Daily Archives: December 5, 2019

Updates from McKinsey

How smart choices on taxation can help close the growing fiscal gap
The growing fiscal gap has policy makers in a difficult position. Swift action in a few areas can help them improve the operational efficiency of fiscal systems.
By Aurélie Barnay, Jonathan Davis, Jonathan Dimson, and Marco Dondi – Governments around the world have implemented a range of fiscal and debt measures to fund policy initiatives over recent decades. As a result, tax revenues as a proportion of GDP have risen four percentage points across Organization for Economic Cooperation and Development (OECD) countries since 1980. However, many governments remain inadequately funded. Despite higher tax revenues, spending is rising faster than income, leading to widening budget deficits and higher levels of debt.

Four distinct trends are playing out: increasing automation in the workplace, leading to pressure on employment; the evolution of global trade through the proliferation of e-commerce and digital business, raising questions over cross-border taxation; rising self-employment; and an aging population. Each of these could further widen the fiscal deficit in the years ahead. Moreover, we see all four accelerating, placing policy makers in an ever-tightening fiscal bind.

Basic economics provides two options for balancing the books: either increase revenues or decrease spending.

The bottom line for governments is that there are no easy answers. Whether they seek to increase taxation or boost efficiency, they are likely to face headwinds. Still, decisive and rapid action is essential to optimize tax collections and keep pace with an inevitable rise in demand for services.

Tax revenues in OECD countries have risen slightly over the past 35 years. However, spending has risen more, leading to widening deficits that governments have bridged with debt. OECD tax revenues were 34 percent of GDP in 2017. Because of tax deficits and the effects of the 2008 financial crisis, the average ratio of gross debt to GDP rose from 66 percent of GDP in 1995 to 88 percent in 2017.

Sources of tax revenue have remained stable over time. Over three decades, personal income and consumption together accounted for 82 to 89 percent of revenues. The biggest single contributor was payroll and income tax, accounting for 50 to 55 percent of revenues (even though the contribution of personal income tax declined by nearly 7 percentage points). Consumption and excise duties remain little changed at 32 to 34 percent of revenues.

More people are working for themselves, either as a contractor to several companies or a single company. This emerging gig economy accounts for an estimated 28 percent of EU and US employment. The proportion would rise to 46 percent if everyone had their preferred working arrangement, according to MGI research.

However, the gig economy creates challenges for tax authorities. First, independent workers are generally less compliant than their employed peers, and in some countries are required to pay less taxes. Evidence from the US suggests that workers subject to limited information reporting, such as the self-employed, have an around 50 percentage point lower rate of tax compliance than traditional workers. There are also ongoing legal debates in some jurisdictions over whether gig economy workers are employees for the purposes of worker classification and social security contributions.

Governments can close the widening gap between revenues and expenditures in a variety of ways through tax revenues, nontax revenues, and spending optimization. In addition, some governments are either implementing or considering approaches based on monetary finance.

The gap between government revenues and spending has widened and is likely to continue to do so. The onus, then, is on tax authorities to act now. more>

Updates from Chicago Booth

Want to be happier? Give more to others
By Alice G. Walton – There’s scientific evidence, it turns out, to back up centuries-old religious teachings that it’s better to give than to receive. Chicago Booth’s Ed O’Brien and Northwestern PhD candidate Samantha Kassirer find that giving to others might make you happier in the long run and has staying power, whereas the joy of receiving fades quickly.

In an experiment, the researchers gave college students $5 for five days in a row and told them to spend it the same way each day. Half of the students were instructed to spend the money on themselves, say by buying a coffee daily. The other half were told to spend the money on others, for example by donating to a single charity or leaving a tip in the same coffee shop each day. Every night, the participants completed a survey in which they reported how they felt overall that day.

The happiness level of the students who spent money on themselves declined over the five days, the researchers find. But for those who donated the money, their happiness level on the fifth day was similarly high as on the first. more>

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Updates from Ciena

Because you asked. Adaptive IP.
In light of the digital disruption being driven by 5G, IoT, AI, and edge cloud, many of our customers have asked us to help them reimagine their IP networks in a way that allows them to scale in a simpler and more cost-effective way. We listened and answered their call with Ciena’s Adaptive IPTM.
By Scott McFeely – IP, or more formally referred to as Internet Protocol, is the common language that enables billions of interconnected humans and machines to “talk” to each other on a daily basis for business and consumer applications and use cases. IP is the “language” and foundation of the largest human construction project ever created – the internet – and it works because it’s based on open industry standards.

The internet has evolved over time and will continue to do so well into the future, as more humans and machines come online with new and evolving applications and use cases, such as 5G, Fiber Deep’s Converged Interconnect Network (CIN) architecture, and IP Business Services. This means that the way IP networks are designed, deployed, and managed also needs to evolve to maintain pace.

Over the decades since its introduction in the 1970s, by the legendary Vint Cerf and Bob Kahn, IP has continually evolved to maintain pace with ever-changing application and end-user demands. This evolution has also led to new RFCs and protocols being standardized, adopted, and deployed within routers (at last count there were over 8,000 RFCs and protocols). It has more importantly led to many of these protocols associated with IP no longer being required, updated, or maintained. This is analogous to human languages where words, phrases, and even whole languages, such as Latin, are no longer commonly used over time.

What do we do with these obsolete protocols? We can eliminate them from modern IP networks to reduce storage, compute, complexity, and operating costs. We call such IP networks “lean” and it allows operators to move away from traditional box-centric IP network designs running ever larger and more complex monolithic software stacks, as many traditional IP vendors have and continue to implement today.

Operators are asking for something different. They are asking for Adaptive IPTM, a simpler way to deliver IP.

Last year, we introduced Ciena’s Adaptive IP solution, based on our Adaptive NetworkTM vision, specifically to deliver IP differently. The foundation of the solution is lean IP-capable programmable infrastructure supported by multiple Ciena Packet Networking platforms, but we didn’t just stop there.

While 5G, IP business services, Fiber Deep, and other bandwidth hungry applications are driving the need for more IP at the network edge, the need for more capacity delivered with the lowest power and smallest footprint has also become key. This is particularly true for power/space-constrained DCI applications, as well as outside plant environments for cable access or 4G/5G applications. It is not surprising, then, that we are starting to see demand in the access network and for some applications in the metro for the integration of coherent optics within packet platforms. As part of our Adaptive IP solution, our packet networking platforms can leverage Ciena’s WaveLogic 5 Nano pluggables to deliver the industry’s leading coherent technology in a footprint and power-optimized form factor. more>

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Updates from Adobe

Hitting the Right Notes in Illustration
By Joe Shepter – At some point in their lives, everyone draws,” says illustrator Gabriel Silveira. “Some people continue to draw, but most stop.”

That’s the humble way the 35-year-old Brazilian describes his path to becoming a highly sought-after professional illustrator. Silveira’s futuristic and intensely graphical creations have graced the pages of magazines like ESPN, Wired, and the Harvard Business Review, and enhanced brands and events like Loot Crate and the MCM London Comic Con.

He admits that as he was growing up, he was much more of a fan than a prodigy. Early on, he discovered the Brazilian cartoonists Laerte and Angeli, as well as Franco-Belgian bandes dessinées, becoming fascinated with artists like Hergé and Moebius. From there, he moved on to American titles and developed a particular affinity for the X-Men. Along the way, he noticed that the comic books didn’t merely have an author; they also credited an illustrator.

This sparked an idea that emerged when he graduated from design school in 2005. After struggling to find a design job in Sao Paulo’s competitive advertising scene, Silveira landed a position as an assistant for noted Brazilian illustrator Carlo Giovanni, with whom he trained diligently for nine months. When Giovanni decided to take his practice in the new direction, he generously shared his editorial contacts with Silveira, who quickly established himself as a talented freelancer. more>

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