- Is Uber a Threat to Democracy?
JUL 23, 2015
AIX-EN-PROVENCE – Every July, economists, business leaders, NGOs, and politicians from around the world gather in Aix-en-Provence, France, for the three-day Rencontres Économiques forum, organized by the Cercle des Économistes. This year’s forum focused on the changing nature of work. The timing of the meeting, which coincided with a heated debate in France about the innovative ride-sharing service Uber, could not have been more apt.
The forum’s theme was undoubtedly selected partly in response to fears that technological advances will lead to widespread unemployment, as machines become advanced enough to replace humans in performing an increasing number of tasks. As MIT’s Andrew McAfee pointed out, historically, technological revolutions have “eventually led to more, if different, jobs”; but, with machines becoming increasingly intelligent, “this time may be different.”
Given this possibility, McAfee suggests, we may need to re-build our societies so that, as intelligent machines increase productivity, the declining demand for human work has welfare-enhancing outcomes like higher (and more equitably distributed) incomes and more leisure time. He is not alone: John Maynard Keynes predicted this possibility 85 years ago.
Uber, which enables people to connect with available drivers through a smartphone app, is precisely the kind of disruptive company that is driving the shift. Taxi drivers in France and around the world are particularly incensed about UberPOP (called UberX outside Europe), a no-frills service. Uber has since withdrawn UberPOP from France, at least temporarily – though not before two of its top managers were arrested for ignoring the government’s injunction to suspend UberPOP.
But the kind of innovation that Uber exemplifies will not be stopped so easily. Uber’s software, in a sense, does the job of thousands of Walrasian auctioneers acting locally in space and time, leading to almost perfect price discrimination. Airlines have long employed such price discrimination, offering multiple prices for the same distance flown, depending on date and time. But Uber price setting is unique in its immediacy, which it has achieved by taking full advantage of modern communications technology.
In terms of work, Uber creates more jobs than it destroys. This leads to a clear increase in efficiency and provides overall income gains. Even if losers were fully compensated, the sum of the gains – shared by the firm, its mostly part-time workers, and its customers – would far outweigh the losses.
Nevertheless, there are real problems that must be addressed. For starters, there are the losers: traditional taxi drivers, who often have had to pay large license fees and thus cannot compete with Uber’s low prices. While this problem always arises when disruptive new technologies appear, innovation and adoption are occurring faster than ever. Taxi drivers are being asked to adjust in a matter of days, rather than years, leaving democratic systems little time to determine how much compensation they should receive, and how it should be distributed.
Another problem is regulation. Taxis produce not only income tax, but also value-added or sales taxes. But the UberPOP software, at least so far, has made it impossible to collect value-added tax. To level the playing field, local or national authorities should require the company to integrate tax-collection software into its app. The fact that UberPOP drivers, unlike taxi drivers, do not cover passenger insurance also amounts to unfair competition, and must be remedied.
The future of the Taliban
- Mullah Omar: the one-eyed man who was king
The Islamist group lose a leader and their unity
The Economist Jul 30th 2015
AS RECENTLY as July 15th Mullah Muhammad Omar, the one-eyed leader of the Taliban, reassured his followers that no religious prohibition barred negotiations with the hated American-backed government in Kabul, the Afghan capital. After all, he wrote in one of the missives he traditionally issued to mark Islamic holidays, the Prophet himself had conducted "face-to-face talks with warring infidel parties".
It was a message from beyond the grave. On July 29th the Afghan government confirmed claims by Pakistani intelligence officials that the mysterious leader had in fact died in Pakistan in April 2013. For two years the insurgency chose to keep this quiet. It put out twice-yearly messages in the name of the former village mullah who claimed to speak with the authority of "Amir ul Momineen", or commander of the faithful. In 2014 even Ayman al-Zawahiri, Osama bin Laden’s successor as leader of al-Qaeda, pledged allegiance (perhaps unwittingly) to a dead man.
Mullah Omar cemented his status as spiritual leader in 1996 by waving a holy relic—the cloak of the Prophet—from the roof of a mosque in Kandahar, the Taliban’s former stronghold in Afghanistan’s south. It was essential to his control over the revolutionary posse of hard-line seminarians that emerged from civil war to conquer almost the entire country. After its government in Kabul crumbled under American air power in 2001, he played a minimal role in running the insurgency it became. But his religious authority maintained the movement’s cohesion in a country riven by rival warlords.
Today the Taliban’s need for a unifying figurehead has never been greater. Despite the battlefield successes of the current summer fighting season, it is no closer to regaining power. And the rise of Islamic State (IS) has turned many Taliban heads. In July one of the best-known jihadist leaders of the 1980s, Gulbuddin Hekmatyar, announced he had ditched the Taliban in favour of the IS caliphate. Mullah Omar’s stature helped stem the tide of similar defections. In consequence, says a senior Afghan official plugged in to jihadi chatter, there had been a sharp increase in demands for proof he was still alive.
The Taliban are split over whether the time has come for peace talks. Pragmatic senior exiles fed up with living under the thumb of Pakistan’s spy agency have long argued for an end to the war. But they are resisted by hardliners, particularly among field commanders and fighters steeped for years in propaganda promising all-out victory. Divisions between the two factions seem to be widening.
The strains on the Taliban’s unity have been intensified by regional pressures. China, worried about domestic extremism, has demanded that the Islamist fires in Afghanistan and Pakistan be extinguished. Ashraf Ghani, the Afghan president, has jettisoned the animosity towards Pakistan that characterized Afghan foreign policy under his predecessor, Hamid Karzai. This has led Islamabad to put unprecedented pressure on the Taliban to engage in direct talks with the Afghan government, which took place on July 7th, in the Pakistani hill station of Murree. Reflecting the outrage of some within the movement, the talks prompted the publication on the Taliban website of a scathing critique, later deleted, that dismissed the negotiators as mid-level figures representing no one.
- Negotiations stall on biggest free trade deal ever, the Trans-Pacific Partnership
CNN August 1, 2015
Washington (CNN) President Barack Obama will have to wait longer to announce the biggest free trade deal in history.
Trans-Pacific Partnership negotiators wrapped up their most recent round of talks in Hawaii on Friday without reaching an agreement on what would be a 12-country pact that encompasses some 40% of the world's economy.
Together, they vowed to continue the talks -- but didn't set a date for their next round of negotiations, indicating the deal's future remains uncertain after two years of claims that its conclusion is near.
The White House had hoped that a measure Congress passed known as "trade promotion authority" would prompt other countries like Japan, Canada and Malaysia to improve their offers and seal the deal. The measure guarantees uncomplicated passage of the deal in the United States via an up-or-down vote without amendments.
But several sticking points remain.
Dairy, cars, currency
Canada is balking at opening its dairy market for more imports -- a key demand not just of the United States but also of New Zealand, where dairy giants like Fonterra are eager to expand the country's top export.
In Japan, the United States wants easier access for its agriculture and automotive companies, but Prime Minister Shinzo Abe faces a legislature strongly influenced by small rice farmers. Long-standing foreign auto trade barriers are difficult to tear down in that country.
And the United States' push for 12 years of patent protection on pharmaceutical drugs is tripping up poorer countries -- such as Malaysia and Vietnam -- that fret they'd face public health challenges without access to cheaper generics.
Critics in manufacturing states have said the deal should include a crackdown on countries that manipulate the value of their currencies to give their exports a price advantage in the United States. That, though, is a non-starter and would halt the deal's progress entirely, negotiators from several countries have said.
Democratic critics attack it
Unfinished, the Trans-Pacific Partnership is already a political flashpoint in the United States.
Obama is under the gun to get the deal done soon, if he wants it to be complete before he leaves office in January 2017. He needs to allow for months of congressional review, text scrubbing and language translations that are inevitable before a vote in Washington.
At the same time, he faces criticism from his own party's liberal base.
It's led by firebrand Massachusetts Sen. Elizabeth Warren, who has lambasted the deal's inclusion of what's known as an "investor-state dispute settlement mechanism." It would allow companies to challenge countries' laws and regulations to an international arbiter.
It has been used in other trade deals by companies like Phillip Morris International to challenge public health measures like cigarette plain packaging laws. The cigarette maker has alleged that its intellectual property -- its branding -- has been being unfairly devalued.
But the mechanism is also helpful, supporters argue, when property rights are assailed by countries involved in the deal.
Labor rules
Democratic Rep. Sandy Levin of Michigan, meanwhile, said it's "wise" that the deal wasn't concluded this week.
Labor rules with countries like Mexico, Vietnam and Malaysia still need to be better addressed, and the United States shouldn't curb access to medications, he said.
"We will also need to closely review the still-classified text to assess the extent to which there has been real and sufficient progress on issues such as the environment and investor-state dispute settlement," he said.
Hillary Clinton has echoed liberal criticisms of the deal. Republican presidential candidates, meanwhile, have largely advocated its conclusion.
Some Congressional Republicans said they're encouraged that the talks will continue.
"The negotiations have not yet reached an agreement that meets the high standards set in TPA (trade promotion authority)," House Ways and Means Chairman Paul Ryan, R-Wisconsin, said in a statement Friday night. But he supported continuing negotiations to get the best possible deal.
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