Poorer Countries Continue to Improve

With all that is going wrong in the world, it is crucial to keep in mind the bigger picture: although there is far too much needless misery and suffering, glimmers of progress and hope persistent nonetheless — even in the most beleaguered regions in the world.

As the above date from the the United Nations Development Programme (UNDP) shows, literally every part of the world has seen a marked improvement in their “Human Development Index” (HDI), a metric devised in the 1990s in attempt to better capture a country’s standard of living (in a way that GDP cannot). 

The Economist provides a great breakdown of how it works:

The index combines four simple measures: life-expectancy at birth; gross national income per person; average years of education; and expected years of school. First, each variable is normalised on a scale of zero to one; next, the two education variables are averaged; and finally, the index is calculated as the geometric mean of its three components. This ensures that a 1% decline in the index for life-expectancy has the same impact as a decline of the same magnitude in education. By incorporating health and schooling, the HDI seeks to provide a more comprehensive measure of quality of life than the simply material prosperity measured by GDP.

Though far from perfect, HDI is a pretty good barometer for how well a society is doing. And from the looks of it, a lot more places are doing a lot better despite ongoing issues of inequality, climate change, corruption, and other barriers to optimal growth.

In 1990 a child born in sub-Saharan Africa could expect to live just 50 years. Today, assuming current mortality trends persist, newborns can expect to live for 61 years. As a result, the gap in life-expectancy between the world’s poorest region and the global average has narrowed by four years. Similar gains have been registered in educational outcomes and income, meaning that all 189 countries with HDI scores have improved their marks since 1990, by an average of 0.5% a year. Just seven countries have seen a reduction in their HDI score since 2010, often as a result of war or famine.

Encouragingly, the HDI data demonstrate that inequality of life outcomes is declining both across and within countries. As developing countries have closed the gap with their developed-country peers, the coefficient of variation—a measure of the spread of the data across countries—of the HDI has fallen by six percentage points since 1990. Because the “raw” HDI is based on nationwide averages, it can provide a misleading picture of overall living standards in highly unequal countries, where a handful of people enjoy long, wealthy lives and advanced schooling, but the masses do not. \

However, the UNDP also publishes an “inequality-adjusted” version of the HDI, which attempts to account for the distribution of health, education and prosperity. The gap between this metric and the unadjusted HDI was slightly smaller in 2017 than it was the year before, suggesting that well-being is being shared more broadly inside countries as well as between them.

While there is still a tremendous amount of work to be done, and these gains remain tenuous in the face of a future global recession, the march of progress across the world is a hopeful sign that more political will and resources can take us further along the moral arc of prosperity and well being for more humans.

For the full ranking of countries by HDI, click here.

When Cities are as Powerful as Nations

Before the emergence of the political units we now call countries, humans organized themselves in a variety of other ways, ranging from bands and tribes, to chiefdoms, kingdoms, and empires. Most of these entities were not proper countries as we think of them today, lacking a cohesive political or national identity, a firm boundary, or much in the way of an organized government.

The ancient societies of Egypt, Greece, China, Mesoamerica, the Indus River Valley, and Mesopotamia were among the exceptions, which is why they are recognized as “cradles of civilization”, places where the first features of what we consider modern society emerged: agriculture, urban development, social stratification, complex communication systems, infrastructure, and so on.

The urban character of civilization is what I find most interesting, because cities were where power, both political and economic, was concentrated. Urban centers were the places from which rulers asserted their authorities. Cities are where democracy and republicanism took root, and where civic engagement survived through the Middle Ages in places like Florence, Venice, Krakow,and Hamburg.

This dynamic has changed little in the 21st century; in fact, it is arguably stronger and more pronounced than ever, as globalization, population growth, and advanced technology come together to create metropolises as populous, wealthy, and powerful as entire countries.

The following map, courtesy of CityLab, draws on data from 2015 to prove the incredible growth and prestige of modern cities (the data for cities comes from the Brookings Institution’s Redefining Global Cities report, while the data for nations is from the World Bank’s World Development Indicators; the map was compiled by Taylor Blake of the Martin Prosperity Institute).

A few highlights noted by the article:

  • Tokyo, the world’s largest metro economy with $1.6 trillion in GDP-PPP, is just slightly smaller than all of South Korea. Were it a nation, Tokyo would rank as the 15th largest economy in the world.
  • New York City’s $1.5 trillion GDP places it among the world’s twenty largest economies, just a tick under those of Spain and Canada.
  • Los Angeles’ $928 billion GDP is bit smaller than Australia’s, with $1.1 trillion.
  • Seoul ($903 billion) has a bigger economy than Malaysia ($817 billion).
  • London’s $831 billion GDP makes its economic activity on par with the Netherlands ($840 billion).
  • Paris, with $819 billion in GDP, has a bigger economy than South Africa, $726 billion.
  • The $810 billion economy of Shanghai outranks that of the Philippines, with $744 billion.

To put things in further perspective: if you added up the ten largest metropolitan areas, you’d get an economy of over $9.5 trillion, bigger than the Japanese and German economies combined. Add the next ten largest metros, and you get the second largest economy in the world, at $14.6 trillion, less than four trillion shy of the U.S.

In other words: Cities really are the new power centers of the global economy—the platforms for innovation, entrepreneurship, and economic growth. But when it comes to fiscal and political power, they remain beholden to increasingly anachronistic and backward-looking nation-states, which has become distressingly obvious with the rise of Trumpism in the United States and populism around the world.

The greatest challenge facing us today is how to ensure that global cities have the economic, fiscal, and political power to govern themselves and to continue to be a force for innovation and human progress.


Very relevant question as the balance of power both within and between countries shifts to certain global cities, especially in the developing world.

What are your thoughts?

Food Stamps Are an Investment in the Future

That, in essence, is the finding of one of the largest studies of its kind on what is officially known as the Supplemental Nutritional Assistance Program (SNAP). Since being nationally mandated in 1975, SNAP has remained the largest national anti-hunger program: last year along, more than 40 million poor working families, people with disabilities and seniors received assistance averaging to about $125 monthly; 70 percent live in households with children.

Whatever the moral case for supporting SNAP, there is certainly an economic one, as one of the largest studies of its kind recently proved.

From Bloomberg:

The economists focus on people born between 1956 and 1981, who were young children when the program was expanding, and who grew up in families with a parent with less than a high school education. They find that access to the program as a young child significantly improved economic outcomes and health status as an adult.

In particular, food stamp access as a child was associated with much lower risk of metabolic syndrome as an adult and, especially for women, higher levels of educational attainment and income along with lower participation on means-tested benefit programs. For example, food stamp access during childhood is linked to a 5 percentage point reduction in heart disease and an 18 percentage point increase in high school completion rates, compared to those who lacked access.

This evidence contradicts some critiques of food stamps, which misleadingly argue that it’s an inefficient and ineffective program.

The authors also highlight that access seems to matter most in utero and up until age 5. Gaining access to food stamps after age 5, by contrast, didn’t improve health outcomes as an adult, perhaps because the person had already been put on a particular health trajectory by that age.

As typical in such studies, there is a question of “correlation versus causation”, but the gradual rollout of SNAP allowed the researchers to account for this because “children living in otherwise similar families either did or didn’t receive benefits depending on whether their county voluntarily participated at the time. (The researchers show that county choice seems to be unrelated to other factors that may have substantially affected children living there.)”

The study also demonstrates the importance of taking a long-term view of these sorts of programs, especially when children are involved. Various other studies suggest that investing in the formative early years of one’s life pays huge dividends later; that is obviously lost on those who focus only during the year the benefit is received. 

What the World Thinks About Pressing Economic Issues

This past Friday, Buenos Aires, Argentina hosted the 13th summit of the “Group of Twenty” (G20), which consists of 19 of the world’s largest economies plus the European Union.

Purple: G20 members | Blue: EU members not individually part of the G20 
Pink: Countries invited to the 2010 summit

Collectively the G20 accounts for around 85% of global GDP, 75-80% of world trade, two-thirds of the world’s population, and about half the world’s land area. Hence it is one of the most influential and important gatherings in the world, even though it is not a formal institution like NATO or the United Nations.

Pew recently conducted polls around the world to gauge global public opinion about some of the pressing issues on the agenda at this year’s summit.

For example, most nations are skeptical of the current economic situation, except for the Netherlands, Sweden, Germany, the Philippines and a few others. A fair number of people–notably Brazilians, Greeks, and Tunisians–had more hope for their economic future. The U.S. and Canada were interestingly pretty happy about the current state of their economies, but deeply pessimistic about their children’s future.

Similarly, most people around the world approve of trading with other countries and yet are nonetheless pessimistic about the benefits for jobs and wages. And with the notable exceptions of Poland, Japan, and Hungary, the majority of people did not think automation would make their economies efficient; moreover, no country had a majority of people agree that automation would create newer and better jobs.


Finally, the leaders of the U.S., Russia, and China — currently the top world powers — are deeply unpopular, whereas Germany’s Merkel and France’s Macron had the most global confidence (and only Merkel got a majority of confidence, albeit at 52%).

Read more from the source here

The Murder Capitals of the World

The waves of migrants fleeing many Latin American countries is in no small part due to the horrifically high rate of homicide that collectively claims hundreds of thousands of lives annually.

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Source: The Wall Street Journal

With just 8% of the world’s population, Latin America accounts for roughly a third of global murders. It is also the only region where lethal violence has grown steadily since 2000, according to United Nations figures.

Nearly one in every four murders around the world takes place in just four countries: Brazil, Venezuela, Mexico and Colombia. Last year, a record 63,808 people were murdered in Brazil. Mexico also set a record at 31,174, with murders so far this year up another 20%.

By comparison, the U.S.–which has one of the highest murder rates in the developed world–lost 17,250 citizens to homicide in 2016. The same year, the European Union, with 28 countries totaling 513 million people, had 5,351 homicides, while China, with over 1.5 billion inhabitants, had a little over 8,600 murders. Given the amount of shock, fear, and sensationalism such comparative rare murders can elicit, imagine the amount of terror and trauma experienced by people in Central and South America.

In recent years, growing numbers of families from Central America, including women and children, have fled to the U.S. because of horrific violence. Gangs such as MS-13 and Barrio 18 enforce a reign of terror, dictating even where people can go to school or get medical care. El Salvador’s murder rate of 83 per 100,000 people in 2016—the world’s highest—was nearly 17 times that of the U.S.

A new study by Vanderbilt University shows that the strongest factor in predicting whether someone emigrates from Honduras and El Salvador isn’t age, gender or economic situation, but whether they had been victimized by crime multiple times in the past year. A World Bank study found that nearly a quarter of children in one Honduran municipality suffered from post-traumatic stress disorder due to violence.

To make matters worse, pervasive corruption has enabled much if this violence, if not colluded in it: law enforcement are known to be as abusive and exploitative as gang members, and often work in concert with organized crime; politicians or police officers who are not bought are cowed into fear, pushed out, or killed.

With little to no recourse for the violence they face, plus a lack of economic activity to boot, it is little wonder thousands are fleeing for their dear lives in droves.

Source: Wall Street Journal

Over 70% of Greenhouse Gas Emissions Comes from 100 Companies

While we should all do our part to reduce pollution and greenhouse gas emissions, a recent study reported in the Guardian finds that such efforts will frankly be worthless so long as a handful of powerful private entities account for the vast majority of climate change-causing pollution.

The Carbon Majors Report (pdf) “pinpoints how a relatively small set of fossil fuel producers may hold the key to systemic change on carbon emissions,” says Pedro Faria, technical director at environmental non-profit CDP, which published the report in collaboration with the Climate Accountability Institute.

Traditionally, large scale greenhouse gas emissions data is collected at a national level but this report focuses on fossil fuel producers. Compiled from a database of publicly available emissions figures, it is intended as the first in a series of publications to highlight the role companies and their investors could play in tackling climate change.

The report found that more than half of global industrial emissions since 1988 – the year the Intergovernmental Panel on Climate Change was established – can be traced to just 25 corporate and state-owned entities. The scale of historical emissions associated with these fossil fuel producers is large enough to have contributed significantly to climate change, according to the report.

ExxonMobil, Shell, BP and Chevron are identified as among the highest emitting investor-owned companies since 1988. If fossil fuels continue to be extracted at the same rate over the next 28 years as they were between 1988 and 2017, says the report, global average temperatures would be on course to rise by 4C by the end of the century. This is likely to have catastrophic consequences including substantial species extinction and global food scarcity risks.

This puts addressing climate change square in the hands of executives, investors, and shareholders–the narrow class of individuals less likely to be impacted by climate change, best equipped to adapt to it, and most likely to be wrapped up in short-term gains ahead of long-term consequences.

Investors should move out of fossil fuels, says Michael Brune, executive director of US environmental organisation the Sierra Club. “Not only is it morally risky, it’s economically risky. The world is moving away from fossil fuels towards clean energy and is doing so at an accelerated pace. Those left holding investments in fossil fuel companies will find their investments becoming more and more risky over time.”

There is a “growing wave of companies that are acting in the opposite manner to the companies in this report,” says Brune. Nearly 100 companies including Apple, Facebook, Google and Ikea have committed to 100% renewable power under the RE100 initiativeVolvo recently announced that all its cars would be electric or hybrid from 2019.

And oil and gas companies are also embarking on green investments. Shell set up a renewables arm in 2015 with a $1.7bn investment attached and a spokesperson for Chevron says it’s “committed to managing its [greenhouse gas] emissions” and is investing in two of the world’s largest carbon dioxide injection projects to capture and store carbon. A BP spokesperson says its “determined to be part of the solution” for climate change and is “investing in renewables and low-carbon innovation.” And ExxonMobil, which has faced heavy criticism for its environmental record, has been exploring carbon capture and storage.

But for many the sums involved and pace of change are nowhere near enough. A research paper published last year by Paul Stevens, an academic at think tank Chatham House, said international oil companies were no longer fit for purpose and warned these multinationals that they faced a “nasty, brutish and short” end within the next 10 years if they did not completely change their business models.

It is also worth pointing out that while a large number of the corporate culprits are based in the West, overall they span most of the world: rich and poor, developed and developing, democratic and autocratic:

screenshot-www.theguardian.com-2018.10.23-10-19-00

Most of these companies are not household names, which reflects the low-key nature of the global energy industry: many of us in the developed world take for granted the seemingly endless supply of electricity, gasoline, and other energy supplies. The extraction, production, refinement, and delivery of these fossil fuels occurs unseen, involving a complex network of companies dispersed around the globe.

Thus, as with so many other solutions to climate change, there will need to be a comprehensive, globally coordinated effort by the international community to reign in on pollution and environmental degradation, in cooperation with–or even in opposition to–some of the most powerful corporate interests in the world.

Is there any possibility that the global masses can apply pressure their governments (and to a lesser degree their businesses) to take action? Are these individuals and institutions too wealthy and far removed from the public to be influenced and accountable to either governments or their constituents? What are your thoughts?

The Three Richest Americans Hold More Wealth Than Bottom 50 Percent

Using data from Forbes’ annual ranking of the 400 richest Americans, the Institute for Policy Studies, a left-leaning D.C. think tank, published a report last fall finding incredible wealth disparities in the United States. As Forbes reported:

Most dramatically, it found that the country’s three richest individuals—Bill Gates, Warren Buffett and Jeff Bezos—collectively hold more wealth than the bottom 50% of the domestic population, “a total of 160 million people or 63 million American households.” Roughly a fifth of Americans “have zero or negative net worth,” the authors wrote.

Bezos, Gates and Buffett held a combined fortune of $248.5 billion in mid-September, when numbers were locked in for the 2017 Forbes 400list. Since then that figure has risen to an estimated $263 billion, thanks largely to Bezos, whose worth has jumped more than $13 billion as the result of a surge in Amazon’s share price.

“If left unchecked, wealth will continue to accumulate into fewer and fewer hands, a trend we’ve been witnessing for decades,” wrote Josh Hoxie, one of the study’s co-authors.

Continue reading

Photos: Chinese-American Rivalry in Asia

As China grows more powerful, it is challenging America’s decades-long dominance of Southeast Asia. As New York Times reported, most countries are either leaning towards China or playing both sides to their advantage.

U.S. v. China

Even staunch U.S. allies are increasingly orienting towards China, namely in terms of commercial ties: every Asian country now trades more with China than the U.S., often by a factor of two to one, an imbalance that will only widen as China’s economic growth outpaces that of America’s.

screenshot-www.nytimes.com-2018.10.16-16-11-27

Nevertheless, many of the 20 countries caught between the two powers do not want to choose sides, instead opting to pursue “strategies intended to draw maximum benefit from both powers, minimize risks of angering either and preserve their independence”.  This is far from the clean lines drawn between the Americans and Soviets in Cold War-era Europe.

 

America’s Surprisingly Bipartisan Love of Foreign Aid

Fun fact: in these hyper-partisan times (to say the least), there is one area that continues to receive surprisingly bipartisan support: foreign aid. Despite the efforts of our isolationist administration to slash the foreign aid budget by a third, the GOP-controlled Congress maintained the budget from last year at $35 billion—the largest in absolute terms of any country in the world (though several countries, mostly in Northern Europe, donate more as percentage of their GDP).

In fact, programs for improving maternal health and combating tuberculosis actually saw increases in funding, and the Trump Administration recently announced a significant–and universally surprisingly–increase in U.S. foreign aid, as The New York  reported:

With little fanfare, Mr. Trump signed a bill a little over a week ago that created a new foreign aid agency — the United States International Development Finance Corporation — and gave it authority to provide $60 billion in loans, loan guarantees and insurance to companies willing to do business in developing nations.

The move was a significant reversal for Mr. Trump, who has harshly criticized foreign aid from the opening moments of his presidential campaign in 2015. Since becoming president, Mr. Trump has proposed slashing $3 billion in overseas assistance, backed eliminating funding for the Overseas Private Investment Corporation and taken steps to gut the United States Agency for International Development, the State Department agency that dispenses $22.7 billion a year in grants around the world.

The president’s shift has less to do with a sudden embrace of foreign aid than a desire to block Beijing’s plan for economic, technological and political dominance. China has spent nearly five years bankrolling a plan to gain greater global influence by financing big projects across Asia, Eastern Europe and Africa.

Setting aside the realpolitik behind this move, it is worth flagging how this big new aid agency resulted from a bipartisan act of Congress that included die-hard Republican lawmakers, of the sort who would normally write off foreign aid as a waste of taxpayer money.

Perhaps just as surprisingly is that this level of broad, bipartisan support for foreign aid is not new: foreign aid more than doubled under George W. Bush. America’s AIDS relief program, PEPFAR, provides over 14 million people with access to life-saving medicine, while funding for anti-malaria measures has saved another six million lives.  And while the administration continues to propose slashes to foreign funding, Congress continues to stand firm; as recently as last month, Democrats and Republicans rejected an effort by the executive branch to claw back $3 billion allocated for foreign funding.

Even right-wing Republicans like Ted Yoho of Florida, who ran in opposition to foreign aid—often capitalizing on the fact that Americans exaggerate how much we spend on it—have often reversed their position once in office. In fact, the erstwhile Tea Party Republican was one of the principal sponsors of the act establishing the new $60 billion aid agency.

There are several reasons why something as seemingly polarizing as foreign aid remains stubbornly bipartisan. These include an attachment to American global leadership, a genuine sense of moral duty, and the perception of foreign aid as furthering national interest (part of the reason it got a boost under W. Bush is that the failures of Iraq and Afghanistan prompted conservatives to rethink the reliance on military power as the sole avenue of global influence).

Of course, these reasons also betray cynical motivations, as reinforced by Trump’s motive behind this latest aid agency: to further influence in certain countries and regions, especially against foreign rivals; to back projects that may enrich U.S. companies and businesses that provide these services; or to maintain a veneer of morality as a smokescreen over immoral policies.