The Growth Conundrum
Laura Tyson, Jonathan Woetzel
MAR 31, 2015

BERKELEY – The world faces a major dilemma. While rapid economic growth, such as that realized over the past 50 years, is critical to support development, we now also know that it can have serious adverse consequences, particularly for the environment. How can we balance the imperatives of growth and development with the need to ensure sustainability?
The unprecedented growth of per capita income during the last 20 years has lifted more than one billion people out of extreme poverty. In developing countries, life expectancy has increased by 20 years since the mid-1970s, and the illiteracy rate among adults was almost halved in the last 30 years.
But rapid economic growth has placed enormous pressure on the environment. Moreover, it has been accompanied by rising income inequality, which has now reached historic highs within many countries (though, across countries, such inequality has declined). Given this, one might argue that slower growth would be good for the world.
In that case, the solution would be at hand. According to a new report by the McKinsey Global Institute (MGI), aging populations and declining fertility rates in many parts of the world could dampen global growth considerably over the next 50 years.
Indeed, even if productivity were to expand at the same rapid rate as during the last half-century, global growth would fall by 40%, far below the anemic rate of the last five years. Employment growth is also set to slow significantly. As a result, even with slower population growth, per capita income growth would fall by about 19%.
To be sure, GDP would still triple, and per capita income would double, over the next 50 years. Nonetheless this rate of long-term growth would constitute a sharp break with the six-fold GDP expansion and nearly three-fold increase in per capita income of the last 50 years.
Despite its potential benefits, especially for the environment, the impending growth slowdown carries significant risks. While growth is not an end in itself, it enables the achievement of a broad set of societal goals, including the creation of economic and employment opportunities for millions of vulnerable and poor people and the provision of social goods like education, health care, and pensions.
So how do we ensure that these imperatives are fulfilled, despite demographic and environmental constraints? The first step is to secure economic growth through productivity gains.
The needed acceleration in productivity growth – by 80% to sustain overall GDP growth and by 22% to sustain per capita income growth at the rates of the last half-century – is daunting. But, based on case studies in five economic sectors, the MGI report finds that achieving it, though “extremely challenging,” is possible – and without relying on unforeseeable technological advances.
Three-quarters of the potential pickup in productivity could come from “catch-up” improvements, with countries taking steps – modernizing their retail sectors, consolidating automobile production into a smaller number of larger factories, improving health-care efficiency, and reducing food-processing wastage – that have already proven effective elsewhere. The rest can come from technological, operational, and business innovations – for example, developing new seeds to increase agricultural yields, using new materials (such as carbon-fiber composites) to make cars and airplanes lighter and more resilient, or digitizing medical records.
Another significant growth opportunity lies in boosting the employment and productivity of women. Today, only about half of the world’s working-age women are employed. They earn about three-quarters as much as men in the same occupations, and are over-represented in informal, temporary, and low-productivity jobs.
MGI estimates that increasing women’s labor-force participation rate could contribute almost 60% of potential labor-force growth during the next half-century. Realizing this potential will require efforts by both employers and governments to eliminate discriminatory practices that impede the recruitment, retention, and promotion of women, as well as credit, tax, and family support policies to help workers balance their responsibilities at work and at home.
Meanwhile, in order to mitigate the environmental impact of continued rapid growth, the world must improve its resource efficiency considerably. MGI and others have identified numerous ecologically responsible growth opportunities emanating from the smarter use of limited resources.
Consider improvements in energy efficiency, which could halve projected energy demand between now and 2020. As California – the world’s eighth-largest economy – has demonstrated, strict energy-efficiency standards can actually be good for growth and jobs. Indeed, such policies have kept California’s per capita energy demand constant for the last three decades – even as such demand grew by 50% in the rest of the United States – without compromising growth.
There is a strong business and consumer case for improving resource productivity, as it could lead to substantial cost savings. Fortunately, policies that support this goal are gaining momentum in developed and developing countries alike.
Even if gains in female labor-force participation and resource-efficient productivity growth sustain high rates of economic growth, one key challenge remains: income inequality. In fact, there is no simple relationship between growth and income inequality; after all, inequality has been increasing in both slow-growing developed economies and fast-growing emerging economies.
According to the French economist Thomas Piketty, income inequality rises when the return on capital exceeds economic growth, meaning that, by itself, faster economic growth would reduce inequality. Using a different approach, economists at the International Monetary Fund also find a positive relationship between lower income inequality and faster growth, concluding that policies that redistribute income can foster faster, more sustainable growth.
Growth still matters. As demographic tailwinds turn into headwinds, and environmental challenges become ever more apparent, businesses and governments need to think carefully about how to improve resource efficiency while fostering more inclusive economic growth.

Legendary Hedge Fund Manager: Europe And The US Are Dysfunctional And Broke

By Lawrence Delevingne

March 29, 2015

Founder and President, Elliot Management Corporation Paul Singer speaks onstage during The New York Times DealBook Conference at One World Trade Center on December 11, 2014 in New York City.
Paul Singer is deeply pessimistic on the state of the developed world.

The conservative, cantankerous hedge fund manager thinks economic stimulus in Europe isn’t likely to work and that the U.S. political system will remain dysfunctional, even with Republican midterm gains.

“With euro interest rates at record lows, we cannot imagine that the ECB’s recently announced QE [quantitative easing] program will improve Europe’s serious economic situation,” Singer said of the European situation in a private letter to investors. “On the other hand, QE might have unpredictable and large negative repercussions if it triggers a generalized loss of confidence.”

ECB refers to the European Central Bank, which is engaged in quantitative easing, or the buying billions of dollars of bonds each month to try to spur regional economies.

Singer’s recommendation is the reform of taxes, labor rules, education, regulation and government assistance programs, to name a few. But he deems such change unlikely, making many countries essentially deadbeats.

“Almost all of the countries in the euro block are long-term insolvent [as are Japan and the U.S.] because of a combination of debt and unpayable long-term entitlements,” the billionaire investor wrote.

The U.S. isn’t much better off, according to Singer.

He called the Republican gains in the recent midterm elections a “repudiation” of President Barack Obama and some Democratic policies. But he said change isn’t likely because the White House isn’t willing to work with conservatives.

“President Obama gives no sign of wanting to work with Congress, and also gives no sign of wanting to pursue a different agenda. Thus, the current tax and regulatory landscape is likely to remain in place at least for the next couple of years,” Singer wrote.

That lack of change in Washington makes Singer pessimistic about the economy.

“It is hard to imagine the American economy lighting up under such conditions,” the letter said, “even without the gravitational forces exerted by Europe’s travails, the strengthening of the dollar, the oil crash, Japan’s highly uncertain path, potential economic changes in China or the uncertain event stream of Islamic jihad, Russian expansionism and continued chaos in the Middle East.”

Heard on the Street

ECB Bond-Buying Brings Another Market Mystery

How and why QE works remains a subject of much debate

By Richard Barley

March 30, 2015 10:35 a.m. ET

Mario Draghi, President of the European Central Bank, following the meeting of the Governing Council in Frankfurt/Main, western Germany, on September 4, 2014. Photo: Agence France-Presse/Getty Images

If there is one thing that quantitative easing reliably generates, it is questions about how it works.

The European Central Bank’s bond-purchase program is no exception. But, this being the eurozone, the puzzles are proving different from elsewhere.

Even the reaction of the government-bond market has proved perplexing. ECB bond purchases were expected to lead to narrower yield gaps between Germany and southern European nations, such as Italy and Spain. But German 10-year yields have fallen while those of Italy and Spain are little changed from March 6, the last trading day before the ECB began buying bonds. In Spain’s case, the yield gap has even widened slightly versus the start of the year.


One theory is that this is because of nerves around Greece, where the government is continuing to labor on economic reform proposals but has yet to develop a plan that satisfies the rest of the eurozone. But set against that is the relatively strong showing put in by Portugal, which might have been expected to be vulnerable to Greek contagion. Portuguese 10-year bonds now yield just 0.45 percentage point more than their Italian equivalents, down from close to 0.9 point at the start of the year.

True, Portugal has had some good news of late: Standard & Poor’s lifted its rating outlook to positive this month, and Fitch maintained its positive outlook last Friday even as it cut Greece’s rating. But while Portugal has made economic progress, it still carries “junk” ratings and has more to do to mend its public finances.

At least the eurozone is being spared the debate that plagued the U.K. in particular during its quantitative-easing program about why the economy was flatlining. The eurozone is rebounding and may well be outpacing the U.S. in the first quarter, a development few had forecast. Of course, QE can’t take the credit for that. The eurozone recovery was already getting under way late last year, with lower oil prices one of the biggest contributing factors.

But that deepens the puzzle of why Spain and Italy are lagging Germany in the bond market. A better growth outlook should be more beneficial for highly-indebted countries whose bonds are perceived to contain credit risk than safe-haven nations like Germany. That suggests that it is perhaps technical factors that are to blame—both Italy and Spain have been issuing long-dated debt that may be weighing on the market—with economic fundamentals counting for little.

The familiar problem with QE is that no one knows what the market would be doing if the ECB were not buying bonds. Perhaps Greece might then be looming larger as a threat, and the yield gap between Germany and southern Europe might be yawning wider. The argument elsewhere is that QE staved off worse outcomes: if it is preventing a resurgence of the eurozone debt crisis, then that is equally true for the eurozone.

Putin’s New Mediterranean Strategy

F. William Engdahl

While attention has been focused in recent weeks on the role of Russia and President Vladimir Putin in brokering a new ceasefire in eastern Ukraine, the Russian president has made time for two crucial state missions—one to Cyprus and one to Egypt. What they both share in common is a border on the shore of the eastern Mediterranean Sea, a strategic body of water whose importance in the escalating NATO confrontation with Russia cannot be underestimated.
For more than 2000 years the Mediterranean Sea has been one of the world’s most strategic waters. It joins Middle East oil and gas with markets in the European Union. It joins Indian Ocean shipping, increasingly from China, India, South Korea and the rest of Asia to European markets and to the Atlantic Ocean through the Egyptian Suez Canal. It joins the vital Russian Black Sea Fleet naval base in Crimea to both the Atlantic and Indian Ocean. In brief it connects Europe, Eurasia and Africa.
With this in mind, let’s look at Putin’s most recent travels.

To Cairo
On February 9 the Russian President met Egypt’s President Abdel Fattah al-Sisi in Cairo. When al-Sisi as chief of the Egyptian Armed Forces led the putsch that ousted Egypt’s US-backed Mohamed Morsi and his Muslim Brotherhood regime in August 2012, Putin was one of the first to support al-Sisi’s presidential bid. In August 2014 al-Sisi was invited to meet Putin in Moscow as Washington became an open opponent of the Egyptian president.
Few details of the latest Cairo visit are being released but Putin said they agreed to boost trade and military cooperation, and Russia has begun supplying weapons to Egypt after signing a memorandum. Commercial agreements are also expected on Putin’s two-day visit, including a likely deal between Russian news agency Rossiya Segodnya and Egypt’s state-owned Al-Ahram newspaper.
And days following Putin’s Cairo meeting with al-Sisi, Russia and Egypt signed an agreement to build four advanced Russian nuclear power reactors in Egypt. They will be a major boost to Egypt’s weak electricity grid and power problems.
At the same time al-Sisi announced that Egypt would join Russia’s new Eurasian Economic Union in the form of a joint Free Trade Agreement. The union consists of Russia, Belarus, Kazakhstan and Armenia. It was Ukrainian President Viktor Yanukovich’s November announcement to the EU that Ukraine would join the Eurasian union that triggered the US blatant coup d’etat of Maidan Square.
Cypriot Jewel in the Sea
Then two weeks after his Cairo talks on February 25 President Putin received Cypriot President Nicos Anastasiades in the Kremlin to discuss a variety of mutual issues. Anastasiades took the occasion to criticize the European Union’s sanctions against Moscow. He declared, “the least I could do is visit Russia during these difficult times to assure it that, despite this situation, our relations will still develop. Whatever sanctions are introduced against Russia, they impact other countries, members of the EU, which include my motherland, that in a lot of ways depends on Russia.”
While that may be of future help to Russia against further EU sanctions, the heart of the talks involved Cyprus-Russia military cooperation. Here Cyprus offered use of its ports to the Russian Navy for certain purposes, “to Russian vessels involved in counter-terrorism and anti-piracy efforts.”  The Russian ships will use the Cyprus port of Limassol a civilian port and home of some 30,000 to 50,000 Russians, a quarter of the city’s population. At present Russia’s only Mediterranean Naval port rights are at the Syrian port of Tartus.
For his part, with the earlier approval of the Russian Duma, Putin offered Cyprus urgently needed debt relief, something not forthcoming from the draconian EU since the Cyprus crisis of 2013 when the EU confiscated Cypriot bank deposits of more than €100,000 in an involuntary theft as condition for a draconian bailout. Hundreds of Russian companies with Cypriot offshore headquarters were affected, in retrospect clearly a beginning part of the Washington-Brussels strategy to begin weakening Putin’s Russia. Maidan Square protests in Kiev began six months after the Cyprus confiscations.
This time Putin, despite the financial sanctions and economic warfare of the US Treasury’s Office of Financial Terrorism (officially called the Office of Terrorism and Financial Intelligence), offered Cyprus urgently needed debt relief. Russia agreed to restructure a €2.5 billion bailout loan it gave to Cyprus in 2011, to cut interest to 2.5% from 4.5% and extend debt maturity to 2018-2021 from next year.
Relations between Cyprus and Russia hold far more potential. Cyprus recently confirmed huge deposits of offshore oil and especially natural gas. Reportedly there are also discussions to invite Gazprom to help develop that. It could seriously undercut the US NATO strategy of blocking South Stream and other Russian gas routes to the EU.
The response of the US State Department to the warming Russia-Cyprus relations was club-footed to put it mildly. US Ambassador to Cyprus John Koenig sent a tweet, which seems to be the main preoccupation of US ambassadors lately. It was sent on February 28, just after the murder in Moscow of opposition figure Boris Nemtsov: “What do people in Cyprus think about the week in Russia as seen from here? Anastasiades visit and statements, Nemtsov assassination?” Koenig crassly implied a link with the simultaneous visit of Anastasiades to Moscow and the murder of Nemtsov, even saying in another tweet that Putin had Nemtsov murdered. The Koenig Tweet created a firestorm of protest in Cyprus and his departure as ambassador in June was announced by Washington. Koenig apparently often Tweets his Kiev colleage, US Ambassador Geoffrey Pyatt, the orchestrator of the Ukraine deconstruction along with Nuland.
When the Russia-Cyprus recent talks are analyzed in the context of the visit of President Putin to Cairo a fascinating strategic map begins to emerge, one that in no way pleases the neo-conservatives in Washington or their EU allies. We can expect Washington to work behind the scenes to heat frictions between Turkey, a NATO country, and Greek Orthodox Cyprus as well as upping pressures on al-Sisi.
Indeed on February 26 Turkish fighter jets openly violated Greek airspace, and announced it was unilaterally staging live fire military exercises the month of March in the Aegean, including a large part of the Greek international waters and the Greek island of Limnos, heating the geopolitical soup.
In Egypt, TV channels controlled by the Obama and CIA-backed Muslim Brotherhood leaked video tapes designed to embarrass al-Sisi. The tapes purport to expose private telephone discussions of al-Sisi as general, just after the 2012 ouster of Morsi and the Brotherhood, discussing how much financial aid Morsi was asking of the Gulf Arab allies who backed the anti-Brotherhood al-Sisi move.
The scandal appears to have fallen flat as al-Sisi’s popularity in Egypt and support from Gulf Arab leaders appears unaffected. It indicates Washington is getting increasingly uncomfortable with Russian geopolitics now in the eastern Mediterranean.
F. William Engdahl is strategic risk consultant and lecturer, he holds a degree in politics from Princeton University and is a best-selling author on oil and geopolitics, exclusively for the online magazine “New Eastern Outlook”.

A Middle East Holocaust

Paul Craig Roberts

March 30, 2015 @ 6:48 am

Dear Friends: We have had a satisfactory response to our request for your support. As long as you support this site, I will as well. Without your support the website would not exist.
Foundations and corporations do not support truth-tellers. American foundations underwrite war and US imperialism. Foundations support subversion of countries that are not Washington’s puppet states. Your website has no foundation support, no corporate support; it only has your support.
I have been around for a long time and have experienced more than most. The current situation in my experience is the most dangerous time of all for humanity.

Nuclear weapons are no longer restrained by the Cold War MAD doctrine. Washington has released them into pre-emptive first strike form.

The targets of these pre-emptive strikes–Russia and China–know it, because Washington proudly proclaims its immorality in public documents describing its war doctrine.

The result is to maximize the chance of nuclear war. If you were Russia and China, and you knew that Washington had a war doctrine that permits a surprise nuclear attack, would you sit there waiting while Washington cranks up its anti-Russian and anti-Chinese propaganda machine, demonizing both countries as a threat to “freedom and democracy”?

The fools in Washington are playing with nuclear fire. Noam Chomsky points out that in a less dangerous time than currently exists, we came very close to nuclear war. [1]
Harold Pinter, one of the last Western intellects, understood the danger in Western arrogance. He denounced the West’s crimes and called for the crimes to be subject to established law before it is too late for humanity.
“We have brought torture, cluster bombs, depleted uranium, innumerable acts of random murder, misery, degradation and death to the Iraqi people and call it ‘bringing freedom and democracy to the Middle East’. How many people do you have to kill before you qualify to be described as a mass murderer and a war criminal? One hundred thousand? More than enough, I would have thought. Therefore it is just that Bush and Blair be arraigned before the International Criminal Court of Justice.” 

Harold Pinter, 2005 Nobel Prize Acceptance Speech.

“An Iraqi Holocaust” by Gideon Polya [2] and “Genocide In Iraq” [3] provide abundant evidence for convicting Bush and Blair.

Dr. Gideon Polya is a professor of science in one of Australia’s leading universities. He has a moral conscience, something increasingly rare in the Western world.
His articles are based largely on the just published by Clarity Press two volume heavily documented Genocide in Iraq by Abdul-Haq Al-Ani and Tarik Al-Ani. Abdul-Haq Al-Ani is a British-educated lawyer with a Ph.D. in International Law and a Ph.D. in electronics engineering. Tarik Al-Ani, is an architect, translator, and researcher.

Currently I am reading the two-volume work and intended to review it. But Professor Polya’s articles suffice as an introduction to Genocide in Iraq. Washington has committed a terrible crime in our name. Washington not only murdered Iraq, Washington has murdered the Middle East. Washington and its despicable vassals–”the Coalition of the Willing”–are responsible for a Middle East Holocaust.

For people in the Anglo-American world who have a moral conscience, the facts are soul-wrenching. The populations of the countries whose governments comprised “the Coalition of the Willing” are contaminated with war crimes committed by their governments in the Iraq Genocide. A progressive modern state was obliterated, and 2.7 million Iraqi people were murdered.

The crime was covered up with propaganda that demonized Saddam Hussein and created fear of nonexistent weapons of mass destruction.

The Iraqi genocide was based on a lie, and both Bush and Blair knew it. The two satanic leaders simply decided to destroy a people who they first demonized and marginalized.

Cheney and the neocons continue to justify the genocide and the illegal torture regime that they created in order to produce fake “terrorists” as a justification for their war crimes. The Western media, especially the New York Times, is also complicit in the Iraqi Genocide as are the insouciant Western peoples themselves who stood by cheering while millions of people were destroyed on the basis of a blatant and transparent lie.

What does the West represent? Greed? Lies? War? Torture? War Crimes? Selfishness, Intolerance? Destruction of life on earth?

The “Christian” West is a master at propaganda and self-deception. Look at the evangelical churches. They support a criminal, inhumane regime while professing to be followers of Christ.

Look at American “conservatives.” They support the militarized police state. They support the routine police murders of dark-skinned American citizens. They support every war Washington dreams up and even more. Indeed, there are not enough wars for the satisfaction of Congressional Republicans who now want war with Russia and with Iran.

Look at the Republicans in Congress and in state governments. They hate the environment.

They love polluters. They worship Israel and Israel’s destruction of the Palestinians and the ongoing theft of the Palestinians’ country, a 60-year old activity. Just look at the map of shrinking Palestine. More is stolen each day.

Washington has supported this theft of an entire country. Yet, Washington is able to masquerade as a great defender of human rights. Whose rights? Washington’s and Israel’s. No one else’s rights count.

How does the world survive the American-Israeli aggression? Probably it will not. The evil is now directed at Iran, Russia, and China. These countries cannot be bombed year after year after year with no consequences to the bombers.

Iran is limited in its destructive ability. But Iran could destroy Saudi Arabia and Israel. Russia and China can destroy the US and all of Washington’s vassal states. The intensity of Washington’s propaganda war is driving the world to destruction.

How can it be stopped when Putin himself says over and over that Washington continually ignores every thing that the Russian government says. Putin is the peacemaker. Every peace proposal he brings is ignored by Washington whose response is to beat the drums of war louder.

Unless European governments recognize the danger in Washington’s aggression and dissolve NATO, planet earth hasn’t long to live.

The American public needs to understand the consequences of Washington’s illegality and criminality. On the one hand it means that those subject to Washington’s aggression have to endure war crimes, but on the other hand it means a growing hatred for America. As Washington’s easy targets are used up, Washington engages countries that can reply to force with force.
Unless the neoconservatives are ejected from the Obama regime and banned from inclusion in any future American government, mushroom clouds will go up over Washington, New York, Boston, Atlanta, Los Angeles, San Francisco, Seattle, Dallas, Houston, St. Louis, Cleveland, Chicago. The American mid-west, which hosts the ICBM silos, will become uninhabitable except by cockroaches.

Americans, and the populations of the American puppet states, desperately need to understand that Washington is incapable of speaking the truth about anything. Washington is an evil force. Washington is Sauron. Washington is Satan.

Look at Iraq. Look at Afghanistan. Look at Libya. Look at Syria. Look at Somalia. Look at Ukraine. Nothing but destruction comes from Washington. Will life on earth be Washington’s next victim?