When the growth model fails

In this rather metaphysical piece, Daniel Cohen grapples with the constant search for economic growth. He suggests we, as a population, “set aside greed and fear” and invest in the economy without worry. Unfortunately, he notes that most of us are driven by capitalism into a constant need for a higher salary. The environment of constant competition produces the inaccessibility of contentment. Wealth hoarding by the rich, and constant worry about the future by the poor means hardly anyone invests in our economy, leading to stangnation. Cohen also tackles the question of labour in am increasingly mechanized world. He observes that unhappy workers don’t invest in economy, and thus, the happiness of workers is essential to economic growth.

Read an excerpt of the article written by Daniel Cohen:

PARIS — Economic growth is the religion of the modern world, the elixir that eases the pain of conflicts, the promise of indefinite progress. It is the solution to our perennial worries about not getting what we don’t have. And yet, at least in the West, the growth model is now as fleeting as Proust’s Albertine Simonet: Coming and going, with busts following booms and booms following busts, while an ideal world of steady, inclusive, long-lasting growth fades away. In the United States, 80 percent of the population has seen no growth in purchasing power over the last 30 years. In France, annual per capita growth has dropped steadily from 3 percent in the 1970s to less than zero in 2013. In the interim, the political class has been flummoxed by stagnation, a hesitation that has opened the doors to populists of various stripes. But in its desperate search for scapegoats, the West skirts the key question: What would happen if our quest for never-ending economic growth has become a mirage? Would we find a suitable replacement for the system, or sink into despair and violence? John Maynard Keynes, writing at the outset of the economic crisis of the 1930s, warned against misdiagnosing the situation. In his famous article ‘‘Economic Possibilities for Our Grandchildren,’’ he declared that a period of exceptional prosperity was at hand and that the world’s ‘‘economic problem’’ would soon be resolved — just as, in the preceding century, strong growth and food safety arrived on a wave of technical innovation. To wring all we can out of the economic growth model, he said, the world must set aside greed and fear, outdated characteristics of a bygone era of misery. Instead, we must learn to enjoy ourselves — and above all to consume, without restraint and without worrying about tomorrow. Ultimately, Keynes believed that we would end up working only three hours a day and after turn to the truly important tasks of art, culture and religion. Sadly, such metaphysical pursuits have not come to be the world’s priority at this point in history; instead, we still live in fear of poverty, inequality and joblessness. The perpetual quest for material wealth remains our primary goal, despite the fact that we in the West are six times richer than we were in the 1930s. Thus it must be said that Keynes, an intellectual giant of economics, erred: The vast accumulation of wealth hasn’t at all satisfied or moderated the appetites of our materialist society. The so-called Easterlin paradox helps explain Keynes’s mistake. According to the economist Richard Easterlin, wealth does not correlate to happiness. A higher salary is obviously always desirable, yet once we’ve reached that target it is never enough: We fall victim to a process of habituation of which we are largely unaware. Similarly, as we each set goals for ourselves driven by our current desires, we fail to take into account how our desires change over time and in new circumstances. This explains why economic growth, more than pure wealth, is the key to the functioning of our society: It provides each of us with the hope that we can rise above our present condition, even though this dream remains ever elusive. Which brings us to the fundamental question: Will economic growth return, and if it doesn’t, what then? Experts are sharply divided. The pessimists, led by the economist Robert Gordon, believe that the potential for economic growth is now much lower than in the last century. The new industrial revolution may have given us the smartphone, but that hardly compares, in his thinking, to the great advances of the 20th century: electricity, the automobile, the airplane, movies, television, antibiotics. On the other hand, optimists like Erik Brynjolfsson and Andrew McAfee tell us in their book ‘‘The Second Machine Age’’ that Moore’s Law is going to allow ‘‘the digitization of just about everything.’’ Already, Google is experimenting with driverless cars, and robots are caring for the elderly in Japan: Another burst of growth appears to be at hand. To decide who is right, one must first recognize that the two camps aren’t focusing on the same things: For the pessimists, it’s the consumer who counts; for the optimists, it’s the machines. ...Read more


Investing in Our Future at Community Colleges

In the article, David Brooks mentions the human capital component in President Obama’s plan to make community colleges free: return on investment. A national policy to offer free community college tuition is a crucial investment in and commitment to our social contract. America prospers because we invest in people, ideas, infrastructure, research, design, education and health care because of the confirmed two-year participation in a national service corps. David Brooks recommends on focussing on a student’s living expenses, mentoring relationships and the “remedial education mess” rather than tuition, which is likely to benefit those for whom community college is already affordable, are on target.

Read an excerpt of the article written by David Brooks:

There is a human capital component to President Obama’s plan to make community colleges free: return on investment. The $60 billion that would be spent over a decade is an investment in our civic future. Our return for that financial commitment should be service to the country, which could include work as a teacher, nurse, engineer, firefighter or police officer. A national policy to offer free community college tuition is a crucial investment in and commitment to our social contract. But let’s be clear about the cost. The tuition isn’t “free”; our citizens cover the cost of “free.” I propose a simple plan: When students agree to accept the tuition (and complete their education), that contract confirms their two-year participation in a national service corps. America prospers because we invest in people, ideas, infrastructure, research, design, education and health care. This is the fabric of the social contract that each generation knows: Invest early, often and with compassion, and watch your returns build the future. MICHAEL G. SIEVERS Portland, Ore., Jan. 21, 2015 To the Editor: “The important task is to help students graduate,” David Brooks says, noting that community college dropout rates now hover somewhere between 66 and 80 percent. Setting graduation as the ultimate goal, however, may be a mistake when technology is changing education and work. Diplomas based on college-mandated credits are becoming anachronistic as online courses become better and more pervasive. more

Uber model may point to work’s future

Farhad Manjoo writes abut the ‘uberization’ of work, referring to the introduction of new technology in various fields, just like Uber did.  Uberization will have its benefits: Technology could make your work life more flexible, allowing you to fit your job, or perhaps multiple jobs, around your schedule. Even during a time of renewed job growth, Americans’ wages are stubbornly stagnant, and the on-demand economy may provide novel streams of income.The complication, here, though, is that most taxi drivers are also independent contractors, so the arrangement isn’t particularly novel in the ride business. The larger worry about on-demand jobs is not about benefits but about a lack of agency: a future in which computers, not humans, determine what you do, when and for how much. The author concludes by saying that the on-demand economy may be better than the alternative of software automating all our work, but that isn’t necessarily much of a cause for celebration

Read an excerpt of the article written by Farhad Manjoo:

As Uber has grown to become one of the world’s most valuable start-ups, its ambitions often seem limitless. But of all the ways that Uber could change the world, the most far-reaching may be found closest at hand: your office. Uber, and more broadly the app-driven labor market it represents, are at the center of what could be a sea change in work, and in how people think about their jobs. You may not be contemplating becoming an Uber driver any time soon, but the Uberization of work may soon be coming to your chosen profession. Just as Uber is doing for taxis, new technologies have the potential to chop up a broad array of traditional jobs into discrete tasks that can be assigned to people just when they’re needed, with wages set by a dynamic measurement of supply and demand, and every worker’s performance constantly tracked, reviewed and subject to the sometimes harsh light of customer satisfaction. Uber and its ride-sharing competitors, including Lyft and Sidecar, are the boldest examples of this breed, which many in the tech industry see as a new kind of start-up — one whose primary mission is to efficiently allocate human beings and their possessions, rather than information. ‘‘I do think we are defining a new category of work that isn’t full-time employment but is not running your own business either,’’ said Arun Sundararajan, a professor at New York University’s business school who has studied the rise of the so-called on-demand economy and who is mainly optimistic about its prospects. Uberization will have its benefits: Technology could make your work life more flexible, allowing you to fit your job, or perhaps multiple jobs, around your schedule. Even during a time of renewed job growth, Americans’ wages are stubbornly stagnant, and the on-demand economy may provide novel streams of income. ‘‘We may end up with a future in which a fraction of the work force would do a portfolio of things to generate an income — you could be an Uber driver, an Instacart shopper, an Airbnb host and a Taskrabbit,’’ Dr. Sundararajan said. But the rise of such work could also make your income less predictable and your long-term employment less secure. And it may relegate the idea of establishing a lifelong career to a distant memory. ‘‘I think it’s nonsense, utter nonsense,’’ said Robert B. Reich, an economist at the University of California, Berkeley, who was a labor secretary in the Clinton administration. ‘‘This on-demand economy means a work life that is unpredictable, doesn’t pay very well and is terribly insecure.’’ After interviewing many workers in the on-demand world, Dr. Reich said he had concluded that ‘‘most would much rather have good, well-paying, regular jobs.’’ It is true that many of these start-ups are creating new opportunities for employment, which is a novel trend in tech, especially during an era in which we’re all fretting about robots stealing our jobs. Proponents of on-demand work point out that many of the tech giants that sprang up over the last decade minted billions in profits without hiring very many people; Facebook, for instance, serves more than a billion users, but employs only a few thousand highly skilled workers, most of them in California. To make the case that it is creating lots of new jobs, Uber recently provided some of its data on ridership to Alan B. Krueger, an economist at Princeton and a former chairman of President Obama’s Council of Economic Advisers. Unsurprisingly, Dr. Krueger’s report, which he said he was allowed to produce without interference from Uber, paints Uber as a force for good in the labor market. more


Ukraine's Facebook warriors

Ms. Anna Sandalova is a rising star of Ukraine and its soldiers. She uses facebook as a source to reach out to fellow Ukrainians to raise money and buy equipment for their underfunded army. David Patrikarakos writes that social Media, not so surprisingly, is the most trusted source of events and recent occurrences in Ukraine. It is also a means to take action. In its 2013 Corruption Perceptions Index, the independent research organization Transparency International ranked Ukraine 144th. The key is to fund the people, not just the government.

Read an excerpt of the article written by David Patrikarakos :

At an army checkpoint near the occupied city of Donetsk in eastern Ukraine, Lt. Col. Natalia Semeniuk approached a convoy of two minibuses that had just arrived from Kiev. Slung over her shoulder was an AK-47 assault rifle. Clumps of long, brown hair poked out from beneath the beanie she wore to guard against the cold, which had dropped to about minus-20 degrees Fahrenheit. Colonel Semeniuk was meeting with Anna Sandalova, a former public relations executive and a founder of Help the Army of Ukraine, a foundation that uses Facebook to raise money to buy equipment for Ukraine’s desperately underfunded army. Ms. Sandalova has become something of a star in her country, especially to its soldiers. She supplies them with everything from body armor to night-vision goggles, to sleeping bags and food. Since her group was established in March, it has raised over $1.3 million, Ms. Sandalova told me, for the fight against the pro-Russian separatists who have occupied large parts of eastern Ukraine. An overwhelming majority of the money is crowdfunded from the Ukrainian people through Facebook. The process is simple: Ms. Sandalova liaises with army divisions fighting in the field. They tell her what they need and she posts their requests to Facebook. People donate via bank transfer into the foundation’s account, and Ms. Sandalova and her colleagues then drive the goods to eastern Ukraine personally. That day, the minibuses were filled to bursting. Clad in body armor and a helmet, Ms. Sandalova followed Colonel Semeniuk to a Ukrainian Army camp in the forest near Donetsk to make her first delivery. Canvas tents dotted the area, erected among thickets of trees covered with snow. Soldiers huddled together, talking and smoking. Some helped unload several mobile shower units. Dozens of these volunteer groups have sprung up as the fighting has intensified. ‘‘It’s all about networks,’’ Ms. Sandalova explained. ...Read more

Along with art and jewels, the rich now collect passports

Robert Frank says that it’s been called diversification of passport portfolios. Stock, real estate portfolios, and other forms of investment are not enough for the wealthy investors that they want to maintain passport portfolios now. The. Investors can gain citizenship of a country upon a few specific years of residency and investment in government bonds, property etc. In some cases like Malta, there is no residency requirement; hence it has benefitted the most. There are even some fast-track programs upon higher payment. Countries like Britain, Australia etc. have adopted such practices. They claim to be selling settlement, not citizenship. 

Read an excerpt of the article written by Robert Frank:

Along with stock and real estate portfolios, the global rich are now buying a new form of economic security: passport portfolios. Wealthy investors from around the world are increasingly shopping for visas or citizenship in other countries, hoping for a personal hedge against volatile governments or economies in their home countries. A vast majority are new millionaires and billionaires from emerging-market countries, especially China, Russia and countries in the Middle East. Often, they are shopping for passports or entree to Europe, the United States, Canada and Australia. Experts estimate that these ‘‘economic citizens’’ are spending $2 billion a year on second or third passports and visas. Demand is so strong that governments around the world have started an arms race of sorts for V.I.P. visas, offering ever-faster residencies and passports for ever-higher prices. Over the past year, Britain and several other European countries, along with Australia and Canada, have raised the prices or investment requirements of their so-called golden visas and created a new fast lane for citizenship. ‘‘Wealthy people in fragile countries want to have a second option in a more stable country,’’ said Christian H. Kalin, group chairman of Henley & Partners, a citizenship advisory firm based in London. ‘‘The wealthy already diversify their assets for protection. Now they want to make sure their residency is diversified as well. Why not have a portfolio of passports, too?’’ Opponents say the programs have a downside, including the potential to offer safe harbor to people who made their fortune through corruption or illegal activities. Others say that at a time when immigration and inequality are heated political topics, V.I.P. visas amount to selling citizenship to the rich without bringing many broader benefits to the host country. ‘‘These programs bring huge benefits to the Russian oligarchs or the various Chinese wanting to benefit from the rule of law, good educations and robust capital markets,’’ said David Metcalf, chairman of the British government’s Migration Advisory Committee and a professor emeritus at the London School of Economics. ‘‘But the fundamental question is, What does everyone else get out of it?’’ Last year, Viviane Reding, then the European Commission’s vice president for justice, fundamental rights and citizenship, put it more bluntly in a speech, saying, ‘‘Citizenship must not be up for sale.’’ Even as criticism mounts, governments are cashing in. One of the biggest winners is Malta. ...Read more

Why 2014 is a big deal

The drastic drop in crude oil prices does increase the purchasing power of the public. But it also reduces the demand for healthy alternatives like electric cars. The articles talks about the radical changes 2014 brought with it including major weather alterations and important decisions for a cleaner environment. The article written by Thomas L. Friedman talks about how fracking (a modern technique to extract oil) is reducing the oil prices and intern cause greater pollution. The notes that the same people who invent various methods to reduce environmental degradation are the ones who invent techniques like fracking. After much pondering, the author comes to a conclusion that the year 2014 can be a year of both technological advancement as well as environment sustainability. 

Read an excerpt of the article written by Thomas L. Friedman: 

I was just about to go with a column that started like this: When they write the history of the global response to climate change, 2014 could well be seen as the moment when the balance between action and denial tipped decisively toward action. That’s thanks to the convergence of four giant forces: São Paulo, Brazil, went dry; China and the United States together went green; solar panels went cheap; and Google and Apple went home. But before I could go further, the bottom fell out of the world oil price, and the energy economist Phil Verleger wrote me, saying: ‘‘Fracking is a technological breakthrough like the introduction of the PC. Low-cost producers such as the Saudis will respond to the threat of these increased supplies by holding prices down’’ — hoping the price falls below the cost of fracking and knocks some of those American frackers out. In the meantime, though, he added, sustained low prices for oil and gas would ‘‘retard’’ efforts to sell more climate-friendly, fuel-efficient vehicles that are helped by high oil prices and slow the shift to more climate-friendly electricity generation by wind and solar that is helped by high gas prices. So I guess the lead I have to go with now is: When they write the history of the global response to climate change, 2014 surely would have been seen as the moment when the climate debate ended. Alas, though, world crude oil prices collapsed, making it less likely that the world will do what the International Energy Agency recently told us we must: keep most of the world’s proven oil and gas reserves in the ground. As the I.E.A. warned, ‘‘no more than one-third of proven reserves of fossil fuels can be consumed prior to 2050’’ — otherwise we’ll bust through the limit of a 2-degree Celsius rise in average temperature that scientists believe will unleash truly disruptive ice melt, sea level rise and weather extremes. ...Read more