Picturing the Evolution of Life Expectancy

The Gapminder, a Swedish non-profit venture that collaborates with universities, UN organizations, public agencies, and NGOs, has a nice interactive graph of the relation between life expectancy and income per capita. You can select the countries in which you are interested and trace their evolution since 1975. Neat!

The Environmental Cost of China’s Growth

The New York Times just published a great special report on the environmental cost of China’s growth. You can read the lead article here and watch the video below. There are also audio files and an interactive map.

Could Globalization Actually Promote Wage Equality?

It is commonly argued that globalization increases inequality in advanced industrialized countries as low-skill workers in labor-intensive sectors are negatively affected by foreign competition (imports, offshoring, etc.) whereas high-skill workers take advantage of new opportunities. The solution to this rising inequality can thus be fiscal reform and targeted social policies, as many economists advocate, or protectionist barriers aimed at reducing the distributive effects of globalization.

However, according to two Scandinavian economists, Karolina Ekholm and Karen-Helene Ulltveit-Moe, that just published an article on VoxEu.org, globalization entails not only specialization, which fosters inequality according to the logic of comparative advantage, but also competition, which fosters firm concentration and affects those high-skill workers that until recently were not negatively affected by globalization. Insofar as there is downward pressure on the relative wage of these workers, wage inequality diminishes. According to Ekholm and Ulltveit-Moe,

“any policy initiative that would aim at dampening negative distributional effects of globalisation by impeding free trade is misguided. In fact, it may very well be that promoting globalisation is not only good for efficiency, but for equality as well. The increased competition that follows from further international integration affects the wages of those who so far have been relatively sheltered from competition. This involves skilled workers much more than unskilled workers, who are already exposed to fierce competition. Increased focus on abolishing remaining protective measures that impede the free movement of goods and services should therefore be the way ahead. Not only for the sake of economic efficiency, but also to promote equality.”

Although I agree that protectionism is not necessarily a solution to rising inequality, I find Ekholm and Ulltveit-Moe’s argument puzzling. I don’t see how the existence of downward pressures on the relative wage of high-skill workers is positive. Ekholm and Ulltveit-Moe’s advocacy for further globalization relies on the belief that it will reduce inequality not by lifting low wages but by reducing high wages. In other words, it indirectly supports the claim that globalization entails a race to the bottom wage-wise. This is not the best defense of globalization I’ve read. I still prefer to the Paul Krugman line.

All the Countries that Fit on a US Map

I just found this map of the US on someone else’s blog. Each US state was renamed for a country with a similar GDP. Pretty striking!

Mapping Global Disparities

It can be difficult to grasp the magnitude of global disparities. Fortunately, the University of Sheffield World Mapper project offers striking pictures of what can sometimes be an abstract discussion. Look, for example, at the map of the world total population…

…compared to that of the GDP wealth (indicating international purchasing power)…

…or that of human poverty (human poverty index that includes non-financial aspects of poverty like life expectancy, adult literacy, and water quality)…

Quite striking indeed!

World Mapper offers international mapping on a wide variety of issues. Look for example at this map of the distribution of global protests against the invasion of Iraq in 2003:

According to World Mapper, “There were protests against the war recorded in 96 of the 200 mapped territories . . . The largest protests were in Italy, Spain, the United Kingdom, Germany and the United States - which together account for 80% of protesters”

It is even possible to consult and improve the database.

Academic Research and Private Funding: A Faustian Deal?

Public and private funding makes advanced research materially possible but also constrains it. How does the source of funding affect what is being researched? How does it affect academic freedom? Who ultimately benefits from private funding? Corporations, universities, or the larger community where both are settled? At a time when cutting edge research seems to depend so much on private funding, are academics selling their soul to the Devil for a fistful of dollars?

The recent half-a-billion-dollar deal between UC-Berkeley and British Petroleum (BP) to found an Energy Biosciences Institute to research “economically viable alternative energy sources” lies at the core of such questions. Larisa Mann raises a few key issues about this deal in the online magazine Wire Trap. In addition to the risk of having corporations deciding what is worthy of being investigated, Mann asks how will the findings be used. If they become public, to begin with. She notes indeed that UC President Robert Dynes “admitted that ‘certain discoveries’ will be exclusively controlled by BP.” Put differently, BP will take advantage of a public institution (as Mann remarks, “Even with 500 million dollars from BP, UC is still a public university, with a public mission. Millions of taxpayer dollars go into it every year.”) to generate technological innovations that it will use for its own benefit.

On the other hand, however, one could nuance Mann’s critique by noting that the UC-BP deal could have a trickle-down effect by attracting talented faculty and students as well as other labs and firms that will settle in the area. This concentration could, in turn, spill over onto other related activities and become a major source of employment and economic growth. Although there is no guarantee that such virtuous circle will emerge, it is a possibility, as the Silicon Valley story and the biotech cluster around MIT and Harvard illustrate.

Therefore, although it is necessary to question the finality of such partnerships, as Mann does, we should avoid Manichean pictures. The issue of academic freedom remains crucial but we should also ask what regulations and incentives are necessary to increase the likelihood that partnerships like the UC-BP deal will generate a virtuous dynamic for the benefit of all stakeholders and not just shareholders.

Workers’ Rights and Economic Performance

A little while ago I pointed out a study suggesting that workplace collectivism, participation, and flexibility, could be the key to worker satisfaction. It seems that these features can also favor economic performance. In yesterday’s Monde, Frédéric Lemaître asked how come France did not manage to produce world leaders such as Toyota. According to Lemaître, the answer could lie in France’s overly hierarchical workplace relations and the overwhelming influence of “inheritors” in leading the main French firms. French employers don’t acknowledge that subordinates could have better ideas than their superiors and see the improvement of working conditions only as a cost and burden. Unions have their share of responsibility in this story–although the CFDT, with its former celebration of self-management, has a long history of emphasizing qualitative demands–insofar as they primarily focus on quantitative demands (job protection, better pay) at the expense of qualitative demands (workers’ rights, economic/workplace democracy).

Although one may wonder whether Japanese society is really a model of non-hierarchical social relations, the point is that making the workplace less hierarchical and more democratic can contribute to economic performance. Michael Piore and Andrew Schrank made a similar point about the implementation of labor standards in developing countries, particularly Latin America. Some forms of labor regulation offer “the possibility for a country to shift from a strategy of competing in world markets through cost-cutting and labor exploitation to a strategy of upgrading business practices to raise productivity, reduce inventory levels, and improve quality.” Countries embarking upon such strategy would not only grow but also develop. Similarly, as Suzanne Berger demonstrated in her book How We Compete, firms can compete in the world economy in different ways and there are no best practices that guarantee success. Offshoring and running after low wages is far from being the only viable or optimal strategy.

Such reflections have the merit of questioning the traditional zero-sum game between workers’ rights and economic performance, according to which consolidating workers’ rights through regulation necessarily hampers economic performance. The opposite could actually be true. The brave new world of globalization is not an iron cage.

European Trade Unions and Flexicurity

Eight hundred union delegates are currently meeting in Sevilla, Spain, for the 11th congress of the European Trade Union Confederation (ETUC). While yesterday the European Central Bank president Jean-Claude Trichet came to warn them about the inflationary risks of wage increases, the central issue is the introduction of “flexicurity”(labor market flexibility and social security or protection) as a potential response to the challenges of globalization. The ETUC is worried that flexicurity will just be an excuse to cut down protection for the benefit of employers. It thus strongly criticized the European Parliament’s draft report on the Commission’s Green Paper “Modernising labour law to meet the challenges of the 21^st century.” Put simply, it believes that there’s too much flexibility and not enough security.

This response provides a taste of what French trade unions are likely to respond to president Nicolas Sarkozy–who believes that labor market reform is the key to reducing unemployment–when he’ll put the issue on the table for negotiations between employers and unions in the fall. The key to introducing the reform will lie in Prime Minister Fillon’s ability to divide unions as he did in 2003, when he introduced a law reforming the French pension system. In this respect, it is worth consulting a recent study laying out the different positions of French trade unions on flexicurity. There’s room for unions to converge on a set of demands but French labor history shows that it has rarely been enough to produce a united front.

Dispatches from the Income Gap

Two different events are taking place at the two extremes of the American income gap. At the top, Democrats are proposing to Congress to adopt a bill that would allow shareholders to take a non-binding vote on how much the Chief Executive Officer (CEO) of their company should be paid. As Jonathan Chait reports in the New Republic, two economists from Harvard and Berkeley have shown that when CEO pay is set by the board of directors, it tends to be higher because board members have incentives to please CEOs. The weaker the board of directors, the higher the CEO pay. Giving shareholders the right to vote on CEO pay–even if non-binding– would balance the potential weakness of the board of directors and exercise downward pressures on CEO pay. It is worth bearing in mind that the average CEO of a Standard & Poor 500 company makes about $15 million a year.

At the other end of the income gap, Starbucks workers are organizing to get better wages, more affordable health insurance, and freedom of association (i.e., the right to form trade unions). It turns out that the company that brags about being socially responsible (read its leaflets about fair trade, sustainable development, etc., available in all its stores) has a long record of worldwide union-busting practices. Liza Featherstone reports in The Nation that in New York, the National Labor Relations Board “has accused Starbucks of violating workers’ freedom of association in about thirty different ways, including illegally firing, threatening and disciplining workers for supporting the union.” Although Starbucks workers founded a union three years ago, the gap to fill is so wide that they’re going to need many cups of foamy coffee to keep the mobilization going. I wonder how they would vote on their CEO’s pay…