Tag Archives: Social economy

They Don’t Just Hide Their Money. Economist Says Most of Billionaire Wealth is Unearned.

By Didier Jacobs – The 62 richest people in the world own as much wealth as half of humanity. Such extreme wealth conjures images of both fat cats and deserving entrepreneurs. So where did so much money come from?

It turns out, three-fourths of extreme wealth in the US falls on the fat cat side.

A key empirical question in the inequality debate is to what extent rich people derive their wealth from “rents”, which is windfall income they did not produce, as opposed to activities creating true economic benefit.

Economists define “rent” as the difference between what people are paid and what they would have to be paid to do the work anyway. The classical example is the farmer who owns particularly fertile land.

With the same effort, she can produce more than other farmers working on land of average productivity. The extra income she gets is a rent. Monopolists also get rent by overcharging customers as compared to what they could charge in competitive markets.

More generally, economists have identified a series of “market failures”, which are situations where full competition does not prevail and where someone can therefore overcharge – they would be ready to do the work for less, but lack of competition allows them to make a quick extra buck. Government can alleviate market failures through proper economic regulation; or it can make them worse.

Political scientists define “rent-seeking” as influencing government to get special privileges, such as subsidies or exclusive production licenses, to capture income and wealth produced by others.

So how much of extreme wealth derives from rents? more>

Updates from ITU

Time to eliminate the password: New report on next-generation authentication for digital financial services
By ITU News – “We don’t want digital financial services to be built on the wrong foundation, which is the password,” says Abbie Barbir, Rapporteur for ITU standardization work on ‘Identity management architecture and mechanisms’ (Q10/17).

Over 3 billion usernames and passwords were stolen in 2016, and the number of data breaches in 2017 rose 44.7 per cent higher than that recorded in 2016.

“We are moving away from the ‘shared secret’ model of authentication,” says digital ID strategist and standards expert, Andrew Hughes of InTurn Consulting, referring principally to the username-password model of authentication.

“Considering the prevalence of data breaches, there are no secrets anymore,” says Hughes.

Designed to overcome the limitations of passwords, specifications developed by the FIDO Alliance (‘Fast Identity Online’) enable users to authenticate locally to their device using biometrics, with the device then authenticating the user online with public key cryptography.

This model is not susceptible to phishing, man-in-the-middle attacks or other forms of attacks targeting user credentials.

“This is the biggest transformation we have seen in authentication in 20 years,” says Jeremy Grant, Managing Director of Technology Business Strategy at Venable. more>

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A New Americanism

Why a Nation Needs a National Story
By Jill Lepore – Carl Degler issued a warning: “If we historians fail to provide a nationally defined history, others less critical and less informed will take over the job for us.”

The nation-state was in decline, said the wise men of the time. The world had grown global. Why bother to study the nation?

Francis Fukuyama is a political scientist, not a historian. But his 1989 essay “The End of History?” illustrated Degler’s point. Fascism and communism were dead, Fukuyama announced at the end of the Cold War.

Fukuyama was hardly alone in pronouncing nationalism all but dead. A lot of other people had, too. That’s what worried Degler.

Nation-states, when they form, imagine a past. That, at least in part, accounts for why modern historical writing arose with the nation-state.

But in the 1970s, studying the nation fell out of favor in the American historical profession. Most historians started looking at either smaller or bigger things, investigating the experiences and cultures of social groups or taking the broad vantage promised by global history.

But meanwhile, who was doing the work of providing a legible past and a plausible future—a nation—to the people who lived in the United States? Charlatans, stooges, and tyrants.

The endurance of nationalism proves that there’s never any shortage of blackguards willing to prop up people’s sense of themselves and their destiny with a tissue of myths and prophecies, prejudices and hatreds, or to empty out old rubbish bags full of festering resentments and calls to violence.

When historians abandon the study of the nation, when scholars stop trying to write a common history for a people, nationalism doesn’t die. Instead, it eats liberalism.

Maybe it’s too late to restore a common history, too late for historians to make a difference. But is there any option other than to try to craft a new American history—one that could foster a new Americanism? more>

Updates from Chicago Booth

The safest bank the Fed won’t sanction – A ‘narrow bank’ offers security against financial crises
By John H. Cochrane – One might expect that those in charge of banking policy in the United States would celebrate the concept of a “narrow bank.” A narrow bank takes deposits and invests only in interest-paying reserves at the Fed. A narrow bank cannot fail unless the US Treasury or Federal Reserve fails. A narrow bank cannot lose money on its assets. It cannot suffer a run. If people want their money back, they can all have it, instantly. A narrow bank needs essentially no asset risk regulation, stress tests, or anything else.

A narrow bank would fill an important niche. Right now, individuals can have federally insured bank accounts, but large businesses need to handle amounts of cash far above deposit insurance limits. For that reason, large businesses invest in repurchase agreements, short-term commercial paper, and all the other forms of short-term debt that blew up in the 2008 financial crisis. These assets are safer than bank accounts, but, as we saw, not completely safe.

A narrow bank is completely safe without deposit insurance. And with the option of a narrow bank, the only reason for companies to invest in these other arrangements is to try to harvest a little more interest. Regulators can feel a lot more confident shutting down run-prone alternatives if narrow bank deposits are widely available. more>

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Why are millennials burned out? Capitalism.

BOOK REVIEW

Kids These Days: Human Capital and the Making of Millennials, Author: Malcolm Harris.

By Sean Illing – What made millennials the way they are? Why are they so burned out? Why are they having fewer kids? Why are they getting married later? Why are they obsessed with efficiency and technology?

His answer, in so many words, is the economy. Millennials, Harris argues, are bearing the brunt of the economic damage wrought by late-20th-century capitalism. All these insecurities — and the material conditions that produced them — have thrown millennials into a state of perpetual panic. If “generations are characterized by crises,” as Harris argues, then ours is the crisis of extreme capitalism.

What Harris focused on is millennials as workers and the changing relationship between labor and capital during the time we all came of age and developed into people. If we want to understand why millennials are the way they are, then we have to look at the increased competition between workers, the increased isolation of workers from each other, the extreme individualism of modern American society, and the widespread problems of debt and economic security facing this generation.

Millennials have been forced to grow up and enter the labor market under these dynamics, and we’ve internalized this drive to produce as much as we can for as little as possible. That means we take on the costs of training ourselves (including student debt), we take on the costs of managing ourselves as freelancers or contract workers, because that’s what capital is looking for.

And because wages are stagnant and exploitation is up, competition among workers is up too. As individuals, the best thing we can do for ourselves is work harder, learn to code, etc. But we’re not individuals, not as far as bosses are concerned. The vast majority of us are (replaceable) workers, and by working harder for less, we’re undermining ourselves as a class. It’s a vicious cycle. more>

Updates from Adobe

Kiwie Bubble Gum Collection
By Charles Purdy – In a recent post on Behance, Kiwie, whose graffiti artwork is well known on the streets of Riga, Latvia, where he makes his home, explained why and how he created the Kiwie Bubble Gum collection—a project that involved Adobe After Effects CC, Illustrator CC, and a fair bit of spray paint

The idea for the Kiwie Bubble Gum collection arose from Kiwie’s need to create new stickers. Wanting a fresh concept for the stickers, he remembered that the bubblegum brands of his youth used to come with collectible pictures folded inside the packaging—so what if he used that gum packaging shape as a way to deliver his stickers?

Then he realized that “Kiwie” and “Turbo” have the same number of letters. He says, “That was the point when the chain reaction started, where the first concept seed was created by simply connecting two dots: new Kiwie stickers and Turbo Bubble Gum. The same day I found on eBay, and ordered, five original Turbo Bubble Gums. I had to see them in my hands.” more>

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‘We Can’t Recycle Our Way Out of This Problem’: Ben & Jerry’s Bans Single-Use Plastics

By Lorraine Chow – Ice cream maker Ben & Jerry’s announced major efforts on Monday to quickly curb its use of single-use plastics.

All together, the move is expected to prevent 2.5 million plastic straws and 30 million plastic spoons from being handed out each year, Jenna Evans, Ben & Jerry’s Global Sustainability Manager, said in a press release.

“We’re not going to recycle our way out of this problem,” she said. “We, and the rest of the world, need to get out of single-use plastic.”

In response to the initiative, Greenpeace praised the brand for setting clear, short-term targets and for acknowledging that recycling alone is not enough to solve the world’s mounting plastic problem.

We’ve all been taught that recycling is an important environmental responsibility, but of the 6.3 billion metric tons of plastic waste generated since the 1950s, only 9 percent has been recycled, according to one recent study. What’s more, recycling plastics only perpetuates the use of fossil fuel-based polymers. more>

Updates from Chicago Booth

Viewing FICO scores spurs better financial habits
By Carla Fried – When it comes to financial matters, consumers tend to have a lot of confidence but a dearth of knowledge.

More than 400,000 customers of Sallie Mae, a private college-loan lender and servicer, were included in a study that tracked whether a quarterly email letting them know how to view their FICO score for free on Sallie Mae’s website might lead to better financial habits.

The FICO score is the ubiquitous financial report card businesses use to size up the creditworthiness of consumers.

Tatiana Homonoff, Rourke O’Brien, and Abigail Sussman find that Sallie Mae borrowers who received a quarterly email “nudge” were 65 percent more likely to log in to the website and view their FICO scores than customers who did not get the inbox prompt. Moreover, during the two-year study period that ended last June, participants who received the messages saw their FICO scores rise and were less likely to be delinquent in paying their bills. more>

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Updates from Ciena

Is technology the answer to stopping unsafe driving behaviors?
By Daniele Loffreda –  No matter how safe of a driver someone is, it just takes one instance of human error for an accident to happen. We shoot through the intersection just as the yellow light changes to red. We drift into the adjacent lane while responding to a text message. We nod out for a split-second because we didn’t get enough sleep the previous night.

Most times when taking these risks, we are lucky and manage to avoid an accident. But it only takes one unlucky moment to cause serious harm to yourself and your fellow motorists. For local departments of transportation (DOT), the multiplier effect of millions of drivers taking risks, can be devastating.

According to the Association for Safe International Road Travel:

  • Each year nearly 1.25 million people die in road crashes around the world, an average of 3,287 deaths a day
  • An additional 20-50 million people are injured or disabled annually
  • Road crashes cost USD $518 billion globally, costing individual countries from 1-2% of their annual GDP

According to the U.K.’s Royal Society for the Prevention of Accidents, human error is still the primary factor in 95% of road crashes.

Some innovative DOT’s have begun partnering with car manufacturers and technology vendors to make roadways safer by minimizing the potential for human error.  Many new vehicles are equipped with safety features like lane-departure correction, obstacle detection and collision avoidance.

And some manufacturers are beginning to include vehicle-to-vehicle (V2V) and vehicle-to-infrastructure technology (V2I) in their newer models.

Ciena is working with one trail-blazing DOT – the Colorado Department of Transportation (CDOT). more>

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Overcoming The Trust Deficit

By Dimitris Avramopoulos – A prosperous, secure and united Europe will not be delivered to us on a silver platter. We will have to fight for it more than ever – with facts, with authenticity, with courage. It will not be enough to have the right solutions on offer – our citizens will have to be willing to trust and accept them too.

Citizens in Europe and across the world today are experiencing a growing deficit of trust. While the world is increasingly becoming globalized, interconnected, digitized and information-saturated, citizens are having trouble discerning what is fact and what is fancy – and most importantly: who to turn to and who to trust. Our citizens are looking for clear and straightforward answers and solutions, in a reality that is becoming all the more complex.

Populists and nationalists are experiencing heydays in times like these. What they tell citizens and their electorate no longer has to be true, as long as it is simple and appealing. We have seen very recently how in the absence of an actual crisis or problem, an imaginary one is created instead and how the seeds of distrust, confusion and fear are sown daily.

Today, there is no single, coherent enemy or threat: terrorism, cybercrime or hybrid threats constitute a particularly toxic and interchangeable cocktail of risks that we need to face on a daily basis, with the same unity in our approach. The cooperation between Member States was enhanced especially in the field of exchange of information between law enforcement authorities, crucial to fight terrorism, organized crime and cybercrime. more>