In a previous blog we examined the relation between GDP and the Human Development Index (HDI) which has been published on an annual basis for the last 25 years by the UN Development Programme (UNDP). In this post, I want to dive a bit deeper into the latter and explore some of its potential policy implications.
HDI components and calculation
The HDI has three main components or subindexes: Income, health and education (or knowledge). The statistical indicators used to estimate the first two components are: Gross national Income per capita (GNI) and life expectancy. The education subindex is comprised of two indicators: literacy and quality of education. One can thus think of the HDI as a 3D index where each of the subindexes constitutes one of its three orthogonal axis. And the HDI is the (more…)
For most people, including many well-known economists, the 2007 global economic crisis was a rude awakening: It seemed to have come out of nowhere, but it certainly managed to bring deep pain to billions of people – and pockets. Soon thereafter, calls to revisit Marx’s theory of capitalism became frequent from both left and right. After all, it seemed he had a plausible explanation for what had just happened.
Nine years later we all can easily agree that capitalism has not collapsed – at least not yet. But has it reach its limits? The latest book by Paul Mason tries to answer this question. And in simple terms his answer is yes. Indeed, he argues that capitalism unique adaptation skills to almost any situation have now stalled. And the rapid development of new technologies have opened the (more…)
Few will doubt both globalization and technology are putting a lot of people under economic stress. Symptoms of this in the US and other industrialized countries include raising inequality, stagnant wages, less opportunities and decreased social mobility, and little to no improvement in living standards for most. Together, they have created an environment characterized by widespread distrust of the current economic system and its regular functioning. Nowadays, such distrust – not communism or fascism – is the main threat to modern capitalism. This is the starting point of Robert Reich’s latest book on how to save capitalism – and democracy too!
But how did we get to this point?
Reich first pinpoints that the ongoing and now repetitive debate on the “free market” vs. government alleged (more…)
GDP: Thanks, but no thanks
A recent issue of The Economist had a couple of articles (plus the issue’s cover) on the topic of measuring prosperity, defined as the advance in living standards overtime. Nowadays, gross domestic product, GDP, is king when it comes to measuring such progress. However, The Economist argues, GDP is certainly not the best indicator to accomplish this. Unlike the 20th century, the issue today is that while GDP is still growing at a regular pace, albeit not as fast as in the past, living standards seem to be stagnant, thanks in part to rising global inequality.
This unintended divorce between GDP and living standards highlights the issue of the quality of goods and services that people (more…)
After the 2008 crisis, many observers expected changes of some sort in current economic thinking and academic teaching. After all, most mainstream economists never saw the crisis coming – with some even claiming that the era of crises was essentially over. For many non-economists, the crisis just demonstrated once again the perils of economics, the “dismal science”. Eight years later we can say that little has changed in economics since. Some will even argue that the current economic paradigms have in fact come back with a vengeance. The debates around austerity policies is but one example of this.
The new book by Rodrick can be described as an honest attempt attempt to try and rescue economics from the bad place it seems to be today, especially in the eyes of non-economists. In his view (more…)
Nowadays, the diffusion pace of technologies on a global scale is perhaps unprecedented. This is particularly true for Information and Communications Technologies (ICTs) best represented by the Internet (and all its newer platforms) and mobile technologies. Most will also agree that technologies do somehow play a positive role in fostering economic development and economic growth. While that might be the true is some contexts, was this always the case?
If we look back in history at the European expansion that started in the XIX Century, can we make the same argument? In other words, did the European colonization of Africa and Asia of that time, which heavily relied on technological innovations and advantages, inevitably brought economic development to the colonies?
This is in part (more…)
The first time I run into the notion of digital dividends was at the end of last century. At the time the first dot-com boom still running at full steam, totally unaware of the looming crash. Building on the hype of the new technologies and of the Internet in particular, the G-8 launched the Digital Opportunity Task Force (aka DOT Force) in July of 2000 with the main purpose of closing the global digital divide and universally spreading digital dividends to all. The DOT Force was not limited to governments. By design, it also included governments from developing countries, the private sector, as well as representatives from civil society, thus foreshadowing what is now known as a multi-stakeholder approach.
The final report of the DOT Force was approved at the G-8 summit in (more…)
A recent article by one of its lead developers argues that Bitcoin, defined as an experiment, has utterly failed. While the initial concept was to develop a form of digital money that was completely decentralized and autonomous from any bank or institution, today Bitcoin is controlled by a few people. In addition, Bitcoin technology has now reach serious limitations that will prevent it from expanding in the near future.
Created in late 2008 right after the bank bailouts by a still anonymous geek that used a Japanese-like name as an alias, Bitcoin has quickly gone from geekdom to stardom. The number of books published on the subject have grown exponentially since 2014. At the same time, banks and other financial institutions are now seriously thinking about adopting blockchain, a core (more…)
Nowadays, autonomous vehicles are all the rage. We even hear that perhaps in just a few years cars will make human drivers obsolete. Instead, roads and highways will be filled with vehicles that drive themselves and carry humans as passengers only. We are also informed that such vehicles will increase safety, at least when it comes to accidents triggered by human error ( or over the limit alcohol consumption!). And the same will also happen in the case of airplanes, space exploration, manufacturing, retail, war, you name it.
Autonomy seen in this context is the result of the advances of both automation and robotics. Automation is certainly not new as it has been taking place since the 1st Industrial Revolution. Back then, mechanical automation was king and queen and, to a large extent, (more…)
No doubt economics has come a long way since the times of Adam Smith almost 250 years ago. It we were to summarize its dynamics of change, we could say that economics has moved from a broad political economy approach to a more narrow and now mainstream focus where mathematics seems to play a vital role. While the former also addressed social and political issues, the latter is much more constraint and centers on the economic sphere per se. This does not however mean that there are no other theories and schools of thought in between. On the contrary. But nowadays mainstream economics gets most of the coverage and, more importantly, provides the framework and concepts for implementing economic policies at the national and global levels.
That being the case, the evolution of economics has generated (more…)