For 200 years, there have been two schools of thought about what determines the distribution of income -- and how the economy functions. It is important to understand both, because our views about government policies and existing inequalities are shaped by which of the two schools of thought one believes provides a better description of reality.
NEW DELHI -- As U.S. President Barack Obama prepares to embark on an historic visit to Cuba, the future of the communist-ruled island is the subject of widespread speculation. Some observers are hoping that the ongoing shift toward capitalism, which has been occurring very gradually under Raúl Castro's direction, will naturally lead Cuba toward democracy. Experience suggests otherwise.
The only cure for the world's malaise is an increase in aggregate demand. Far-reaching redistribution of income would help, as would deep reform of our financial system -- not just to prevent it from imposing harm on the rest of us, but also to get banks and other financial institutions to do what they are supposed to do: match long-term savings to long-term investment needs.
MILAN -- The truth is that the Internet-led process of exploiting under-utilized resources - be they physical and financial capital or human capital and talent - is both unstoppable and accelerating. The long-term benefits consist not just in efficiency and productivity gains (large enough to show up in macro data), but also in much-needed new jobs requiring a broad range of skills. Indeed, those who fear the job-destroying and job-shifting power of automation should look upon the sharing economy and breathe a bit of a sigh of relief.
WASHINGTON -- In just six weeks, world leaders will meet in Paris to negotiate a new global climate change agreement. To date, some 150 countries have submitted plans detailing how they will move their economies along a more resilient low-carbon trajectory. These plans represent the first generation of investments to be made in order to build a competitive future without the dangerous levels of carbon dioxide emissions that are now driving global warming.
Western political and economic structures are, in some ways, specifically designed to resist deep and rapid change, if only to prevent temporary and reversible fluctuations from having an undue influence on underlying systems. This works well when politics and economies are operating in cyclical mode, as they usually have been in the West. But when major structural and secular challenges arise, as is the case today, the advanced countries' institutional architecture acts as a major obstacle to effective action.
ISTANBUL -- A new social contract is needed to account for the increasingly important role that individual preferences, and individual responsibility, play in today's world. Each citizen should feel empowered, not isolated and abandoned, in the face of globalization and technological transformation.
I consider this ideology to be the greatest danger that the world will face in the next decade. Its seeds are growing in Europe, the United States, Asia, and elsewhere. With its twisted religious overtones, this pre-packaged franchise of hate is available for any terrorist group to adopt. It carries the power to mobilize thousands of desperate, vindictive, or angry young people and use them to strike at the foundations of civilization.
As early as 1993, China's chief negotiator on Hong Kong, Lu Ping, told the newspaper People's Daily, "The [method of universal suffrage] should be reported to [China's Parliament] for the record, whereas the central government's agreement is not necessary. How Hong Kong develops its democracy in the future is completely within the sphere of the autonomy of Hong Kong. The central government will not interfere."
Eventually, Hong Kong's people will get what they want, despite China's objections; freedom invariably wins in the end. But China's rulers would take a giant step forward by recognizing that such aspirations are not a threat to the country's well-being. For now, however, China, a great country and a growing power, is handling its economic affairs with more sophistication and a surer touch than it is addressing its political challenges.
The much-vaunted "liberal order" policed by the U.S. was a product of World War II and the Cold War. Germany and Japan had to be kept down, the Communist powers had to be contained, and the old countries of Europe had to learn to live with one another under unifying pan-national institutions. All of this was made possible by American money and military might. As a result, the Free World, in Western Europe and East Asia, became a US dependency. This cannot go on forever. Indeed, the arrangements are already fraying. But then comes the old imperial paradox. The longer others remain dependent on the U.S., the less capable they will be of taking care of their own affairs, including their security. And, like an authoritarian parent, the U.S. itself, despite its admonitions to its allies to pull their weight, is often loath to let go of its increasingly unruly dependents.
BUDAPEST - When it comes to geopolitics, there is always a market for gloom. Business has been booming in this respect lately, with The Economist, Foreign Affairs, and many less exalted journals full of claims that the global order is crumbling, America's ability (and willingness) to save it is in terminal decline, and the prospect of avoiding major conflict in the decade ahead is illusory. Plenty of recent events -- along with the ghosts of 1914 and 1939 -- have boosted the reputations, royalties, and revenues of today's doomsayers. There is Russia's adventurism in Ukraine; China's territorial assertiveness -- and Japan's new push-back nationalism -- in East Asia; continuing catastrophe in Syria and disarray in the wider Middle East; the resurgence of atrocity crimes in South Sudan, Nigeria, and elsewhere in Africa; and anxiety about renewed communal strife in India after Hindu nationalist Narendra Modi's stunning election victory. But, though global political conditions are hardly as good as they could be -- they never are -- there are plenty of grounds for thinking that they are not nearly as bad as so many are claiming. Here are the five most important reasons not to lose as much sleep as some pundits say you should.
In the past week, Abe created for himself considerably more political space to act as a strategic partner, not only to India, but also to Japan's other allies, particularly the United States. Quietly, a panel appointed by Abe's government last week offered a reinterpretation of a key element of Article 9 of Japan's constitution. For the first time since the Pacific War's end in 1945, Japan's Self-Defense Forces would be able to participate in "collective self-defense" -- meaning that Japan could come to the aid of its allies should they come under attack. Of course, China and others in Asia have tried to muddy this change with the alarmist charge of a return to Japanese militarism. But the new interpretation of Article 9 augurs just the opposite: it embeds Japan's military within an alliance system that has been, and will remain, the backbone of Asia's prevailing structure of peace. If properly understood by China, this can foster a greater strategic equilibrium in the region. It is now possible for Asia's greatest powers -- China, India, Japan, and the U.S. -- to form something akin to the concert system that gave Europe a century of almost complete peace in the 19th century.
In the world of venture capital, a success rate of 30 percent is considered a great track record. In the world of international development, critics hold up every misstep as proof that aid is like throwing money down a rat hole. When you're trying to do something as hard as fighting poverty and disease, you will never achieve anything meaningful if you're afraid to make mistakes.
SAO PAULO -- Brazil's House of Representatives has passed a genuine Internet "Bill of Rights," which was unanimously approved by the senate and signed into law by President Dilma Rousseff last week -- much to the delight of civil-society advocates. The legislation, widely described as an Internet constitution, seeks to safeguard online freedom of expression and limit government collection and usage of Internet users' metadata. The bill ensures "net neutrality" (meaning that Internet service providers must treat all information and users equally), and subjects global companies, such as Google and Facebook, to Brazilian law and precedent in cases involving its own citizens.
As the world struggles to recover from the global economic crisis, the unconventional monetary policies that many advanced countries adopted in its wake seem to have gained widespread acceptance. In those economies, however, where debt overhangs, policy is uncertain, or the need for structural reform constrains domestic demand, there is a legitimate question as to whether these policies' domestic benefits have offset their damaging spillovers to other economies. The disregard for spillovers could put the global economy on a dangerous path of unconventional monetary tit for tat. To ensure stable and sustainable economic growth, world leaders must re-examine the international rules of the monetary game, with advanced and emerging economies alike adopting more mutually beneficial monetary policies.
Dulling Putin's knife and ending the Ukraine crisis peacefully depends largely on the EU. Sanctions will not impress Putin (he and his cronies are isolating Russia economically and financially more effectively than most sanctions could); peaceful yet tangible political steps within Europe will. Polish Prime Minister Donald Tusk has made the right suggestion here: prompt establishment of a European energy union, starting with the market for natural gas and including joint external representation and a common pricing policy. This step, combined with further differentiation among supplier countries and progress toward implementing renewable-energy technologies, would invert the balance of power between the EU (Russia's most important customer for oil and natural gas) and the Kremlin.
U.S. President Barack Obama is visiting Tokyo at a unique moment in my country's history, with Japan's economy moving onto a stable new growth path that will take full advantage of its geographic position. Japan no longer considers itself the "Far" East; rather, we are at the very center of the Pacific Rim, and a neighbor to the world's growth center stretching from Southeast Asia to India.
For Japanese leaders and citizens, President Vladimir Putin's brutal annexation of Crimea was an unsurprising return to the normal paradigm of Russian history. Indeed, most Japanese regard the move as having been determined by some expansionist gene in Russia's political DNA, rather than by Putin himself or the specifics of the Ukraine crisis. Japan is particularly concerned with Russian expansionism, because it is the only G-7 country that currently has a territorial dispute with Russia, which has occupied its Northern Territories since the waning days of World War II.
Western feminism has made some memorable theoretical mistakes; a major one is the frequent assumption that, if women held the decision-making power in society, they would be "kinder and gentler" (a phrase devised for George H.W. Bush in 1988 to appeal to the female vote). Indeed, so-called "second-wave" feminist theory abounds in assertions that war, racism, love of hierarchy, and general repressiveness belong to "patriarchy"; women's leadership, by contrast, would naturally create a more inclusive, collaborative world. The problem is that it has never worked out that way, as the rise of women to leadership positions in Western Europe's far-right parties should remind us. Leaders such as Marine Le Pen of France's National Front, Pia Kjaersgaard of Denmark's People's Party, and Siv Jensen of Norway's Progress Party reflect the enduring appeal of neofascist movements to many modern women in egalitarian, inclusive liberal democracies.
Before our eyes, the post-Soviet international system in Eastern Europe, the Caucasus, and Central Asia is being overthrown. Nineteenth-century concepts of international order, based on zero-sum balance-of-power considerations and spheres of interest, are threatening to supersede modern norms of national self-determination, the inviolability of borders, the rule of law, and the fundamental principles of democracy. As a result, this upheaval will have a massive impact on Europe and its relations with Russia, for it will determine whether Europeans live by 21st century rules. Those who believe that the West can adapt to Russian behavior, as Putin's Western apologists suggest, risk contributing to further strategic escalation, because a soft approach will merely embolden the Kremlin.