Category Archives: Media

The world is sitting on a $400 trillion financial time bomb

By Allison Schrager – Financial disaster is looming, and not because of the stock market or subprime loans. The coming crisis is more insidious, structural, and almost certain to blow up eventually.

The World Economic Forum (WEF) predicts that by 2050 the world will face a $400 trillion shortfall (pdf) in retirement savings. (Yes, that’s trillion, with a “T”.)

The US will find itself in the biggest hole, falling $137 trillion short of what’s necessary to fund adequate retirements in 2050. It is followed by China’s $119 trillion shortfall.

Much of the massive shortfall is baked into retirement systems; setups in which nobody, neither individuals nor the government, saves enough.

About three-quarters of the projected comes from underfunded promises from governments, with the rest mostly accounted for by under-saving on the part of individuals. more> https://goo.gl/UUisEk

End-times for humanity

BOOK REVIEW

Death of the Posthuman: Essays on Extinction, Author: Claire Colebrook.
This Changes Everything: Capitalism vs the Climate, Author: Naomi Klein.
Antifragile, Author: Nicholas Taleb.
A Vindication of the Rights of Woman, Author: Mary Wollstonecraft.
The Social Contract, Author: Jean-Jacques Rousseau.

By Claire Colebrook – The panic isn’t merely about civilisational threats, but existential ones. Beyond doomsday proclamations about mass extinction, climate change, viral pandemics, global systemic collapse and resource depletion, we seem to be seized by an anxiety about losing the qualities that make us human.

Social media, we’re told, threatens our capacity for empathy and genuine connection.

How did we arrive at this moment in history, in which humanity is more technologically powerful than ever before, and yet we feel ourselves to be increasingly fragile?

What contemporary post-apocalyptic culture fears isn’t the end of ‘the world’ so much as the end of ‘a world’ – the rich, white, leisured, affluent one. Western lifestyles are reliant on what the French philosopher Bruno Latour has referred to as a ‘slowly built set of irreversibilities’, requiring the rest of the world to live in conditions that ‘humanity’ regards as unlivable.

And nothing could be more precarious than a species that contracts itself to a small portion of the Earth, draws its resources from elsewhere, transfers its waste and violence, and then declares that its mode of existence is humanity as such. more> https://goo.gl/1nriI9

Our obsession with GDP and economic growth has failed us, let’s end it

BOOK REVIEW

Wellbeing Economy: Success in a World Without Growth, Author: Lorenzo Fioramonti.

By Lorenzo Fioramonti – The idea that the economic “pie” can grow indefinitely is alluring. The “growth first” rule has dominated the world since the early 20th century. No other ideology has ever been so powerful: the obsession with growth even cut through both capitalist and socialist societies.

But what exactly is growth? Strangely enough, the notion has never been reasonably developed.

For common sense people, there is growth when—all things being equal—our overall wealth increases.

Paradoxically, our model of economic growth does exactly the opposite of what common sense suggests.

Here are some examples. If I sell my kidney for some cash, then the economy grows. But if I educate my kids, prepare and cook food for my community, improve the health conditions of my people, growth doesn’t happen.

If a country cuts and sells all its trees, it gets a boost in GDP. But nothing happens if it nurtures them. more> https://goo.gl/k6G27r

Resisting Authoritarian Populism: Lessons From/For Singapore

By Kenneth Paul Tan – Although a young, small, and multi-ethnic nation-state, Singapore is prosperous, peaceful, and surprisingly influential in the global imagination. But its international image has attracted contradictory reactions.

History presents numerous examples of fragility where liberal democracies are concerned. Political philosophy tells us that diversity—and nearly every society today is diverse—can weaken the  communitarian basis of a society, making it difficult for the state to function well and eroding the trust that binds people to one another and to their institutions.

Without a strong institutional basis, the nation-state can become vulnerable to authoritarian populism, particularly when hit by crisis. Out of a demoralized society, moral and political entrepreneurs, often skillful demagogues, emerge and compete for power by mobilizing a collective sense of victimhood directed against an allegedly corrupt establishment as well as scapegoats such as immigrants, ethnic minorities, and sexual minorities, upon whom the entire blame for all of society’s ills are placed. more> https://goo.gl/8GKyGP

Updates from Chicago Booth

By Robert Shiller – The human species, everywhere you go, is engaged in conversation. We are wired for it: the human brain is built around narratives.

We call ourselves Homo sapiens, but that may be something of a misnomer—sapiens means wise. The evolutionary biologist Stephen Jay Gould said we should be called Homo narrator. Your mind is really built for narratives, and especially narratives about other humans. That is why advertisers tend to focus not on a product itself, but rather on somebody doing some human action related to the product.

Narratives are contagious: they spread from one person to another. Some narratives disappear quickly; others can last a long time.

The stock market gives us opportunities to construct narratives. For instance, earlier this year there were narratives around the Dow-Jones Industrial Average eclipsing 20,000 points for the first time in its history.

In reality, that’s absolutely meaningless: the Dow started at 40 points in 1896, but it could have started at 50, or something else. Yet we constructed narratives around this moment.

Why do narratives affect economics? Because when we want to understand a depression or recession, for instance, we have to understand why some people will stop spending. Recessions happen when people stop buying things: they don’t buy a new car; they don’t buy a new house. So why not? They might say they stopped spending because recession struck, but that doesn’t tell me why the recession started. I think the catalysts for events such as that are related to narratives. more> https://goo.gl/hjpU4r

Related>

Why Wall Street Went Astray: Eight Ways To Humanize Finance

BOOK REVIEW

The Wisdom of Finance: Discovering Humanity in the World of Risk and Return, Author: Mihir Desai.

By Steve Denning – Why did Wall Street go astray?

For most of the last several centuries, bankers and financiers were the pillars of society, the bastions of morality, the people in society that everyone respected.

Yet over the last few decades, Wall Street has become almost a synonym of evil. What went wrong? What can be done to restore the financial sector to the level of respect that it once enjoyed?

For people outside finance: Finance is deeply misunderstood, and we need to make it understandable to people so that they don’t demonize it. The way to do that is not through equations or graphs, but through stories. Finance is central to our lives and ignorance of it is very costly on an individual and societal level.

For people in finance: The core ideas of finance are quite life affirming and very noble — we should make people in finance aspire to them rather than expect so little of them. If finance is going to rehabilitate itself, and I do think it’s broken in many ways, the way to rehabilitate is not through regulation, or outrage, but rather returning to its basic underlying ideas, which are actually quite wonderful. In the long run, that’s how we make finance better — by getting back to the core ideas. more> https://goo.gl/Kr4Mnj

American dreaming 3.0

BOOK REVIEW

American Nietzsche: A History of an Icon and His Ideas, Author: Jennifer Ratner-Rosenhagen.
The Epic of America, Author: James Truslow Adams.
Dreams from My Father, Author: Barack Obama.
A Discourse on the Method, Author: René Descartes.
The Liberal Imagination, Author: Lionel Trilling.
The Third Reich of Dreams, Author: Charlotte Beradt.
Freedom Dreams, Author: Robin Kelley.

By Jennifer Ratner-Rosenhagen – Because the ‘American Dream’ is such a key phrase of the country’s self-understanding, it feels like a founding ideal of the US. However, it is not so old. It was scarcely used before the historian James Truslow Adams first popularized it in The Epic of America (1931) as both a vision that united centuries of US history, and also a universal human aspiration. It was, wrote Adams, ‘that dream of a land in which life should be better and richer and fuller for every man, with opportunity for each according to his ability or achievement’. The ‘American Dream’ represented equality, social mobility and opportunity.

How to assess the potential political uses of dreams?

The great potential of dreams for our public life lay in their ability to help people question that which goes by the clumsy and overworked moniker of ‘reality’ in political debate. Taking dreams seriously can lead to the kind of fundamental, unobvious discussions that those who wield ‘reality’ to browbeat people into ignorant submission, or dutiful obedience to whatever status quo, use to defend it. But these are examples when ‘reality’ is on its best behavior. more> https://goo.gl/mwXNYT

Murphy’s Law is totally misunderstood and is in fact a call to excellence

By Corinne Purtill – You have likely at some point heard the saying known as Murphy’s Law: Everything that can go wrong will.

Murphy’s Law originated at Edwards Air Force Base in southern California, the same place where Chuck Yeager broke the sound barrier in 1947. Around that time, a team of Edwards engineers was working on Project MX981, a mission to determine the amount of force a human body could sustain in a crash.

In the late 1940s, the team received a visit from an Air Force captain and reliability engineer named Edward A. Murphy, Jr. The details of the story vary. The best and most comprehensive history of Murphy’s Law comes from documentarian Nick T. Spark, who interviewed the surviving witnesses more than 50 years after the fact. more> https://goo.gl/CwNE5e

Skills and Global Value Chains

OECD – Since 1990s, the world has entered a new phase of globalization. Information and communication technology, trade liberalization and lower transport costs have enabled firms and countries to fragment the production process into global value chains (GVCs): many products are now designed in one country and assembled in another country from parts often manufactured in several countries. To seize the benefits of GVCs, countries have to implement well-designed policies that foster the skills their populations need to thrive in this new era.

GVCs give workers the opportunity to apply their skills all around the world without moving countries: an idea can be turned into a product more easily and those who are involved in production can benefit from this idea.

GVCs give firms the possibility of entering production processes they might be unable to develop alone. At the same time, the demand for some skills drops as activities are offshored, exposing workers to wage reductions or job losses in the short term. In the long term, however, offshoring enables firms to reorganize and achieve productivity gains that can lead to job creation.

The rise of GVCs has prompted a backlash in public opinion in some countries. This negative reaction has sometimes focused on the leading role of multinationals and foreign direct investment. Multinationals can boost production and job creation in the host country by engaging local companies as suppliers, but they can also quickly relocate parts of the production process from country to country. This increases uncertainty about the demand for jobs and skills in each country, while making uncoordinated policy response in each country less effective. Multinationals are often seen as responsible for offshoring jobs while contributing to the increase in top incomes.

In all countries, more educated workers enjoy high job quality than low-educated ones. But the gap in job strain between low-educated and high-educated workers is larger in countries that participate more in GVCs (Estonia, Hungary, Poland and Slovenia). Investing in skills along with increasing participating in GVCs is particularly important in developing economies that tend to be at the lower end of value chains, where working conditions are more often poor.

Strong cognitive skills are not enough on their own to achieve good performance in GVcs and to specialize in technologically advanced industries. Industries involve the performance of several types of tasks, but all require social and emotional skills as well as cognitive skills. To succeed in an internationally competitive environment, countries and industries needs in addition to those related to their domain specializations. more> https://goo.gl/a8hPgv

“I have nothing to hide. Why should I care about my privacy?”

By Fábio Esteves – There are two sets of reasons to care about your privacy even if you’ve got nothing to hide: ideological reasons and practical reasons.

Don’t confuse privacy with secrecy. I know what you do in the bathroom, but you still close the door. That’s because you want privacy, not secrecy.

A company like Facebook or Google allows you to upload unlimited data to their servers, for free. What’s their business model? How do they make so much money? They sell your info to advertising companies. But they never asked you if you wanted to sell your information. If someone asked you in person 100 questions about your personal life to sell it, would you answer them? Probably not, right? But you let this happen every time you use a service that makes money selling your info. more> https://goo.gl/mstSm5