6-experts-on-how-capitalism-will-emerge-after-covid-19?partner=feedburner&utm