Tag Archives: Regulations

Crisis Of Globalization: Restoring Social Investment Is Key

By Robert Kuttner – Why is democracy under siege throughout the West? How much of the story is cultural or racial, and how much is economic? And can the slide into authoritarianism be reversed? I think it can.

In the remarkable three decades after World War II, the economy delivered for ordinary people and there was broad support for democracy. That era was unique in two key respects.

First, the economy not only grew at record rates for peacetime, but it also became more equal. Second—and not coincidentally—this was a period when raw capitalism was tightly regulated, on both sides of the Atlantic, economically and politically.

Banking was very limited in what products it could offer, and at what prices. It was almost like a public utility. There were no exotic securities like credit derivatives to deliver exorbitant profits and put the whole economy at risk. Globally, there were fixed exchange rates and capital controls, so bankers could not make bets against currencies and entire economies.

Organized labor was empowered. Unions were accepted as legitimate social partners and had substantial influence. This was true in both Europe and America.

In the years since then, political and financial elites have redefined trade agreements to mean not just reciprocal cuts in tariffs but broader changes in global rules to make it easier for banks and corporations to evade national regulation.

Laissez-faire, discredited and marginalized after 1929, got another turn at bat(ting). Hyper-globalization was a key instrument. And that reversion had economic and ultimately political consequences. more>

We Don’t Have Elections

BOOK REVIEW

Terms of Service: Social Media and the Price of Constant Connection, Autor: Jacob Silverman.

How tech companies merge with the nation-state
By Jacob Silverman – It should shock no one if Facebook emerges from its latest privacy imbroglio with a meager fine and a promise to do better—even as our elected leaders, whose lack of knowledge of Facebook’s workings reflected their advanced age, tut-tutted that this time Facebook has to do better.

The canon of American regulatory practices tends toward the ceremonial, with extreme deference shown toward corporations that may one day hire former regulators. Senator Lindsey Graham even invited Zuckerberg to submit possible regulations—an example of regulatory capture so blatant that “corruption” doesn’t even seem like the proper word.

Playing along, Zuckerberg expressed an openness to regulation, though he asked for a light touch, which, barring another data spillage, he should expect.

Beyond a few mild critiques, Congress’s overriding opinion of Zuck seems to be that he was a classic American success story, and perhaps—in his cunning acquisition of ungodly riches on the backs of others’ labor—he is.

To better understand Silicon Valley’s politics, we might return to the nation-state metaphor and consider technology companies as recently ascendant great powers. Endowed with impressive resources, making themselves known in assorted global capitals, their CEOs are greeted in the manner of heads of state. Their vast offshore cash reserves resemble sovereign wealth funds, whose investments have the power to shape politics. more>

Updates from Chicago Booth

Why policy makers should nudge more
By Alex Verkhivker – When policy makers around the world want to influence their constituents’ behavior, they have a few options. They can offer a carrot, such as a tax incentive, stipend, or other reward. They can use the legislative stick by passing a mandate or a ban.

But research suggests they should turn more often to a third tool, a “nudge,” which in many cases is the most cost-effective option.

Nudging is the word used in behavioral science for structuring policies and programs in ways that encourage, but don’t compel, particular choices. For instance, requiring people to opt out of rather than into a program, such as a retirement savings plan, might nudge them toward participating. So might reducing the paperwork necessary to enroll. more>

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How the EU’s General Data Protection Regulation empowers digital civic engagement


By Hollie Russon-Gilman – The European Union’s General Data Protection Regulation (GDPR) is scheduled to take effect on May 25. While companies who serve customers in the EU have to adhere, there are numerous applications for civil society, journalists, academia, philanthropy, and the private sector as well.

The GDPR represents an important step forward for envisioning a civic life where citizens are empowered not only as data producers but also data owners. Any conversation of leveraging data, technology, or innovation to enhance civic life or governance should seriously consider how such a framework could more deeply empower citizens in the United States.

Several core components of the GDPR are relevant for broader governance and civic conversations around the world. First, having a clear sense of who collects your information and what information they collect. This reflects a demand to look under the hood at how your personal information is used and what is shown to you in turn. The GDPR requires notification if a breach has occurred within 72 hours.

Understanding the implications behind algorithmic decisionmaking begins with understanding what data is being generated and how that information is being collected, used, disseminated, and re-packaged both to the user and others.

Second, having a right to be forgotten. If I want my data to be removed from a company, the GDPR provides this opportunity. One of the most exciting aspects of the GDPR is the concept of “data portability.”

Third, enhancing data protection responsibilities. The GDPR aims to foster better practices from the onset with privacy in mind.

As communication moves almost entirely to networked online technology platforms, the governance questions surrounding data and privacy have far-reaching civic and political implications for how people interact with all aspects of their lives, from commerce and government services to their friends, families, and communities. That is why we need a discussion about data protections, empowering users with their own information, and transparency. more>

Are We Master or Machine?

By Junko Yoshida – The two AI leaders are the US and China. In the US, it’s entirely driven by the private sector… Chinese players collect a lot of data driven by a government. Neither reflects our principles and values, says French President.

Most U.S. consumers, swept into the era of Big Data, in a prosperous nation where Google, Apple, Facebook and Amazon have become the definition of Big Business, don’t readily dwell on the constitutional complexities of personal privacy.

Last Thursday, Emmanuel Macron, president of France, laid out a new strategy for artificial intelligence in his country. The French government will spend 1.5 billion euro ($1.85 billion) over five years to support research in the field, encourage startups, and collect data that can be used and shared by engineers.

Macron’s goal is obvious. France is figuring out that they’ve got to start catching up to the U.S. and China. He wants the best and the brightest in the AI field to come to Paris.

To most American observers, Macron’s economic argument is easy to understand. Where things get tricky for most Americans to comprehend is the French argument on “values.”

This is where Macron introduces “digital sovereignty.” more>

Why a trade war with China would hurt the U.S. and its allies, too

By David Dollar and Zhi Wang – Two-thirds of world trade now occurs through global value chains that cross at least one border during the production process, and often many borders. As a result, the typical “Chinese product” that the United States imports has a lot of value-added from countries other than China.

Furthermore, in computers and electronics, more than half of China’s exports come from multinational firms operating in China.

U.S. firms are also involved in production chains. Thirty-seven percent of U.S. imports from China are intermediate products used by American firms to make themselves more competitive. Putting tariffs on intermediate products is shooting oneself in the foot. The list of targeted products posted by the United States includes some intermediates, such as aircraft propellers.

Many of the targeted products are consumer goods such as televisions and dishwashers.

What all this means is that tariffs are a very poor instrument for punishing China for any unfair trading practices. Some of the cost will be borne by American consumers; some by American firms that either produce in China or use intermediate products from China; some by firms in countries (mostly U.S. allies) that supply China; and some by Chinese firms (mostly private ones). more>

America has a broken political system our leaders need to fix

By Former Rep. Tom Ridge (R-Pa.) and Former Sen. Tom Daschle (D-S.D.) – According to a recent poll by the American Psychological Association, the future of the country is a significant source of anxiety for nearly two-thirds of Americans.

We elect leaders to place country above party, address the most critical issues plaguing the nation and prevent future crisis from taking root. But Washington needs to face the facts: The political system itself is broken, wearing down too many leaders with endless fundraising demands and turning the job of elected representative into a never-ending campaign whose purpose is to vilify the other party. We used to have to arrange schedules around fundraisers for senators. It was considered the exception, and now it is the rule.

Leadership in Congress focuses more on the capacity of lawmakers to raise money, rather than their policy expertise and merit on legislative issues. The political parties and system supporting them have come to care more about majorities in the legislative branch than governing.

Our experience tells us that if America lacks the will and moral strength to elect leaders who will repair the divisions in the country, then dysfunction in government will continue to be the greatest threat facing the nation. Our leadership on the global stage will diminish. Democracy as a way of life, and the freedoms only it can offer, will suffer. We must strengthen our bonds, not deepen our divisions. more>

Europe’s Poor Need More Than Jobs

By Ive Marx – The idea that – to use a ubiquitous political slogan – “the best protection against poverty is a job” remains the mantra in the corridors of power right across Europe and indeed in Brussels. It is, alas, more tenet of faith than a statement of fact.

Unfortunately, things are not as simple. Employment growth never yielded the hoped-for reductions in poverty in the past (see here). There is no reason to expect that things will turn out any different this time.

First, many of the poor live in households where no adult has a job. Such “jobless households” often face severe financial hardship, including any children. In the past, employment growth never produced anywhere near commensurate drops in household jobless rates. Instead it tended to boost the number of double- or multi-earner households.

A second reason why more people in work does not automatically bring less poverty is that getting a job may not be enough for a household to escape poverty. Long considered a typically American phenomenon, there is now ample evidence that the “working poor” are to be found in significant numbers in every European country.

In conclusion: it is time to remind Europe’s politicians of the promises they made to bring poverty down. They seem to think that Europe’s buoyant labor markets will do the job. They will not. more>

Why Don’t Free Markets Always Work?

By Peter Pham – Free markets are not always safe. If a state-run economy implements the free market, then it usually goes head over heels, and may even crash.

Over the last ten years, China’s state-controlled economy has been alleviating capital controls and freeing its market. Will the 1997 Asian financial crisis repeat itself?

After WW2 ended, savings and investment rates in most Asian nations were between 30 to 50 percent. That means governments were able to allocate as much funds as they pleased.

Japan, South Korea and other Northeast Asian countries preferred to invest in Asian Capital Development (ACD), where governments protect and control certain industries.

They funneled credit to sectors that are less profitable (in the short-run) such as agriculture and export-oriented manufacturing. The goal was to slowly and surely develop human capital. This process gave birth to globally competitive companies and increased foreign exchange reserves. more>

The danger in deregulation

By Samantha Gross – In the United States and around the world, energy production depends on support from local communities, what the industry calls “social license to operate.” Especially in a democracy, public opposition can make life very difficult for energy producers. Public support for energy resource development depends on trust—in the companies doing the development and in the regulatory structure that governs their activities.

When the Trump administration dismantles energy regulation, it runs the risk of undermining the trust that underpins domestic energy development. U.S. oil and gas production has grown dramatically in recent years, but we have also seen a public backlash.

The proposal to open nearly all U.S. offshore waters to drilling is an opening salvo in a battle likely to go on for some time. Many governors, even Republicans, are vehemently opposed to drilling in waters off their states.

But the hard push toward deregulation is likely to have consequences for public trust, not just in companies, but in government itself. If the public feels that the government is being run by and for the energy industry, accomplishing many important societal goals—like modernizing infrastructure and preventing the worst impacts of climate change—become much more difficult. more>