Category Archives: History

Investing in People to Build Human Capital

World Bank – Scientific and technological advances are transforming lives: they are even helping poorer countries close the gap with rich countries in life expectancy. But, poorer countries still face tremendous challenges, as almost a quarter of children under five are malnourished, and 60 percent of primary school students are failing to achieve even a rudimentary education.

In fact, more than 260 million children and youth in poorer countries are receiving no education at all.

“Human capital” – the potential of individuals – is going to be the most important long-term investment any country can make for its people’s future prosperity and quality of life.

In many countries, the workforce is unprepared for the future that is fast unfolding.

This is a key insight from the World Bank’s forthcoming World Development Report 2019: The Changing Nature of Work. The frontier for skills is moving faster than ever before. Countries need to gear up now to prepare their workforces for the tremendous challenges and opportunities that are being driven by technological change. more>

How evil happens

BOOK REVIEW

Passions and Tempers: A History of the Humours, Author: Noga Arikha.
Eichmann in Jerusalem, Author: Hannah Arendt.
The Science of Evil: On Empathy and the Origins of Cruelty, Author: Simon Baron-Cohen.
Home Fire, Author: Kamila Shamsie.

By Noga Arikha – The ‘sapiens’ in Homo sapiens does not fully describe our species: we are as violent as we are smart.

This might be why we are the only Homo genus left over in the first place, and why we have been so destructively successful at dominating our planet. But still the question nags away: how are ordinary people capable of such obscene acts of violence?

Today, biology is a powerful explanatory force for much human behavior, though it alone cannot account for horror. Much as the neurosciences are an exciting new tool for human self-understanding, they will not explain away our brutishness. Causal accounts of the destruction that humans inflict on each other are best provided by political history – not science, nor metaphysics. The past century alone is heavy with atrocities of unfathomable scale, albeit fathomable political genesis.

The social neuroscientist Tania Singer at the Max Planck Institute in Leipzig in Germany defines empathy as the ability to ‘resonate’ with the feelings of the other. It develops from babyhood on – as imitation at first, then joint attention – into the ability to adopt the point of view of another, along with a shift in spatial perception from self to other, as if one were literally stepping into another’s shoes.

This requires an ability to distinguish between self and other in the first place, an aspect of the so-called ‘theory of mind’ that one acquires over the first five years of life.

But while empathy ensures the cohesion of a group or a society, it is also biased and parochial. Revenge thrives on it. more>

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The Temp Economy and the Future of Work

BOOK REVIEW

Temp: How American Work, American Business and the American Dream Became Temporary, Author: Louis Hyman.

By Gabrielle Levy – The way people work is changing. Machines and computers reduce the need for labor. Companies have shifted to hiring relatively few permanent staff and opting instead to strike temporary contracts with outside workers.

Uber, the ride-sharing behemoth, is perhaps the best known of these modern companies, with its thousands of drivers operating as independent contractors, but it did not invent the form. The roots of the gig economy go all the way back to the years after World War II, with the creation of the first temp and consulting agencies, including Manpower Inc. and McKinsey & Co.

We will see work become less tied to a particular employer in lots of ways. For some people, that’s fantastic, If you’re a consultant or independent contractor and you have lots of control over your life and you get paid pretty well, then this is a fabulous turn. And if you are a gig worker and you are running errands for somebody else, it’s kind of a nightmarish turn.

Do people really want full-time work? Do they want secure work? And the answer is, yes and no.

Everybody likes to work when they want to work, just like every employer wants workers who will start and stop as needed.

How do we create a system where work can be flexible but we can still have a baseline level of security for our health and our families that allows us to take risks and be entrepreneurial and explore new economic possibilities? more>

Is Silicon Valley’s giant foundation just hoarding money?

By Ben Paynter – In late July, the Institute for Policy Studies warned that one of the fastest growing ways of giving to charity could be manipulated to benefit super-rich donors instead of those most in need.

The charitable vehicle in question is called a donor-advised fund (DAF), which allows donors to give money and non-cash assets, including public stock, to charity to receive an immediate tax benefit, but then wait to distribute the money. It’s a clever incentive that’s particularly en vogue among the 1%, in part because it allows for contributions of non-cash assets, such as stock, private company shares, and real estate, to avoid capital gains tax.

The issue is that there isn’t any formal timetable for that money to flow back out again, or necessary guidance on how particularly large sums might effectively be spent. Both issues appear to affect the Silicon Valley Community Foundation, a $13.5 billion cause fund that has received donations from Mark Zuckerberg, among other tech elite.

Among the 80% of charities that have tried to expand in recent years, half have exceeded their sustainable budgets, a precarious position for any organization that relies on (hard to access) grant money to remain afloat. Per Open Impact’s report, the region’s tech elite may be giving billions to philanthropy annually, but community groups have historically received next to nothing. more>

Looking Past GDP to Measure Economic Strength

By Sophie Mitra – GDP has many limitations. It captures only a very narrow slice of economic activity: goods and services. It pays no attention to what is produced, how it is produced, or how it might improve lives.

Still, many policymakers, analysts, and reporters remain fixated on the GDP growth rate, as if it encapsulates all of a nation’s economic goals, performance, and progress.

The obsession about GDP comes, in part, from the misconception that economics only has to do with market transactions, money, and wealth. But the economy is also about people.

Despite the media’s obsession with GDP, many economists would agree that economics considers wealth or the production of goods and services as means to improve the human condition.

One approach is to have a dashboard of indicators that are assessed on a regular basis. For instance, workers’ earnings, the share of the population with health insurance, and life expectancy could be monitored closely, in addition to GDP.

However, this dashboard approach is less convenient and simple than having one indicator to measure progress against. A wide set of indicators are, in fact, available already in the U.S.—but attention remains stuck on GDP. more>

The Progressives’ Plan to Win in 2018

By Elaine Godfrey – Democrats have been grappling with key questions about coalition building since the 2016 election: Should they prioritize winning back the voters they lost to Trump?

Should they attempt to woo the white voters gradually fleeing the party?

Progressives this weekend said, emphatically, no. It’s a genuine attempt to remake the Democratic Party at a time when racial and class tensions are the highest they’ve been since the 1960s—and it’s also put them on a collision course with party leaders and other Democrats.

That doesn’t mean ignoring whites and Trump voters, she says. Instead, “it’s rejecting the notion that our way to victory is having a centrist, moderate right-leaning strategy that feels like we could peel off Romney Republicans, versus investing in communities of color, marginalized groups, and progressive white people,” Anoa Changa said. “There is this notion that … we can’t address the issues of race, systemic oppression, because we don’t want to piss these voters off. We have to find a way to do both.” more>

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What did Max Weber mean by the ‘spirit’ of capitalism?

By Peter Ghosh – Max Weber’s famous text The Protestant Ethic and the Spirit of Capitalism (1905) is surely one of the most misunderstood of all the canonical works regularly taught, mangled and revered in universities across the globe.

We use the word ‘capitalism’ today as if its meaning were self-evident, or else as if it came from Marx, but this casualness must be set aside. ‘Capitalism’ was Weber’s own word and he defined it as he saw fit. Its most general meaning was quite simply modernity itself: capitalism was ‘the most fateful power in our modern life’.

More specifically, it controlled and generated ‘modern Kultur’, the code of values by which people lived in the 20th-century West, and now live, we may add, in much of the 21st-century globe. So the ‘spirit’ of capitalism is also an ‘ethic’, though no doubt the title would have sounded a bit flat if it had been called The Protestant Ethic and the Ethic of Capitalism.

Weber supposed that all previous ethics – that is, socially accepted codes of behavior rather than the more abstract propositions made by theologians and philosophers – were religious. Religions supplied clear messages about how to behave in society in straightforward human terms, messages that were taken to be moral absolutes binding on all people. In the West this meant Christianity, and its most important social and ethical prescription came out of the Bible: ‘Love thy neighbor.’

As a guide to social behavior in public places ‘love thy neighbor’ was obviously nonsense, and this was a principal reason why the claims of churches to speak to modern society in authentically religious terms were marginal.

The ethic or code that dominated public life in the modern world was very different. Above all it was impersonal rather than personal: by Weber’s day, agreement on what was right and wrong for the individual was breaking down. The truths of religion – the basis of ethics – were now contested, and other time-honored norms – such as those pertaining to sexuality, marriage and beauty – were also breaking down. more>

Updates from Chicago Booth

By Michael Maiello – Yale University’s Bryan T. Kelly, Chicago Booth’s Dacheng Xiu, and Booth PhD candidate Shihao Gu investigated 30,000 individual stocks that traded between 1957 and 2016, examining hundreds of possibly predictive signals using several techniques of machine learning, a form of artificial intelligence.

They conclude that ML had significant advantages over conventional analysis in this challenging task.

ML uses statistical techniques to give computers abilities that mimic and sometimes exceed human learning. The idea is that computers will be able to build on solutions to previous problems to eventually tackle issues they weren’t explicitly programmed to take on.

“At the broadest level, we find that machine learning offers an improved description of asset price behavior relative to traditional methods,” the researchers write, suggesting that ML could become the engine of effective portfolio management, able to predict asset-price movements better than human managers.

Of almost 100 characteristics the researchers investigated, the most successful predictors were price trends, liquidity, and volatility. more>

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What’s More Dangerous, Immigration Or Russian Meddling?

By Robert Reich – What’s the most worrisome foreign intrusion into the United States—unauthorized immigrants, Chinese imports, or interference in our democracy?

For Trump, it’s immigrants and imports. He doesn’t care much about the third.

Yet Trump continues to assert that talk of Russian meddling in American elections is “a big hoax.” And his White House still has no plan for dealing with it.

In fact, Trump has it backwards.

Illegal immigration isn’t the problem he makes it out to be. Illegal border crossings have been declining for years.

And if the Chinese want to continue to send us cheap imports that we pay for with U.S. dollars and our own IOUs, that’s as much of a potential problem for them as it is for us.

But Russian attacks on our democracy are a clear and present threat aimed at the heart of America. more>

Are Stock Buybacks Starving the Economy?

By Annie Lowrey – Stock buybacks are eating the world. The once illegal practice of companies purchasing their own shares is pulling money away from employee compensation, research and development, and other corporate priorities—with potentially sweeping effects on business dynamism, income and wealth inequality, working-class economic stagnation, and the country’s growth rate. Evidence for that conclusion comes from a new report by Irene Tung of the National Employment Law Project (NELP) and Katy Milani of the Roosevelt Institute, who looked at share buybacks in the restaurant, retail, and food industries from 2015 to 2017.

Buybacks occur when a company takes profits, cash reserves, or borrowed money to purchase its own shares on the public markets, a practice barred until the Ronald Reagan administration.

The regulatory argument against allowing the practice is that it is a way for companies to manipulate the markets; the regulatory argument for it is that companies should be able to spend money how they see fit.

In recent years, with corporate profits high, American firms have bought their own stocks with extraordinary zeal.

Federal Reserve data show that buybacks are now equivalent to 4 percent of annual economic output, up from zero percent in the 1990s. Companies spent roughly $7 trillion on their own shares from 2004 to 2014, and have spent hundreds of billions of dollars on buybacks in the past six months alone. more>