When the Speaker of the US House of Representatives, Paul Ryan, retires at the end of his term in January, he will likely qualify for an annual government pension of more than $80,000. Ryan’s case – and that of the dozens of other members of Congress who will be retiring this year – highlights the chasm between the financial benefits available to politicians and those available to the vast majority of citizens they are supposed to serve, regardless of how well they actually perform in office.
The Himalayan range rises five millimeters a year. Geological forces from deep within the earth are slowly pushing the mountains into the Tibetan plateau. The view of the Himalayas outside my window in Nagarkot is breathtaking. I find it hard to comprehend the strength it takes to move mountains. However, if I intend to do business in Nepal, I must find similar strength.
French President Emmanuel Macron received plenty of praise in the international media for his recent speeches in Washington, DC, and Brussels. But for the French, what really matters is Macron’s management of domestic problems, of which there are many, not least rolling strikes by railway workers across the country.
In Lake Wobegon, Garrison Keillor’s fictional American town, all the children are above average. And life imitates art, not only in America – and not only for the young. In survey after survey, in rich and poor countries alike, people report feeling satisfied with their family lives, happy with the neighborhoods they live in, and optimistic about their personal futures. The same people tell pollsters that their countries and the world are going to hell in a handbasket.
The vast and growing gap between rich and poor has been laid bare in a new Oxfam report showing that the 62 richest billionaires own as much wealth as the poorer half among the world’s 7.6 billion population.
A week rarely goes by without a new dystopian prediction about technologically driven mass unemployment. As artificial intelligence (AI) and robotic technologies advance faster than even their own developers expected, studies are finding that many of the tasks and occupations that employ people can already be automated.
More than a decade ago, I undertook a study, together with Graciela Kaminsky of George Washington University and Carlos Végh, now the World Bank’s chief economist for Latin America and the Caribbean, examining more than 100 countries’ fiscal policies for much of the postwar era. We concluded that advanced economies’ fiscal policies tended to be either independent of the business cycle (acyclical) or to lean in the opposite direction (countercyclical). Built-in stabilizers, like unemployment insurance, are part of the story, but government outlays also worked to smooth the economic cycle.
US President Donald Trump’s plan to boost infrastructure spending through tax credits has received a cool reception from investors. His long-awaited proposal to upgrade and repair America’s crumbling roads, airports, bridges, tunnels and other infrastructure will come to nothing unless all sides are open to new thinking about how such projects are to be financed. Currently, infrastructure investments are paid for either with taxes or through user charges such as tolls.
Until recently, it seemed that Latin America had eluded the great white shark of populism, just as North America and Europe swam toward it with eyes wide shut. Yes, Nicolás Maduro’s chavista regime continues to imprison citizens and wreck Venezuela’s economy. Evo Morales in Bolivia and Daniel Ortega in Nicaragua keep changing the rules of the game so that they can be reelected indefinitely.
Since eliminating a wealth tax and imposing a flat tax on capital gains, French President Emmanuel Macron opponents have quite maliciously compared him to US President Donald Trump, who slashed taxes for the wealthiest Americans in December. Some of his harshest critics even refer to Macron as a “president for the rich.”
The end of the Cold War has reshuffled the cards on the international scene. The American hegemony has been challenged by the rise of emerging economic powers which yearn to bolster their growing political influence. In this multipolar world, rivalries have been shaped by vivacious diplomatic initiatives to protect and promote national interests.
Empirical relationships in economics are sufficiently fragile that there is even a “law” about their failure. As British economist Charles Goodhart explained in the 1980s, “any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes.” Central banks in advanced economies have recently been providing a few more case studies confirming Goodhart’s Law, as they struggle to fulfill their promises to raise inflation to the stable plateau of their numerical targets.
The poor don’t often decide elections in the advanced world, and yet they are being wooed heavily in Italy’s current electoral campaign. Former Prime Minister Silvio Berlusconi, the leader of Forza Italia, has proposed a “dignity income,” while Beppe Grillo, the comedian and shadow leader of the Five Star Movement, has likewise called for a “citizenship income.”