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#4 from 2017: Review of Doughnut Economics – a new book you will need to know about

Duncan Green's picture

https://flic.kr/p/9XqtbSOur Top Ten blog posts by readership in 2017. This post was originally posted on April 24, 2017.

My Exfam colleague Kate Raworth’s book Doughnut Economics is launched today, and I think it’s going to be big. Not sure just how big, or whether I agree with George Monbiot’s superbly OTT plug comparing it to Keynes’s General Theory. It’s really hard to tell, as a non-economist, just how paradigm-changing it will be, but I loved it, and I want everyone to read it.

Down to business – what does it say? The subtitle, ‘Seven Ways to Think Like a 21st Century Economist’, sets out the intention: the book identifies 7 major flaws in traditional economic thinking, and a chapter on each on how to fix them. The starting point is drawings – working with Kate was fun, because whereas I think almost entirely in words, she has a highly visual imagination – she was always messing around with mind maps and doodles. And she’s onto something, because it’s the diagrams that act as visual frames, shaping the way we understand the world and absorb/reject new ideas and fresh evidence. Think of the way every economist you know starts drawing supply and demand curves at the slightest encouragement.Her main target is GDP (the standard measure of national economic output), and its assumptions – an open systems approach to economics that ignores planetary boundaries as it promotes economic growth. Her breakthrough moment while at Oxfam was coming up with ‘the doughnut’ – two concentric rings representing the planetary ceiling and minimum standards for all human beings. The ‘safe and just space’ between the two rings is where our species needs to be if it wants to make poverty history without destroying the planet.

When Kate came up with the doughnut in a highly influential 2012 paper for Oxfam, my non-visual mind failed to grasp its full value. After all, wasn’t this just a restatement of the idea of sustainable development? But it went viral, especially at the UN, because it allowed activists and policy makers to visualize both the threats and how they were trying to overcome them.

Quote of the week: Trevor Noah

Sina Odugbemi's picture

“I see most things in terms of finance and investment and marketing. In school, one of my favourite subjects was business economics. I had an amazing teacher who went beyond the syllabus. And so even now, in life, I read economics textbooks and I try to dabble in financial accounting, just to understand the world.”

-
Trevor Noah – South African comedian, television and radio host.

Quoted in Financial Times Weekend print edition December 17, 2016 "Life" by Michael Skapinker
 

Review of Doughnut Economics – a new book you will need to know about

Duncan Green's picture

https://flic.kr/p/9XqtbSMy Exfam colleague Kate Raworth’s book Doughnut Economics is launched today, and I think it’s going to be big. Not sure just how big, or whether I agree with George Monbiot’s superbly OTT plug comparing it to Keynes’s General Theory. It’s really hard to tell, as a non-economist, just how paradigm-changing it will be, but I loved it, and I want everyone to read it.

Down to business – what does it say? The subtitle, ‘Seven Ways to Think Like a 21st Century Economist’, sets out the intention: the book identifies 7 major flaws in traditional economic thinking, and a chapter on each on how to fix them. The starting point is drawings – working with Kate was fun, because whereas I think almost entirely in words, she has a highly visual imagination – she was always messing around with mind maps and doodles. And she’s onto something, because it’s the diagrams that act as visual frames, shaping the way we understand the world and absorb/reject new ideas and fresh evidence. Think of the way every economist you know starts drawing supply and demand curves at the slightest encouragement.

#2 from 2016: The 2016 Multidimensional Poverty Index was launched last week. What does it say?

Duncan Green's picture

Our Top Ten blog posts by readership in 2016. This post was originally published on June 14, 2016. 

This is at the geeky, number-crunching end of my spectrum, but I think it’s worth a look (and anyway, they asked nicely). The 2016 Multi-Dimensional Poverty Index was published yesterday. It now covers 102 countries in total, including 75 per cent of the world’s population, or 5.2 billion people. Of this proportion, 30 per cent of people (1.6 billion) are identified as multidimensionally poor.

The Global MPI has 3 dimensions and 10 indicators (for details see here and the graphic, right). A person is identified as multidimensionally poor (or ‘MPI poor’) if they are deprived in at least one third of the dimensions. The MPI is calculated by multiplying the incidence of poverty (the percentage of people identified as MPI poor) by the average intensity of poverty across the poor. So it reflects both the share of people in poverty and the degree to which they are deprived.

The MPI increasingly digs down below national level, giving separate results for 962 sub-national regions, which range from having 0% to 100% of people poor (see African map, below). It is also disaggregated by rural-urban areas for nearly all countries as well as by age.
 

The global technocracy confronts an inconvenient beast

Sina Odugbemi's picture
Power concedes nothing without a demand. It never did, and it never will.  --Frederick Douglass
 
Suddenly, the tumultuous on-rush of clarity. As the technocrats and leaders who run the global economic system reflect on widespread angry reactions to globalization and rapid social change, a new language is permeating the discussion of economic issues. Top economic policy leaders are now saying that ‘inclusive growth” is crucial. They are saying globalization must “work for everyone”. We are hearing exhortations about paying attention to public opinion (that famously unruly and inconvenient beast!). According to Larry Summers, a notable commentator on these matters, (in a Financial Times piece titled: “Voters sour on traditional economic policy”):
People have lost confidence in both the competence of economic leaders and in their commitment to serve the wider public rather than the global elite.

A number of traditional economic leaders in the public and private sector seemed to be making their way through the traditional grief cycle – starting with denial, moving to rage, then to bargaining and ultimately to acceptance of the new realities.


Will anything change though? There is reason to be skeptical. For, at bottom, the issue is that the global technocracy insists on economic policy being the exclusive preserve of experts. So, once the experts do the numbers and they declare a trade agreement beneficial that should be the end of the matter. Or, once the experts decide that what appears to be a high level of immigration to the ordinary citizen is actually economically helpful they tell leaders to ignore public opinion and go for it. The point, naturally, is not that expert input into policymaking is not crucial. Of course it is. The point is: it is just an input. Wise leaders must add other considerations.

Blog post of the month: The 2016 Multidimensional Poverty Index was launched last week. What does it say?

Duncan Green's picture

Each month People, Spaces, Deliberation shares the blog post that generated the most interest and discussion. In June 2016, the featured blog post is "The 2016 Multidimensional Poverty Index was launched last week. What does it say?" by Duncan Green.


This is at the geeky, number-crunching end of my spectrum, but I think it’s worth a look (and anyway, they asked nicely). The 2016 Multi-Dimensional Poverty Indexwas published yesterday. It now covers 102 countries in total, including 75 per cent of the world’s population, or 5.2 billion people. Of this proportion, 30 per cent of people (1.6 billion) are identified as multidimensionally poor.

The Global MPI has 3 dimensions and 10 indicators (for details see here and the graphic, right). A person is identified as multidimensionally poor (or ‘MPI poor’) if they are deprived in at least one third of the dimensions. The MPI is calculated by multiplying the incidence of poverty (the percentage of people identified as MPI poor) by the average intensity of poverty across the poor. So it reflects both the share of people in poverty and the degree to which they are deprived.

The MPI increasingly digs down below national level, giving separate results for 962 sub-national regions, which range from having 0% to 100% of people poor (see African map, below). It is also disaggregated by rural-urban areas for nearly all countries as well as by age.

The 2016 Multidimensional Poverty Index was launched last week. What does it say?

Duncan Green's picture

This is at the geeky, number-crunching end of my spectrum, but I think it’s worth a look (and anyway, they asked nicely). The 2016 Multi-Dimensional Poverty Index was published yesterday. It now covers 102 countries in total, including 75 per cent of the world’s population, or 5.2 billion people. Of this proportion, 30 per cent of people (1.6 billion) are identified as multidimensionally poor.

The Global MPI has 3 dimensions and 10 indicators (for details see here and the graphic, right). A person is identified as multidimensionally poor (or ‘MPI poor’) if they are deprived in at least one third of the dimensions. The MPI is calculated by multiplying the incidence of poverty (the percentage of people identified as MPI poor) by the average intensity of poverty across the poor. So it reflects both the share of people in poverty and the degree to which they are deprived.

The MPI increasingly digs down below national level, giving separate results for 962 sub-national regions, which range from having 0% to 100% of people poor (see African map, below). It is also disaggregated by rural-urban areas for nearly all countries as well as by age.

The income of the world’s poor is going up, but they’re $1 trillion poorer. What’s going on?

Duncan Green's picture

Oxfam number cruncher Deborah Hardoon tries to get her head round something weird – according to the stats, the poorest half of the world is getting poorer even though the incomes of these people are rising.

It has become something of a tradition that in January every year we take a look at the Forbes list of billionaires and the Credit Suisse Global Wealth databook and calculate how many billionaires it takes to have the same amount of wealth as the bottom 50% of the planet. Since we started doing these calculations, we have watched the wealth of the top grow at the same time as the wealth of the bottom 50% has fallen. The data tells us that the bottom 50% have approximately $1 trillion (that’s $1,000 billion) less wealth than they did 5 years ago, whilst the richest 62 have about $0.5 trillion more.

The extremely wealthy are able to accumulate more wealth in a day than a whole factory full of workers could earn in a year. On 21stApril, in a 24 hour period, Carlos Slim made more than $400 million. Thomas Piketty famously points out that the rate of return on capital is higher than the general growth rate, such that capital owners are at a distinct economic advantage.

Meanwhile those 3.6 billion people in the bottom 50% include people in debt, people with nothing and people with a net wealth of up to about $5,000. People with little, no, or negative wealth, especially in developing countries with poor social insurance mechanisms (four out of five people in the bottom 50% live in Africa or Asia – including China and India), will not only find it hard to respond to financial shocks – like a poor harvest or a medical bill, but will also find it much harder to invest in their families’ future. Having little wealth may be concerning, but having less and less wealth year to year is even more worrying.

Quote of the week: Angus Deaton

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Angus Deaton at a press conference at the Royal Swedish Academy of Sciences"Politics is a danger to good data; but without politics data are unlikely to be good, or at least not for long."

- Angus Deaton, a British-American economist. In 2015, he was awarded the Nobel Memorial Prize in Economic Sciences for his analysis of consumption, poverty, and welfare. The Nobel Prize website writes, "To design economic policy that promotes welfare and reduces poverty, we must first understand individual consumption choices. More than anyone else, Angus Deaton has enhanced this understanding. By linking detailed individual choices and aggregate outcomes, his research has helped transform the fields of microeconomics, macroeconomics, and development economics."

Quote of the week: Lawrence Summers

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"The core of the revolt against global integration, though, is not ignorance. It is a sense, not wholly unwarranted, that it is a project carried out by elites for elites with little consideration for the interests of ordinary people — who see the globalisation agenda as being set by big companies playing off one country against another."

-Lawrence Summers, an American economist who currently serves as President Emeritus and Charles W. Eliot University Professor of Harvard University.  He worked as Chief Economist at the World Bank from 1991 to 1993 before being appointed as Undersecretary for International Affairs of the United States Department of the Treasury. In 1999, he became Secretary of the Treasury, a position he held until 2001. Summers later joined the Obama administration, serving as Director of the White House United States National Economic Council for President Barack Obama from January 2009 until November 2010. In mid-2013, his name was floated as a potential successor to Ben Bernanke as Chairman of the Federal Reserve, though after receiving pushback, Obama nominated Federal Reserve Vice-Chairwoman Janet Yellen for the position.

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