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2020 Vision: What Does 2030 Hold in Store

 By   Shlomo Maital

     20/20 means that you can see things at a distance of 20 feet that normal eyes see at that distance. 20/100 means, you need to be 20 feet from something to see it, when normal eyes see it at a distance of 100 feet. In the metric system, 20/20 translates to 6/6.

         So if we all had 20/20 vision to see what the year 2030 holds in store, what would we see and what can we say about it, as we greet the New Year 2020?

         The New York Times International Edition comes to the rescue today. Some dozen public figures weigh in.

   * Edward Snowden, who stole crucial NSA files and software, thinks the Internet will become a weapon of the rich, and berates server farms for gobbling massive amounts of electricity.                   * Democratic presidential candidate Andrew Yang want us to put “people ahead of profits” and rethink how we work and create jobs. * Vox.com editor Ezra Klein wants us to stop killing 70 billion animals for food each year. *  Mark Blyth, politics prof, thinks the only issue for the new decade will be climate change…and thinks we’ll continue to wail about it and do nothing.*  Caity Weaver, NYT author, sees ads becoming more and more personalized (“in 2030 the only ads I encounter will be for products I would kill to buy”)…[say, who in the world would ‘kill to buy’ anything??]. * Mike Gallagher, Republican congressman, warns that in 2030 there will be a Chinese Communist Internet. * Alexandra Scaggs, financial analyst, warns that we will have to become legal businesses in order to work in the gig economy, which dominates. * Stacey Abrams (Democrat candidate from Georgia, possible VP candidate) sees America becoming majority/minority by 2030 (i.e. minorities will rule, there will be no single majority ethnic group); * Jami Attenberg, novelist, sees community bookstores thriving. * Dambisa Moyo, economist, warns against the population explosion that will bring world population to 9 billion by 2030. *  Gary Kasparov, chess master, warns the world is moving to a post-truth fake news reality, like that he grew up with, in the old Soviet Union. Min Jin Lee, novelist, thinks that by 2030 religion will have a stronger hold on young people. * P.W. Singer, cybersecurity specialist, thinks everything in our lives will be networked, in smart cities. Larry David, comic writer and producer, thinks “the next big trend will be outright, brazen lying”.

     And, the icing on the cake, in a separate “Strategies” blog   Jeff Sommer warns us, again, that “stock market forecast are less than worthless” (why less? Because people believe and act on them, this does damage).

     Some, all or none of this might come to pass. ‘

     So, as we greet the new year and new decade –   take special good care of your loved ones, surround yourself with people you love and admire, do good, cause no pain, challenge yourself daily, find ways to create value and stay relevant, look after your health, and be happy.   And if you do, the coming decade will take care of itself.

My Two Key Skills: What are Yours?

 By   Shlomo Maital

Qwerty keyboard on an old Underwood typewriter

   After writing magazine columns on our failing schools, I reflected on what I myself learned in school.

   The two key skills I learned?   In high school, Grade 9 – touch typing. I learned to type very fast, 80 words a minute, owing to strong incentives to do boring exercises again and again. This turned out to be a crucial skill. I was able to put my thoughts on to paper very rapidly, as I could type almost as fast as I could speak. Probably, in another life, I would have chosen to be a journalist rather than an economist. That skill that I learned in 1956 has served me well for 63 years. I even worked one summer as a typist, typing invoices — I can touch-type numbers very fast, too.

       Note: I still have my mother’s old Underwood typewriter, with the QWERTY keyboard, designed so that the keys, operated by spring mechanisms, should not clash and tangle with one another… Qwerty is still the standard, even though typing has long since been digital – showing the inertia of human behavior. My late mother worked as a typist for the Provincial Government, Dept. of Agriculture, in Regina, Saskathewan; I’m forever grateful she urged me to learn touch typing. 

   The second key skill I learned was as a freshman in college, at Queen’s University, Kingston Ontario. All freshmen in Arts & Science, in those days, had to take Philosophy 1, given by A.R.C. Duncan, a Scottish philosopher of the old school. It was a tough rigorous course, covering the 3 branches of Philosophy – ethics, metaphysics and logic. I learned critical thinking, how to fashion a logical argument, what the various approaches to right and wrong are….. memorable, and something I use daily.  

   I fear today’s young people do not have the same privilege, and do not acquire crucial critical thinking skills.

….

   Dear reader: What, on reflection, did YOU learn in school, that turned out to be supremely valuable and relevant?  

Global Winners & Losers: The “Elephant” Diagram

By Shlomo Maital

Source: World Bank: Christoph Lakner, Branko Milanovic, 2014

     The above diagram tells the story. On the “X” axis: the global distribution of income, from the poorest 5% to the richest 5%. On the “Y” axis:   the global rate of growth of the income for each of the 20     5% groups.   The time period is the two decades, from 1988 through 2008. In these two decades, the Berlin Wall fell, global trade boomed, China grew by double digits, Asia prospered…and then it ended, in 2008, when the ceiling fell, with the global financial crisis.

     The diagram has been dubbed the ‘elephant’ diagram, because it does look like an elephant, trunk and all.

       What is the story it tells?   The poorest 5% were left out – their incomes did not grow at all. The ‘middle class’ in the poorer countries, mainly China, enjoyed strong growth. The ‘middle class’ in the wealthy countries were hard hit — the 80th percentile did not grow at all, in income.   And the top 5%?   Their income soared.

     Now — looking at elections in the UK, in the US, and elsewhere — I think you could have made strong predictions just based on the ‘elephant’. A large underclass, in the left-out economy. A large middle-class hard hit and struggling. A wealthy elite, able to buy political influence. The rising economic power of China.

     Britain’s Labor Party leader Corbyn was crushed, because he lost touch with his voters. There is a real and present danger that the Democrats in the US may do the same – though I understand, they are studying the UK election closely.

       The two groups of big-time losers, in the elephant diagram, will stay home or vote against you, if you ignore what matters to them and if you ignore policies that they believe will help them. It happened before – it could happen again.*

* “Lakner & Milanovic: “democracy is correlated with a large and vibrant middle class, its continued hollowing-out in the rich world would, combined with growth of incomes at the top, imply a movement away from democracy and towards forms of plutocracy. Could then the developing countries, with their rising middle classes, become more democratic and the US, with its shrinking middle class, less?”

Paul Volcker, 1927-2019: How He Saved the World from Inflation

By Shlomo Maital

Paul Volcker 1927-2019

  Paul Volcker has passed away; he was 92. Volcker served as Chair of the Federal Reserve Bank, appointed by Jimmy Carter in 1979.

   Volcker was a giant, physically, standing 6 ft. 7 inches tall – but also a giant in wisdom and courage. The US was afflicted by double digit inflation, from 1979 to 1981, driven by cost-push price rises and soaring oil prices.   Volcker quickly understood the threat. With the dollar serving as the world’s major, perhaps only, globally-accepted currency, US inflation threatened not only the US but also the global trading system, then struggling from recessions in 1973 and again in 1978/9.

   Volcker acted with what then seemed like outrageous boldness. He raised Fed interest rates to 21%.   This was unheard of. I can only imagine what today’s President, Donald J. Trump, would have said, had he (heaven forbid) have been president at that time. Trump wants zero interest rates, no matter what the economy needs, and has hassled current Fed Chair Jerome Powell over his unwillingness to promote cheap credit at all cost and at all times.

     Volcker’s move put a halt to the inflation, stopping it in its tracks, but also ground the economy to a halt, causing a recession, or what came to be known as stagflation. Partly as a result Jimmy Carter became a one-term President, defeated in November 1980 by Ronald Reagan. It was ironic that Carter lost partly because of a very wise and strong appointment that he made, to the Fed.

     We must remember Volcker and the strong independence of the Federal Reserve system that prevailed, until now. No President has dared messing with the Fed’s independence, until now. Research shows that nations with strong independent central banks fare far better than those where governments make their central banks into private money-printers. Trump endangers today’s Fed, and as a result, endangers the world. We should remember Volcker fondly, and recall the lesson he taught us.

 

We Ignored Keynes in 1919 – Are We Repeating the Mistake in 2019?

By Shlomo Maital

  Today’s New York Times has an Op-Ed by Boston College political science professor named Jonathan Kirshner.* He reminds us of a book published 100 years ago, by J.M. Keynes, that contained a precise prediction: the Versailles Peace Agreement, that imposed unbearably heavy war reparations on Germany, will create the new world war and facilitate the rise of the Nazis.

   It did.

   Keynes was then an obscure economist who advised British Prime Minister Lloyd George and who attended the Versailles conference. He returned home from it, greatly upset and worried, and wrote The Economic Consequences of the Peace, published by Macmillan on Dec. 8, 1919.

     Kirshner writes, “Keynes’s book is essentially correct with regard to its most important arguments. But it was, and remains today, largely misunderstood. The enduring contributions of the book are to be found not in Keynes’ first dissenting clause (his “objection to the treaty”), but in the second, about “the economic problems of Europe.” Keynes was sounding an alarm about the fragility of the European order.”

     Keynes’ book is relevant today as well. The current world economic and political order is exceedingly fragile. Very bad things can happen, unless we wake up.   Russians, Iranians and others constantly meddle in democratic elections, now in the UK, and in the US. Far-right racist politicians gain political power and representation. The US withdraws from the Paris climate accords, and engages in trade/tariff wars. The “left-out economy”, as TIME magazine calls it, finds new political voice, as demonstrations break out all over the world, facilitated by social media.

     The current world order was shaped in part by Keynes himself, at Bretton Woods, NH, in July 1944. It worked very well indeed, helping many nations in Asia especially become wealthy. But it also meant, by the same token, that many nations and many people, not skilled and wise enough to compete globally, became poor.

     Only one thing was missing from the Bretton Woods architecture – a way to tax the rich to help the poor. It was a fatal mistake. It took 75 years, but the left-out underclass are now rising up and are threatening the current world order, creating chaos in many countries.

       It’s time we read again Keynes’ little book and began to think about addressing the left-out economy more seriously.   What Keynes warned us of, in 1919, came about 20 years later, in 1939, with disastrous consequences.

  • Jonathan Kirshner. “The man who predicted Nazi Germany”. New York Times, Dec. 9/2019

The Educational Tower of PISA is leaning—dangerously!

By Shlomo Maital

The Leaning Tower of Pisa

   PISA 2018 (Programme for International Student Assessment) is a report on the educational attainments of 15-year-olds globally. As expected, China leads, followed by Singapore, in math, reading and other skills. Overall, scores declined. Israel especially did poorly, leading the world in the spread between top and bottom in schooling achievements.

     But one key point emerged, that is especially disturbing. A British educator, Kevin Courtney, made this observation:

       “…globally fewer than 1 in 10 students were able to distinguish between fact and opinion…[this] is extremely worrying in an era of fake news.”

        Fewer than one in 10 know the difference between fact and opinion. This means that more than 9 in 10 15-year-olds believe that when someone states, “I think that…”, that is indistinguishable from when someone says, “it is a fact that…”.  

         Fact and opinion.   This implies the death of truth, globally. And it indicates we are failing to teach our kids how to engage in critical thinking, which is simply the skill at knowing what is fact and what is not and hence needs checking and verification.

       We should not be surprised, then, when wild unsubstantiated rumors take on a life of their own, and fanciful conspiracy theories, once stated, are widely believed.

         Learning math, reading, science, these are all important. Telling fact from fiction is more important. It is time we taught this to our kids. If they don’t get it in school, perhaps we can give it to them at home?

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
December 2019
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