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Archive for 28. September 2018

The world’s oldest political party’s new problems

Posted by hkarner - 28. September 2018

Date: 27-09-2018
Source: The Economist

How Brexit weakens and strengthens Britain’s Conservatives
And how it may yet spell their doom

THE Conservative Party has met with triumph and disaster a number of times since the 1830s, and if it has not treated them just the same, it has at least survived them. There were long periods of uninterrupted rule, such as 1951-64 and 1979-97. There were times of marginalisation, even irrelevancy, like that which followed Robert Peel’s decision to repeal the Corn Laws in 1846 and the one that was ushered in by the victory of Tony Blair’s New Labour in 1997. Today, though, it is experiencing something stranger than either: both. The Tories are weak and strong at the same time.

When the party gathers in Birmingham on September 30th for its annual conference, the evidence of weakness will be plain to see. The party does not have a majority in the House of Commons; Theresa May, the prime minister, is clinging to power through a grubby deal with the ten Northern Irish MPs of the Democratic Unionist Party (DUP). The government’s domestic agenda is so threadbare that there will be no Queen’s Speech (which traditionally lays out the government’s agenda at the beginning of the new parliamentary session) this year. Den Rest des Beitrags lesen »

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The Restructuring of the World

Posted by hkarner - 28. September 2018

Michael Spence, a Nobel laureate in economics, is Professor of Economics at NYU’s Stern School of Business, Distinguished Visiting Fellow at the Council on Foreign Relations, Senior Fellow at the Hoover Institution at Stanford University, Advisory Board Co-Chair of the Asia Global Institute in Hong Kong, and Chair of the World Economic Forum Global Agenda Council on New Growth Models. He was the chairman of the independent Commission on Growth and Development, an international body that from 2006-2010 analyzed opportunities for global economic growth, and is the author of The Next Convergence – The Future of Economic Growth in a Multispeed World.

Trade protectionism, together with fears over the national-security implications of technological development, are contributing to a balkanization of the world order. This is not good news for the United States as it faces an intensifying rivalry with an increasingly powerful China.

MILAN – The global economy is undergoing a far-reaching transformation. Change is being driven by shifts in countries’ populations, productivity, wealth, power, and ambitions, and accelerated by US President Donald Trump’s moves to reshape supply-chain structures, alter cross-border investment incentives, and limit the movement of people and technology across borders.

The tensions that these changes are producing are most apparent in escalating disputes over trade. Notwithstanding some dislocations in emerging economies, markets’ reaction to the tit-for-tat tariffs so far has been only muted. Investors probably assume that it is all just part of a renegotiation process that will ultimately produce new rules of engagement for global business – rules that are even more favorable to the powerful.

But such assumptions may underestimate the complexity of the issues at play, beginning with the politically salient matter of where investment and employment are created. On their own, tariff and trade barriers, if viewed as transitory negotiating tactics, will not significantly change global investment patterns or the structure of global supply chains and employment.

Protectionists like Trump argue that the power of tariffs and other trade barriers lies in their ability to curb cheating and free-riding. The implication is that such measures can help to eliminate the tensions, imbalances, and polarization associated with globalization.

“Cheating,” of course, is in the eye of the beholder. State subsidies for specific sectors, including preferential treatment of state-owned enterprises, may be regarded as cheating. So may requiring technology transfer in exchange for market access, public procurement favoring domestic entities, acceptance of unsafe work environments and exploitative labor practices, and exchange-rate manipulation.

The test of free-riding is whether a country contributes too little, relative to its capacity, to the provision of global public goods, such as defense and security, scientific and technical knowledge, mitigation of climate change, and absorption of refugees. The culprits depend on the topic in question.

But whatever the downsides to cheating or free-riding, tackling these behaviors is unlikely to eliminate the conditions that have contributed to economic, social, and political polarization. After all, labor arbitrage has been the core driver of the organization of global supply chains for at least three decades – accelerating, of course, with China’s rise – with significant distributional and employment effects. It seems unlikely that, had China and other emerging economies adhered to the letter of World Trade Organization rules, the distributional effects of their integration into the global economy would have disappeared.

What, then, is the real purpose of the tariffs? Trump could be interested only in leveling the playing field, at which point he will accept global market outcomes. But it is more plausible that this is all part of his strategy – echoed by leaders in a growing number of countries worldwide – to win support by asserting national priorities and sovereignty.

Such efforts are pushing the world toward a more balkanized system. Moreover, the challenges and fears raised by advances in technology, especially digital technology, with regard to both national security and economic performance are also propelling the world toward greater fragmentation.

Fifteen years ago, few would have predicted that mega-platforms like Google or Facebook would become key players in areas like image recognition, artificial intelligence, and the development of autonomous vehicles (including military vehicles). Yet that is exactly what has happened. In fact, Google is now a defense contractor (though it may not renew its contract).

Given the security implications of these developments, as well as a host of issues like data privacy and security, social fragmentation, and foreign interventions in elections, countries are unwilling to leave the Internet unregulated. But they are also unwilling to delegate regulation to a supra-national body. As a result, many are taking matters into their own hands, leading to a growing divergence among countries regarding Internet regulation.

Reflecting the national-security tilt of these initiatives, the scope and authority of the Committee on Foreign Investment in the United States – responsible for reviewing the national-security implications of foreign ownership of US companies or operations – has recently been expanded.

Despite these efforts, however, the fact remains that innovation cannot easily be blocked by national borders. On the contrary, the diffusion of ideas may well become the most consequential dimension of globalization in the future.

While this may complicate national-security planning, it represents powerful new opportunities for business, even as trade faces headwinds. Already, there has been an explosion of innovative, digitally-based business models, many of which could become powerful engines of inclusive growth, especially in emerging economies. Digitally-enabled ecosystems, with open architecture and low barriers to entry, are one example of an emerging model with considerable economic potential.

There is one more crucial dynamic that will shape how the global economy will develop in the coming decades: the strategic rivalry between China and the US. At this point, it is impossible to say precisely what form this rivalry will take. What is clear is that every part of the global economy will be affected by the mix of cooperation and competition that emerges.

In the face of a powerful rival, one might expect the US to pursue a strategy focused on building, expanding, and consolidating alliances with natural allies – that is, countries with similar governance structures and shared views about the benefits of international cooperation and open markets. Instead, Trump has alienated longtime allies and attacked multilateral structures and institutions, all while antagonizing China in what is quickly becoming a two-player game.

This is a bizarre strategy. Whatever advantage Trump thinks he will gain by positioning the US in opposition to its natural allies will be dwarfed by the losses. A split between the US and its traditional allies, if it becomes a permanent feature of the new global order, would lead to deeper fragmentation among the world’s market-oriented democracies. That will surely shift the long-term balance of power in China’s favor, as it moves steadily toward becoming the world’s largest economy.1


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Historian Yuval Noah Harari on the Robot Revolution

Posted by hkarner - 28. September 2018

Date: 27-09-2018
Source: The Wall Street Journal

The author of ‘Sapiens’ sees a future in which machines make better doctors, AI aids dictatorships and surveillance has a silver lining

Historian Yuval Noah Harari on the Robot Revolution

Science fiction is full of artificial intelligence that gains consciousness and wreaks destruction on humankind. In reality, the threat is less dramatic but just as scary, according to historian Yuval Noah Harari, who predicts upheaval in the workforce, global governments and our emotional lives.

Harari gained a global fan base after the 2011 release of “Sapiens: A Brief History of Humankind,” a bestseller that questioned conventional wisdom on the evolution of the species. He followed that up in 2017 with “Homo Deus: A Brief History of Tomorrow.” In “21 Lessons for the 21st Century,” published in September, the Israeli scholar offers advice on tackling the most pressing issues of tomorrow, from information technology to terrorism.

Harari, age 43, recently spoke to The Future of Everything about potential winners and losers in the automation revolution, how AI could help dictatorships outpace democracies, and the rise of machines more sympathetic than humans.

Most Jobs Will Not Be Worth Saving Den Rest des Beitrags lesen »

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Italien marschiert wieder Richtung Abgrund

Posted by hkarner - 28. September 2018

Neue Schuldenpläne für Wahlgeschenke

Italiens populistische Regierung will die Schulden dramatisch erhöhen – gegen alle Abmachungen mit Brüssel und gegen den eigenen Finanzminister. Es ist ein hochriskantes Spiel.

Von Hans-Jürgen Schlamp, Rom

Donnerstag, 27.09.2018 10:30 Uhr, spiegel.de

Wahlen zu gewinnen ist leicht: Man verspricht ein Mindesteinkommen für alle, Steuersenkungen, einen früheren Rentenbeginn, mehr Geld für Krankenhäuser, Schulen und Polizei – und die Stimmen kommen. So haben es in Italien die rechtsnationale Lega und die populistische 5-Sterne-Bewegung zur klaren Mehrheit gebracht.

Regieren ist da schon schwieriger. Denn da muss man sagen, wie man die Wohltaten bezahlen will. An dem Punkt ist die römische Koalition gerade. Und weiß nicht weiter.

Deswegen gibt es seit Wochen internen Krach. Wechselseitig drohen sich die Koalitionäre mit Neuwahlen, lassen durchsickern, dass sie mit anderen potenziellen Partnern sprechen. Die 5-Sterne-Bewegung drohte, die – vermutlich sowieso verfassungswidrigen – Migrations- und Sicherheitsgesetze der Lega im Parlament zu blockieren. Die verkündete im Gegenzug, das wichtigste Wahlversprechen der Sterne-Truppe, ein Grundeinkommen für alle, zu torpedieren. Weil es zu viel Geld koste. Den Rest des Beitrags lesen »

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The Albanian Miracle

Posted by hkarner - 28. September 2018

Ricardo Hausmann, a former minister of planning of Venezuela and former Chief Economist of the Inter-American Development Bank, is Director of the Center for International Development at Harvard University and a professor of economics at the Harvard Kennedy School.

Once the „North Korea of Europe,“ Albania now boasts an income level that is 25% that of Germany, double-digit export growth, and a strengthening currency. This suggests that the economists and multilateral institutions now being blamed for all sorts of disappointing outcomes may not be entirely useless after all.

TIRANA – Five years ago, Albania faced a truly ominous situation. With Greece and Italy reeling from the euro crisis, remittances and capital inflows were falling and the economy suffered a severe slowdown. The fiscal deficit ballooned to over 7% of GDP, financed to a large extent by arrears, as access to external financial markets had collapsed and domestic interest rates were sky high.

Den Rest des Beitrags lesen »

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Labor Shortage Lifts Wages on Europe’s Eastern Flank

Posted by hkarner - 28. September 2018

Date: 27-09-2018
Source: The Wall Street Journal

Unlike in some Western economies, wages are rising fast as workers grow scarce in Hungary, Poland and the Czech Republic

BUDAPEST, Hungary—Akos Niklai says he has increased wages at his historic restaurant in downtown Budapest by around 20% in each of the past three years. He still struggles to retain staff.

The Hungarian businessman was recently forced to stop serving lunch on Sundays due to a worker shortage. Unemployment in this nation of 10 million people is at an all-time low of 3.6%, down from 10% five years ago.

“It is very hard to find labor in Budapest,” said Mr. Niklai. “Wages are still not high enough.”

In a half-dozen countries across Central and Eastern Europe, hourly labor costs are shooting up by 9% or more a year, defying a trend of weak wage growth that has bedeviled many advanced economies for years.

The increases seem to answer a question economists have been puzzling over for several years: Does low unemployment still cause wages to rise? Den Rest des Beitrags lesen »

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Trump’s Nineteenth-Century Grand Strategy

Posted by hkarner - 28. September 2018

Date: 27-09-2018
Source: Foreign Affairs By Charles A. Kupchan

The Themes of His UN General Assembly Speech Have Deep Roots in U.S. History

When U.S. President Donald Trump spoke to the United Nations General Assembly yesterday, he deliberately signaled a definitive break with the internationalist consensus that has guided U.S. grand strategy since World War II. “We will never surrender America’s sovereignty to an unelected, unaccountable global bureaucracy,” he proclaimed. “Sovereign and independent nations are the only vehicle where freedom has ever survived, democracy has ever endured, or peace has ever prospered. And so we must protect our sovereignty and our cherished independence above all.” He was dumping cold war water on multilateralism and global governance—and the commentary that followed duly noted just how sharply his message diverged from those of his predecessors.

But Trump’s brand of statecraft is not in fact out of step with much of U.S. history. Rather, he is discarding the key tenets of U.S. foreign policy since World War II in favor of an older strain of thinking about the United States’ role in the world. As I argued in the March/April 2018 issue of this magazine (“The Clash of Exceptionalisms”), “America first” has deep roots in the United States’ past. It’s a callback to a time before World War II—to an earlier iteration of American exceptionalism and an older brand of statecraft. The hostility to U.S. participation in international pacts, the economic protectionism, the aversion to democracy promotion, the racially tinged nationalism, the isolationist temptation—these aspects of Trump’s “America first” approach are right out of the playbook that anchored foreign policy for most of U.S. history prior to the Japanese attack on Pearl Harbor. Den Rest des Beitrags lesen »

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Managing the Global Factor Better

Posted by hkarner - 28. September 2018

Mohamed A. El-Erian, Chief Economic Adviser at Allianz, the corporate parent of PIMCO where he served as CEO and co-Chief Investment Officer, was Chairman of US President Barack Obama’s Global Development Council. He previously served as CEO of the Harvard Management Company and Deputy Director at the International Monetary Fund. He was named one of Foreign Policy’s Top 100 Global Thinkers in 2009, 2010, 2011, and 2012. He is the author, most recently, of The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse.

The IMF is the body best suited to serve as a trusted adviser and an effective conductor of the global policy orchestra. If it is to fulfill that role, however, it must strengthen its credibility as a responsive and effective leader. That means listening to its members, then guiding them toward more harmonious policies.

SEATTLE – Imagine a world in which the annual meetings of the International Monetary Fund were more client-driven. Ahead of the gathering – this year’s will take place in Indonesia in October – the IMF would solicit from its 189 member countries three key policy issues on which to focus, not only in official discussions, but also in the numerous seminars that are held in parallel. The result would be an agenda that responded better to the continued anxiety that a growing number of policymakers – and populations – are feeling.

Den Rest des Beitrags lesen »

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What it takes to get an edge in the Internet of Things

Posted by hkarner - 28. September 2018

Three practices can help differentiate successful companies from those that struggle to gain traction.

Internet of Things (IoT) technologies have evolved rapidly in recent years and continue to change how we interact with our surroundings. For companies, IoT brings new ways to monitor and manage objects in the physical world, while massive new streams of data offer better avenues for decision making (often mediated by machines). The steady fall in prices of sensors and communications technologies, combined with a parallel rise in understanding of how they can be applied, have raised the strategic importance of IoT. As we have shown elsewhere, this can produce immense value in settings ranging from retail and healthcare to manufacturing and technology.

Despite the promise, we continue to see substantial differences in how well companies apply IoT in their businesses. Targeting IoT applications correctly and managing them effectively is far from easy, leaving many companies stuck and unable to move beyond pilots. To better understand what differentiates successful initiatives from struggling ones, we surveyed IoT executives at 300 companies—those that have moved beyond experiments and have scaled up IoT use in their businesses.1 We asked them about the practices that directly support their IoT strategy, as well as other factors that may influence it, and sorted leaders from laggards based on their self-reported economic impact from IoT.2 We found that while a number of IoT “habits” play a role in successes, three are particularly relevant for C-level executives who may be considering heavier investment in IoT or searching for reasons their programs have failed to gain traction. Den Rest des Beitrags lesen »

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Gute Staatsfinanzen durch Bad Banks

Posted by hkarner - 28. September 2018

Die Staatsschulden sind 2017 erstmals seit 20 Jahren auch absolut gesunken, durch den Abbau der Lasten aus der Bankenrettung. Auch das gesunkene Defizit hat zur Hälfte mit ihr zu tun.

Wien. Schlichte Jubelmeldungen könnte man leicht formulieren, aus den endgültigen Daten der Statistik Austria zu den öffentlichen Finanzen des Vorjahrs. Etwa so: Die Staatsschulden sind 2017 erstmals seit 20 Jahren auch in absoluten Zahlen gesunken! (von 296 auf 290 Mrd. Euro). Oder so: Das gesamtstaatliche Defizit hat sich halbiert! (von 1,6 auf 0,8 Prozent des BIPs). Und weil die Wirtschaft weiter rund läuft, Einnahmen sprudeln und die Zinsen extrem niedrig bleiben, sollte es mit der Schuldenquote (im Vorjahr 78,3 Prozent) auch heuer in die gewünschte Richtung gehen, nämlich deutlich bergab. Zumal Finanzminister Löger für 2019 ein Nulldefizit in Aussicht gestellt hat. Den Rest des Beitrags lesen »

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