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Since the time of Adam
Smith, economists have understood that the wealth or poverty of nations hinge
on the quality of their institutions. Political, economic and social rules of
the game can be inclusive, offering opportunities for prosperity to all, or
extractive, protecting the rents of a few. But the international effort to
introduce one such rule – formal property rights – shows that even simple
changes can have complex and unwelcome effects in alien cultural settings.
Dr. Emmanuel Martin
Another year, another missed opportunity for fiscal reform in France. Like his predecessors, President Emmanuel Macron has ended up mostly raising taxes instead of decreasing the size of government and reducing expenditures. The “national dialogue” to come following the Yellow Vest protests could bring better democratic representation – and with it, more economically responsible governance. But entrenched interests will put up stiff opposition.
the Yellow Vest protests, France has finally fractured between its metropolitan
areas and a resentful low-wage periphery. What started as a tax revolt has
become a diffuse and unstructured uprising against an unaccountable ruling
caste. Many of the movement’s demands would only perpetuate France’s
administrative and social centralism, yet its appearance shows that this
political model may no longer be sustainable.
is praised as a model of vocational training, with youth unemployment of just
over 6 percent. France, where 22 percent of young people don’t have jobs, has
long known that its own vocational education system needs fixing. A comparison
of how these two great European economies prepare pupils to become future
employees may provide a useful guide for other countries.
Since the collapse of communism, Western powers have kept urging African countries to establish democracies by holding elections. Yet democracy is a complex institution that does not adapt well to multiethnic, impoverished societies – especially when it is imposed from outside. Too often the trappings of centralized democracy have been used to legitimize “elected autocrats,” yet there are signs the import will take if grafted onto native roots.
Like other areas of public policy, development aid has had its recurrent fads. The pendulum has swung from socialist-style big-push schemes to pro-market reforms and their latest iteration, results-based aid. This micro-oriented approach has recently come under attack for neglecting the wider “macro” environment of states and institutions. Decades after the flaws of the traditional aid model were exposed, economists are still casting about for a better alternative.
Algeria seems headed down a road already taken by other resource-rich authoritarian countries like Venezuela. Low oil and gas prices have made it harder for a crony oligarchy to buy off the public with subsidies and benefits. Their latest expedient to stave off reforms is to use the central bank to fund a government stimulus program, but that only delays the day of reckoning.
Maghreb & the Middle East
The rise of industrial robotics has led some analysts to hail the beginning of a new era of “reshoring” and “deglobalization,” in which companies from developed countries bring manufacturing back home. The data show a more nuanced story though, and any manufacturing that returns will not bring many jobs with it – that will still depend on entrepreneurship and innovation.
The street revolts of 1968
targeted authority and promised liberation from the traditional social order. What
they brought was an age of unbridled consumerism. In today’s infantilized
societies, perhaps the only way to avoid a dystopian, technocratic version of
“bread and games” is for the social pendulum to swing back toward personal
responsibility – assuming anyone is still interested in such old-fashioned
– a decentralized ledger of transactions that uses computer technology to link,
secure and encrypt records – has the potential to become a hugely disruptive
technology, rendering financial intermediaries unnecessary and making money
transfers nearly instantaneous. However, it requires huge amounts of computing
power and still cannot come close to processing the volume of transactions that
modern credit card companies do, for example. But these challenges represent
opportunities that are sure to be seized by a cascade of innovations.