Monthly Archives: January 2020

A Foreign Policy for All

Strengthening Democracy—at Home and Abroad
By Elizabeth Warren – Around the world, democracy is under assault. Authoritarian governments are gaining power, and right-wing demagogues are gaining strength. Movements toward openness and pluralism have stalled. Inequality is growing, transforming rule by the people into rule by wealthy elites. And here in the United States, many Americans seem to accept—even embrace—the politics of division and resentment.

How did we get here?

There’s a story Americans like to tell ourselves about how we built a liberal international order—one based on democratic principles, committed to civil and human rights, accountable to citizens, bound by the rule of law, and focused on economic prosperity for all. It’s a good story, with deep roots. But in recent decades, Washington’s focus has shifted from policies that benefit everyone to policies that benefit a handful of elites. After the Cold War, U.S. policymakers started to believe that because democracy had outlasted communism, it would be simple to build democracy anywhere and everywhere. They began to export a particular brand of capitalism, one that involved weak regulations, low taxes on the wealthy, and policies favoring multinational corporations. And the United States took on a series of seemingly endless wars, engaging in conflicts with mistaken or uncertain objectives and no obvious path to completion.

The impact of these policy changes has been devastating. While international economic policies and trade deals have worked gloriously well for elites around the world, they have left working people discouraged and disaffected. Efforts to promote the United States’ own security have soaked up huge resources and destabilized entire regions, and meanwhile, U.S. technological dominance has quietly eroded. Inequality has grown worldwide, contributing to an unfolding nationalist backlash that seeks to upend democracy itself. It is little wonder that the American people have less faith in their government today than at any other time in modern U.S. history. The country is in a moment of crisis decades in the making.

To fight back, we need to pursue international economic policies that benefit all Americans, not merely an elite few. We need strong yet pragmatic security policies, amplified by diplomacy. And the United States can no longer maintain the comfortable assumption that its domestic and foreign policies are separate. Every decision the government makes should be grounded in the recognition that actions that undermine working families in this country ultimately erode American strength in the world. In other words, we need a foreign policy that works for all Americans.

The urgency of the moment cannot be overstated. At home and abroad, democracy is on the defense. The details of the problem vary from place to place, but one cause stands out everywhere: the systematic failure to understand and invest in the social, political, and economic foundations on which democracies rest. If we do not stand up to those who seek to undermine our democracy and our economy, we will end up as bystanders to the destruction of both. more>

Why the recent debt buildup is a concern

By Peter Nagle – Since 2010, debt in emerging market and developing economies has grown to record highs.  Current low interest rates —which markets expect to be sustained in the medium term—appear to mitigate some of the risks associated with high debt. However, emerging market and developing economies (EMDEs) also face weak growth prospects, mounting vulnerabilities, and elevated global risks. A menu of policy options is available to reduce the likelihood of the current debt wave ending in crises and, if crises were to take place, to alleviate their impact.

Global debt reached a record-high of about 230 percent of global GDP in 2018.  Total EMDE debt also reached an all-time high of about 170 percent of GDP in 2018, an increase of 54 percentage points of GDP since 2010.

Over the past fifty years, there have been four historical waves of debt accumulation:  1970-89, 1990-2001, 2002-09, and since 2010. The latest wave, which started in 2010, has been the largest, fastest and most broad-based increase of the four.

Rapid increases in debt are common among EMDEs. Between 1970 and 2009, the sector accumulating debt shifted from the public to the private sector. However, since 2010, both governments and private sectors have rapidly accumulated debt. more>

Updates from McKinsey

Jobs lost, jobs gained: What the future of work will mean for jobs, skills, and wages
By James Manyika, Susan Lund, Michael Chui, Jacques Bughin, Jonathan Woetzel, Parul Batra, Ryan Ko, and Saurabh Sanghvi – The technology-driven world in which we live is a world filled with promise but also challenges. Cars that drive themselves, machines that read X-rays, and algorithms that respond to customer-service inquiries are all manifestations of powerful new forms of automation. Yet even as these technologies increase productivity and improve our lives, their use will substitute for some work activities humans currently perform—a development that has sparked much public concern.

Building on our January 2017 report on automation, McKinsey Global Institute’s latest report, Jobs lost, jobs gained: Workforce transitions in a time of automation (PDF–5MB), assesses the number and types of jobs that might be created under different scenarios through 2030 and compares that to the jobs that could be lost to automation.

The results reveal a rich mosaic of potential shifts in occupations in the years ahead, with important implications for workforce skills and wages. Our key finding is that while there may be enough work to maintain full employment to 2030 under most scenarios, the transitions will be very challenging—matching or even exceeding the scale of shifts out of agriculture and manufacturing we have seen in the past.

  1. What impact will automation have on work?
  2. What are possible scenarios for employment growth?
  3. Will there be enough work in the future?
  4. What will automation mean for skills and wages?
  5. How do we manage the upcoming workforce transitions?

We previously found that about half the activities people are paid to do globally could theoretically be automated using currently demonstrated technologies. Very few occupations—less than 5 percent—consist of activities that can be fully automated. more>

Updates from ITU

At Davos, UN Broadband Commission advocates for financing inclusive meaningful connectivity for sustainable impact

ITU – The ITU UNESCO Broadband Commission for Sustainable Development examined new financing models that would help accelerate ‘meaningful universal connectivity’ on the sidelines of the Annual Meeting of the World Economic Forum in Davos, Switzerland.

Today, an estimated 3.6 billion people remain offline. The majority of the unconnected live in least developed countries, where an average of just two out of every ten people are online.

The Commissioners agreed that targeted efforts are needed to lower the cost of broadband, as well as innovative policies to finance the rollout of broadband infrastructure to unconnected populations. Collaboration among diverse stakeholders will be key to making universal and meaningful connectivity a reality for all.

“We are on the verge of a new era that requires quick, effective and innovative financing instruments to connect the remaining unconnected. The old ways can no longer work in this era and we can no longer afford having anyone left behind,” said Paula Ingabire, Minister of ICT and Innovation, Republic of Rwanda, representing President Paul Kagame, who Co-Chairs the Commission. more>

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What if Competition Isn’t As “Natural” As We Think?

By John Favini – “The struggle for life,” Darwin deduced, would naturally select those beings whose hereditary mutations made them most fit to a specific environment. Over successive generations, scientists came to see the driving force behind evolution as perpetual competition between discrete individuals, a biological arms race to eat and reproduce in a world of scarcity.

Fast forward a century and a half, and “survival of the fittest”—the expression social theorist Herbert Spencer coined to sum up Darwin’s thinking—is as much a cultural cliché as it is a scientific theory. Hell, your worst colleague at the office might even offer it as a justification for his one-upmanship. More than just a cliché, though, the supposed naturalness of competition has played a central role in substantiating the laissez-faire variety of capitalism the majority of the American political spectrum has championed for the past four or so decades.

Indeed, any non-market-based solution to social issues usually falls prey to claims of utopianism, of ignoring the fundamental selfishness of the human species. Advocates for welfare programs, for instance, often run up against criticism that their policy proposals fail to understand to importance of “losing,” that they lessen the stakes of the competition innate to human social life.

Similarly, collectively owned spaces or institutions (like communal land trusts or co-ops) are often presumed short-lived or inefficient, doomed to suffer the “tragedy of the commons” as the innate self-interest of each member leads to an overuse of collective resources—a thesis that has been debunked again and again since its first articulation by Garrett Hardin in 1968.

To put it simply, we have let Darwinism set the horizon of possibility for human behavior. Competition has become a supposed basic feature of all life, something immutable, universal, natural.

Yet new research from across various fields of study is throwing the putative scientific basis of this consensus into doubt. Mind you, there have always been people, scientists and otherwise, who conceived of life outside a Darwinian paradigm—the idea of evolutionary biology is and has been a conversation among a mostly white and male global elite. Yet, even within centers of institutional power, like universities in North America, competition’s position as the central force driving evolution has been seriously challenged recently. In fact, criticisms have been mounting at least since biologist Lynn Margulis began publishing in the late ’60s

Put simply, life is beginning to look ever more complex and ever more collaborative. All this has fractured Western biology’s consensus on Darwin. In response to all these new insights, some biologists instinctively defend Darwin, an ingrained impulse from years of championing his work against creationists. Others, like Margulis herself, feel Darwin had something to offer, at least in understanding the animal world, but argue his theories were simplified and elevated to a doctrine in the generations after his passing.

Others are chartering research projects that depart from established Darwinian thinking in fundamental ways—like ornithologist Richard Prum, who recently authored a book on the ways beauty, rather than any utilitarian measure of fitness, shapes evolution. Indeed, alongside the research I have explored here, works by scientists like Carl Woese on horizontal gene transfer and new insights from epigenetics have pushed some to advocate for an as-yet-unseen “Third Way,” a theory for life that is neither creationism nor Neo-Darwinian evolution. more>

Updates from McKinsey

Five ways that ESG creates value
Getting your environmental, social, and governance (ESG) proposition right links to higher value creation.
By Witold Henisz, Tim Koller, and Robin Nuttall – Your business, like every business, is deeply intertwined with environmental, social, and governance (ESG) concerns. It makes sense, therefore, that a strong ESG proposition can create value—and in this article, we provide a framework for understanding the five key ways it can do so.

Just as ESG is an inextricable part of how you do business, its individual elements are themselves intertwined. For example, social criteria overlaps with environmental criteria and governance when companies seek to comply with environmental laws and broader concerns about sustainability. Our focus is mostly on environmental and social criteria, but, as every leader knows, governance can never be hermetically separate. Indeed, excelling in governance calls for mastering not just the letter of laws but also their spirit—such as getting in front of violations before they occur, or ensuring transparency and dialogue with regulators instead of formalistically submitting a report and letting the results speak for themselves.

Thinking and acting on ESG in a proactive way has lately become even more pressing. The US Business Roundtable released a new statement in August 2019 strongly affirming business’s commitment to a broad range of stakeholders, including customers, employees, suppliers, communities, and, of course, shareholders.

Of a piece with that emerging zeitgeist, ESG-oriented investing has experienced a meteoric rise. Global sustainable investment now tops $30 trillion—up 68 percent since 2014 and tenfold since 2004.

The acceleration has been driven by heightened social, governmental, and consumer attention on the broader impact of corporations, as well as by the investors and executives who realize that a strong ESG proposition can safeguard a company’s long-term success. The magnitude of investment flow suggests that ESG is much more than a fad or a feel-good exercise. more>

Updates from Ciena

The next sports phenomenon requires the network
The latest sports craze doesn’t involve a ball or a helmet, it’s esports, and it is filling arenas and drawing millions of online fans. Ciena’s Kevin Sheehan tells the story of his recent experience at ESL One, and how massive online events like these require a network that defeats all challengers.
By Kevin Sheehan – As the gaming industry grows to become a $152 billion-a-year giant, with over 2.5 billion gamers globally, video games have evolved way beyond casual entertainment. We are now talking about esports – competitive multiplayer electronic games played by professional athletes for substantial cash prizes. Tournaments like ESL One attract thousands of spectators, and millions of fans streaming the event live.

ESL One was held at Barclays Center, a massive arena that several NBA and NHL teams call home. The seats were full, and big names sponsored the event. The enthusiastic crowd loudly supported their favorite teams, and also demanded a high degree of interaction with the game and the gamers. They and the millions streaming remotely will make comments on game play, play the game, and interact with each other and the players all in real time.

I was enthralled as I watched eight of the world’s best Counter-Strike Global Offensive teams square off. There was an enormous, high-definition screen above the teams that cycled through each player’s field-of-view on the battlefield, while three announcers (yep 3) rapidly called the play-by-play and provided color commentary.

I wondered, what are the network requirements for ESL to create the robust and secure infrastructure that makes all this possible? In a strange way, the network is on display during this live tournament almost like an NBA superstar’s shooting ability. If an image locked, frames are dropped, or a weapon doesn’t fire on cue, the world will see, and “the network” would be to blame. And don’t forget, there is a lot of money on the line. more>

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Updates from Chicago Booth

The questions that will shape the future of capitalism
Advocates of free markets must engage in the public debate about them
By John Paul Rollert – What is the promise of capitalism?

That may seem like a strange question, and when I ask it of my MBAs, I suspect they regard it as an exercise in the pedagogical pastime Guess What Teacher Is Thinking. Still I ask it, for I hope it prompts my students to think about the kinds of problems capitalism is equipped to solve as well as those that are beyond its compass.

This is hardly a matter of idle speculation, especially for those who have good reason to believe that they will someday enjoy a disproportionate amount of the system’s spoils. Those fortunate individuals sometimes need to be reminded that free markets, however mighty, will not mend their marriage, relieve their cold, or stop their brother-in-law from bragging about his golf game. Indeed, there are plenty of things capitalism can’t do, and reflecting on them is a good way of distinguishing what it can do—and what it should.

Naturally, what capitalism can and should do are not one and the same. The first is a technical matter best left to economists; the second is more of an ideological affair, the province of moral and political philosophy. The distinction is an important one, but it tends to fade whenever one believes that free markets will solve most any problem: moral, social, and political as well as economic. If capitalism can do anything, so the thinking goes, then it should do everything.

Now, with the kind of intellectual prodding the question above intends, almost no one honestly believes that capitalism can, or should, do everything. Yet up until recently, it passed for conventional wisdom, in the United States and throughout most of the developed world, that capitalism could do most things, that the obvious solution to nearly any pressing problem of social organization was freer trade, fewer regulations, and far less government intervention. more>

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Class struggle à la droite

Populism is boosted by economic crises, but its roots are cultural.
By Claus Leggewie – Populism is a method. It works by mobilizing an imaginary homogeneous entity called ‘the people’ against an equally ill-defined and generally despised ‘elite’, thus radically simplifying the political and social field. Such simplifications have served to orchestrate conflicts since the 19th century and in particular during economic and cultural crises—on the left, in terms of a class struggle against the powers that be; on the right, in terms of a confrontation with an ‘other’, be it foreigners or minorities.

Sometimes these two tendencies have gone hand in hand—for instance, when migrant workers have been portrayed as wage-squeezing competitors. In fact, though, a populism that purports to be about solidarity with the ‘common people’ always promotes social disunity.

As a catchphrase in political debates, populism may be useful; a productive analytical concept it however certainly is not. The ‘people’ our modern-day, nationalist populists champion are no longer defined socioeconomically (as in the ‘proletariat’). Rather, the populists employ ethnic constructs (such as Biodeutsche or français de souche), which suggest a homogeneous community with a shared ancestry, a long history and a solid identity.

It is to these ‘people’—not the actual, pluralist demos—that populists ascribe an authority which exceeds that of institutions: ‘The people stand above the law,’ as a slogan of the Austrian ‘Freedom Party’ goes.

In this view, there is no legitimate ‘representation’ through democratic processes. Instead, ‘the people’ form movements which back charismatic leaders and legitimize them retroactively by means of plebiscites. Right-wing movements may be diverse, but what they all have in common is a worldview that is utterly authoritarian (and usually patriarchal and homophobic too).

One’s own nation, ethnically defined, takes center-stage—think ‘America first!’ or La France d’abord! more>

Updates from McKinsey

The drumbeat of digital: How winning teams play
Pace and power go hand in hand for digital leaders, which typically run four times faster and pull critical strategic levers two times harder than other companies do.
By Jacques Bughin, Tanguy Catlin, and Laura LaBerge – Most executives we know have a powerful, intuitive feel for the rhythm of their businesses. They know how hard and fast to pull strategic levers, move their organization, and drive execution to achieve their objectives. Or at least they did. Digitization has intensified the rhythm of competition in many industries, leaving executives adrift, with information-gathering systems that are too slow or disconnected, direction-setting approaches that are too timid, and talent-management norms that are misaligned and incremental.

These leaders know their companies must adjust and accelerate. Digital is putting pressure on profit pools as it transfers an increasing share of value to consumers. Furthermore, those profit pools are bleeding across traditional industry lines as advanced technologies enable companies to forge into adjacencies, changing who in the value chain is making money, what share of the pie they capture, and how. The slow and inefficient are left behind, competing for scraps.

What is unclear to these executives, however, is how much and how fast to adapt their business rhythms. The exhortation to “change at the speed of digital” generates more anxiety than answers. We have recently completed some research that provides clear guidance: digital leaders appear to keep up a drumbeat in their businesses that can be four times faster, and twice as powerful, as those of their peers.

You can’t quicken the pace of an organization by fiat. You have to build it by accelerating the frequency of manageable practices that are integral to achieving key goals, such as serving the customer or driving internal efficiency. These “light-touch” actions are low risk and low investment, but they can provide high-yield returns. We have grouped them into two buckets that can help mold incumbents into digital players.

How often does your organization analyze customer data to look proactively for new ways of delighting your customers?

How frequently do your senior business leaders take time to investigate and understand new digital technologies so that they recognize which ones are truly relevant to their areas of the business?

How quickly and consistently does your company share lessons acquired from test-and-learn experiments performed by those on the front lines? more>