Will Theresa May and Donald Trump Solve the #1 Challenge of Our Time?

by John Brian Shannon – Originally posted at LetterToBritain.com

UK Prime Minister Theresa May was invited to the White House on January 27 to be the first foreign leader to meet with the new American president, Donald Trump.

It’s always an honour to be the first invitee of the new president, and the timing couldn’t be better as the Western economic order is beginning to churn.

In the West, the past 70 years have been a relatively stable era with increasing wealth (although since the Reagan-era tax cuts, obscene inequality has become a destabilizing force) and social mobility has increased dramatically since the creation of the internet.

This combination could prove extraordinarily useful to motivate leaders to provide the kind of leadership required of the times — or 2017 could prove to be the pivotal moment in the unravelling of the Western democracies.

President Trump wasn’t elected U.S. president because American citizens were bored by the Democrats.

Americans voted Trump/Pence to overthrow the existing plutocracy in Washington, not to overthrow foreign governments.

Regardless how many Middle Eastern conflicts the West has prosecuted, the rich keep getting richer and the poor keep getting poorer. But this time the problems are here at home, not in some faraway country.

Americans voted for Barack Obama (2008 and 2012) and now Donald Trump (2016) in large part to stop the unfolding economic disaster in the West. Britons may have held similar ideas to American voters about a sustainable economic plan when they voted for Brexit.

Will Prime Minister of Britain Theresa May and President of the United States Donald Trump work together to solve the existential challenge of our time? Image displays the share of the world’s total wealth for the Top 1% vs. the Bottom 99%. Image courtesy of OXFAM
Will Prime Minister of Britain Theresa May and President of the United States Donald Trump work together to solve inequality, the existential challenge of our time? Image displays the share of the world’s total wealth for the Top 1% vs. the Bottom 99%. Image courtesy of OXFAM.

The chart below (from 2010) reveals the bottom 80 percent of Americans share just 7 percent of the nation’s wealth, but it’s much worse now (in 2017) and this phenomenon is no longer confined to the United States.

Theresa May must work with Donald Trump to roll back record inequality
Britain’s Theresa May must work with U.S. president Donald Trump to roll back record inequality that will eventually destroy the entire middle class. You can see the bottom 80% compete for only 7% of America’s total wealth. (This image is from 2010. It’s actually much worse now)

That trend will not change until politicians are bigger than the challenges that confront them, and actually do something about the record inequality sweeping the West.

It’s not a call to ‘do something, anything, anything at all’ — as some so-called ‘solutions’ might be worse than the problem.

But what citizens of the Western nations require is an acknowledgement by politicians of the sheer scale of the problem, and some initial steps to slow the rapid transfer of wealth away from the bottom three quintiles to the top 1 percent. (Even tiny baby-steps are preferable to the decades-long stony silence on the matter)

Theresa May and Donald Trump must ensure that globalization and free trade work for everyone.
Britain and the United States must ensure that globalization and free trade work for everyone. Image courtesy of the New York Times, You can’t feed a family with GDP by Neil Irwin.

Inequality ignored, will only result in citizens ‘giving up’ on their governments and ‘giving up’ on democracy — and we know how that will end. Badly. For everyone.

Including powerful politicians who serve for amazingly short stints of time in office. Once you’re in politics, four years pass by like a long summer!

Today’s toxic combination of ultra-low taxes on the rich and unrestricted globalization aren’t working for 3/5ths of the population. In 10 years, it won’t be working for 4/5ths of the population. And let’s remember, all of them are voters.

Here’s how that looks

In 2016, more than 50 percent of the world’s wealth was owned by the 1 percent.
By 2030, more than 70 percent of the world’s wealth will be owned by the 1 percent.
By 2045, more than 85 percent of the world’s wealth will be owned by the 1 percent.

Put another way; Do you really want to live in a world where 8 billion people are fighting over the then-remaining 30 percent of the world’s wealth?

Can you imagine what it’s going to look like in 2045 when 9 billion people are fighting over the then-remaining 15 percent of the world’s wealth?

At that time, you’d better be living on an island in the mid-Pacific that doesn’t appear on any map, in a castle with 100-metre high concrete walls.

I respectfully suggest to Prime Minister Theresa May and President Donald Trump that if inequality isn’t addressed this year, it’ll be too late. Just look for a remote island in the Pacific Ocean… now, before the rush begins.

The time involved in getting new legislation passed, combined with the lag time involved for it to take effect during the following fiscal cycle, is years after the day it is first discussed.

Can Theresa May and president Donald Trump cooperate to solve record inequality.

Let’s hope that January 27, 2017 will come to be known as, ‘The day the decline of the bottom-three quintiles was halted and reversed’ by these two great leaders.

Renewable Energy dena Start Up Energy Transition Award - Banner_Startup_Energy_700x116px

The Synergy of the Good Economy

Reposted from JohnBrianShannon.com

An economy that constantly grows and improves because it has enough virtuous circles (and cycles) is by design, a good economy.

It’s what every economy wants to be when it grows-up.

However, there are no generally accepted metrics to measure what constitutes a good economy — but a definition by Edmund S. Phelps in his recent Project Syndicate essay is a definition that one can appreciate.

It is worth noting that the UN Happiness Index could be a way to grade the successful march towards a ‘Good’ or ‘Virtuous’ economy, as nations that rank highly on the UN Index also tend to have high productivity, high per capita income, low unemployment, a high degree of personal rights and freedoms, low crime rates (and related to that stat) generally high levels of education, and in other ways their citizens live fulfilling lives in a stable environment.

It’s easy to ‘work it back’ from the end-user point-of-view.

Another way to grade the march toward a Good Economy would be the Social Progress Imperative’s SPI Index.

If nations are ranking highly on SPI heuristics, it’s obvious that everything needed to support those high grades are *already in place* and working. Ergo, a high-scoring SPI nation is one with a Good Economy.

Social Progress Index 2015
The Good Economy as demonstrated in the Social Progress Index 2015

Perhaps nations (and economists!) should put more emphasis on UN Happiness Index and SPI heuristics and less emphasis on GDP growth.

After all, You Can’t Feed a Family with GDP

The 1%’ers will always rate their country highly on the UN Happiness Index and on the SPI Index, as their incomes and security are guaranteed and their income growth meets or exceeds GDP growth. What matters in this case, is what 99% of the population thinks.

In developed countries, GDP growth has largely plateaued, and even in the United States of America the largest economy on the planet and the country with the strongest military, GDP growth is anemic at 2% annually.

There just isn’t room to grow the U.S. (and other) developed economies more than 2% per year under the existing paradigm.

“If you keep on doing what you’ve been doing, you’re going to keep on getting what you’ve been getting.” — Jackie B. Cooper

Einstein said something similar — “The definition of insanity is doing the same thing over and over again, but expecting different results.”

Therefore, to try to get more growth out of the U.S. economy by ‘doubling-down’ on everything that we’re already doing, does nothing except prove the truth of such quotes.

But what the U.S. hasn’t tried (enough) is to use heuristical analyses to plot a policy path towards high UN Happiness Index and high SPI scores. By doing so, I posit that the U.S. could unlock another 2% of GDP growth annually.

If that’s true for the U.S. economy, it works double for China’s economy.

Did anyone else notice the productivity increases in China during, and for a short time after, the Beijing Olympics?

Yes, a mini economic boom occurred as a result of hosting the Olympics — just as it does in any country that hosts the Olympics. But productivity isn’t known to spike upwards when a country hosts the Olympics.

I guess after not seeing the sky for decades due to a permanent and thick blanket of industrial smog, Beijing residents finally got to see the sky — due to some very foresighted Chinese air pollution abatement policies that were implemented for the duration of the Olympics.

“Look everyone, The Sky!”

The Good Economy gave much-needed respite to Beijing residents during the 2008 Olympics by lowering smog levels which improved their quality of life, consequently and unexpectedly, worker productivity improved. Image by scmp
The Good Economy gave much-needed respite to Beijing residents during the 2008 Olympics by lowering smog levels which improved their quality of life, consequently and unexpectedly, worker productivity improved.

Constant smog is a normal state of affairs for residents of China’s major cities, except during the 2008 Olympics when special air quality policies went into effect (in Beijing only) unfortunately.

An improved quality of life picture for Beijing residents worked to improve overall productivity, improving the bottom line for Chinese companies.

Certain other perks were added, including never-before-seen-in-China freedoms to travel and to miss time from work in order to travel to the Olympics.

That’s what I call a virtuous circle!

Imagine if that could be made permanent. It’s an example of how improved lives for workers can positively affect productivity and the bottom line.

By employing end-user heuristical data, developing nations could double their GDP growth annually.

For the rest of us; Now that the standard economic tools to increase growth have largely ‘topped-out’ in developed nations, it’s now time to look at improving the lives of citizens by using heuristical analyses — to increase the happiness of citizens, which will increase productivity, improving the bottom line, leading to higher GDP growth.

The proof that this works well is easily found by investigating the Norwegian, Danish, Swiss, Swedish, Liechtenstein, and UAE economies.

Ultimately, the question is a regional one; How can we improve the lives of workers and their families so that productivity can be enhanced, and thereby improve annual GDP growth?

Some nations have asked, and the results have been astonishing.

Soon, people will be saying things like; “The synergy of the Good Economy is that the pursuit of happiness by individuals is directly related to the pursuit of worker productivity by corporations, which is directly related to the bottom line and GDP growth.”

And when those words are commonly spoken by both the masses and the elites, for the first time in history, our civilization will be firing on all cylinders — courtesy of the Good Economy.

by John Brian Shannon

China Opens A Window of Opportunity 2014-2020

by John Brian Shannon.

Three Decades of GDP Growth

After three full decades of impressive GDP numbers, China’s strong growth looks set to continue until the end of the decade.

Never in history has any country accomplished such staggering GDP growth numbers, modernized its infrastructure, oriented its political structures to accept a minimal degree of capitalism, and carry the demands of 1.35 billion people.

Let’s take a look at China’s 1979-2013 GDP numbers.

China GDP growth 1979-2013. Image courtesy of the IMF.

China is now enjoying stable growth rates. In short, as China’s economy has matured, it has successfully transitioned from a Frontier economy to an Emerging economy — and with plenty of momentum in hand, has settled-in to the long-term task of building a Developed economy.

For those willing to engage with China there is the potential for substantial reward, and as in any emerging economy, an element of risk is associated with investing there. In the case of investment or corporate relocation to China, responsible leaders and individual investors alike, are wise to seek the guidance from experienced professionals as they navigate several cultures and languages and the various levels and departments of a (still) communist government.

Focus on Planning

Fortunately, statist economies like China’s are centrally-planned in five year cycles, and for the most part these five year plans are released, translated, and then published by the media.

For one example of China’s long-range planning, in this case regarding China’s aggressive energy, renewable energy and conservation policies, please see: CHINA – Atmospheric Pollution Prevention Action Plan – State Council on the issuance of air pollution control action plan notification – Guo Fa 2013, No.37 [English Translation]

For a summary of that official document, please see: China’s new Atmospheric Pollution Prevention Action Plan

Addressing the Source

One of China’s most pressing problems is the quality of life for her citizens, the absence of which can affect overall citizen satisfaction and even worker productivity.

The poor air quality in China, which reportedly leads to 410,000 premature worker deaths per year, has been addressed with a huge push towards renewable energy. The Common Language Project (clpmag.org) provides a telling snapshot:

“China faces a number of serious environmental issues caused by overpopulation and rapid industrial growth.

Water pollution and a resulting shortage of drinking water is one such issue, as is air pollution caused by an over-reliance on coal as fuel.

It has been estimated that 410,000 Chinese die as a result of pollution each year.

Deforestation and desertification are also issues and an estimated one-fifth of agricultural land since 1949 has been lost to soil erosion and economic development. The country is also host to the trade of endangered species. The country’s rivers constitute the largest potential source of hydropower in the world.

Since 2007, China has stepped up government efforts to work toward environmental sustainability by holding local officials to national standards, publishing national climate change policies and establishing groups on climate change.” — clpmag.org

Measurable Results

To say China’s leadership has posted an aggressive response to air pollution, water pollution, soil contamination and the follow-on effects on citizen health and the economic costs of widespread pollution is a verifiable understatement.

In only a few years, China has surpassed wind and solar PV leaders Germany and the U.S. in the production and installation of wind turbines and solar panels and increased energy efficiency.

Announced in July of 2013, China’s National Energy Administration told the media that they expected to install 10 GW of solar by year end of 2013, another 10 GW of solar to be installed in year 2014, and yet another 10 GW of solar to be installed in year 2015.

While many nations were installing mere MegaWatts (MW) of solar or wind power in an effort to ‘look green’ — China’s energy officials said that although they had planned to install 10 GW of solar power in 2013, China may have surpassed that target by a full 4 GigaWatts for a grand total of 14 GW of solar installed in year 2013!

It was later announced that 12 GW would be installed in year 2014, and it has been reset once more to 14 GW of solar PV power to be installed in year 2014.

The latest pollution reduction measures announced in China now point to increased spending on energy efficiency and a commitment to the installation of 14 GW of solar panels in 2013 (already done), another 14 GW in year 2014 (in progress) and yet another 14 GW for 2015.

Now that’s an active pollution management file.

Energy news is never boring in China — so stay tuned!