Daily Archives: July 5, 2021

The COVID-19 pandemic has exacerbated socioeconomic inequalities within and across countries. The policy responses designed to mitigate them in the form of either relief and recovery packages or welfare protections have mostly proved to be short-term fixes. In the long-term, however, the distributional consequences of the pandemic between and within countries, like during previous pandemics and recessions, are bound to widen inequality.

According to the World Inequality Database 2020 update, Latin America and the Middle East stand as the worlds most unequal regions, with the top 10% of the income distribution capturing respectively 54% and 56% of the average national income. Despite Gulf countries (Bahrain, Kuwait, Oman, Qatar, UAE, Saudi Arabia) having among the highest GDP per capita levels, they have also marked extreme inequality levels, with little variation since the 1990s. However, the starkest change has been the rise in concentration of incomes in the US, with the top 10% witnessing an increase from 34% to 45% of the national income between 1980 and 2019.

The data is an indicator that countries with strong investments in public services, social protection, and labour market policies have the lowest inequality levels, with Europe standing as the most equal of all regions driven by its redistribution and progressive taxation mechanisms, seen in the Commitment to Reducing Inequality Index.

Moving beyond looking at global inequality purely from an income distribution lens, it is critical to take into consideration multidimensional factors such as social mobility, gender equality, livelihood infrastructure, technology access, civil society voice, privacy, social and environmental protections, progressive tax laws and labour rights when examining the how societies perform on reducing inequality and serving public interest.

The COVID crises has forced us to reimagine and rethink our shared futures as the world attempts to rebuild. From proposals of long-standing arguments relating to basic income and collecting the tax deficit to the more emerging debate on inheritance for all, the highly asymmetric impact of the pandemic and divergent recovery beckon a universal call for us to build back broader.

Mitigating inequality will now demand a mix of bottom-up and top-down changes that recognize the social and economic systems aggravating inequality are a matter of choice. Where do we go from here?

We asked seven global experts from the World Economic Forum Expert Network to provide their perspective on how we can build a better future where we leave no one behind. Heres what they said.

Tak Niinami, Chief Executive Officer, Suntory Holdings and Senior Economic Advisor to the Prime Minister of Japan

The pandemic has made it apparent that Japan also faces the issue of inequality. A widening in the gap must be prevented by all means, as it would bring social unrest and social divide. In the short term, given Japans comparatively low wages, it is particularly crucial to increase the minimum wage and thoroughly implement equal pay for equal work policy to bridge the gap between regular and non-regular workers.

The acceleration of redistribution of wealth is also imperative. Taxation on assets and capital gains should be increased so that this resource can be utilized to fund NPOs (nonprofit organizations) that can take measures against issues such as poverty and isolation.

Furthermore, in the long term, I believe education is key in mitigating inequality. The widening education gap can spill over from generation to generation, creating a chain effect that must be avoided. Technology can prove to be a solution if it can be applied to ensure equal opportunities, enabling high-quality education to anyone and anywhere, no matter where you live.

Deepak Xavier, Head of Inequality Advocacy and Campaigns, Oxfam International

The world risks the greatest rise of inequality since records began, and today it is inequality that perpetuates COVID-19, which is ending so many lives. The grotesque inequality in accessing healthcare is proving fatal. To be without a hospital bed or medical oxygen in the face of a pandemic is frightening enough, however, for most of the world that has long been the case. Pre-pandemic 10,000 people were dying daily due to lack of access to healthcare.

Progress on universal healthcare is achievable as countries such as Costa Rica have shown. Implementing a fair and progressive tax system to avoid concentration of wealth to the top 10% is one way to provide a fiscal boost. A 0.5% extra tax on the wealth of the richest 1% alone could raise $418bn each year which could be redistributed towards resilient healthcare systems. Issuing US$1 trillion of IMFs Special Drawing Rights (SDRs), global reserve asset would dramatically increase the funds available to countries for example, the Ethiopian government will have access to an additional $630 million enough to increase its health spending by 45%.

Well-funded and quality universal healthcare must be the legacy of the pandemic: to save lives and better tackle future pandemics.

Leslie Parker, Partner and Member of the Board of Directors, Kearney

It used to be that there was very little crossover between our work and personal lives. Since COVID, that has changed. The new work-from-home model has given us intimate access to our colleagues personal lives and surfaced a whole new set of inequalities.

We see family members juggling caring responsibilities with the demands of their jobs. We see people who live alone, who might not physically encounter another human being that week. We see housemates sitting three to a table, trying to work at the same time. And we see laptops propped on kitchen counters, stacks of boxes and pairs of knees, as people search for an elusive quiet space or change of scenery.

The ability to work from home is an incredibly privileged position for many. But with working patterns and norms changed beyond all recognition, we need policies that take on these and other new inequalities including lack of choice over working location into account. Its not enough to dish out some grants for home office equipment. What about some let-up from home schooling or eldercare, or help to tackle loneliness? Why not help our teams create better connections with one another that can offer more than the virtual happy hour and more time behind a laptop? We need to go beyond one-dimensional Diversity, Equity, Inclusion programmes and policies, and really support our people outside of the nine to five.

At Kearney we have taken a first step by asking employees around the world to tell us what would improve their lives and how we can help as leaders. We are already seeing wellbeing, both physical and mental, as a major theme. We introduced more mental and physical health programmes with free classes available to employees, redesigned our future work model strategies to allow for flexibility of working hours and location (no longer adopting five-days-a-week office model), offered an option to go to co-working spaces to employees whose current situation is not supportive of their work or mental health and improved coaching and mentoring guidelines in the absence of in-person onboarding and support.

Ibrahima Hathie, Distinguished Fellow, Initiative Prospective Agricole et Rurale (IPAR), Senegal and Southern Voice network member

Sustainable Development Goal 10 of the 2030 Agenda seeks to reduce inequality within and among countries. Yet, the goals targets and indicators focus on horizontal inequality and exclusion of the vulnerable and marginalized population from opportunities. The United Nations over-arching principle of Leave No One Behind reflects this orientation and calls for a transformative agenda. However, it fails to address deep-rooted social, economic, and political systemic problems that preserve and often amplify vertical inequalities.

A path to achieving this must seek to reduce the political influence of elites in the formulation and implementation of public policies. It would promote more transparent and accountable systems. Tackling inequalities between countries is also imperative if we are to face the consequences these have on the most vulnerable in developing countries. Addressing overlapping disadvantages through a comprehensive development strategy can be an excellent response to horizontal inequalities. Vertical inequalities require more: progressive economic institutions with pro-poor taxation, investment, and trade.

In Senegal, for example, the government should choose and invest heavily in food value chains, funding of research of these value chains, training of family farmers, agricultural entrepreneurs, technicians, and engineers and introduce multisector governance to ensure smooth coordination to achieve the goals set out by the Malabo Declaration. This would lead to increased industrial development, improved health and nutrition, and decent and abundant jobs for young people and women.

Marie McAuliffe, Head, Migration Research Division, International Organization for Migration

In addition to measures on improving social protection of migrant workers, reducing costs of international remittance transfers, and bolstering migrants' rights throughout the migration process, the fundamentals of knowledge creation and collaboration must be addressed. Affected communities impacted by increasing inequality must be part of processes aimed at formulating effective responses.

Developing country experts and research institutions must be able to meaningfully participate in researching, proposing, designing, and evaluating solutions according to their priorities and needs. A much greater focus on leveraging opportunities to undertake participatory and collaborative research with (and for) marginalized populations is needed. Only then can the programmatic and policy responses designed to reduce inequality globally be truly sustainable.

We advocated this approach as part of consultations on the UN Research Roadmap on COVID-19, which makes a strong case for participatory research to support long-term global transformations. In 2017, IOM invited the worlds leading migration researchers from around the world to join in sharing their expertise and knowledge in support of the 2018 global compact on safe, orderly and regular migration. As a consequence, the resolution on the Global Compact for Safe, Orderly and Regular Migration was adopted by the United Nations General Assembly in 2018.

Susan Ferguson, Women Representative for India, UN Women

The COVID-19 crisis in India has impacted millions, not only those suffering from the disease, but also those who care for them. As always, women have taken on the heavy burden of caring for the sick and finding ways to meet their familys basic needs. A recent Oxfam report shows that Indian women and girls put in 3.26 billion hours of unpaid care work every day a contribution of at least 19 trillion a year to the Indian economy.

Yet in India, duties performed at home have historically not been considered work, because of unequal gender and caste norms. And now, with after the second wave of COVID-19, the combination of illness, unpaid care, economic slowdown and lack of access to financing for female entrepreneurs means that many women are unable to return to work.

If these trends arent reversed, they will have a devastating impact on the economy and further exacerbate gender inequality. For this generation of women to emerge relatively unscathed from this pandemic and be able to return to the workforce, we must invest seriously in education and livelihoods of women and girls in India. UN Womens Second Chance Education programme is a prime example of how we can and must focus on womens livelihoods right now, before the equality gaps widen even more. Another way to mitigate the inequality crisis would be to increase public investments in the formal and informal care economies and tap into the job creation potential of the care economy.

In the end, it will come down to changing attitudes. Whether its at home, in the office or in the fields, we must stop taking womens work for granted.

Melody Patry, Advocacy Director, Access Now

From Singapore to Jamaica, governments are scrambling for solutions to help the world return to a pre-virus normality. Vaccine certificates or passports that record and authenticate vaccination statuses, however, are short-term fixes that potentially pose long-term risks to human rights. These fast-tracked stopgaps are a blueprint for exclusion and discrimination, and present serious and disproportionate threats to the privacy and security of millions of people.

COVID-19 and its reverberations already impact our most vulnerable and underserved individuals and communities from limited health care, to increased economic instability we cannot allow techno-solutionism to exacerbate the divide further.

Global leaders, and their industry counterparts, must stop, recalibrate, and ensure technology plays a positive, cornerstone role in pandemic recovery. As laid out by U.N. Special Procedures on the eve of RightsCon 2021, "we need to act together to embrace the fast-pace expansion of digital space and technological solutions that are safe, inclusive and rights-based."

World Economic Forum Strategic Intelligence, in partnership with the Institute for Global Prosperity, University College London (UCL) launched the transformation map on Inequality.

The experts cited in this article are part of the World Economic Forum Expert Network.

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How can the world address inequality? 7 experts explain - World Economic Forum

Executives today are under a tremendous amount of pressure in todays post-pandemic knowledge-driven economy. They began to listen and respond to the plethora of information in the form of articles, books, and models attempting to provide effective leadership to help impact not only the productivity and profitability of the organization but also the competitive advantage. This article is set in place to inspire leaders to effectively lead their companies to meet and exceed the global challenges today. It is about getting the information needed to be successful in the right hands of executives worldwide in a post-COVID world.

Todays post-pandemic knowledge-driven economy is placing more pressure on companies to achieve a high level of knowledge-driven performance. In this economy, remote work has risen as the most predominant concern. And CEOs such as Jamie Dimon of J. P. Morgan and Brent Beardall of Washington Federal express their concern for the extenuating circumstances of remote work. They express that more leaders and employees are working from flexible office hours or remote sites. In this situation, knowledge-driven performance has become a focal point of the executive span of control. Executives that manage knowledge and use it as an important driving force for business success find their organization to be more competitive and on the cutting edge in the new economic normal. For now, executives can develop conducive organizational climates that foster an atmosphere of trust and openness in which knowledge, as a driver of improved knowledge-driven performance.

This article blends scholarly concepts with real world application and places a great deal of emphasis on the literature on organizational resources as significant indicators for knowledge-driven performance and organizational competitiveness. This article has several implications for practitioners. First, this article adds to a relatively small body of business literature and develops our understanding of todays post-pandemic knowledge-driven economy. Second, this article develops a new and dynamic conception of organizational resources. Particularly, I show that a firms ability to enhance knowledge-driven performance, create competitive advantage and also recognize the global changes occurring in the post-COVID business environments and effectively respond to them can be significantly affected by organizational resources.

In a post-pandemic world, the business environment is constantly changing. Knowledge is a crucial part of hypercompetitive environments. Organizations can design, copy, or update products and services easier with more adaptability then ever today. Organizations compete globally but must think locally if they expect to exceed. And new markets place demands on the roles of change leaders in organizations operating in this modern environment.

Todays knowledge-driven economy is placing more pressure on organizations to employ effective leaders who are capable to develop knowledge-based organizations and create competitive advantage. Culture, structure, strategy, networks and stakeholders are internal resources that can increasingly facilitate knowledge-driven performance and improve the search for knowledge.

Based on an integrated framework of the above ideas, I depict an applicable and reliable model for executives as Figure 1. This framework of the model highlights a relationship between organizational resources and knowledge-driven performance and organizational competitiveness. In Figure 1, organizational resources have sizable impacts on knowledge-driven performance which also leads to better competitive advantage. In fact, an agile strategy, a trust-based culture, a flexible structure, and better networks and stakeholder orientation can lead to higher knowledge-driven performance and organizational competitiveness.

There are some executives that like to look at academic journals but unfortunately the crossover literature has not reached them enough. I attempt to blend scholarly concepts with real world application. In this article, executives see that I expand upon the subject matter of an organizations internal resources. Insufficient consideration of the impacts of organizational resources on knowledge-driven performance and organizational competitiveness has been exposed. Thus, for executives, this article can portray a more detailed picture of the effects of these organizational factors on knowledge-driven performance and organizational competitiveness that have been mentioned but not placed in a model in the past.

This article raises vital questions as to how executives can successfully contribute to knowledge-driven performance and subsequently improve competiveness at all levels of the organization and overcome threats to ones survival as a company. This article offers practical contributions for managers at all levels of the organization. I stress that knowledge is a strategic resource for organizational portfolios in a post-pandemic world. Many organizations still implement knowledge development initiatives without sufficient consideration of their organizational resources. When executives ensure the effectiveness of organizational resources they increase knowledge-driven performance and lessen operational risk.

This article suggests that five organizational factors of culture, structure, strategy, networks stakeholder orientation constitute the foundation of a supportive workplace to improve knowledge-driven performance and organizational competitiveness. The nature of the interactions between these organizational resources and knowledge-driven performance and organizational competitiveness can suggest several complementary insights for the existing business literature.

The focus of this article is based upon the critical role of these organizational resources which allows a rich basis to understanding the mechanisms by which knowledge-driven performance and organizational competitiveness are influenced. This article articulates a different approach. I simply extended the business literature by showing how executives can also contribute to knowledge-driven performance and organizational competitiveness by fostering a trust-based culture, a flexible structure, an agile strategy, and more effective networks stakeholder orientation. These five factors coupled with knowledge-driven performance and organizational competitiveness is presented as a new approach for executive implementation.

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The Post-Pandemic Economy Has Accelerated Business Transformation - Here's How Companies Can Adapt - Supply Chain Management Review

The big data era has created valuable resources for public interest outcomes, like health care. In the last 18 months, the speed with which scientists were able to respond to the covid-19 pandemicfaster than any other disease in historydemonstrated the benefits of gathering, sharing, and extracting value from data for a wider good.

Access to data from 56 million National Health Service (NHS) patients medical records enabled public health researchers in the UK to provide some of the strongest data on risk factors for covid mortality and features of long covid, while access to sensitive health records sped up the development of lifesaving medical treatments like the messenger-RNA vaccines produced by Moderna and Pfizer.

But balancing the benefits of data sharing with the protection of individual and organizational privacy is a delicate processand rightly so. Governments and businesses are increasingly collecting vast amounts of data, prompting investigations, concerns around privacy, and calls for stricter regulation.

Data increasingly powers innovation, and it needs to be used for the public good, while individual privacy is protected. This is new and unfamiliar terrain for policymaking, and it requires a careful approach, wrote David Deming, professor and director of the Malcolm Wiener Center for Social Policy at the Harvard Kennedy School, in a recent New York Times article.

A growing number of startupssome 230 and counting, according to Data Collaborativesare helping to empower citizens, nonprofit groups, and governments to gain more control over their data.

These startups are adopting legal and institutional structures like data trusts, cooperatives, and stewards to provide people and organizations with a means of effectively and securely gathering and using relevant dataand in the process, taking on Big Techs control of the data economy.

The relationship between data and society is fundamentally broken, says Matt Gee, CEO of Brighthive, which helps networks and organizations set up alternative governance models including data trusts, data commons, and data cooperatives.

We think it should be more collaborative instead of competitive, it should be more open and transparent, it should be more distributed and democratic instead of monopolistic. This is how we make the gains more equitable and reduce harmful biases in data.

As demonstrated by the pandemic, medical research and public health planning can be enriched by access to electronic health records, prescription and medicines data, and epidemiology. But health data are also highly sensitive, with understandable public scrutiny over efforts to share them. So-called secondary use, which applies personal health information for uses outside health-care delivery, requires a new governance framework.

Findata is an independent authority in the Finnish Institute of Health and Welfare, established by a government act in May 2019. The agency facilitates researchers access to Finnish health data, issuing permits for use or responding to specific statistical requests. In so doing, it aims to protect the interests of citizens while also appreciating the value that their data could offer to medical research, teaching, and health planning.

Prior to the formation of Findata, it was costly and complex for researchers to access this vital research resource. The purpose of this agency is to streamline and secure the use of health data, explains Johanna Seppnen, director of Findata.

Before, if you wanted to have data from different registers or hospitals, you had to apply for data separately from each data controller, and there were no standard ways of handling them, no ways to determine prices. It was very time-consuming, difficult, and confusing.

Findata is the only agency of its kind so far, but it might inspire other countries that want to realize more value from health data in a safe and secure way.

The UKs NHS recently faced pushback from privacy campaigners over reforms to improve data sharing for public health planning, showing the challenges that can come from attempts to change data collection and sharing protocols.

Helping disenfranchised individuals and groups has been another focus area for new data governance organizations.

Data stewardswhich range from community-based collectives to public or private organizationsserve as both intermediaries and guardians during the exchange of data, thereby supporting individuals and communities to better navigate the data economy and better negotiate on their data rights," saysSuhaMohamed, strategy and partnerships associate at Aapti, an organization working on the intersection of technology and society with a focus on data rights.

One example of where data stewards can prove useful is for individuals in the gig economy, a fast-growing labor market that has been characterized by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs, and has been rife with power inequalities.

Asymmetric control of data is one of the primary levers of power that gig platforms use to manage their workforce and shape the narrative and public policy in the arena that they operate in, says Hays Witt, co-founder and CEO of Drivers Seat, a driver-owned data cooperative specializing in ride-hailing.

Very few stakeholders have access to the data they need to engage in productive and constructive ways, starting with gig workers themselves. Our premise [at Drivers Seat] is: lets use tech and a data cooperative to empower gig workers to collect, aggregate, and share their data, says Witt.

Drivers Seat has developed a proprietary app through which workers can submit their location, work, and earnings information, which is then aggregated and analyzed. Drivers then receive insights that help them understand their real earnings and performance, informing their choices about where, when, on what platforms, and on what terms to work.

Drivers Seat is developing tools that can tell drivers their average real pay across platforms in their city, compare their pay with averages, and tell them whether their pay is going up or down. All of this could help drivers move to platforms that offer them a better deal, empowering what is an otherwise atomized labor force.

Our drivers are really excited to be engaged, because their day-to-day experience is seeing metrics, fed back to them by the platforms, that they don't trust, says Witt. They know that the metrics are influential, their day-to-day experience is totally mediated by data. It impacts their earnings and their life, and they know it.

Witt believes that in the future, workers will increasingly be able to contribute to crowdsourced information to develop collective analyses of their problems, which means they can put forward collective policy solutions or agreements to negotiate with the employment platform.

All data startups, whether they are government-sanctioned institutions like Findata or entrepreneurial businesses like Drivers Seat, face the challenge of balancing their mission with operational sustainability.

Securing a sustainable financial footing is a major challenge for nonprofit groups and social impact businesses. For data equity institutions, the funding mix commonly includes community- and membership-driven approaches, and philanthropic aid.

But some organizations, like Brighthive, have found win-win models where private sector companies are looking to improve data governance and are willing to pay for it.

Brighthives Gee describes commercial clients who have seen whats happening in the European Union around AI regulation and they want to get ahead of it in the US. They are taking a proactive stance on issues like algorithmic transparency, equity audits, and an alternative governance model for how they use customer data.

Other data equity platforms have found revenue models in which beneficiary data can be harnessed by third parties in socially positive ways. Hays Witt at Drivers Seat cites the example of municipal authorities and planning agencies.

Both the authorities and ride-hailing drivers have an incentive to reduce dead time in which a driver is circulating without earning money, causing emissions and congestion. If appropriate data can be collected, aggregated, and analyzed in a useful way, it can lead to better traffic and mobility decisions and infrastructure interventions. So, all participants benefit.

Witt points out other neutral cases where beneficiary data could be valuable to unrelated private sector entities in ways that do not work against the interests of the drivers. He gives the example of commercial real estate developers who are often forced to make decisions about investments and services based on out-of-date traffic and mobility data.

Drivers Seat is exploring opportunities to offer aggregated analytics products to such companies with revenues returned as dividends to gig workers and to help finance the cooperative.

Many data startups seeking out sustainable revenue opportunities need to decide where to draw the line in terms of the kind of work they are willing to take on or the kind of businesses theyre willing to work with.

Brighthives Matt Gee points to growing investor interest in startups that can help companies navigate the end of cookies, which have been critical to third-party advertising but are now being phased out. Investors are concerned about the death of third-party data and are hungry for companies addressing that, he says.

But as socially minded startups gain more business from corporate clients, they need to balance their mission for social good with the financial gain of lucrative contracts.

Is being a public benefit corporation more about what you do and how you do it, or who you work with? If we work on a data collaborative that provides transparency and accountability for marketing organizations pooling customer lists, are we actually reducing societal harm? These are questions that our team is constantly grappling with, says Gee.

Data startups will inevitably face challenges, including balancing social mission, ethics, and business models, but as the data economy continues to grow, they are in a unique position to carve out new ways of responsibly leveraging the insight that data can provide for citizens, organizations, and governmentswresting some of the power over data away from Big Tech.

"Our data economy needs to anchor on creating value for everyone in society, and that requires user control, trusted intermediation, and collective governance to be embedded in innovative data stewardship models, saysSushantKumar, principal of responsible technology at social change venture Omidyar Network.

"Onboarding a critical mass of users, receiving regulatory support, and achieving financial sustainability will also ensure these designs succeed in disrupting the status quo and injecting fairness into the current paradigm.

This content was produced by Insights, the custom content arm of MIT Technology Review. It was not written by MIT Technology Reviews editorial staff.

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Rebalancing the data economy: Startups for a restart - MIT Technology Review

Federal poverty guidelines are the foundation for deciding who gets aid from government and other programs designed to help disadvantaged Americans. But theres strong consensus the guidelines are flawed, while philosophical divides are wide on both the shortcomings and the solutions.

Some experts believe the official poverty benchmarks leave people out who really need substantial help. Others say they fail to count all resources people have, making some seem poorer than they are.

The well-being of families experiencing economic hardship often depends on being able to access assistance like free or reduced-price school lunch and other food help, or housing and medical supports. But federal safety net programs cost taxpayers a lot and dont meet all the need, so making sure funding targets the right people is crucial, experts across the political spectrum agree.

The reason we should improve on the official poverty measure is that it does a poor job of identifying who the neediest Americans are, how much our antipoverty programs reduce poverty, how we have done over time reducing poverty, and how different groups or regions compare against each other, Scott Winship, resident scholar and director of poverty studies at the American Enterprise Institute, told the Deseret News.

The poverty threshold is the dollar amount the U.S. government sets indicating the minimum income necessary to meet basic needs based on family size. Households below that poverty level, are poor. The number is the same for all mainland states, regardless of cost-of-living differences. The numbers are higher for Alaska and Hawaii, because it costs considerably more to live in those states, the Institute for Research on Poverty at the University of Wisconsin said.

According to the U.S. Census Bureaus 2019 data, the median U.S. household income was $68,703, up 6.8% from 2018, while a family of four with a household income of $25,750 or less was considered poor. The overall share of people living in poverty was 10.5%, down 1.3% and the lowest since 1959. Among children, 14.4% lived in poverty in 2019, while 9.4% of working-age adults 18 to 64 lived in poverty. Among older adults, 65 and older, the poverty rate was 8.9%.

How accurate, though, is the definition of poverty? Theres broad agreement the methodology underpinning federal poverty guidelines is outdated and needs improved.

There are two measures. The Official Poverty Measure, adopted in 1969 and derived by using a very basic meal budget from 1963 times three, estimates whether or not people can afford essentials. In its 50-plus years, the measure has only been adjusted for inflation. Critics say underlying assumptions are no longer valid.

It is based on archaic assumptions, including, as Mollie Orshansky, who designed the measure, has noted: that households include a housewife who is a careful shopper, a skillful cook and a good manager who will prepare all the familys meals at home, said Shawn Fremstad, a senior fellow at the Center for Economic Policy Research in Washington, D.C.

The Supplemental Poverty Measure, developed by the Office of Management and Budget during Barack Obamas presidency and used since 2011, considers income including noncash benefits like food stamps and the earned income tax credit and expenses like child care costs to try to create a better picture of a households finances. The measure includes regional cost adjustments since housing and other expenses vary.

A few adjustments to that measure are expected in September, including the value of some in-kind benefits and replacing the cost of a telephone with the cost of internet, among other changes, according to The American Action Forums Tara ONeill Hayes.

Many policy wonks and academics are talking about how best to measure poverty. Last week, Brookings Institution and the American Enterprise Institute teamed up for an online discussion of how measures could or should be refined, based partly on a report from an integrated working group issued in January.

The working group 25 people from 11 agencies including the Census Bureau and the Bureau of Labor Statistics, meeting 46 times for at least two hours each time suggested the federal government create a poverty measure that blends administrative and survey data with a consumption poverty measure. The new measures would be added to the existing poverty measures, not replace them.

The guidelines are important for determining eligibility for a number of programs and services, which sometimes identify income eligibility as a percentage: up to 125% of poverty or 400% of poverty. Programs that use a poverty line vary, but include block grant funding, Head-Start, Supplemental Nutrition Assistance Program (food stamps), home weatherization services, Job Corps, Temporary Assistance for Needy Families and others.

Not all of the services that use the guidelines are governmental. Utility companies, for instance, may provide help to low-income households and use federal poverty guideline to determine if someone qualifies.

Conservatives typically argue that the official poverty line is too high because it over- adjusted for inflation, particularly in earlier decades, said Fremstad. He noted that the argument was made in a report produced by the Trump administrations Council of Economic Advisors, which he said implied that the poverty line for a family of four today should be about $17,000.

Less partisan conservatives will acknowledge that the poverty line needs to be reset to reflect modern economy/society and that this should be done in a transparent fashion, according to Fremstad. Meanwhile, progressives and many others, he added, think the poverty line needs to be higher because it needs to reflect a modest, basic basket of goods and services, and that the publics understanding of what it takes to have a modest, basic standard of living is different than it was in, say, the early 1960s.

The U.S. governments poverty line is much lower than what the public generally considers poor; its also lower than poverty lines used by Canada, the U.K. and other wealthy countries, Fremstad said.

One criticism of only adjusting the original poverty measure for inflation is that some things now cost more even after accounting for inflation like housing and because the idea of whats necessary or basic for families has changed today, as well. Internet, for example, proved to be a necessity when schools went online during the pandemic. And mothers working outside the home some families have no choice moved supports like child care and after-school programs into a basic-needs column, too, experts told the Deseret News.

Using administrative data that links official information on what people receive in benefits would help with what technical working group co-chairman Bruce D. Meyer, a University of Chicago professor whos a visiting scholar at the American Enterprise Institute, called a persistent problem with under-reporting of income.

He said formation of the working group was driven partly by concern about misreporting of income, most often under-reports of income. The group said the real administrative data instead of self-reported survey numbers could weed out inaccuracies. The working group reported that the Current Population Survey misses half of Temporary Aid to Needy Families benefits, 42% of the benefits from the Supplemental Nutrition Assistance Program and one-third of unemployment insurance payments, Meyer said.

The working group verified the patterns of underreporting by linking individual survey records to individual payment records, Meyer said in the online discussion. And its not just social insurance and welfare benefits that are under-reported. It is also earnings in pension income, interest, dividends, capital gains and other sources.

He noted that while folks might say poor people dont have capital gains, thats the point. If you dont include a key source of income, people who arent poor can look poor. And the problem is getting worse.

Neither of those recommendations would solve the question of what to do with health insurance benefits or their lack, said Gary Burtless, a senior fellow with Brookings Future of the Middle Class initiative, during the online panel. The working group recommended the Census Bureau come up with both an income-based resource measure that includes the value of health insurance and another that excludes it.

Oren Cass, executive director of American Compass, a conservative think tank, said that just adjusting a poverty measure for inflation do little to bring calculations up to date. Inflation does not measure affordability. Key assumptions built into inflation indexes for the purpose of measuring the underlying, economy-wide upward pressure on prices are different from, and often counter to, the key assumptions necessary for assessing the economic choices and constraints faced by households, he wrote in a report for the Manhattan Institute, The Cost-of-Thriving Index: Reevaluating the Prosperity of the American Family.

Hes created a measurement he calls the Cost-of-Thriving Index.

The point isnt to validate some specific policy agenda, but to introduce a new set of facts that should help inform the starting point for our debates. How to get higher wages? How to get lower costs? Lets at least acknowledge these are pressing and long-worsening problems, he said in a Twitter thread.

Figuring out whether programs designed to help disadvantaged people actually do help is important, according to Winship.

Of these, the most important deficiency is that the current measure doesnt let us evaluate the effectiveness of our antipoverty programs. Take the child allowance debate. Since the official poverty measure doesnt consider taxes or tax credits, the most generous child tax credit that could be designed would have no impact on reducing poverty. All the estimates of their poverty-reducing effects rely on the Supplemental Poverty Measure, which Winship said has its own flaws.

Winship said deciding where to draw the poverty line is arbitrary, so we dont care so much about where the lines are drawn, but we have to be able to redraw them consistently back in time, so that we can see the progress that has been made in reducing poverty. We dont want new poverty lines that dont allow us to compare hardship today to hardship in the past.

Were he designing a poverty measure, it would account for all the noncash benefits and taxes included in the Supplemental Poverty Measure, he said. And it would include health insurance benefits as income, which that supplemental measure ignores. Updating poverty thresholds to reflect inflation requires a better measure than those in use and should incorporate administrative data on earnings, safety net benefits and other income sources to correct for underreporting in our surveys.

If administrative data is used, Marianne Bitler, of the University of California at Davis, said its crucial states all participate and provide their data. This idea that states get to decide whether a federally funded programs data is shared is something we need some political movement on and not just us thinking that its important, she said.

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How does the government decide who is poor? Where is the poverty line? - Deseret News

In recent months, policies and initiatives at the European and global level have emphasized the potential of remanufacturing as the key model for the circular economy, useful in extending the lifespan of products and preserving value in the economy.

In April, the Remanufacturing Industries Council (RIC) organized Reman Day, a series of online webinars celebrating one of the foundational Rs of the circular economy: remanufacturing. Also known as the backbone of the circular economy, remanufacturing is an industrial practice that involves "returning a product to at least its original performance with a warranty that is equivalent or better than that of the newly manufactured product."

The European Remanufacturing Council which counts Enel among its members is the sectors leading expert body in Europe, created following the example of the US-based RIC. To fully understand the potential and prospects for remanufacturing, Renewable Matter interviewed David Fitzsimons, director of the European Remanufacturing Council, who has over 25 years of experience in the sector.

Antonella Ilaria Totaro:Where are remanufacturing activities mostly concentrated today?

David Fitzsimons: Traditionally, 90 percent of remanufacturing activities take place in the business-to-business sector. Therefore, it is an industrial activity that could be termed commercial. However, the B2C (business-to-consumer) side is also growing, especially for products such as smartphones. I believe there will be a continuous increase, driven by the right to repair movement, in consumer goods seeing their lifespan extended thanks to both local small-scale repair franchises and large industrial-scale factories at the national and international level. While in the former case we can talk about remanufacturing as repair, in the second case we can talk about remanufacturing as "re-production."

Antonella Ilaria Totaro:Which elements have the greatest potential to accelerate the spread of remanufacturing activities?

David Fitzsimons:Robotics and digital technologies have great potential; they could vastly expand possibilities across the sector. There are great opportunities in the automotive sector, where the WEF is working on the Circular Cars Initiative. The problem is that remanufacturing often comes into play only in the post-sale phase. There is no awareness of the fact that it could also contribute during the production of new vehicles. If this were to change, the potential would be enormous. For this to happen, legislation changes and some economic incentives are required.

Antonella Ilaria Totaro: What changes, in particular, are you referring to?

David Fitzsimons:To the new and imminent initiative on sustainable products that I am currently contributing to in Brussels. There is a lot to do at the legislative and political level. We have developed many policies in the right direction over the past 20 or 30 years, and now is the time to look to better design and extending the lifespan of products. The challenge set by the European Commissions current Sustainable Product Initiative is to develop a series of policies that make remanufacturing a profitable activity for businesses. It will take time, but I think we will see a constant transfer of expertise in the sector, which is currently worth 30 billion euro in the EU. It sounds like a lot, but it only accounts for 2 percent of Europes economy. This is why we are trying to make the sector more attractive to investments. It is vital to also make political decision-makers aware of the need for new incentives to support businesses. The EU and the United Nations are very ambitious in this regard, as shown also by the launch of GACERE Global Alliance on Circular Economy and Resource Efficiency last February. GACERE will help spread policies developed in the EU and the vocabulary used here beyond the borders of the single market.

Antonella Ilaria Totaro:What are the most interesting sectors for remanufacturing?

David Fitzsimons:In terms of absolute value, I would say undoubtedly aviation, while the automotive sector wins out in terms of volume. The third-largest sector is probably defense, whose true size no one really knows. These are followed by the machinery and off-road vehicles (such as large excavators) sector, then by b2b ICT equipment. Then there is a series of other sectors defined in the Remanufacturing Market Study published by the European Remanufacturing Network and funded by Horizon 2020. It is a crucial sector for large companies like Michelin and Volvo and small businesses like Hetzel, a leading German family-run automatic car gear remanufacturing company.

Antonella Ilaria Totaro:Which are the most advanced countries?

David Fitzsimons:In terms of national leadership, definitely France. French politicians seem to be well-prepared enough to take risks. The Netherlands and the Scandinavian countries come next. As the United Kingdom has just left the EU, I am expecting relevant policy to emerge this year or next year.

90%of remanufacturing activities take place in thebusiness-to-business sector.

As far as the size of the sector is concerned, Germany is undoubtedly in a leading position, followed by;Italy, France, and the United Kingdom, which change their ranking based on the type of product being considered. Poland, meanwhile, is a country that we have previously underestimated. However, we have noticed that many investments are directed at Poland, because it is well-located from a logistical standpoint to supply all of Europe, and it has an excellent road network. Some of our members, such as Lexmark with its remanufactured printer cartridges, have been very happy with the investments they have made in Poland, where many components for avionics and agricultural vehicles are also remanufactured. Outside of Europe, Canada is one to look out for, its case having recently been studied by RemanCan.

Antonella Ilaria Totaro:What are the elements around which the future of remanufacturing will play out?

David Fitzsimons:Definitely data. Currently, I see so much data being lost during products life cycle, data that do not make it to the manufacturer but that would be vital in extending the lifespan of products if they were shared. During the manufacturing process and up to the point of sale, all possible techniques are implemented to obtain even the smallest added value, even if often the work involves tiny margins for improvement. After the sale, meanwhile, products loss of value is catastrophic, and the potential to preserve or restore this value over time is huge. I think that those who will start to look to digital technologies in this sense will gain a major competitive advantage. I am in complete disagreement with the work that McKinsey is doing on lighthouse factories. The Global Lighthouse Network celebrates the use of digital technologies and industry 4.0 by only looking at the efficient use of resources in production facilities. It does not ask what happens once products have left the factory. The entire life cycle is not celebrated, and neither is the supply chain. Fortunately, in contrast with this, I am starting to see companies giving value to this factor. Among them are some Italian machine-tool manufacturers that want to use robotics, or RecoNext, which aims to apply artificial intelligence to sort products that are ready for remanufacturing.

Antonella Ilaria Totaro:Will there be many jobs created in the sector in the coming years?

David Fitzsimons: I have seen so much speculation on this and do not believe any of it. The starting point is flawed: We should not be led by the possibility of new jobs, but be driven primarily by the possibility of investments. Investments generate jobs, many of which we are not even aware of. We could build large factories, with loads of machines and very little personnel, but the supply chains around them will be transformed and maybe there will be a lot of work created in and around them. This is work that we simply have not been able to measure. I do not believe that it is possible to make concrete predictions in this sense.

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Remanufacturing is central to the circular economy | Greenbiz - GreenBiz

The Biden administration has explicitly linked its foreign policy agenda to the goal of improving the economic circumstances of the United States, especially the middle class. It seems natural that a country would connect its prosperity to how it navigates the often-treacherous waters of international relations. But are these goals national wealth and security easily pursued together?

There are at least five big issues to consider when assessing the goal of linking Americas economic well-being to its national security policies. First, while there are similarities and connections, a states national security goals often pull in different directions than its foreign economic ambitions, which themselves can be at odds with its domestic economic priorities. Where are the tensions between economics and national security, and can a thoughtful grand strategy overcome them? Second, it is important to comprehend how the American economy functions both in the past and the present and to better understand what role federal policy has played in its development. Third, what goals and values have animated U.S. economic statecraft in the past? The United States has, throughout its history, viewed the dangers and opportunities of the international economy differently than other states. Fourth, after pursuing a largely hands-off approach to the global economic order from its founding through the 1930s, the United States reversed course after World War II to pursue an ambitious foreign economic policy. This economic statecraft was consequential if at times inconsistent and erratic. Finally, the United States and the world are entering a new period of economic transformation that will generate difficult dilemmas and questions. How these dilemmas and questions are confronted will shape how successful the administration is in incorporating economics into its national security strategy, as well as shape the next decades for both the United States and the world.

Tension Between Economics and Security

Writ large, any national grand strategy should seek both prosperity and security, and there are many reasons to believe these goals are interconnected. Historically, however, there are at least four major tensions between foreign economic and national security policy.

First is a chicken and egg story which comes first, wealth or security? It is difficult to generate productive economic activity in an unstable, insecure environment. A national security policy that removes threats and dangers and provides stability creates a far better environment for economic growth. On the other hand, providing security is costly. Subsidizing standing militaries and bureaucracies that support them is not only expensive, but it also involves opportunity costs by removing otherwise productive citizens and organizations from contributing to the economy. Spending too much wealth on security (i.e., the military) can decrease a nations productivity and lead to economic decline. Privileging the economy over security, on the other hand, can lead to a state having less influence on the world order in which it operates. More worryingly, it can expose a state to coercion, predation, and even conquest. History provides stark examples of the danger of both spending too much and too little on security.

The second dilemma is related and somewhat contradictory. While eliminating destabilizing violence and lawlessness is necessary for economic growth, the greatest periods of technological, governmental, financial, and even sociocultural innovation have often coincided with intense geopolitical competition and even war. Western Europes rise to economic dominance from the 17th through the middle of the 20th century can, in part, be attributed to a fierce security competition on the continent, where to fall behind was to risk second-rate status or even extinction. European imperialism was driven by similar pressures and propelled by the innovations produced by continental competition (modern banking and finance, efficient governance, steam, rail, telegraph, advanced medicine, etc.). These in turn fostered similar reforms globally among nationalizing and decolonizing movements trying to escape the grip of European imperial power. It is no accident that the period that witnessed the greatest geopolitical upheaval also witnessed world historical economic growth and unprecedented increases in life expectancy. The foundations of the computing and telecommunications revolution, to give the most recent example of security-driven innovation, had its roots in the Cold War competition.

Third, different theories and mechanisms drive the effort to acquire greater wealth as opposed to obtaining greater security. Success in economics is measured by absolute gain. Economic productivity and wealth creation is driven by the laws of comparative advantage, where exchange between individuals, communities, and nations is mutually beneficial. Security, on the other hand, is measured by relative power. In other words, it matters less how much a states power increases in absolute terms than how its position changes compared to its competitors. This generates a conundrum for grand strategy should a state pursue global economic exchange that will increase its wealth if it also enriches, perhaps more, a potential adversary? This dilemma has been at the heart of U.S. policy toward China over the past 30 years.

The fourth tension involves interdependence. Increased trade, commerce, and financial interactions between nations makes them more connected and in some sense dependent upon each other. Some argue this interdependence increases security, as nations develop a common interest in maintaining the mutual gain that comes from their shared, interwoven economic activity. Political scientists often refer to the capitalist peace. Others who often self-identify as realists worry this is an illusion. Ultimately, a states desire for security and power will always trump its desire for wealth and economic gain, and no level of interdependence will prevent it from pursuing its interests, even if those interests threaten a conflict that would undo the economic system and interdependence. Others even go so far as to suggest that interdependence dangerously increases a nations security vulnerability and may even heighten friction between states.

Despite vigorous debate among international relations theorists, economists, and historians, there is no agreed upon resolution to these dilemmas between national security and economics. The best grand strategies are the ones that most effectively recognize and reconcile these tensions between security and economics. The United States has also long had a different way of viewing and resolving these tensions than other powers.

Americas Economic History

How should we understand the American economy its history, current state, and future path? How is wealth generated and distributed, and how do these practices and outcomes compare to other states? Understanding how the U.S. economy works, and the role of national policy in its development, is critical to incorporating it into a national security strategy.

The United States has long been a wealthy nation, even before its political founding. It became the worlds largest economy in the late 19th century, but not merely because of its size. It also had the largest per capita gross domestic product. Despite profound changes in the global economy, and the fact that the second-largest economy has changed often (Great Britain, Germany, the Soviet Union, Japan, now China), the United States has maintained its leading position for over 130 years. Its recent percentage of global GDP is not considerably different than it was in 1913.

In the 19th and 20th centuries, the United States excelled at the activities that generated wealth in the modern world: agricultural production and resource extraction; manufacturing and industrial output, first based on crafts and small manufacturing before transitioning to mass production; effectively overcoming geographical barriers to transport goods across land and sea; excellence in the fields that facilitated trade, both within the United States and globally, including banking and finance, insurance, accounting, and law; and communicating over longer distances and at increasing volume and speed.

Americas impressive and sustained economic success has been based on a number of factors. It possesses enormous amounts of fertile land and diverse natural resources, as well as navigable rivers, excellent access to two oceans and a gulf, with good ports. It has long emphasized early education and historically had high levels of literacy and numeracy. Americas legal system prioritizes the protection of private property, both physical and intellectual. Relatively open and large-scale immigration injected youth and creativity into the population at key moments. American politics and culture incentivize entrepreneurship and small business creation. World leading research organizations, especially American universities, have consistently generated inventions, innovation, and adaptation. This history is deeply stained, of course, by a multitude of sins, the worst being the horrific legacy of slavery and persistent racism toward black Americans. Compared to its competitors, the United States has demonstrated an ability and at times a willingness to acknowledge and work to correct these pathologies, if too slowly and far from completely.

What role has national policy played in Americas economic well-being? Over its history, the federal government has had six primary responsibilities regarding the economy. The first is national tax and budgetary policy, including debt management, which is largely shaped by the Congress in cooperation with the executive branch. The second is monetary policy. Both were transformed in 1913, when the United States inaugurated a peacetime income tax and created the Federal Reserve banking system. The third is land policy how would the United States distribute and regulate its vast territory? Fourth is regulatory, competition, and antitrust policy, another largely 20th century innovation that the progressives initiated and more fully emerged during President Franklin Roosevelts New Deal. The fifth, social welfare, insurance, and health provision, also emerged from the New Deal but expanded significantly under President Lyndon Johnsons Great Society programs, supplemented by health care expansion under Presidents George W. Bush and Barack Obama. The sixth and the only one that deals explicitly with international economics is tariff and trade policy. Despite the global component, however, tariffs and trade were seen until the 20th century as the primary source of federal revenue and a way to protect nascent American manufacturing, agriculture, and industry.

These six roles seem impressive. The U.S. national government, however, has always done less in each of these categories and in overall management of the economy than other advanced countries. On many aspects of domestic life affecting most Americans, ranging from education to criminal justice to transportation, local and state governments matter more. Even regulatory and social transformations ushered in by the New Deal and Great Society reflected far less intervention than, say, the actions taken by national governments in France, Germany, the United Kingdom, Japan, or China.

In addition, most U.S. economic policy is overwhelmingly focused on the domestic economy, and its percentage of gross domestic product that comes from trade is lower than others. Unlike most other nations, whose monetary policy is as much concerned with the external value of its currency, the United States rarely worried about formal exchange rate policy. While the American economy is obviously influenced by the global economy, and the economy of the rest of the world has long been affected by the United States, foreign economic policy plays a less prominent role than it does in many other countries.

The United States Is Different

The relatively small role of the federal government, at least compared to other states, and its focus on its domestic economy highlight a few of the ways the United States views the relationship between economics and national security that are somewhat different from other powers, both in the past and today.

Historically, the United States has an attitude toward the international economic activity that can be puzzling to other countries. For example, the United States has throughout its history been less dependent on trade than most other powers. It possesses a massive domestic market, which it has focused on developing. Much of its trade is with its neighbors Mexico and Canada. And contrary to conventional wisdom, it has never been a free trade country. It has always employed tariffs, often quite high, both to generate government revenues (in the 19th century) and protect and nurture nascent domestic industries.

On the other hand, while it has not been a free trade country, it has always passionately believed in the freedom to trade. For the United States, trade has always been about more than economic gain. The founders believed that commerce, between peoples and nations, was the best way to guarantee peace between states. When this freedom to trade was threatened, the United States became apoplectic: The War of 1812 and the U.S. intervention in World War I were arguably driven in large measure by outrage over interference with American freedom to trade with whomever it wanted. The United States has sometimes taken the complete opposite track when the freedom to trade is threatened, seeking to isolate itself from global commerce. Thomas Jeffersons Embargo Acts and much of U.S. foreign economic policy during the 1930s (and to a lesser extent, the 1970s) reflected this instinct. War, on the one hand, and self-isolation, on the other, while wildly different responses, were two sides of the same coin. America does not believe anyone should curtail its freedom to engage the world through the peace-inducing qualities of mutually beneficial commerce. Arguably, these responses had less to do with geopolitics (each was potentially foolish), or even wealth, given the relatively small exposure the U.S. economy had to trade. Rather, they emanated from a broad set of principles and frames for how the United States understood the world.

This helps explain the significance of the much derided open door policy of the United States. In the late 19th and early 20th century, the European powers exploited a China rocked by deep political turmoil to carve out separate economic spheres for themselves. U.S. Secretary of State John Hay tried to establish the principle that no state should have exclusive trading rights in any part of China and all states should be allowed to compete freely for its trade. While the open-door notes were specific to China, and the United States offered mere words and no force to back its declaration, the notes reflected principles held by the United States before and after this particular episode. It was less about economic gain trade with China played a negligible role in the overall American economy than the idea that a world where sovereign states were allowed to trade freely was one that would be more peaceful. This highlights another key part of Americas philosophy toward economics and security its profound disapproval of formal empire, which it associated with dangerous European behavior.

Academics have argued endlessly about Americas historical attitude toward empire. It is correctly pointed out that Americas relentless drive to establish continental hegemony in North America over native populations was perhaps the most extreme form of imperialism. The United States also acquired island territories in the Caribbean and Pacific. It fought a brutal counter-insurgency in the Philippines, while allowing itself to routinely intervene in the domestic affairs of its Latin American neighbors. If imperialism is defined in the broadest possible way to include cultural influence and economic sway the United States rivals any historical hegemon.

Unlike the European empires, however, the United States sensed from its founding that the process of acquiring, subduing, and exploiting overseas colonies for economic gain was politically corrupting, both by poisoning domestic institutions and making international affairs more prone to war. The political logic was simple but profound: Formal empire exploits people unjustly and can be maintained only through coercion. Coercion requires expensive standing militaries and large, intrusive bureaucracies, which demand high taxation; highly regulated, often mercantilist economies; and powerful, often non-representative central governments. And the more militarized the world, the greater temptation to resort to force. In a world without empire and formal colonies, however, large militaries, higher taxation, and overweening central governments are less needed. Citizens can pursue gain and mutual benefit through commerce, which leads to peace among nations. There is no doubt this stylized understanding of world politics contained within it contradictions and elements of hypocrisy. To an extent rarely recognized, however, the United States associated European empire with tyranny and war, and saw free commerce as a way to avoid those evils.

American Foreign Economic Policy After 1945

The United States abandoned its hands-off relationship with the international economy as a result of World War II. A variety of considerations motivated this shift, including its own economic fears. Contrary to critical accounts, however, economic order building was inspired less by a desire to create an American empire, formal or informal, than to break what it saw as the links between empire, autarky, and war. A world with stable, mutually beneficial trade was more likely to be prosperous and peaceful. These goals motivated a variety of initiatives, ranging from the institutions and rules that emerged from the 1944 Bretton Woods conference to the Marshall Plan.

It is important to remember that the history of Americas foreign economic policy and American national security policies since 1945 followed distinct paths and histories, sometimes overlapping, sometimes at odds, other times discrete and unconnected. In other words, the history of Americas role in this global economic order is not the same as the history of the Cold War competition with the Soviet Union. Furthermore, there was not, as is often thought, a single liberal world economic order that emerged in 1945 and persists today. Instead, postwar American foreign economic policy can be divided into at least four different periods.

The first period, the Bretton Woods era, lasted from the immediate postwar years to the early 1970s. This period was not, as often thought, animated by a desire to increase globalization, open economies, and foster interdependence. Instead, the aim was to take the best elements of the free enterprise system while avoiding its worst elements. It was believed that the interwar period revealed the dangers of unregulated globalization: international debt and massive swings in investment and capital flows leading to currency volatility, which in turn created pressures for economic nationalism, trade blocs, and beggar-thy-neighbor economic policies. These in turn encouraged autarky on one hand and imperial preferences on the other, generating (at least in the minds of American statesmen) the seeds of authoritarianism, war, and conquest. The statesmen who met at Bretton Woods in 1944 sought above all else to stabilize currencies, even at the expense of free trade and capital movements, and prioritized domestic economic priorities and national reconstruction, as well as regional integration, over globalization and free trade.

The Bretton Woods system successfully achieved its goals a postwar depression was avoided and Western Europe and Japan recovered and grew rapidly. The system possessed the seeds of its own dissolution, however. Fixed exchange rates are difficult to maintain for long periods. Diverging rates of inflation between countries change the real value of the currency, unless there is a mechanism to readjust those values. Before World War II, the movement of gold to cover balance of payments deficits was supposed to do the trick. Since national monetary supplies were based on gold, losing the metal to cover deficits required raising interest rates and deflating the domestic economy to return it to balance of payments equilibrium. The link between gold, the balance of payments, and the domestic economy was largely broken in the postwar period. No national government, least of all that of the United States, would deflate its economy and increase unemployment to balance its international payments. The United States refused to undertake either the domestic or international policies that would have been needed to maintain the fixed exchange rate regime, which began unraveling in the 1960s before collapsing in the early 1970s.

The second postwar period of U.S. foreign economic policy was the early 1970s through the early 1990s, which might be thought of as the most volatile, disruptive period of globalization. Efforts to reconstitute the fixed exchange rates failed and international capital flows ballooned. At the same time, increasing commodity prices, wage pressures, and loose monetary policies unleashed inflation. Large segments of the domestic economy were deregulated. Despite efforts in the 1980s to create trade, financial, and exchange rate stability, both the domestic and international economy were marked by crises Third World debt, U.S. budget and balance of payments deficits, higher interest rates, and the collapse of the domestic savings and loan industry. While the American economy grew (erratically), the system could have come off the rails, and in many ways, the collapse of communism in the Soviet Union and Eastern Europe masked some of the deep problems within the post-Bretton Woods system.

The third period, which began in the early 1990s and lasted through the 2008 global financial crisis, might be thought of as the period of unfettered globalization or the so-called Washington consensus, which emphasized fiscal responsibility, monetary stability, privatization, and the increased global movement of goods, capital, and ideas. The United States managed to get its own domestic house in order, driving down its budget deficits, lowering its interest rates, and benefiting from the productivity gains emerging from the nascent technology revolution in Silicon Valley. The World Trade Organization was created in 1995 and China was welcomed as a member in 2001, massively increasing global trade. The system did have crises in Mexico in 1994 and Russia and East Asia in 1998, but global growth, especially in East Asia, was impressive.

The fourth period was the 2008 crisis and its aftermath, and we are still trying to make sense of it. On the one hand, innovative policies, both by the Obama administration and Ben Bernankes Federal Reserve, likely prevented a deep recession from developing into a global depression. On the other hand, the economic recovery was slow and often inequitable, and a dissatisfaction with the politics of both the crisis and recovery helped drive populist nationalism, both in the United States and abroad. Arguably, no real economic system emerged from the crisis, either at home or internationally, offering the Biden administration an opportunity in the wake of the COVID-19 pandemic to rewrite and rebuild the rules of both the domestic and international economy, while creating a more durable, prosperous, and equitable system.

The Way Forward?

If the Biden administration is to place domestic and foreign economic policy at the heart of its national security strategy, there are at least five big questions about the future of the American economy and how it relates to U.S. national security strategy that must be examined.

First, how will the United States respond to the ongoing transformation of the domestic and international economy? Economic success going forward will be less based on traditional measures and low value-added activities, such as agriculture, resource extraction, low-end services, and even mass industrial prowess. Growth will increasingly emerge from generating and implementing technological innovations, as well as from the ability to creatively finance them. New technological breakthroughs in AI and machine learning, quantum computing, automation and robotics, 3D printing and advanced manufacturing, biomedicine, nanotechnology, etc. have the potential to revolutionize fields ranging from energy and health to manufacturing and transportation. Will the United States generate and adapt to these innovations, while also providing its population with the skills necessary to thrive in this new world? Success in the technology and financial realm have also tended to increase inequality, while also worsening geographical divisions between innovation hubs (Boston, San Francisco, New York, Austin) and other parts of the country. Will the government devise wise policies to ameliorate these frictions without losing the benefits of innovation?

How this question is answered is largely a matter of domestic politics. Yet how it is answered will shape both Americas global competitiveness and its political and societal well-being.

Relatedly, will the United States reject globalization and turn inward? In many communities, intense globalization is associated with de-industrialization and offshoring, despair and the opioid crisis, debt and inequality, climate change, and the rise of China. The United States has, throughout its history, gone through periods where it has turned its gaze away from the international economy. These historical episodes have rarely ended happily. Is there a way to capture the benefits of globalization while minimizing the harmful excesses?

The third question concerns the future of Americas economic relationship to China. The argument for decoupling and reducing vulnerability to China is powerful. First, COVID-19 demonstrated the dangers of vulnerable supply chains. Second, it does not make sense to continue to enrich a current and future rival. Third, increasing automation and robotics means that labor cost differentials are a less compelling reason to offshore production. For those who are skeptical of the pacifying effects of interdependence and believe security concerns should always trump economic ones, pulling away from Chinas economy is the obvious choice.

The problem is that left to its own devices, the American and Chinese economies wont naturally decouple. General Motors sells more cars, and Apple has sold more iPhones, in China than in the United States. Supply chains remain deeply integrated, including on the high-end technology front. Dissolving those relationships will be costly. Trade today is less between countries than within firms, whose operations are global rather than national. Shared technology platforms increase productivity, which would be lost under decoupling.

Trade flows, however, do not begin to capture the deep integration between the two economies. The financial and monetary spheres are far more interconnected. Chinese companies are raising record amounts on Wall Street, while U.S. banks and financial firms increase their investment and business in China. Despite political strains over the past decade, direct investment and financing in both directions shows little signs of decreasing. Reversing economic interdependence if that policy is chosen for national security purposes will both be costly and require political will. It would also fully signal that the United States sees China not as a competitor or even a rival, but as a full-blown adversary.

What are the sources of innovation and adaptation, and what role will the national government play in facilitating creating, scaling up, and implementing new technologies? This is the fourth big question faced by the Biden administration, and the issue here will be shaped by its view of U.S. competition and antitrust policy. On the one hand, the recent computing and telecommunications revolution has revealed the power of companies that dominate networks and platforms. The United States has done very well in this new world, and there are important arguments that the government should applaud and support the success of American tech giants dominating the global economy. On the other hand, some experts question whether it is healthy from a competition, innovation, and fairness perspective to allow companies like Amazon, Apple, Google, and Microsoft to achieve such dominating market power. They harken back to the spirit of President Theodore Roosevelt and his controversial but popular program of trust-busting in the early 20th century. There are critical national security considerations to both views.

Relatedly, there is a long-debated question of the role the government should play in seeding, supporting, subsidizing, and even directing the private sector. The United States has long steered clear of national economic planning. Yet the Chinese governments massive, directed investments and championing of its companies, both for economic and national security reasons, has caused many Americans to rethink their priors on the relationship between the state and the private sector. This is reflected in the impressive, bipartisan support for the Endless Frontier Act to support improved technological competitiveness vis--vis China.

The final question involves Americas role as the banker to the world. Will the United States continue in this role, and what will the consequences be? This question has two parts, the first involving international monetary policy, the second surrounding capital formation.

One of the most important global economic developments of the past 15 years has been the emergence of the Federal Reserve Bank as the lender of last resort, not just to the United States, but to the world. The Federal Reserve banking system demonstrated masterful adaptability and far-sighted innovation during both the 2008 financial crisis and the economic fallout from last years COVID-19 crisis that, in both cases, arguably prevented a global depression and increased its mandate well beyond securing the U.S. financial system. In the process, it quietly but significantly increased Americas already potent global monetary and financial power. Despite previous predictions to the contrary, it is and will remain for some time a dollar-dominated world. Will this increased monetary power marry up with Americas recent proclivity to deploy economic sanctions, and if so, will that add or diminish American economic influence over the long term?

Part of the answer will be shaped by the uncertain outcome of current economic policies. The United States is currently undergoing a consequential experiment, with relative loose fiscal and monetary policy leading to a rethinking of how much debt and liquidity the economy can contain. Will this produce destabilizing inflation and a return to 1970s stagflation? Or will this liquidity be efficiently absorbed into higher productivity, a reduction in inequality, and overall growth? Interest rates, both nationally and around the world, remain near historical lows, despite the surge in liquidity.

The second aspect to Americas global financial power comes in its world leading innovation, sophistication, and depth of its financial sector. In recent decades, New York City competed with Hong Kong and London as the best place to raise capital and list companies. As recently as a decade ago, New Yorks competitors showed signs of taking the lead. Great Britains decision to leave the European Union and Chinas decision to crack down on dissent in Hong Kong has moved the advantages back to the United States. In addition to the traditional methods of Wall Street finance and exchange listings, Americas innovative venture capital financing capabilities in Silicon Valley, Boston, Austin, and elsewhere provide important and impressive domestic and global advantages. Can they be maintained and expanded upon?

Conclusion

Will the Biden administrations efforts to link economic and national security succeed? While a commendable goal, accomplishing it may not be as easy or simple as one might think. To do so, U.S. officials would be wise to recognize the complex, often contradictory factors shaping economic and security goals, calculating how best to resolve the tension while advancing both. Foreign economic policy is about a lot more than trade policy, for example, and the most effective long-term policy toward China likely eludes simple binaries. They should also keep in mind Americas unique history and perspective on the purpose of economic statecraft, which is often at odds with other countries. Finally, the administration should recognize and generate policies to deal with the profound economic changes wrought by the larger technological and financial transformation of both the national and global economies. The United States is at an inflection point, both in how its economy operates and in the global security landscape it faces. How it handles the balance between the two generating wealth while also creating security will have consequences for years to come.

Francis J. Gavinis the Giovanni Agnelli Distinguished Professor and the inaugural director of the Henry A. Kissinger Center for Global Affairs at Johns Hopkins School of Advanced International Studies.He is also the Chairman of the Board of Editors of the Texas National Security Review. Gavin has written several books, including Gold, Dollars, and Power: The Politics of International Monetary Relations, 1958-1971.

Image: U.S. Air Force (Photo by Staff Sgt. Christopher S. Muncy)

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Economics and US National Security - War on the Rocks

CRAIG With the impending closure of coal mines and power plants in northwest Colorado, Craig officials and river enthusiasts are hoping a long-overlooked natural resource just south of town can help create economic resilience.

The city has applied for a $1.8 million grant from the federal Economic Development Agency for the Yampa River Corridor Project, which will refurbish boat ramps, add parking areas and a whitewater park, in an effort to develop the Yampa River as a source of outdoor recreation and local pride. The project is part of a multi-pronged approach to help rural Moffat County transition from an extraction-based economy to one that includes outdoor and river recreation as one of its main pillars.

(River use) has definitely grown in the last couple of years, said Jennifer Holloway, executive director of the Craig Chamber of Commerce. Awareness that the river could be part of our future has grown. It had just not been on our radar as a town. We had the coal mines, we had the power plants. People tubed the river and fished in it sometimes, but it was not looked at as an economic asset until the last few years.

An August 2020 preliminary engineering report by Glenwood Springs-based consultant SGM laid out the project components. The first phase of the proposed project would include improvements to Loudy Simpson Park on the west end of town, including a boat ramp, parking, a picnic area and vault toilet. The park is often a take-out point for tubers and boaters who float from Pebble Beach, just a few miles upstream. The project would also create better waves, pool drops with a fish passage, two access points and a portage trail at whats known as the Diversion Park, as well as improve the citys diversion structure.

The total project cost is roughly $2.7 million. A second project phase, which is still conceptual, would include bank stabilization and a trail connecting the river to downtown Craig.

Project proponents see the river as one of the towns most under-utilized amenities and say it can add to the quality of life in the town of about 9,000.

Josh Veenstra is the owner of Good Vibes River Gear in Craig. The company rents paddle boards, rafts and tubes, runs shuttles on the Little Yampa Canyon and sells hand-sewn, mesh bags and drying racks, which are popular among the boating community. This is the fourth season for his company and Veenstra said the momentum is unbelievable.

What its going to do is give Craig a sense of identity, he said.

Two of the regions biggest employers and energy providers, Tri State Generation and Transmission and Xcel Energy, announced in 2020 that they would be closing their coal-fired plants and mines. Tri-State, whose plant is supplied by two local mines, Trapper and Colowyo, plans to close all three of Craigs units by 2030. Xcel, whose plant is located in nearby Hayden, plans to close both its units by the end of 2028.

According to Holloway, the closures represent about 800 lost jobs.

All of our restaurants survive off the power plant workers, all of our retail, all the rest of our businesses, she said. Most of our small businesses downtown are run by women whose husbands work in the mine. So I think we are going to see a mass changeover of people leaving.

Holloway is focusing on ag-tourism, the arts and outdoor recreation as industries that can help replace lost jobs. Although she recognizes that tourism jobs generally dont pay the high wages of extraction industries, outdoor recreation has been identified as an industry with a large potential for growth and is identified as a priority in Moffat Countys Vision 2025 Transition Plan.

In addition, the pandemic has shown that many white-collar workers can work remotely from anywhere that has internet. It has also increased interest in outdoor recreation. Project supporters say improving the river corridor could help attract a new demographic interested in the outdoors but who dont want to pay the premiums of a resort community, like nearby Steamboat Springs.

Entrepreneurs in the rec industry would be a great fit, Holloway said. A warehouse here would be so much cheaper than Steamboat. If we could get some of those entrepreneurs, that would attract those that have a remote job or business elsewhere but that want the rural outdoor lifestyle.

Although city officials are moving forward with plans to build the whitewater park, they are for now at least forgoing a step that could help protect their newly built asset and keep water in the river.

Many communities in Colorado with whitewater parks, including Glenwood Springs, Basalt, Durango, Silverthorne and Vail, have a water right associated with the man-made waves, known as a recreational in-channel diversion or RICD. This type of water right ties an amount of water necessary for a reasonable recreational experience to the river features.

A RICD can help make sure there is enough water in the river for boating, but it also has the potential to limit future upstream water development. Under Colorado water law, known as the prior appropriation system, older water rights have first use of the river and therefore, a RICD does not affect existing senior water rights.

Its something that we have had some discussion about and we are looking closely at; it can be kind of political, said Craig City Manager Peter Brixius. I have not personally heard from folks, but I know people are opposed to it.

Brixius said the conversation about a RICD is on hiatus at least until the fall.

Without a water right, which would secure the whitewater parks place in line, future upstream water development could jeopardize having enough water for the park.

Peter Fleming, general counsel for the Colorado River Water Conservation District, said that while he cant speak specifically for Craig, it makes sense for a municipality to protect its place in the prior appropriation system with a water right.

If there may be some risk in the future that somebody is going to develop some water upstream that would either reduce or eliminate entirely the benefit of this expenditure, then yeah, you go to water court and try to protect this investment you have made, he said. Even if you dont see anything on the horizon that is going to impact you, who knows whats going to happen in 20 years.

The city expects to find out if it got the EDA grant in early fall. The project has also received funding from Moffat County, Friends of the Yampa, Trapper Mine, Northwest Colorado Parrotheads, the Yampa/White/Green Basin Roundtable, Resources Legacy Fund and the Yampa River Fund.

City officials are hoping the Yampa River Corridor Project will attract visitors, contribute to marketing efforts to rebrand northwest Colorado and build morale around the areas economic future. For river gear shop owner Veenstra, that future cant come fast enough. He hopes to hold swift water rescue courses and do environmental education using the new river corridor area.

Craig is one of the coolest little towns, he said. The closure of the power plant, everybody says its going to be the downfall of Craig. Its the best thing that could ever happen to us because it made people snap out of it and go, oh, we need to do something different. Thats why the whitewater park is getting built. It was a blessing in disguise.

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A northwest Colorado town is betting on the Yampa River to help it transition away from a coal economy - Sky Hi News

We are hopeful that the AEC will continue to be a constructive partner for the countries and communities involved, and that the Council continues to advocate for much needed economic development in the Arctic in general, and specifically for the Indigenous Peoples who live there, says ICC Greenlands Kuupik V Kleist, pictured here in a file photo. (Ulrik Bang/AFP via Getty Images)

The Inuit Circumpolar Council (ICC) Greenland joined the Arctic Economic Council (AEC) this month, saying Greenlands economic aspirations fit well with the AECs focus on responsible development in the North.

We are joining the AEC to ensure the wellbeing of the Arctic Peoples and sustainable economic development in the region, ICC Greenlands Kuupik V Kleist said in a news release.

Our code of ethics is in line with the principles of the AEC, and we see the organization as a guide for sustainable and responsible investments and development in the region.

ICC is an organizationthat represents the approximately 180,000 Inuit in the Arctic and has chapters in Alaska, Canada, Greenland, and Chukotka, Russia.

The Arctic Economic Council was established during Canadas last chairmanship(2013-2015),of the Arctic Council, an international forum made up of the worlds eight circumpolar nations and six Arctic Indigenous groups.

The AEC was initially conceived as an entity to advise the Arctic Council on business issues but has evolved tofacilitate business-to-business activities in the North and promote responsible economic development.

The AEC is separate from the Arctic Council, but chairmanship of the bodyrotates among the circumpolar countries to mirror the Arctic Councils rotating two-year chairmanships.

AEC members include both Arctic-based companies and groups, and those based elsewhere in the world, as well as Indigenous groups and corporations. The AEC is open to small and medium sized businesses, as well as large companies.

I am very happy to have ICC Greenland as a member, Mads Qvist Frederiksen, director of the AEC, said.

This strengthens our representation in Greenland and our work to develop Indigenous businesses across the region. Instead of thinking North-South collaboration, we have to think more across the Arctic.

The AECs working groups are focusing on the kinds of industries and investment that make the most sense for the North, something Kleist says is important for Greenland.

Greenland, like other Arctic communities, is in an urgent need for diversifying its economic activities, Kleist said.

We are almost completely dependent on the export of fish, which makes the economy fragile and pushes the limits of resources. Greenland must diversify its economic activities so to ease the pressure on the fish stocks. Harvesting natural resources is a moving target; when nature and the world market economy speaks, one has to obey.

Responsible resource development is a promising track for the autonomous territory, Kleist said. But recent elections that saw the election of a party which campaigned against a controversial rare earth minerals mining project, has been misinterpreted by some of the international business community, as Greenland being against such initiatives.

Considering the fragile Arctic environment, there is scepticism towards mining minerals with radioactive content, Kleist said.

While the recently inaugurated Government is strictly against uranium mining, it needs to make it very clear for international investors: the Government is not against mining activities in general.

Frederiksen agrees.

The AEC has together with the World Economic Forum developed the Arctic Investment Protocol, which is a set of guidelines for companies operating in the Arctic, he said.

Nonetheless, we still have a continuous task to promote the Arctic as a favourable place to do business. Since the recent government election in Greenland, we have seen some investors getting cold feet about recent developments in mining.

Kleist says he hopes having ICC Greenland on the AEC will send an important message about the kind of the economic development needed in the region.

We are hopeful that the AEC will continue to be a constructive partner for the countries and communities involved, and that the Council continues to advocate for much needed economic development in the Arctic in general, and specifically for the Indigenous Peoples who live there.

Write to Eils at eilis.quinn@cbc.ca

Related stories from around the North:

Canada: Strong rebound coming for northern territories: Conference Board of Canada, CBC News

Finland:Kemi-Tornio area in northern Finland gets 4.2m recovery package to cope with Veitsiluoto mill closures, Yle News

Norway:Are Norways energy policies caught between black gold & green ambitions?, Blog by Marc Lanteigne

Russia:Moscow wants new connection to Arctic coast, revives plans for a railway to Sabetta, The Independent Barents Observer

United States:Cruise ship docks in Skagway, Alaska for the first time in 21 months, CBC News

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ICC Greenland joins the Arctic Economic Council - Eye on the Arctic

On Monday, June 28, Whitecourt Town Council heard their findings. Josh Burger, Manager, Government Relations and Public Affairs with Ballad walked Council through the details.

Town-led outreach in the early stages of the pandemic found that COVID-19 was impacting 92 percent of the towns businesses. At that time, there was a lot of uncertainty on whether these effects would be temporary or permanent and how this pandemic would impact businesses.

Burger stated the obvious. The impact of COVID has been massive whether at the regional level, provincially, nationally or internationally. There is a lot of uncertainty remaining about the impacts of the pandemic. We know it will be felt for years to come, and theres going to be a need for durable solutions to these challenges from all levels of government.

Ballad reached out to almost 300 businesses, and of those, 75 completed the full interview. The engagement concentrated on key industries to the town, oil and gas, the resource sector, and consumer-facing industries such as retail, trade, and personal services. There was a roughly 40/60 split between vary small businesses, those with fewer than five employees, and those on a larger scale, he explained.

Burger said that many businesses were forced to close due to provincial health guidelines and that falling energy prices directly or indirectly impacted many. He said that the regional unemployment was significant and that it started from a base that was already higher than the province, around ten percent. Many small and medium-sized businesses indicated a real uncertainty around their ability to pay back emergency loans which is something that we flagged as pretty critical.

He said that sales and revenue had fallen across the Towns business community since the onset of the pandemic. The direct effects are that following multiple rounds of public health restrictions, workers were laid off, while consumers could not access the services they wanted. Indirectly it resulted in widespread concerns over the state of the global economy and energy demand. Adding to high crude oil inventories and no decrease in production meant a decline in energy prices. He mentioned that they do see early signs of recovery in the energy sector.

Burger said that 71 percent of businesses saw their sales decrease. Some saw higher losses than others. Pretty much everything was impacted with just a small minority, just twelve percent of businesses interviewed, saying they saw an increase in sales. That was really pandemic-driven. Restrictions on foreign travel meant people were spending on recreational products like ATVs and RVs. There was an increase in residential investment in some areas, which led to a strong year for lumber producers. We also had lower residential financing costs, said Burger. In Whitecourts case, he said that it translated to more robust sales in the upper end of the residential sales market.

For businesses deemed essential services, demand remained. Pharmaceuticals, compliance and safety services, wellness products, many of those companies had a good year, but this is a small minority in the overall business community. And even smaller minority were able to proactively target new markets with some pivoting their business. Burger said that many businesses repurposed equipment for other uses or offered curbside pickup and delivery in response to decreasing revenues. Only 29 percent of companies described their sales as highly resilient to more public health restrictions even with those changes.

Shifting to online retailing showed uncertainty, especially for small businesses. Barriers included shipping and delivery costs and the limited discounting capacity for smaller companies compared to big box stores. As we begin to see an increase in demand, there is a challenge with supply chain constraints more than anything, so its kind of a double hit, said Burger. We hear of significant shipping problems, and thats just compounded further from when the Suez Canal was blocked off, which created a backlog that we still see today.

Burger provided an example. One business I spoke with, their pre-pandemic shipping container cost was $2,500 to bring in a container full of product. The current pricing is $16,000. So, an exponential increase in shipping costs makes many products unviable for sale. In that case, they simply stopped bringing those containers in.

One thing that was vital for keeping business afloat was public support. We are really happy to see the town proceeding with recommendations on micro-grant funding and business visitation. You are doing pretty much everything you can in terms of supporting these businesses that are struggling, said Burger. Once the dust settles, we have to determine what this looks like in terms of debt repayment. A significant share of businesses indicated that their closure or downsizing risks are elevated in the region of 40 percent. Their capacity to repay loans is impacted.

He said that despite issues with funding supports, it was clear that the money was a vital lifeline for many businesses. For some sectors, especially those that saw multiple closures during the pandemic, financial assistance has ensured their survival. Burger said that building up the resiliency of the region is essential moving forward. He noted that more regional supply chains and boosts to the labour market with local skill development are two ideas.

I hear this time and time again whether, from smaller businesses or larger employers, theres so much more success in hiring local people that are going to stay in the area versus people that come from outside, stay one to two years and then move on. To leverage that local talent through RAP programs, internships, co-ops and pairing with local high schools and post secondaries, all that will be very important going forward.

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For viability, 35 percent of businesses view their risk of closing as moderate or high. During our May and June engagement, the number of businesses started to expand on that and indicated that they would not survive another lockdown, said Burger. We had some very heavy conversations, and my heart goes out to the business owners.

In wrapping up his presentation, Burger said he felt that Whitecourt could become a model for other resource-based municipalities seeking to make similar shifts with proactive approaches. He commended the steps already taken to identify and address barriers to growth.

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An update on how area businesses are doing from a recent COVID-19 Impact Assessment and Recovery Project - Toronto Star

The concept of vertical farming has been gaining popularity for a while now. According to estimates from the United Nations, the global population is expected to witness a massive surge from 7.8 billion to 9.7 billion over 2020-2050. A rising number of urban dwellings may define this population explosion almost two-third of this number will likely be residing in urban areas. Increasing industrialization has also led to an increase in income levels in recent years.

These developments are giving rise to a new, larger, richer, and more demanding demographic. To meet the soaring expectations of the growing population, strong emphasis must be placed on enhancing sustainable food production and agriculture productivity in the years ahead.

As per experts, if the world needs to address the major upsurge in food demand in the coming years, remedies must be undertaken to help the natural resources replenish. One such remedy could be the recently emerging trend in agriculture, vertical farming.

The acute need for sustainability in the current landscape is expected to drive this revolutionary technology, that is far more conducive to the environment than its conventional counterpart. Vertical farming techniques allow for the production of nearly 240 times the crop yields of conventional farms, requiring 99% less land use and 98% less water consumption. Vertical farming operates on controlled environmental resources and can also be undertaken in agriculturally unfavorable locations, such as shipping containers, vacant warehouses, skyscrapers, and more since they are stacked vertically rather than spread across an expanse of land.

Noted below are 3 crucial advancements that are shaping the future of the vertical farming market, and in essence, the future of agriculture itself.

As per projections from Algorithmias 2021 Enterprise Trends in Machine Learning report, over 50% of the businesses surveyed revealed plans to increase expenditure for AI (Artificial Intelligence) and ML (Machine Learning) in 2021, with 20% having already increased their budgets. This means that a substantial chunk of businesses expenditure in recent times will contribute to the development of AI-based machines and tools across myriad industrial sectors.

The farming and agriculture industry is one of the sectors leveraging the potential of AI.

By using AI-powered tools and robotics, modern farmers and key agricultural industry players are able to track and control plant development, right from the soil, water, and light exposure to the crop yield data.

For instance, a San Francisco-based agricultural technology startup, dubbed Plenty, has established an advanced climate-controlled vertical farming setup, as a part of its efforts to reinvent farming. These upright farms, equipped with AI-powered robots which control watering, temperature, and lighting, are able to produce 720 acres worth of fruit and vegetable yields in just 2 acres of farmland. The facility also makes use of LED panels to replicate sunlight, creating more optimal conditions for growth round-the-clock.

Furthermore, the recapture of evaporated water and recycling efforts contribute to less wastage than conventional farms. Consequently, the next-gen, AI-powered vertical farming technology, designed as a contemporary and highly efficient alternative to conventional farming methods, has helped reduce the use of both land and water by as much as 99% and 95% respectively.

Studies show that the global economy consumes over 90 trillion natural resources. Of these, the world reuses a mere 8% for other purposes. Surging industrialization has led to rising resource demand and climate change. This is in turn, has led to a rise to environmental hazards, like droughts, floods, and water shortages.

Given the worsening conditions, the most befitting answer to this challenge seems to be a circular economy model, which will help fight climate change adversity and improve the economic landscape at the same time.

Switzerland-based startup, YASAI has come up with a concept that emulates this theory, by integrating vertical farming technologies into a circular economy model, which empowers customers to grow more with less and develop sustainable food production systems. Originating as a Masters Thesis, the startup was established with an aim to convert the agriculturally unsuitable landscape of an abandoned limestone quarry in one of the smallest nations, into one of the largest vertical farming facilities worldwide.

Focusing on health, sustainability, and circularity, numerous efforts are undertaken by YASAI to transform the agricultural landscape of La Sarraz, including recycling concrete for mitigation of grey energy, recycling nutrients from wastewater, and leveraging the existing limestone mines setting as a natural coolant solution for the facility. Furthermore, the startup makes use of captured rooftop rainwater to supplement its irrigation systems, geothermal heat pumps that allow for internal cooling via activated ceilings, repurposed biowaste for electricity generation and CO2 captured from compressors to support plant growth.

In this manner, YASAIs vertical farms are working towards achieving a potential fresh produce yield of almost 3,525 tons each year, whilst capturing nearly 614 tons of CO2 annually, and subsequently shedding light on the contribution of vertical farming technologies towards achieving circularity in food production.

Aeroponics a revolutionary alternative to traditional soil & water-based farming

Years and years of relentless soil usage have resulted in the rising prevalence of soil erosion across several regions, leading to a significant shortage in farming land. This factor, along with burgeoning climate concerns, may boost vertical farming market trends in the foreseeable future.

Aeroponics vertical farming proves to be a boon in these situations, as it relies on air and requires almost 95% less water and space for farming purposes. The recent determination to grow plant life in unfavorable environments has led to many studies and developments in alternative agriculture.

A notable example of this is indoor vertical farming leader, AeroFarms, which has been pioneering innovations in vertical farming since its inception in 2004, including breaking ground on its most technologically advanced and largest indoor aeroponic vertical farm to date, dubbed the Model 5 farm, in April 2021.

The firm is known for its proprietary aeroponics technology, which combines the benefit of engineering, data science, nutrition, food safety, and genetics to facilitate optimum year-round production of over 550 different plant varieties ranging from tomatoes, to berries to leafy greens, irrespective of weather or seasonal changes.

The world seems to be standing on the precipice of a devastating food crisis over the next few decades. Yet, consistent efforts, technological advancements, and growing financial support may prove to be a much-needed solution to bridge the gap between the expanding population and agricultural capabilities.

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3 emerging trends in vertical farming that will cultivate the future of agriculture - Intelligent Living