Mending Bangladesh’s Garment Industry

KUALA LUMPUR – Four years ago, the deadly collapse of the Rana Plaza garment factory in Bangladesh pulled back the curtain on the employment practices of the global apparel industry. We had hoped that the tragedy, which killed more than 1,100 workers – the deadliest accident in the industry’s history – would have brought meaningful change to a business long left to its own devices. Unfortunately, our research suggests the opposite has happened.

Media reports highlight the industry’s ongoing transgressions in Bangladesh, in particular the persistent reliance on child labor. In 2014, the British current-affairs program Exposure found evidence of children as young as 13 working in factories (often under harsh conditions) producing clothes for retailers in the United Kingdom. Another undercover report by CBS News interviewed a 12-year-old girl who obtained a factory job using a certificate that falsified her age. And journalists from The Australian Women’s Weekly found girls as young as ten stitching clothes for top Australian brands.

While the media reports are troubling, they do not provide the entire picture. How many minors and adolescent girls are employed overall in factory jobs? More important, should they be barred from such jobs entirely?

Access to factories is restricted, and most employees will not disclose their actual age in the workplace. Indeed, journalists often mask their identity to document abuses. We took a different approach to assess the prevalence of underage workers in the garment industry, and to determine the sector’s value to Bangladeshi society.

As part of a recent nationwide census, we collected data from thousands of mothers and girls in Bangladesh’s three industrial districts with the highest concentration of ready-made garment factories (particularly those operating outside the Export Processing Zones): Ashulia, Gazipur, and Narayanganj. The majority of the country’s female garment workers are concentrated in these areas. For comparison, we also carried out interviews in 58 urban areas where garment factories are not located.

During our research, we identified 3,367 women and girls in the survey areas who reported being employed in the apparel industry. Of them, 3% were between the ages of ten and 13, and 11% were 14-17 years old. Of the 861 girls below the age of 18 who were engaged in any kind of work, 28% said they worked in the garment industry.

Based on this evidence, it would appear that Bangladesh’s garment factories are using child labor (particularly that of young girls) more pervasively than even the most sensational media reports suggest. But for us, the real question is whether this practice should be eradicated or reformed.

Global brands relying on cheap labor have promised eradication. In 1992, about 10% of the garment sector’s workforce was below the age of 14. The following year, after the introduction of the Child Labor Deterrence Act in the United States – the so-called Harkin Bill, which barred US imports of products made with child labor – some 50,000 underage workers were removed from the factory floor. Meanwhile, the Bangladesh Garment Manufacturers and Exporters Association has pledged to phase out child labor and put children back in school – female school enrollment is typically lower in areas of high garment-industry employment than in other areas – upholding a 2010 law prohibiting employment of children under 14.

Clearly, our data suggest that the industry’s promises have yet to be fulfilled (though the government of Bangladesh claims that there currently is “no child labor” in garment processing units).

But that may not be entirely bad for underage female workers in Bangladesh. Thanks to pressure on garment manufacturers in the wake of the Rana Plaza disaster, the industry’s minimum wage was increased 77%, to $68 a month. This has made it more attractive for young girls to take up paid employment in the sector, which, paradoxically, does have some social benefit.

The majority of young girls who are working in Bangladesh are from poor families. Even in garment manufacturing areas, relatively better-off families rarely send their daughters to work in factories. Although recent initiatives have lowered the cost of schooling for girls (through cash stipends and the elimination of school fees), many young women still drop out of secondary school, even without the opportunity to engage in paid work. That often leaves girls with one option: marriage. And in a country where minimum marriage-age laws are rarely implemented, earning a paycheck is the best way to avoid a premature wedding day.

In such a situation, when many young girls must choose between factory work and marrying young, banning factory employment for girls under 18 would do more harm than good. To help young girls avoid this choice, and to reduce the presence of minors and young girls in factories, requires greater emphasis on poverty reduction in rural areas.

Bangladesh’s garment industry is expected to quadruple in size over the next two decades, attracting millions more female workers, young and old, to the production floor. According to our estimates, one of every ten of these new employees will be between 10-17 years of age.

Consumers around the world reject clothing stitched by child labor, which is commendable. Children under 18 should be in school and learning important life skills, not working long hours under difficult conditions. But the lessons from the 2013 tragedy at Rana Plaza are more complicated than much of the international media make them out to be. The garment industry does need to reform; but, for the time being, if women and girls are not to suffer needlessly again, promising to eradicate child labor may not be the right answer.

M Niaz Asadullah is Professor of Development Economics at the University of Malaya, in Kuala Lumpur, Research Fellow at the IZA Institute of Labor Economics, and Visiting Fellow at the Center on Skills, Knowledge, and Organization Performance (SKOPE) at the University of Oxford. Zaki Wahhaj is a senior lecturer at the University of Kent.

By M Niaz Asadullah and Zaki Wahhaj

The Age of Incompetence

BERKELEY – On January 20, 2017, US President-elect Donald Trump will take office having received almost three million fewer votes than his opponent; and he will work with a Republican Senate majority whose members won 13 million fewer votes than their Democratic opponents. Only the Republican majority in the House of Representatives, led by Speaker Paul Ryan, has any claim to represent a numerical majority of the 55% of Americans who voted on Election Day 2016.

Trump will also begin his presidency with an approval rating below 50%. This is unprecedented – or “unpresidented,” as one of his semi-literate tweets put it (before he deleted it) – in the history of such ratings. The government of the world’s oldest democracy is, in fact, not democratic. Also unprecedented is the fact that so few members of the president-elect’s own party, and none of the Democratic opposition, consider him to be qualified for the duties of the presidency, apart from serving as Cheerleader-in-Chief.

Of course, the Trump phenomenon has been gestating for a long period. With the honorable exception of George H.W. Bush, who had the requisite knowledge, intelligence, temperament, and values to serve, the last time a fully qualified Republican was inaugurated was in 1957. No one denies that Richard Nixon had the knowledge and intelligence to be president; but most people will admit that his temperament and values left something to be desired.

Similarly, most people thought that Ronald Reagan lacked the requisite knowledge and intelligence for the office. According to the journalist Peter Jenkins, former British Prime Minister Margaret Thatcher once said of Reagan, “Poor dear, there’s nothing between his ears.” And the qualifications that Reagan did have on Inauguration Day eroded over time, after he was wounded in a failed assassination attempt 69 days into his presidency, and, later, when he began to suffer from Alzheimer’s disease.

Still, Reagan’s temperament and values (generally speaking) were well suited to the presidency. He fully understood that being the star did not mean that he was the boss. Both as a Hollywood actor and as a US president, Reagan had smart, dedicated, and trained professionals writing his lines and directing his moves. He knew that his job was to be on screen, and not to interfere with the people behind the camera and in the post-production editing room, who were responsible for the finished product.

This is what most observers expected to see when George W. Bush took office in 2001: a folksy cheerleader who would follow the lead of the wise advisers he had inherited from his father. But the younger Bush came to think of himself not just as the star, but as “the decider,” too. And while Vice President Dick Cheney and Secretary of Defense Donald Rumsfeld had been savvy policymakers back in the 1970s, they had become rather erratic by the early 2000s. For whatever reason, Bush bonded with the two, which sealed his fate. He has not attended any Republican National Conventions since leaving office, and he may wish that he had he never sent James Baker to Florida in November 2000 to secure his victory over Al Gore.

Trump clearly has not taken any lessons from the second Bush presidency. He knows that he is the star, but he also wrongly believes that he has the knowledge and intelligence to be the boss. He seems unaware that his campaign is over, that he could fail catastrophically and permanently in his new role, and that it is in his own interest to ensure that his proposals are sound, not just as slogans, but as actual policies that will keep the US safe and create prosperity.

So, what should the millions of Americans who now fear for the future do? First, we can work at the state level to try to neutralize any Trump policy initiatives that are flawed or infeasible. Democrats and principled Republicans in state legislatures need to work together to keep tax revenues flowing and to fund the many spending programs that are in the American interest, regardless of what is happening in Washington, DC. And they should promise each other that, regardless of who comes to power in 2021, they will not hold each other liable for acting as disruptors today.

At the national level, we should constantly remind Senate Republicans that they speak for 13 million fewer voters than the Democrats do. And we should remind Paul Ryan that he made a mistake by going along with the Bush administration’s discredited economic and foreign-policy initiatives between 2001 and 2008, and that it is a disservice to the country to show unconditional partisan support for an administration that is so obviously unfit.

And, if all else fails, we should remember that standing up to an unpopular president who received almost three million fewer votes than his opponent is not just the right thing to do; it will also make for great reality TV.

J. Bradford DeLong, a former deputy assistant US Treasury secretary, is Professor of Economics at the University of California at Berkeley and a research associate at the National Bureau of Economic Research.

By J. Bradford DeLong

Fixing Fixed-Investment Incentives

LONDON – Back in February, I noted that the global economy at the end of 2016 was in a stronger cyclical position than most people had expected, given the political upheavals of the previous 12 months. That upward momentum carried through to the first quarter of 2017. According to the latest “nowcast”-type indicators, world GDP growth is exceeding 4% – perhaps the strongest performance seen since before the 2008 financial crisis.

Still, some observers – and not just chronic pessimists – have countered that the evidence remains anecdotal, and that it is impossible to predict how long the current economic moment will last. Indeed, there have been other periods in the long post-2008 recovery when growth returned, only to peter out quickly and become sluggish again.

To bolster long-term economic growth, business investment will have to increase. Unfortunately, this is easier said than done. In Western economies in particular, non-residential fixed investment is precisely the factor that was missing in previous, short-lived cycles of acceleration.

No one can say for sure why non-residential business investment has failed to recover in recent years. But I suspect that the slightly pessimistic conventional wisdom on this question is wrong.

The conventional argument asserts that wary CEOs have come to see long-term risks as “just not worth it.” The many uncertainties they face include concerns about excessive regulation, burdensome corporate taxation, high debt levels, erratic policymaking, the political backlash against globalization, and doubts that consumer spending outside (or even within) the United States will last.

A less pessimistic view holds that, after 2008, it became inevitable that the global economy would unhitch itself from the US consumer engine and adjust to the rise of emerging consumer economies, not least China. When that happens, we can all live happily ever after.

I tend to side with this less pessimistic crowd. As I pointed out in March, China’s economy did surprisingly well in the first quarter of 2017, and that seems to be the case in the second quarter as well. In fact, China’s latest monthly data show signs of economic acceleration, especially in consumption. And it was evident in the first-quarter data that Chinese consumers are becoming an increasingly important driver of economic growth.

When confronted with the numbers, pessimists respond by insisting that China’s recent strong economic performance is only temporary – a product of yet more unsustainable stimulus. And even if growth does last, they argue, the Chinese authorities will not allow Western businesses – or even Chinese businesses, according to ultra-pessimists – to benefit from it. But whether or not the pessimists turn out to be right about China, it is odd that business investment remains tepid even during times when the engine of global growth is located elsewhere, such as in the US or Europe (Germany in particular).

During my time as the head of the British government’s Review on Antimicrobial Resistance, I had to develop a better understanding of the pharmaceutical industry, and I learned that there is something to be said for microeconomic forces – and for basic common sense.

Consider the future, which always has been uncertain and always will be. And yet the biggest economic busts have happened when businesses were not uncertain enough – when they were sure that the future would be rosy. An overabundance of certainty might explain the 2000-2001 dot-com bubble, and many others.

But if, thanks to the increased availability of so much information (including different viewpoints and opinions), we now know that the future is always uncertain, the behavior of Western businesses (and many in the emerging world) is eminently logical, especially given the current workings of the financial system. Why would business leaders invest in an uncertain world, rather than paying dividends to demanding (but generally risk-averse) investors, or buying back some of their companies’ own shares (thereby improving the price/earnings ratio and, better yet, increasing their own remuneration)?

At the end of the day, the CEOs and the most aggressive investors are all happy with this approach. Unfortunately, the same cannot be said for the company’s employees, past and present, who reap no benefits in their paychecks or pensions (which are actually being eroded by the low yields on government bonds across Western countries).

It is past time for our elected governments to change the rules of the game. For starters, that means updating the tax code to make debt issuance far less attractive, especially when the proceeds are being used to buy back shares. At a minimum, it should be harder to buy back shares than to issue true dividend payments. That way, at least all shareholders, not just senior-executive insiders, will benefit.

Furthermore, those same executives should not be remunerated on the basis of short-term price-to-equity targets. More investors should be demanding that the incentives change to reflect true measures of long-term performance.

To its credit, the Norwegian Sovereign Wealth Fund recently spoke out in favor of such changes. Other large institutional investors and policymakers should follow suit, to give the corporate world a nudge. If we change the incentives, we just might finally see business investment make a comeback.

Jim O’Neill, a former chairman of Goldman Sachs Asset Management and former Commercial Secretary to the UK Treasury, is Honorary Professor of Economics at Manchester University and former Chairman of the British government’s Review on Antimicrobial Resistance.

By Jim O’Neill

Germany’s Coming Silver Age

MUNICH – Record levels of migration to Germany over the last two years have called into question the country’s demographic projections. But Germany’s rapid shift to a more favorable profile is not a reason to postpone politically painful policy decisions about retirement and pensions.

At the beginning of this century, forecasts that were considered reliable predicted that Germany would lose more than ten million inhabitants by 2050, owing to declining immigration and a low average birth rate. Today, population projections are significantly brighter. According to the government’s latest calculations, Germany’s population could remain above 80 million until 2060, and the reduction in the labor supply might not be as drastic as was previously feared.

Demographic forecasts needed to be corrected significantly, because the number of immigrants to Germany has fluctuated wildly and unpredictably, as opposed to emigration from Germany, which has remained relatively stable.

During high-immigration periods – such as in the early 1990s, after the collapse of the Soviet Union, or in the wake of the mid-1990s Balkan wars – population projections were fairly optimistic, because it was assumed that net migration would remain relatively high in the future as well.

Instead, immigration to Germany fell drastically after the turn of the century, because the country’s weak economic growth and rising unemployment until 2005 deterred would-be newcomers. To account for this reduction in net immigration, forecasters also lowered their estimates for the future, and thus underestimated the decade of population growth that began after 2005.

Alongside immigration, birth rates and average life expectancy also factor into population growth. In 2015, the fertility rate in Germany rose for the first time in 30 years, to 1.5 children per woman – probably owing to more focused family support and a strengthening economy, which reduced the financial risks of starting a family. The current fertility rate is expected to remain relatively stable into the future. But it is worth remembering that nobody foresaw the baby boom of the 1950s and 1960s or the dramatic fertility-rate decline in the 1970s.

Average life expectancy is similarly hard to pin down. In recent decades, it has consistently risen faster than demographers expected, which makes one wonder if longevity – and thus the size of the future retirement-age population – is being systematically underestimated.

As a rule, population forecasts start with static or period life tables that capture average life expectancy under the existing circumstances at any given time. But generation life tables, which are used to determine retrospectively how old a given age group has become, usually show a much higher average life expectancy than period life tables.

For example, German women born in 1910 would have had a life expectancy of 50.7 years at that time. But, looking back, they ended up living 58.8 years on average, even as they endured two world wars. By this logic, a woman born in 2009 should have already had an average life expectancy of more than 88 years; but current population estimates do not foresee that average life expectancy for newborns until 2060.

This shows that population estimates have relatively high margins of error. Contrary to what is assumed in many economic-growth models, demography is not a purely exogenous variable. Rather, it is susceptible to change as a result of economic development and other factors.

If Germany sustains its current level of economic growth in the coming decades, all three drivers of population growth – immigration, fertility, and average life expectancy – could rise, and the population would remain relatively constant. In this scenario, if Germany can integrate immigrants into the labor market and increase older workers’ labor-participation rate, it would be in a better position to finance existing social-welfare programs.

But we must not forget the one “constant” in all demographic forecasts: the aging of the population. Right now, baby boomers are still economically active, and will remain so for some time. But, by 2035, they will have retired, and Germany will have more than 21 million inhabitants over the age of 67; half of them will be over 80 by 2050. And if longevity rises faster than is currently expected, this age group will be even larger.

Germany cannot expect to see a sustained, moderate shrinking of its retirement-age population until after 2060. Thus, proposals to water down previously implemented pension reforms, in light of rising immigration and healthy economic growth, are more than negligent. Germany should be using the current aging pause to ensure its social systems’ long-term sustainability, create age-appropriate jobs, and adapt housing and infrastructure to the needs of an aging society.

In addition, Germany should have an active population policy to manage the three drivers of population growth, especially immigration. In the past two years, net migration was heavily influenced by the influx of asylum-seekers. The number of people who will need protection in the coming years or decades remains to be seen, and will depend on whether crises in the Middle East can be resolved, and on European and Germany’s own efforts to secure external borders and craft a comprehensive asylum policy.

Given these variables, the degree to which migration is affected by asylum-seekers will not be easy to predict or control. By contrast, economically motivated immigration from countries outside of the European Union can be managed at the national level. So, German policymakers should be giving more consideration to the role of domestic requirements in immigration law. Now more than ever, they need to recognize that population growth is a policy objective that they can help to shape. Michael Heise is Chief Economist of Allianz SE.

By Michael Heise

The Making of Macron

PARIS – Relief and pride are the main emotions many French citizens are feeling after the first round of the French presidential election, in which Emmanuel Macron finished first. For once, the pollsters were right: the two favored candidates – Macron and the National Front’s Marine Le Pen – advanced to the second-round runoff on May 7. Gone is the sense of anxiety that had attended the weeks, days, and hours before the election, owing to fears that France would wake up to a second-round choice between the far-right Le Pen and the far-left candidate Jean-Luc Mélenchon.

Many observers saw France as economically, socially, and politically vulnerable – even more so than the United Kingdom, the United States, or Germany – to such a choice. After the UK’s Brexit vote and Donald Trump’s victory in the US presidential election, surely this was Le Pen’s window of opportunity. Some of us, only half-jokingly, have even mused about where we would flee if Le Pen won. Between a Great Britain that is leaving the European Union, and a US under Trump, there are few good options.

Fortunately, reason and hope prevailed over anger and fear, and French citizens defied those who warned that populism might triumph in the land of the French Revolution. While a Le Pen victory is technically possible, the composition of the French electorate makes it highly unlikely. Very few of Mélenchon’s leftist voters will cross over to the extreme right. And while some of the center-right candidate François Fillon’s supporters may now vote for Le Pen, it will not be enough to sway the election in her favor.

In other words, the French exception is alive and well. France’s contrarian electorate has demonstrated to the world – and especially to the Anglo-Saxon world – that one need not betray one’s defining values to defeat populism. Despite a recent wave of terror attacks, the French have proved their resilience against the politics of fear. And even with Euroskepticism on the rise, the pro-European candidate, Macron, received more votes than any other.

Exceptional circumstances sometimes give rise to exceptional characters. Without the French Revolution, Napoleon Bonaparte would have remained a junior officer in the French Royal Army. Similarly, albeit less dramatically, if France’s two main political parties had not collapsed, the 39-year-old Macron, who was unknown to most French voters a year ago, would still be just another economic whiz kid.

Macron looks like a French John F. Kennedy and he campaigned in the mode of Barack Obama. But he got where he is because the Socialist Party of François Mitterrand is dead, and the conservative Les Républicains are in shambles. The Socialists, for their part, could not come up with a modern political agenda. And the Republicans failed to tap another candidate after Fillon became tainted by scandal.

As a result, France, despite its reputation for melancholy, self-doubt, and pessimism, is about to elect its youngest-ever president. At that point, however, Macron will face a whole new set of challenges, starting with legislative elections that are scheduled for June. Will Macron end up with a governing majority in the National Assembly, or will the right present a united front and force him into the uniquely French practice of cohabitation?

In France’s semi-presidential system, cohabitation means that the executive branch can become paralyzed if the president and the prime minister represent different political factions. But Macron wants to prove that he can implement the majority-coalition model followed in parliamentary systems, with an “alliance of the willing,” comprising different but compatible political sensitivities, pursuing a common goal.

To my mind, France is ripe for a coalition government that can transcend increasingly anachronistic left-right political lines. The real political divide in France, as in so much of the West, is now between those who defend global openness and those who favor a return to nationalist isolation.

Macron will have to acknowledge the cultural roots of traditional left-right divisions, while also addressing the deep-seated, revolutionary anger that now exists in France. Despite Macron’s strong showing in the first round, some 40% of the French electorate voted for the Euroskeptic candidates Le Pen and Mélenchon. Restoring these voters’ confidence in existing institutions, and reintegrating them into the political mainstream, will not be easy. Defeated parties will be tempted to take to the streets and block attempts at reform. Having failed at the ballot box, they may – in traditional French revolutionary fashion – resort to “the barricades.”

Macron has demonstrated his immense qualities as a candidate. After May 7, he will have to prove that, despite his youth and lack of experience, he can become a great president. Winning power is one thing; but it is another matter to exercise power effectively, while avoiding the authoritarian tendencies that can emerge under extraordinary circumstances.

That is the task facing Macron. Driven by a sense of destiny, he must resist the temptations of Bonapartism. In the meantime, the democratic world should see Macron for what he is: a beacon of hope in a sea of doubt and despair. Dominique Moisi is Senior Counselor at the Institut Montaigne in Paris.

By Dominique Moisi

How to Help the African Dust Bowl

SEATTLE – Picture a small farm under a blazing hot sky. An intense drought is afflicting the surrounding region, prospects for the next harvest are bleak, and the financial system lacks the capacity to provide the loans farmers need to get by. This scenario describes today’s southern Africa, which is in the grips of an epic drought. As it happens, it also describes eastern Nebraska in the “Dust Bowl” years of the early 1930s – a period through which my own family lived.

My father, Ralph Raikes, was the first in his family to graduate from college. After working for Standard Oil in California, he stopped by his parents’ farm on his way to Cambridge, Massachusetts, where he planned to pursue graduate studies at MIT. He never made it. He had to stay in Nebraska and help my grandfather save the family farm from the banks, which had already repossessed one-third of the land.

The most important change my father made was in his mindset: he came to think of the farm not as a subsistence operation, but as a family business. He turned to the University of Nebraska, where he had received his undergraduate degree, and acquired hybrid corn and other improved seeds that the university was developing. Then he tracked inputs and weather conditions, which was rarely done at that time.

My father realized that he couldn’t go it alone, and that he would need better access to financing. So he helped guide – first as a customer, and later as an adviser and director – Farm Credit, a national banking cooperative network, in its efforts to help local farmers weather the Dust Bowl years. He also helped found the Nebraska Farm Business Association, which aggregated the data that he and his peers collected, so that they could determine best practices. And he worked together with my mother, Alice, who ran the family poultry business.

Farm Credit and the University of Nebraska’s labs and greenhouses emerged out of United States government programs that had been created to improve the agriculture sector’s performance. That sector was under water in 1933; with one-quarter of the population living on farms at the time, more investment was needed. That year, Congress passed the first “farm bill,” the Agricultural Adjustment Act, which boosted investment in the rural economy and helped lift farm income by 50% within two years. Federal farm programs treated farming as a business enterprise, enabling businessmen like my father to prosper.

Eighty years later, African farmers need to make the same switch, by treating their subsistence operations as family-owned enterprises. And, like my father during the Dust Bowl years, they have novel means at their disposal: a wide range of new seeds and other technologies have been developed for African family farms – those with 4-5 acres or less – to use in the field. In October, a group of scientists received the World Food Prize for producing and disseminating a sweet potato variety that adds vitamin A to Sub-Saharan Africans’ diets, and other new seed varieties are helping farmers survive the harvest-crushing drought.

But, as a recent report from the Alliance for a Green Revolution in Africa (AGRA) makes clear, government investment must follow the science. Agriculture comprises almost two-thirds of Sub-Saharan Africa’s workforce, and in 2003 the African Union called for countries to increase their investment in the sector to an ambitious 10% of all government spending. Only 13 countries answered that call, but their investments – in research and development, services that help farmers take advantage of new research findings, credit and financing initiatives, commodity exchanges, and other marketing efforts – have already paid dividends. Those 13 countries have experienced marked improvements in agricultural production, per capita GDP, and nutrition.

Government investment paves the way for private-sector investment, and it could be a game-changer for African farmers, who have operated at subsistence levels for far too long. Only about 6% of rural households in Sub-Saharan Africa receive loans from financial institutions. Moreover, almost two-thirds of African farmland soil is missing key nutrients, and many farmers lack the technical knowledge and resources to restore their land’s fertility, leaving them unable to take full advantage of new technologies. African farmers growing new crop varieties are increasing their yields by only 28%, compared to 88% for farmers in Asia.

My parents made certain that all five of their children graduated from college. Like them, farmers everywhere want to ensure that their children lead healthy, prosperous lives; and they all recognize the importance of education. The farmers I have met around the world often just want to sell enough extra produce to pay their health bills and put their children through school. They take advantage of opportunities when they arise, and they position their children to reap larger profits in the future.

One hopes that an American story of economic progress, like that of my family, will soon be an African story, too. With so many new innovations becoming available, Africa’s family farmers need their governments to invest in their future. If they do, that future will look much better than today’s dusty and desperate reality.

Jeff Raikes is Co-founder of the Raikes Foundation, former CEO of the Bill & Melinda Gates Foundation, and, previously, President of Microsoft Business Division. He is a board member of the Alliance for a Green Revolution in Africa (AGRA).

By Jeff Raikes

Development Beyond the Numbers

NEW YORK – It has been said that statistics are people with the tears washed away. This is a message that attendees ofthe World Bank and International Monetary Fundspring meetings in Washington, DC, should bear in mind as they assess progress on global development.

Despite the impressive gains many countries have made, hundreds of millions of people are still being left behind. To highlight this problem, the United Nations Development Program has made social and economic inclusion a major theme of its2016 Human Development Report, “Human Development for Everyone.”The reportoffers an in-depth looks at how countries, with support from their partners, can improve development results for all of their citizens, especially the hardest to reach.

Since the UNDP issued its first report in 1990, we have seen significant improvements made inbillions of people’s lives worldwide. Back then,around 35%of humanity lived in extreme poverty. Today, that figure stands at less than 11%. Likewise, the proportion of children dying before their fifth birthday has been halved, partly because an additional two billion people now benefit from better sanitation and wider access to clean drinking water.

We should take pride in these achievements;but we must not rest on our laurels. A sizeable number of people are still missing out on these gains. Worse, theyare now in danger of being forgotten –literally so.Sometimes, they are not recorded in official statistics at all. And, even when they are, national averagescan paint a distorted picture: an increase in average income, for example, might conceal thedeepening poverty of some, as it is offset by large gains for a wealthy few.

One of the most profound demographic shifts in recent years has been the massive expansion of a middle class in the global south. The convergence of global incomes has blurred the line between“rich” and “poor” countries. But, at the same time, inequality within many countries has increased. As a result,poverty – in all forms – is a growing problem in many countries, even as the number of people living in poverty worldwide has declined.

Confronting this challenge will require us to rethink fundamentally what development should look like, which is why the UN’sSustainable Development Goals, unlike the previous Millennium Development Goals, apply to all countries – not just the poorer ones.

After decades of making steady development gains, what can we do differently to help the planet’s most disadvantaged people?As the latest Human Development Report makes clear, there is no simple answer. One reason is that those who are being left behind often face disadvantageson several fronts. They are not just short of money;often, theyare also sick,uneducated, and disenfranchised.

Theproblems that affect the world’s most disadvantaged people begin at birth, and worsenduring their lifetime.As opportunities to break the cycle are missed, these disadvantages are passed on to subsequent generations, reinforcing their impact.

Still, while today’s development challenges are numerous and complex, they also share common characteristics. Many of the disadvantaged belong to specific demographic groups that tend tofare worse than othersin all countries, not least because theyfacesimilar economic, legal, political, and cultural barriers.

For example, indigenous peoples constitute just 5%of the globalpopulation, but account for 15%of theworld’s poor. And, to participate in work and community life, people with disabilitiesmust overcomeobstacles that the rest of us often do not even notice. Last but not least, women and girls almost everywherecontinue to be underrepresented in leadership and decision-making circles, and they often work more hours for less money than their male counterparts.

Although development policies will continue to focus on tangible outcomes –such as more hospitals, more children in school, andbetter sanitation –human developmentmust not be reduced only to that which is quantifiable. It is time to pay more attention to theless palpable features of progress, which, while difficult to measure, are not hard to take a measure of.

All people deserve to have a voice in the decisions that affect their lives; but the most marginalized in society are too often denied a say of any kind.Ensuring that those most in need are not forgotten – and that they have the freedom to make their own choices– is just as important as delivering concrete development outcomes.

History has shown us that many of today’s challenges can be overcome in the years ahead. The world has the resources and the knowhow to improve the lives of all people. We just need to empower people to use their own knowledgeto shape their futures. If we do that, more inclusive development will be within our reach.

SelimJahan is Director of the Human Development Report Office and lead author of the Human Development Report.

By SelimJahan

The G20’s Timefor Climate Leadership

PARIS– At the start of 2016, the United States was well positioned to lead the globalfightagainstclimate change. As the chair of the G20 for 2017, German Chancellor Angela Merkel had been counting on the US to help drive adeep transformation in the global economy. And even after Donald Trump won the US presidential election,Merkelgave him the benefit of the doubt, hoping against hope that the US might still play a leading role in reducing global greenhouse-gas emissions.

But at Merkel and Trump’s first in-person meeting, no substantive statements were issued, and their body language made the prospect of future dialogue appear dim. Trump’sslogan “America first” seems tomean“America alone.”

By reversing his predecessor’s policies to reduce CO2 emissions, Trump is rolling back the new model of cooperativeglobal governance embodied in the 2015 Paris climate agreement. The countries that signed onto that accord committed themselves to sharing the risks and benefits of a global economic and technological transformation.

Trump’s climate-change policy does not bode well for US citizens – many of whom are now mobilizing resistance to his administration – or the world.But the rest of the worldwill still develop low-carbon, resilient systems.Private- and public-sector players across the developed and developing worlds are making the coming economic shift all but inevitable, and their agendas will not change simply because the US has a capricious new administration. China, India, the European Union, and many African and Latin American countries are still adopting clean-energy systems.

As long as this is the case, businesses, local governments, and other stakeholders will continue to pursuelow-carbon strategies. To be sure, Trump’s policiesmight introduce new dangers and costs, domestically and worldwide; but he will not succeed in prolonging the fossil-fuelera.

Still, aneffective US exit from the Paris agreement is a menacing development. The absence of such an important player from the fight against climate change could underminenew forms of multilateralism, even if it reinvigorates climate activism as global public opinion turns against the US.

More immediately,the Trump administration has introduced significant financial risks that could impede efforts to address climate change. Trump’s proposed budget would place restrictionson federal funding forclean-energy development and climate research.Likewise, his recent executive orderswillminimize the financial costs of US businesses’ carbon footprint, by changing how the “social cost of carbon” is calculated. And his administration hasalready insisted that language aboutclimate change be omitted from a joint statement issued by G20 finance ministers.

These are all unwise decisions that pose serious risks to the USeconomy, and to global stability, as United Nations Secretary-General AntónioGuterres recentlypointed out. The US financial system plays a leading role in the world economy, and Trump wants to take us all back to a timewhen investors and the general public did not account for climate-change risks when making financial decisions.

Since 2008, the regulatory approach taken by the US and the G20 has been gearedtoward increasing transparency and improving our understanding of possible systemic risks tothe global financial system, not least those associated with climate change and fossil-fuel dependency. Developing more stringent transparency rules and better risk-assessment tools has been atoppriority for the financial community itself. Implementing these new rules and tools can accelerate the overall trend in divestment from fossil fuels, ensure a smooth transition to a more resilient, clean-energy economy, and provide confidence and clarity forlong-term investors.

Given the heightened financial risks associated with climate change, resisting Trump’s executive order to roll back Wall Street transparency regulationsshould be a top priority. The fact that Warren Buffet andthe asset-management firm Black Rock have warned about the investment risks of climate change suggests that the battleis not yet lost.

CreatingtheG20 was a good idea.Now, itmust confront itsbiggest challenge. It is up to Merkel and other G20 leaders to overcome US (and Saudi) resistance and stay the course on climate action.They can count as allies some of the world’s large institutional investors, who seem to agree on the need fora transitional framework of self-regulation.It is incumbent upon other world leaders to devise a coherent responseto Trump, and to continue establishing a new development paradigm that is compatible across different financial systems.

At the same time, the EU – which iscelebrating the 60th anniversary of the Treaty of Rome this year – now has a chance to think about the future that it wants to build. These are difficult times, to be sure; but we can still decide what kind of world we want to live in. Teresa Ribera, Director of the Institute for Sustainable Development and International Relations (IDDRI) in Paris,wasSpain’sSecretary of State for Climate Change.

By Teresa Ribera

The Economic Policy Trump Should Pursue

LONDON – As Donald Trump assumes the US presidency, a group of 35 prominent international business leaders, led by Unilever CEO Paul Polman and me, is stepping forward to defend open markets, endorse the fight against climate change, and demand a massive push against global inequality. These are the core elements of what we believe is the only viable economic strategy for the United States and the world.

Recent electoral outcomes, including Trump’s election, highlight the intensifying economic grievances of many households across the developed world. In the 20 years before the 2008 financial crisis, unprecedented globalization raised incomes for just about everyone. The incomes of the poorest third of humanity rose by 40-70%, and those of the middle third increased by 80%. The top 1% did even better – so much better, in fact, that the business elite is now facing a powerful backlash.

And yet the incomes of a crucial group – lower middle-income households – barely rose at all. And, since 2008, this same group has borne the brunt of austerity. Unsurprisingly, its members feel “left behind” by globalization – and are now demanding change.

Trump’s administration might be tempted to address this group’s problems in isolation, with inward-looking policies targeting specific industries, or by attempting to limit trade competition. But the problems facing these households are not isolated. Rather, they stem from the social and environmental limits now reached by the prevailing model of economic growth – and the version of globalization that this model has underpinned. Ignoring this reality and implementing narrow and nationalistic solutions would only make matters worse.

Socially, the relative hardship in the US Rust Belt, where support for Trump was integral to his victory, is an unintended consequence of a rapidly expanding global labor market that leaves workers almost everywhere vulnerable – even in emerging economies whose workers have seemed like the “winners” of globalization in recent decades. Countries and regions competing to attract corporate investment make weak negotiators and weak defenders of high labor standards.

On the environmental front, the evidence is dire. Human activity has already pushed the planet beyond four of its nine physical safety boundaries, including those for climate change and loss of biosphere integrity. The rapidly rising costs of environmental damage are restricting economic growth, making the relaxation of environmental protections a false economy.

For example, damage to ecosystems and biodiversity caused by current practices in the food and agriculture sector alone could cost the equivalent of 18% of global economic output by 2050, up from around 3% in 2008. In emerging markets, especially in Asia, rapid economic expansion has brought life-threatening smog and constant gridlock to cities unable to expand their infrastructure fast enough.

Tackling the world’s environmental and ecological problems, and improving the lot of those who have been left behind, will require public action, such as that which I oversaw in my roles at the World Bank, the United Nations, and the British government. But it will also demand the participation of business.

In my own career, I have seen firsthand that the growth fueled by business competition in a globalizing world can do far more to combat poverty, hunger, and disease than government-funded programs alone. But when that competition is not conducted responsibly, the opposite can happen – and, in many cases, it has.

In seizing the opportunities of globalization, businesses have often neglected the developed-world workers they leave behind, while subjecting developing-country workers to extraordinary deprivation. Moreover, individual businesses have often lobbied against and evaded environmental protections that are indisputably in our collective interest.

Today, I am encouraged to see that a fast-growing group of business leaders recognize that the greater freedoms and wealth they gain from globalization imply greater responsibility for labor and the environment. We expect our strategy to ensure continued globalization – in a revised form that is more sustainable and inclusive – to attract more such leaders to the cause.

The framework of our strategy is already in place, in the form of the 17 Sustainable Development Goals that were agreed by UN member states in 2015. Achieving these goals will mean decent pay, working conditions, and safety nets for all participants in the global labor market, as well as safeguarding the environment.

The SDGs also promise to provide a level playing field for growth-boosting competition. Across the four major sectors we considered in detail, we saw high-return business opportunities arising from the strategy, fueling an increase in annual global GDP of at least $12 trillion. Other changes we advocate – especially the creation of prices for resources that reflect their full social and environmental costs – will ensure that future economic growth protects both workers and the planet.

Securing these outcomes won’t be easy, because it will require a new social contract among governments, businesses, and civil society. To succeed, all parties must view themselves as collaborators in a win-win deal, rather than adversaries in a zero-sum game. All the evidence indicates that only a more sustainable, open, and inclusive world economy can support an environmentally secure, economically prosperous, and socially just future for humanity.

As for the US, this strategy aligns with Trump’s own declared priorities. Not only does it offer the most promising solution to the economic grievances of his core supporters; it also entails a surge in infrastructure spending, much like the one Trump has already promised.

Instead of using fiscal stimulus in a vain effort to revive failed smokestack industries and old energy sources, Trump’s administration – and the world – should place its bets on a low-carbon future. Plenty of businesses surely would get on board. Mark Malloch Brown is Chair of the Business and Sustainable Development Commission.

By Mark Malloch Brown

Why Scientists Are Marching

LONDON – On April 22, scientists from around the world will mark Earth Day by participating in an unprecedented “March for Science.” The aim of the march will be to “celebrate and defend science at all levels – from local schools to federal agencies.” For the rest of the world, it is important to understand why the usually sedate community of scientists will be leaving their labs and offices to take to the streets in a global demonstration of concern.

The answer was signaled in November 2016, when Oxford Dictionaries named “post-truth” its “Word of the Year.” In an era in which “objective facts are less influential in shaping public opinion than appeals to emotion and personal belief,” scientists like us cannot afford to stay silent any longer. So we will be marching to return scientific “certainty” to its rightful place in public debate.

“Post-truth” describes well a year in which disregard for facts became a pervasive feature in world politics. As a candidate, US President Donald Trump denied the overwhelming evidence for climate change, endorsed the discredited claim that vaccinations caused autism, and asserted that compact fluorescent light bulbs can cause cancer.

But Trump does not have a monopoly on post-truth politicking. Policymakers in the US and Europe have trafficked in equally outrageous “expert views” on the consequences of their opponents’ positions on topics ranging from genetically modified foods to nuclear energy to Brexit. Recent social media attacks on a measles-rubella vaccination campaign even surfaced in India, fueling a mix of conspiracy theories, safety concerns, and questions of motivation – and demonstrating the extent to which lives can be imperiled when facts are ignored.

Earlier warnings, such as Ralph Keyes’ 2004 book The Post-Truth Era: Dishonesty and Deception in Contemporary Life, attracted little attention from the science community. That’s because we’d heard it all before; “post-truth” responses to “objective facts” are as old as science itself. An early example was the persistent belief in a flat earth, a view maintained for centuries after the ancient Greeks had accumulated clear evidence to the contrary. In some places, the denial and invective hurled at Darwin and his theory of evolution in the nineteenth century continue to this day. “Don’t confuse me with the facts,” goes an old joke capturing the post-truth sensibility: “my mind is made up.”

But now we have arrived at a watershed moment, when this sensibility has entered the political mainstream, influencing policies that will profoundly affect the health and wellbeing of the planet and its inhabitants. Those who regard the scientific method – the systematic observation, measurement, and hypothesis testing that has underpinned humans’ apprehension of ourselves and the world for centuries – as a core value of society must step forward to defend its central role in guiding public debate and decision-making.

To be persuasive, however, we scientists must put our own house in order, by avoiding behavior that can fuel post-truth rhetoric. Lapses in ethical standards give ammunition to the enemies of science. When published findings are based on falsified data or deliberately misleading conclusions, the credibility of every scientist suffers. Peer review must be rigorous and always strive to detect and snuff out shoddy or deceptive work.

Equally important, researchers must do a better job explaining what scientific “certainty” means, helping the public and policymakers to distinguish between proven hypotheses and unverified theories. They must show how alternate models are tested against all available evidence under controlled conditions, yielding observations that can be repeated – and measurements that can be reproduced – by other researchers. Conclusions that are not derived from such carefully controlled observations must remain conjecture.

Those engaged in science urgently need to develop and implement more effective strategies to communicate scientific advances and discoveries that affect society and the environment. A central focus of this effort should be to explain and defend the methods and rigor of the underlying process of evidence collection and validation. Simply put, a higher level of science literacy among the public, the media, and especially among policymakers is essential to recognizing and rejecting unreasoned attempts to discredit science and scientists.

In his 1946 book The Discovery of India, India’s first prime minister, Jawaharlal Nehru, advocated the development of a “scientific temper” – the adoption of the scientific method as a way of life. To defeat the post-truth threat, that temper is needed now more than ever. On April 22, let’s defend it with passion.

Stephen Matlin is an adjunct professor at the Institute of Global Health Innovation, Imperial College London. Goverdhan Mehta is University Distinguished Professor of Chemistry at the University of Hyderabad. Henning Hopf is a professor in the Institute of Organic Chemistry at the TechnischeUniversitätBraunschweig. Alain Krief, Executive Director of the International Organization for Chemical Sciences in Development, is Emeritus Professor of Chemistry at Namur University and an adjunct professor in the HEJ Research Institute of Chemistry at the University of Karachi.

By Stephen Matlin, Goverdhan Mehta, Henning Hopf, and Alain Krief

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