Opinion

 Africa’s Unique Vulnerability to Violent Extremism

 

ADDIS ABABA – Africa bears the brunt of lives lost, economies ruined, and relationships fractured by terrorism. It is the continent where al-Qaeda launched its war against the United States in 1998, by bombing the US embassies in Nairobi, Kenya, and Dar es Salaam, Tanzania; where Boko Haram kidnapped 276 Nigerian schoolgirls in 2014; and where 147 students were killed in their sleep at Kenya’s Garissa University in 2015.


While these attacks did garner the world’s attention, most people do not realize that, in the past five years alone, 33,000 people have died in terrorism-related violence in Africa. Violent extremism and groups espousing it are threatening to reverse Africa’s development gains not only in the near term, but also for decades to come.

African countries are particularly vulnerable to violent ideologues, owing to the prevalence of weak institutions and ungoverned territory where extremist groups can germinate. Add to this the mismanagement of ethnic and religious diversity, stir in a large and growing cohort of unemployed and digitally connected youth, and the continent offers ideal conditions for mayhem.

Emulating countries elsewhere, African governments have responded to violent extremism primarily by putting “hard” security first. But this strategy has not reduced extremist groups’ potency or limited their reach. In fact, there is evidence that an exclusively military response can be a waste of resources, or even do more harm than good. What is missing is a deeper examination of root causes, particularly underlying development challenges.

Some people claim that the connection between socioeconomic conditions and violent extremism is specious, because most poor and marginalized communities do not join terrorist groups. But this argument fails to address the relevant issue: poverty, social marginalization, and political disenfranchisement are the fertilizers extremist groups need to take root and grow. Around the world, policies and operational responses to violent extremism are largely informed by theory, rather than drawing on thorough empirical evidence of the personal motivations and structural factors that drive people to commit terrorist acts.

I recently visited Galkayo, in North Somalia, to interview captured al-Shabaab fighters as part of an ongoing United Nations Development Programme study of the roots of African extremism. What struck me was that, apart from their being imprisoned, these young men seemed entirely normal, and their individual journeys toward extremism were not particularly informed by religion.

Rather, what united the young al-Shabaab militants I spoke to was a shared experience of deprivation. They had all grown up surrounded by conflict, and none of them had ever been given a good reason to view the government as a positive force in their lives. When I asked whether they went to public school, most could not even fathom the idea of free education or health care. These children and young adults are by-products of a failed state and society; they have spent their entire lives in an environment that is ripe for terrorist recruitment and exploitation.

Just as tuberculosis infects a body already compromised by HIV, extremism thrives under the right conditions, such as those created by the conflict in Somalia, or the political fragility and social neglect in northeastern Nigeria, where many interviewees cited scarce access to both religious and secular education.

The UNDP’s primary research into extremists’ personal motivations – based on more than 350 interviews with formerly active violent extremists in prisons and transitional centers in Cameroon, Kenya, Niger, Nigeria, Somalia, and Uganda – is the most extensive project of its kind in Africa, if not globally.

Our preliminary results suggest that the ideology behind violent extremism is delivered with a flexible marketing strategy, whereby extremist groups tailor their message for potential recruits. For the unemployed or the poor, they offer paid jobs; for marginalized ethnic and religious minorities, they offer recourse through violence; and for the middle class, they offer an adventure, a sense of “purpose,” and an escape from mundanity. The ideology mutates to exploit its intended recruit’s vulnerabilities.

Our research, which will be completed in early 2017, aims to shed light on individual journeys to extremism, through the words and perspectives of people who have been involved in terrorist organizations in Africa. It will also provide communities, other researchers, and policymakers with empirical evidence on which to base their future interventions.

One thing we already know for certain is that poverty and underdevelopment can no longer be ignored if we are ever to combat violent extremism effectively. Addressing these issues, rather than just strengthening military and law-enforcement capacity, must be a high priority for any plausible strategy. Mohamed Yahya is Africa Regional Program Coordinator for the United Nations Development Programme (UNDP).

By Mohamed Yahya

The Insecurity of Inequality

NEW YORK –Global inequality today is at a level last seen in the late nineteenth century – and it is continuing to rise.With it has come a surging sense of disenfranchisement that has fueled alienation and anger, and even bred nationalism and xenophobia. As people struggle to hold on to their shrinkingshare of the pie,their anxiety has created a political opening for opportunistic populists, shaking the world order in the process.


The gap between rich and poor nowadaysis mind-boggling. Oxfam has observed that the world’s eight richest people now own as much wealth as the poorest 3.6 billion. As US Senator Bernie Sanders recently pointed out,the Walton family, whichownsWalmart,now owns more wealth than the bottom 42% of the US population.

I can offer my own jarring comparison. Using Credit Suisse’s wealth database, I found that the total wealth of the world’sthree richest people exceeds thatofall the people in three countries –Angola, Burkina Faso, and the Democratic Republic of Congo– which together have a population of 122 million.

To be sure, great progress on reducingextreme poverty – defined as consumption of less than $1.90 per day –has been achieved in recent decades. In 1981, 42% of the world’s population lived in extreme poverty. By 2013 – the last year for which we have comprehensive data – that share had droppedto below 11%. Piecemeal evidence suggests that extreme poverty now stands just above 9%.

That is certainly something to celebrate. But our work is far from finished. And, contrary to popular belief,that work must not be confined to the developing world.

AsAngus Deatonrecentlypointed out, extreme poverty remains a serious problem in rich countries, too. “Several million Americans – black, white, and Hispanic – now live in households withper capitaincome of less than $2 per day,” he points out. Given the much higher cost of living (including shelter), he notes, such an income can pose an even greater challenge in a country like the US than it does in, say, India.

This constraint is apparent in New York City, where the number of known homeless peoplehas risen from 31,000 in 2002 to 63,000 today. (The true figure, including those who have never used shelters, is about 5% higher.) This trend has coincided with a steep rise in the price of housing: over the last decade, rents have been rising more than three times as fast as wages.

Ironically, the wealthy pay less, per unit, for many goods and services. Astark example is flying. Thanks to frequent flier programs, wealthy travelerspay less for each mile they fly. While this makes sense for airlines, which want to foster loyalty among frequent fliers, it represents yet another way in which wealth is rewarded in the marketplace.

This phenomenonis also apparent in poor economies. A studyof Indian villages showed that the poor face systematic price discrimination, exacerbating inequality. In fact, correcting for differences in prices paid by the rich and the poor improves the Gini coefficient (a common measure of inequality)by 12-23%.

The betteroff also get a whole host of goods for free. To name one seemingly trivial example, I can’t remember when I last bought a pen. Theyoften simply appear on my desk, unintentionally left behind by people who stopped by my office. They vanish just as often, as people inadvertently pick them up. The late Khushwant Singh, a renowned Indian journalist, once said that he attended conferences only to stock up on pens and paper.

A non-trivial example is taxation. Rather than paying the most in taxes, the wealthiest peopleare often able to take advantage of loopholes and deductions that are not available to those earning less. Without having to break any rules, the wealthy receive what amount to subsidies, which would have a far larger positive impact if they were allocated to the poorest people.

Beyond these concrete inequities,there are less obvious – but equally damaging – imbalances. In any situation where, legally, one’s rights are notenforced or even specified, the outcome will probably depend on custom, which is heavily skewed in favor of the rich.Wealthy citizenscan not only vote; they can influence elections through donations and other means. In this sense, excessive wealth inequality can undermine democracy.

Of course, in any well-run economy, a certain amount of inequality is inevitable and even needed, to create incentives and power the economy. But, nowadays, disparities of income and wealth have become so extreme and entrenched that they cross generations, with family wealth and inheritance having a far greater impact on one’s economic prospects than talent and hard work. And it works both ways: just as childrenfrom wealthy families are significantly more likely to be wealthy in adulthood, children of, say, former child laborers are morelikely to work during their childhood.

None of this isany individual’s fault. Many wealthy citizenshave contributed to society and played by the rules. The problem is thatthe rules are often skewed in their favor.In other words, income inequality stems from systemic flaws.

In our globalized world, inequality cannot be left to markets and local communities to solveany more than climate change can. As the consequences of rising domestic inequalityfeed through to geopolitics, eroding stability, the need to devise new rules, re-distribution systems, and even global agreements is no longer a matter of morals; increasingly, it is a matter of survival. KaushikBasu, a former chief economist of the World Bank, is Professor of Economics at Cornell University.

By KaushikBasu

The Pie-in-the-Sky UBI

BERKELEY – According to the conventional wisdom in Silicon Valley, robots will soon eat everyone’s job, and a universal basic income will become necessary. Lately, tech titans are especially eager to extol the results of a UBI pilot project in Kenya that is being funded largely by Silicon Valley philanthropists.


While the idea of UBI often arises during periods of economic and social stress, this is the first true test of it. The Kenya project provides a guaranteed poverty-ending income for those who receive it. In 40 poor, remote villages, 6,000 adults are now receiving 75 cents (yes, cents) per day – or $22 per month for 12 years.

We hope that the experiment in Kenya works. Cash assistance shows much promise for eliminating extreme poverty in developing countries. But, to be effective, it must be delivered directly to those in need over a sustained period of time, and inadequate amounts. In poor developing countries, a UBI can disintermediate expensive aid programs that fail to address the targeted population’s needs, and that are often undermined by corrupt regimes.

Still, Silicon Valley’s titans should curb their enthusiasm. The Kenya UBI relies on M-Pesa, a for-profit mobile banking system that was built with the support offoreign aid, private companies, and a forward-looking government – not well-meaning philanthropists.

And even if a UBI succeeds in Kenya over the next 12 years, it is not a solution to pressing problems in the US economy today. A UBI for the United States is as fanciful as President Donald Trump’s border wall: it would be prohibitively expensive; and it would not solve the problems that it is meant to address.

Worst of all, UBI proposals are disingenuous distractions from such immediate problems as persistent poverty, especially for children and racial and ethnic minorities; stagnant real (inflation-adjusted) wages and incomes for most households; expanding income inequality; declining social mobility; inequalities in educational opportunities; and the income volatility that comes with erratic employment.

Technology has not yet significantly reduced the overall number of jobs in the US, but it has certainly undermined job quality for millions of workers. New technologies are wiping out routine manual and cognitive middle-skill jobs, and exacerbating labor-income inequalities, the most important source of overall income inequalities. But does this litany of problems justify a basic income for every working American, including Silicon Valley “superstars,” whose skills and incomes have been complemented and enhanced by skill-biased, labor-saving technological change?

Even if a UBI for every American adult was a desirable goal, no serious proposal for funding it exists. In Kenya, a $22 monthly payment might very well eradicate poverty; but it would be “chump change” in the US, where the official poverty line for an adult in 2016 was $12,700 per year.

Each year, a $10,000 basic income for every American adult would cost more than $3 trillion, consuming more than three-quarters of the annual federal budget. This would require historically high taxes, and yet we rarely hear wealthy UBI advocates calling for their taxes to be raised. They are more likely to advocate cutting existing social-welfare spending, such as Social Security and other programs that benefit the bottom two-fifths of the population, including children.

While we await the results of the Kenyan UBI pilot and anticipate the future destruction of jobs by intelligent robots, we need to modernize and strengthen existing programs that address the challenges workers face today. Quality education at all levels, including job-relevant training and lifelong learning opportunities, are critical to provide the skills that labor markets demand, but require significant investment.

Transition-assistance programs, to help workers and their families cope with employment and income disruptions, also will be needed. In Silicon Valley, “disruption” connotes positive change; in reality, disruption inflicts substantial pain on those whose livelihoods are upended by new technology.

In the US, current programs – such as Medicaid, unemployment compensation, the Supplemental Nutrition Assistance Program (SNAP), and Temporary Assistance for Needy Families (TANF) – should be made more generous. In addition, the US should develop a national, universal income-insurance program to assist those facing financial insecurity as a result of unemployment, disability, illness, or the death of a family member. Meanwhile, as a larger share of the workforce engages in independent work, the current employment-based benefits system will need to be replaced with a portable benefits system that covers all workers, regardless of employer.

Americans also need a higher federal minimum wage. Had the minimum wage kept pace with rising productivity, it would be nearly $19 per hour today, instead of $7.25. Among workers earning the minimum wage, more than half are women, and many of them depend on tipping for the bulk of their income, as restaurants are permitted to pay a shockingly low minimum wage of $2.13 per hour. A majority of Americans support raising the minimum wage, as do seven Nobel laureates in economics; one hopes that Silicon Valley’s UBI proselytizers do, too.

Finally, America should start to develop a means-testedincome supplementfor workers whose jobs are displaced, or whose wages are undercut, by automation. To that end, the earned-income tax credit should be replaced by a generous negative income tax – an idea that the economist Milton Friedman proposed decades ago, when robots were still the stuff of science fiction.

A negative income tax – which, unlike a UBI, provides a powerful incentive to work – could raise the take-home pay of millions of workers employed in low-wage jobs. Many of these are “care” and other “personal services” jobs, which are projected to be among the fastest-growing occupations in the next decade – and which robots are unlikely to “disrupt.”

As Teddy Roosevelt said, “Far and away the best prize that life offers is the chance to work hard at work worth doing.” The focus of policy today should be on worthwhile work that pays a living wage, not starry-eyed proposals for a post-work future.

Laura Tyson, a former chair of the US President’s Council of Economic Advisers, is a professor at the Haas School of Business at the University of California, Berkeley, and a senior adviser at the Rock Creek Group. Lenny Mendonca, Senior Fellow at the Presidio Institute, is a former director of McKinsey & Company.

By Laura Tyson and Lenny Mendonca

Boycott America?

MELBOURNE – The catastrophic outcome of last November’s United States presidential election is now clear. President Donald Trump’s indifference to the risk of climate change, and the actions he is taking because of that indifference, are likely to have consequences that dwarf the significance of his executive order on immigration, his nomination of an archconservative to the Supreme Court, and, should he manage to achieve it, his repeal of the Affordable Care Act (“Obamacare”).


With the exception of launching a nuclear war, it is hard to think of anything a US president could do that is liable to harm more people than last month’s order canceling rules issued under former President Barack Obama to freeze the construction of new coal-fired power plants and shut down many old ones. Trump’s order followed his pledge to rescind stricter fuel-efficiency standards for cars and trucks, and his announcement that he wants to slash spending on climate science.

Although Trump did not announce the withdrawal of the US from the Paris climate agreement, his actions are likely to prove incompatible with the US government’s pledge to reduce greenhouse-gas emissions to 26% below 2005 levels by 2025. The Paris agreement, signed by 195 countries, is our last real chance of keeping global warming to less than 2ºC above pre-industrial levels. Even 2ºC is too much for the inhabitants of low-lying island states. Many of these states were pleading for a 1.5ºC limit – without which some will disappear beneath the ocean.

Any increase in global temperature greater than 2ºC, scientists agree, risks triggering feedback loops that cause much greater warming and could render large parts of the planet uninhabitable. For example, further warming would release large quantities of methane – a more potent greenhouse gas than carbon dioxide – from thawing Siberian permafrost, leading to more warming, more thawing, and more methane in the atmosphere. Similarly, warming causes the loss of arctic ice, which means that less of the sun’s heat is reflected back rather than being absorbed by the ocean.

During the election campaign, Trump described climate change as a “hoax” perpetrated by the Chinese to destroy American industry. Last month, Scott Pruitt, Trump’s appointee to head the Environmental Protection Agency, said that he did not believe that CO2 is the primary contributor to climate change. He added that “we do not know that yet,” and “we need to continue the review and analysis.”

The American Meteorological Society promptly wrote to Pruitt saying that it is “indisputable” that CO2 and other greenhouse gases are the primary cause of global warming, and that it is “not familiar with any scientific institution with relevant subject matter expertise that has reached a different conclusion.”

That is true. What many commentators failed to notice, however, is that even if, contrary to all the evidence, we were to accept Pruitt’s statement that “we do not know” whether CO2is the primary contributor to climate change, the Trump administration’s actions would still be reckless. Unless the probability that CO2is the primary contributor to climate change is vanishingly small, it is wrong to take chances with the future of our planet and the lives of hundreds of millions of people in order to reduce energy costs for Americans and preserve a few thousand jobs in the coal industry. (In fact, coal jobs are disappearing because of automation and competition from cheaper natural gas, not because of regulations to reduce CO2emissions.)

Perhaps, though, Trump does not see his policy as reckless because, as he has repeatedly proclaimed, he puts “America first.” And it is indeed America between now and the next election that he puts first, at the expense of Americans’ longer-term interests and the interests of everyone who is not American. In the short term, those who will suffer most from climate change are not Americans, but people living in tropical latitudes, and especially the poor, who will have nowhere to go when rains fail or the heat parches their crops. When sea levels rise, those island-state inhabitants, living just a meter or two above sea level, will be the first to be driven off their land, followed by tens of millions of people farming small plots in fertile delta regions in Bangladesh, Southeast Asia, and Egypt.

The Paris climate agreement has no mechanism for sanctioning countries that fail to fulfill their pledges. The idea is that such countries will be “named and shamed.” Well before Trump was elected president, however, when the notorious video in which he boasted of groping women became public, it was obvious that he is immune to shame. What, then, can other countries, and individuals, whether in the US or beyond its borders, do about the fact that Trump is jeopardizing the future of us all, for many generations to come?

If the US uses the cheapest available fuels to produce energy, irrespective of the harm that burning those fuels does to others, it is giving its companies an unfair advantage over those elsewhere that are making a good-faith effort to reduce their greenhouse-gas emissions and meet their Paris pledges. That should be enough for the World Trade Organization to allow other countries to erect trade barriers against US goods. If, however, the WTO is not brave enough to take that step, the remedy is in the hands of foreign consumers, who should show the Trump administration what they think of its policies by choosing not to buy American.

A boycott is a blunt instrument that would, regrettably, harm many US workers who did not vote for Trump and are in no way responsible for his policies. But with so much at stake, and such limited means of changing Trump’s policies, what else is there to do?

Peter Singer is Professor of Bioethics at Princeton University and Laureate Professor at the University of Melbourne. His books include Animal Liberation,The Life You Can Save,The Most Good You Can Do, and Ethics in the Real World.

By Peter Singer

Confronting a New Era of Anti-Semitism

LONDON – Ambassador Ronald Lauder, the President of the World Jewish Congress, had much on his mind when we met in London on a rainy day in early March. The tall, distinguished 73-year-old art collector, hommed’affaires, and philanthropist was clear-minded about a number of issues, even on five hours of sleep.


At the top of his list of concerns is a worrying upsurge of anti-Semitic incidents, not least in his native United States. These include threats to, or actual attacks on, synagogues and other Jewish institutions, and the desecration of graves in St. Louis, Missouri, and other cities. “Even in the US, the country with the strongest Jewish community in the diaspora,” Lauder laments, “anti-Semitism is alive and kicking.”

Anti-Semitism comes in waves, and each historical epoch provides its motives. Christian anti-Semitism blamed Jews for the crucifixion of Jesus. This anti-Semitism, which systematically marginalized Jews in the medieval and early modern periods, was supplanted by a pseudo-scientific race-based discourse that culminated in Auschwitz. When the sheer enormity of the Jewish Holocaust was revealed, these ideas slithered back into the shadowy world of the extreme right. But the anti-Semitism rearing its head again in Europe now sometimes comes from the far left as well.

Lauder, for his part, is particularly concerned about developments in Hungary, France, and the United Kingdom. In Hungary, dubious historical figures such as the Regent Admiral MiklósHorthy have been rehabilitated – and even commemorated – in domestic political discourse. Horthy persecuted Jews for decades before Nazi Germany invaded Hungary. Today’s far-right Jobbik party is his direct political heir.

In France, the National Front’s Marine Le Pen has distanced herself from the morbid anti-Semitic obsessions of her father, Jean-Marie Le Pen, in favor of opportunistically attacking French Muslims. But she has still called for a ban on yarmulkes and kosher slaughter as part of a promise to crack down on public displays of religion. Should Le Pen win the presidency and make such discrimination a reality, Lauder hopes that all French men will take to wearing small skullcaps in a show of solidarity.

Last but not least, in Britain, the Labour Party under Jeremy Corbyn has become a catchall protest party, and is now the political home for Palestinian Solidarity Campaign (PSC) activists, even though there are only 20,000 Palestinians in Britain. The PSC is the driving force behind the Boycott, Divestment, and Sanctions (BDS) movement, which often conflates opposition to Israel with hatred of Jews.

BDS activists have picketed Jewish-owned businesses – from single shops in Glasgow to the retail giant Marks & Spencer – while making many university campuses increasingly uncomfortable for Jewish students. The movement’s frequent likening of Israel to apartheid South Africa is especially nasty, given that many South African Jews fought against apartheid, sometimes from within the ranks of the African National Congress.

Lauder may be a worldly diplomat, but he is also ready to fight. He reports that, in the United Kingdom, there are ongoing efforts to contest local councils’ right to introduce “gestural” BDS motions aimed at banning procurement from Israeli businesses. And at the “street level,” the advocacy group Jewish Human Rights Watch maintains an excellent website that monitors PSC and BDS acts of intimidation.

Lauder, during his time at the WJC, has personally enlisted world leaders of all stripes, from the late Venezuelan president, Hugo Chávez, to Russian President Vladimir Putin, to join the battle against anti-Semitism. Among Putin’s few redeeming qualities is a revulsion to anti-Semitism. And, as it happens, Russia’s Jewish community is thriving. Jewish kindergartens and other schools are full, and five new Jewish universities have opened. Moreover, according to a survey conducted by the Russian Jewish Congress, anti-Semitic attitudes in Russia are among the lowest in the world, at 8% of those polled.

The WJC was founded in Geneva in 1936, beneath the dark clouds of an earlier period of anti-Semitism. But it would be wrong to assume that fighting anti-Semitism is the organization’s sole focus. It played a leading role in helping Jews escape from the former Soviet Union, and in defending the religious freedoms of those who remained there.

The WJC is also a major player in Holocaust-remembrance efforts. And it works to return Jewish families’ stolen assets, by confronting museums that do not closely trace the provenance of art works.
In addition, the WJC is active in fostering Jewish communities around the world. Ironically, Germany is the only European country with a growing Jewish community, now 125,000-strong. A renaissance of Jewish culture is now occurring: many new synagogues have opened; and a majority of the faculty and students in Judaic studies courses are Gentiles.

Still, this cultural rejuvenation has not been trouble-free. Leaders of the far-right Alternative for Germany (AfD) party routinely question the need for Holocaust monuments, including the particularly moving “Memorial to the Murdered Jews of Europe” near Berlin’s Brandenburg Gate.

In Lithuania, the WJC sponsors a center that is working to revive Yiddish, the language that Eastern European Jews spoke for 800 years. And it is helping to promote broader inter-religious dialogue, notably with the Roman Catholic Church, by encouraging more student-exchange programs. These efforts are geared toward removing one of the primary sources of anti-Semitism: mutual ignorance and incomprehension.

When talking to Lauder, one quickly gets the impression that his combination of urbanity and insight makes him exactly the right person to speak for the world Jewish community in these troubled times. With headstones being smashed in Philadelphia, of all places, my encounter with Lauder could have left me filled with gloom; instead, it left me feeling optimistic.

Michael Burleigh’s books includeSmall Wars, Faraway Places: The Genesis of the Modern World,Blood and Rage: A Cultural History of Terrorism, The Third Reich: A New History, and The Best and the Worst of Times: The World As It Is (forthcoming).He is CEO of the global political risk consultancy Sea Change Partners.

A Dramatic Comeback for Europe

LONDON – The Dutch are famous for building dykes that hold back the tides and storms sweeping across the Atlantic. Have the Dutch now done it again, holding back the wave of populist politics that seemed to be threatening Europe after last year’s Brexit referendum and Donald Trump’s victory in the United States?


The unexpectedly weak performance of Geert Wilders’ Freedom Party (PVV) in the Dutch election on March 15 seems to suggest this. Despite predictions running as high as 25% of the popular vote for Wilders, the PVV gained only 13%. If voters in France’s upcoming presidential election prove closer to the Dutch than to Americans and Britons in their susceptibility to xenophobia and protectionism, their decision will have global implications for politics, economics, and the ideology of global capitalism.

A swing back to the center in continental Europe would strongly suggest that the unexpected victories for populist and anti-globalization movements in the US and Britain were not primarily a response to unemployment and disappointing economic performance since the financial crisis, mass migration, or the threat of Islamist terrorism. This conclusion follows from the fact that France has suffered from much higher unemployment and a longer post-crisis recession than either the US or Britain, as well as experiencing more problems with terrorism and Islamic militancy.

If German voters in the autumn follow the French and Dutch in moving back toward the political center, immigration will also be discredited as the root cause of populism. After all, Germany has experienced a much larger influx of foreigners than Britain or the US. Instead, populism will look more like an Anglo-Saxon phenomenon, motivated less by immigration and economic policy than by conservative cultural attitudes among Trump and Brexit voters and the unusual demographic alliances pitting old against young, rural against urban, and university graduates against less educated voters in the US and Britain.

The economic implications will also be far-reaching if the center holds in Europe. The European Union is a bigger trading partner than the US for most emerging economies. And the euro is the only real alternative to the dollar as an international currency.So the EU’s continuing commitment to a philosophy of open trade, globalization, and carbon reduction could be sufficient to prevent a paradigm shift toward protectionism and climate-change denial that seemed almost inevitable with Trump’s election.

Such a change in global leadership would require a dramatic improvement in Europe’s economic performance. Fortunately, that outcome can be expected if voters reject populist politics in France and Germany. The EU has suffered a prolonged economic slump since the 2008 financial crisis, largely because the German government vetoed the kind of monetary and fiscal stimulus that helped to pull the US out of recession in 2010. Germany’s veto on US-style quantitative easing was also the main reason for the near-collapse of the single currency in 2012.

But a dramatic change to European policy and economic conditions occurred in March 2015, when the European Central Bank belatedly launched a bond-buying program similar to America’s, but on a far larger scale. By purchasing almost three times the total net issuance of eurozone bonds, the ECB effectively circumvented eurozone rules and began to monetize Europe’s government deficits, as well as creating a mutual support system between strong economies such as Germany and weaker ones like Italy and Spain.

The ECB’s actions quickly reversed the fragmentation of the European banking system and eliminated fears of a euro breakup. The immediate result was an upsurge in confidence among both businesses and consumers.

By last summer, most of Europe was already enjoying a decent recovery, when renewed fears of disintegration, this time caused by politics, not finance, suddenly overwhelmed the improvement in economic conditions. Brexit and Trump created an expectation that Europe would be the next domino to fall to populism in the looming Dutch, French, and German elections.

Of course, this possibility still cannot be dismissed, which is why international investors remain cautious about Europe. But if the populist victories that worry investors do not in fact happen, a surge of business and consumer confidence will send waves of investment flowing into the eurozone.

The key event will be the final round of the French election on May 7. If this results in a victory for Emmanuel Macron, the centrist front-runner, France will embark on a path leading to at least a modicum of economic reforms.

That, in turn, will create a much more cooperative relationship between France and Germany. Both main candidates for German Chancellor are eager to rebuild post-Brexit Europe by strengthening the Franco-German axis – and the start of a French reform process would reassure German voters that their government, by easing EU austerity, would not merely be pouring money into a bottomless pit.

This brings us to the ideological implications if centrist forces win and economic recovery accelerates in Europe this year. In the immediate aftermath of the global financial crisis, the European “social market” model of capitalism seemed like a logical alternative to the Thatcher-Reagan market fundamentalism that had broken down after 30 years of global dominance. Indeed, President Barack Obama moved the US toward greater government activism in macroeconomic management, financial regulation, environmental policy, and health care.

Paradoxically, however, Europe moved in the opposite direction. Under German pressure, the EU became the last bastion of monetarism, fiscal austerity, and the “disciplining” role of financial markets. The result was the near-fatal euro crisis of 2010-2012.

If this year’s elections result in a centrist French president and a revival of Franco-German cooperation, the EU’s unexpected infatuation with market fundamentalism will probably end. Europe will enjoy a better, more sustainable, and socially inclusive economic recovery than the US under Trump. If this happens, the rest of the world may again start to see the EU as a source of inspiration and a model. Anatole Kaletsky is Chief Economist and Co-Chairman of GavekalDragonomics and the author of Capitalism 4.0, The Birth of a New Economy.

By Aynatole Kaletsk

The End of Poverty in China?

BEIJING – One of the most cited statistics about China may well be the number ofChinese whohave been lifted out of poverty over the last 35 years. Atover 800 million, itis a huge number – and an extraordinary feat. Indeed, no other country has achieved such a level of poverty reduction insuch a short period.But what about the millions of Chinese who have remained behind?


China’s government is committed tofinishing the task, with the aim of reducing rural poverty essentially to zero by 2020. The authorities first made the pledge at the United Nations in 2015, and have reiterated it in subsequent official settings. But fulfilling that promise – which would now entail improving the wellbeing of about 45 million people, roughly equivalent to Sudan’s entire population – will carry significant costs.

Poverty reduction, like so many important endeavors, is subject to the law of diminishing returns:the more you do something, the less productive your efforts become. Think ofwinding a watch: the more you wind, the more resistance builds up in the mainspring, and the more energy it takes to move the stem the same distance.

When it comes to poverty reduction, the people whobenefit first are most likely those who were best equipped to do so, owing to, say, their background or geography. By the time there are only a few – or even a few million – left, one can expect reaching them to be much harder.

China’s experience illustrates this phenomenon perfectly. During the first seven years of China’s official “reform and opening up,” whichbegan in 1978, it is estimated that around 110 million people annually rose out of poverty. For the next 15 years – from 1985 to 2000 – the pace of progressslowed considerably, with around 26 million people moving above the poverty line each year. From 2000 to 2015, the figure stood at just over 22 million per year. The government’s target now is to lift ten million people out of poverty annually.

As the pace of poverty-reduction has slowed, its costs have risen – a trend illustrated ina new UN report, togetherwith World Bank data. In 2000, lifting a person out of poverty in China cost the central government approximately $48 per year (in nominal terms). By 2010, this figure had increased more than three-fold, to $150 per year. Now that the government is working to reach the most remote people – those without access to roads, electricity, or clean water – the cost exceeds $200 per year.

This is not to say that China will not be able to meet its 2020 target.On the contrary,the government’s plans and implementation appear as strong as ever. In fact, last year, thegovernment exceeded its target, with 12.4 million people escaping rural poverty. And the budget for this year is 30% larger, meaning that at least $1,000 has been allocated for each of the ten million people China’s government plans to lift out of poverty in 2017.

But, as the government attempts to “get to zero” on rural poverty – by moving all people above the national rural poverty line of CN¥2,230 ($324) per year – it should not lose sight of broader poverty-related challenges. China continues to experience rapid urbanization – a phenomenon that contributed substantially to past poverty reduction, but that also places a growing number of urban dwellers at risk of destitution.

According to official figures, the average income of the poorest 5% of households in Chinese cities amounts to about $1,128 (CN¥7,521). That isabout 3.5 times China’s rural poverty line. But, overall, the average income in cities is at least four times higher than that in the countryside, suggesting that living on such a budget may be even tougher than living at the rural poverty line. And that does not even account for the many migrant workers who live under the radar in cities andare likely to earn even less than the poorest 5%.

These forms of povertymay be even harder to address, not least because China has less experience doing so. Given this, just as China’s successful efforts to reduce ruralpoverty can serve as a model for others, other countries’ successes in managing urban poverty can – and should – help to guide China’s efforts.

China is far from alone in focusing on the fight to end poverty; indeed, the very first Sustainable Development Goal calls for an end to poverty in all of its manifestations by 2030. With the process becoming increasingly challenging and costly, looking across borders could prove vital to enabling all Chinese to live decent, dignified lives. Hannah Ryder is a former head of policy and partnerships for the United Nations Development Programme in China.

By Hannah Ryder

Artificial Intelligence and Artificial Problems

BERKELEY – Former US Treasury Secretary Larry Summers recently took exception to current US Treasury Secretary Steve Mnuchin’s viewson“artificial intelligence” (AI) and related topics. The difference between the two seems to be,more than anything else, a matter of priorities and emphasis.


Mnuchintakes a narrow approach. He thinks that the problem of particular technologies called “artificial intelligence taking over American jobs” lies “far in the future.” And he seems to question the high stock-market valuations for “unicorns” – companies valued at or above $1 billion that have no record ofproducing revenues that wouldjustify their supposed worth and no clear plan to do so.

Summers takes a broader view. He looks at the “impact of technology on jobs” generally, and considers the stock-market valuation for highly profitable technologycompanies such asGoogle and Apple to be more than fair.

I think that Summers is right about the optics of Mnuchin’s statements. AUS treasury secretary should notanswer questions narrowly, because people will extrapolate broader conclusions even from limited answers. The impact ofinformation technology on employment is undoubtedlya major issue, but it is also not in society’s interest to discourage investment in high-tech companies.

On the other hand, I sympathize withMnuchin’seffort to warn non-experts against routinely investing in castles in the sky.Although great technologies are worth the investment from a societal point of view, it is not so easy for a company to achieve sustained profitability. Presumably, a treasury secretary already hasenoughon his plate to have to worry about the rise of the machines.

In fact, it is profoundly unhelpful to stoke fears about robots, and to frame the issue as “artificial intelligence taking American jobs.” There are far more constructive areas for policymakers to direct their focus.If the government is properly fulfilling its duty to prevent a demand-shortfall depression, technological progress in a market economy need not impoverish unskilled workers.

This is especially true when value is derived from the work of human hands, or the work of things that human hands have made, rather than from scarce natural resources, as in the Middle Ages. Karl Marx was one of the smartest and most dedicated theorists on this topic, and even he could not consistently show that technological progress necessarily impoverishes unskilled workers.

Technological innovationsmake whatever is produced primarily by machines more useful, albeit with relatively fewer contributions from unskilled labor. But that by itself does not impoverish anyone. To do that, technological advances also have to make whatever is produced primarily by unskilled workers less useful. But this is rarely the case, because there is nothing keeping the relatively cheap machines used by unskilled workers in labor-intensive occupations from becoming more powerful. With more advanced tools, these workers can then produce more useful things.

Historically, there are relatively few cases in which technological progress,occurring within the contextof a market economy,has directly impoverished unskilled workers. In these instances, machines caused the value of a good that was produced in alabor-intensive sector to fall sharply, by increasing the production of that good so much as to satisfy all potential consumers.

The canonical example of this phenomenon is textiles in eighteenth- and nineteenth-century India and Britain.New machines made the exact same products that handloom weavers had been making, but they did so on a massive scale. Owing to limited demand, consumers were no longer willing to pay for what handloom weavers were producing.The value of wares produced bythis form of unskilled labor plummeted, but the prices of commodities that unskilled laborers bought did not.

The lesson from history is not that the robots should bestopped; it is that we will need to confront the social-engineering and political problem of maintaining a fair balance of relative incomes across society. Toward that end, our task becomes threefold.

First, we need to make sure that governmentscarry out their proper macroeconomic role, by maintaining a stable, low-unemployment economy so that markets can function properly.Second, we need to redistribute wealth to maintain a proper distribution of income.Our market economy should promote, rather than undermine, societal goals that correspond to our values and morals. Finally, workers must be educated and trained to use increasingly high-tech tools (especially in labor-intensive industries), so that they can make useful things for which there is still demand.

Sounding the alarm about“artificial intelligence taking American jobs” does nothing to bring such policies about. Mnuchin is right:the rise of the robots should not be on a treasury secretary’s radar.

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

Donald Trump’s Climate Fantasies

NEW YORK – Legend holds that King Canute brought his flatterers to the sea to show them that even a king could not command the ocean waves, that the laws of nature are more powerful than the decrees of men. So pity Donald Trump, who really believes that his executive orders can hold back the tides.


Trump is surrounded by cronies rather than flatterers, and they and their foolish, ignorant king believe that by denying climate change they can restore the wealth and glory of coal, oil, and gas. They are wrong. Greed will not reverse human-caused climate change, and Trump’s executive orders will not stop the global process of phasing out coal, oil, and gas in favor of wind, solar, hydro, nuclear, geothermal, and other low-carbon energy sources.

In less than 100 days, we have learned that Trump is a man living in a fantasy world. He issues decrees, barks orders, sends out midnight Tweets, but to no avail. The facts – real ones, not his “alternative” variety – keep intervening. There is physics; there is law; there are courts; there are procedures; and there are voters, only 36% of whom approve of Trump’s job performance. There is also China, which wins technologically and diplomatically from every self-defeating move by the incompetent US president.

The latest fantasy involves climate change. Trump has issued executive orders that he claims will reverse former President Barack Obama’s climate policies. His orders would rescind the Clean Power Plan regulations of the US Environmental Protection Agency; roll back standards to control methane releases from oil and gas production and distribution; and end the regulatory use of a “social cost of carbon,” introduced by the EPA to calibrate the dollar value of climate damage caused by the emission of an additional ton of carbon dioxide.

According to Trump, these new measures will create new jobs in the coal sector, achieve US “energy independence,” and boost economic growth. In addition, Trump recently authorized the building of the Keystone XL pipeline from Alberta, Canada to the US state of Nebraska, with the purpose of linking Canada’s oil sands to oil refineries in the US. Obama had rejected that project on the grounds that it would aggravate global warming.

Trump’s overriding motivation is to serve the economic interests of the US coal, oil, and gas industries, which provide ample campaign financing and media backing for the Republicans in Congress and in state governments across the country. In short, this is political corruption: government policies in exchange for campaign funds.

ExxonMobil, Chevron, the US Chamber of Commerce, and Koch Industries are all major players, and almost all of the Republican members of Congress are implicated in this disgraceful behavior. They are prepared to look like fools in public – denying climate science and global warming – as long as it keeps the campaign money flowing. Whether or not Trump himself is foolish enough to believe what he says, he knows that his executive orders play into the sweet spot of Republican power.

But, as with so many of Trump’s decisions, there is more bark than bite, more bluster than reality. First, Trump can’t stop the waves, or the rising ocean levels in the case of global warming. The science is real, even if Trump is happy to show off his scientific ignorance.

Second, the world knows it’s real. Every UN member state signed the Paris climate agreement in 2015. The planet has just experienced the hottest three years on record. The oceans are warming dramatically (recently damaging 93% of Australia’s Great Barrier Reef in the process). Trump’s cynicism and ignorance will change no minds and will attract no followers globally.

Moreover, Trump’s actions will be challenged in court, and he will almost surely lose. He will pump up a few voters in West Virginia and receive praise from Koch Industries. But he will not be able to overturn the EPA’s regulation of CO2 emissions.

Those standards are protected by the Clean Air Act, and Trump lacks the votes in Congress – by a wide margin – to change that legislation. And American voters, by a wide margin, favor a shift from fossil fuels to renewable energy. Even with America’s corrupt politics, the voters’ views still matter.

Nor can Trump revive the dying coal sector. Coal has everything against it these days. It causes lung disease among miners and the public living near coal-fired power plants. It releases more CO2 per unit of energy than oil and gas, and it – and all the fossil fuels – are increasingly being outcompeted by wind, solar, hydropower, and other zero-carbon energy sources.

As for jobs, coal mining is becoming so automated that the entire sector employs just a few tens of thousands of workers in a labor force of more than 150 million. Coal mining will play no significant role in future US employment trends, Trump or no Trump.

For the same reason, my bet is that the Keystone XL Pipeline, which would cost several billion dollars, will never be built. The world does not need Canada’s oil sands, given the urgent global need to move to zero-carbon energy sources. Canada’s oil sands are expensive to exploit, highly polluting, and far from markets. Regardless of Trump’s approval, investors are likely to reject a pipeline that would probably go bankrupt well before the planned horizon for its use.

China, Europe, and even the Gulf region will not be swayed by Trump’s moves. China is intent on lowering CO2 emissions, cleaning its air, and becoming the twenty-first-century leader in low-carbon technologies such as photovoltaics and electric vehicles. Europe is well on its way to a zero-emission economy. The Gulf countries are deploying large new capacity in renewable energy, especially solar energy.

In the end, we can be amazed at the foolishness of America’s president and the corruption of the US Republican Party. But we should not believe that Trump’s climate fantasies will change global reality or alter the implementation of the Paris climate agreement.

Jeffrey D. Sachs, Professor of Sustainable Development and Professor of Health Policy and Management at Columbia University, is Director of Columbia’s Center for Sustainable Development and the UN Sustainable Development Solutions Network.

By Jeffrey D. Sachs

Trump’s Virtual Wall

CAMBRIDGE –In many ways, the Republican Party’s plan to implement a “border adjustment tax” in the United States is the virtual complement of the physical wall President Donald Trump plans to erect on the US-Mexican border. Although the border adjustment tax has not seeped into public consciousness in nearly the same way as Trump’s physical wall has, it could end up affecting the average American a lot more – and not necessarily in a good way.


On the surface, the basic idea is to slap a tax of, say, 20% on imports, and to provide tax breaks worth a similar amountonexports.Most populists’ gut reaction is that this must be fantastic for US jobs, becauseit discourages imports and encourages exports. Unfortunately, as many have pointed out, there is a loose screw in this logic, which is that the United States has a floating exchange rate.

A stronger dollar –a likely result of imposing a border adjustment tax –makes it cheaper for Americans to buy imports (because a dollar buys more foreign currency); conversely, a stronger dollar makes US exports more expensive to foreigners. In fact, the baseline textbook result is that the exchange-rate effect would fully offset the tax, leavingthe trade balance unchanged. If you think the Republicans’ proposal sounds like hocus pocus, you might be right, but let’s hold that thought.

Several highlyregarded academic economists favor the border adjustment idea, but for entirely different reasons. They take it as an article of faith that the exchange rate willin fact rise to neutralize the trade effects of a border adjustment tax. But they like it anyway.

First, the US imports a lot more than it exports, so it runs a large trade deficit, with the broadest measure (the “current account”) at around 2.5% of GDP. While that is a vast improvement over the 6%-of-GDP deficits the US was running a decade ago, the US still imports considerably more than it exports, meaning the government stands tocollect far more revenues from its 20% tax on imports than it would have to give in tax breaks to exporters. Indeed, the tax-subsidy schedule could, on paper at least, bring in roughly $90 billion a year.

And the magic doesn’t stop there. Although it might surprise people who are used to thinking of imports and exports as a pure “us versus them” phenomenon, in fact roughly half of all trade is intra-firm – transactions between foreign and US divisions of the same company. And because US corporate taxes are among the world’shighest, firms will go to great lengthsto assign as much value as they can to foreign subsidiaries, and as little as possible to US companies.

One way to do this is by puttingan artificially high bookkeeping price onintra-firm imports, and an artificially low bookkeeping price onexports. Under- and over-invoicing is a time-honored way to get around taxes and controls. When a transaction is all “in-house,” it essentially just involves accounting sleight of hand to book profits in low tax jurisdictions.

As the University of California at Berkeley’sAlan Auerbach first pointed out, the border tax adjustment is a way to push back on under- and over-invoicing ina high-tax jurisdiction such as the US. So, all in all, even if a border adjustment tax does not directly make US goods more competitive, it is an efficient way to raise revenues, potentially making room for other tax cuts.

So what could possibly be wrong with such a technocratically sound idea? First, it relies on some heroic assumptions – for example, that people cannot easily game the labyrinthine system and that foreign governments will exercise restraint in retaliating. Second, it ignores a host of difficult transition problems.

For starters, the overwhelming majority of US imports are priced in dollars, not foreign currency. So, even if foreign currencies become cheaper, it might not help importers locked into dollar contracts. Their costs would just be 20% higher because of the import tax. And, despite the tax subsidy, some exporters would lose, because, as a recent New York Federal Reserve note points out, they rely on imported intermediate goods in producing their products.

Another problem is that a strongerdollar would mean a massive wealth loss for Americans, because the value of many foreign assets would go down, as my colleagues Emmanuel Farhi, Gita Gopinath, and Oleg Itskhokihave discussed. The biggest problem of all, though, is the blithe assumption that the dollar exchange rate would neatly move to offset the tax/subsidy scheme.

If there is anything that the past 40years of exchange-rate research have taught us, it is that exchange rates canmove wildly away from their fundamentals for many years at a time. It is thoroughly unrealistic to assume that a border tax will quickly lead to a sharp offsetting movement of the dollar. The process could take many years, and the short-term effects on US unemployment easily could be negative.

True, high border taxes could boost US employment. The scheme wouldrequire a huge increase in customs agents, and it would most likely lead to significant expansion in the underground economy as people seek to evade the taxes. But are those really the typesof jobs proponents of a border tax have in mind? Kenneth Rogoff, a former chief economist of the IMF, is Professor of Economics and Public Policy at Harvard University.

By Kenneth Rogoff

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