ESADEgeo Daily Digest, 15/12/2017

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The New York Times—Eduardo Porter & Karl Russell / It’s an unequal world. It doesn’t have to be.

  • The “World Inequality Report” was published yesterday by the creators of the World Wealth and Income Database, who include the economists Thomas Piketty and Emmanuel Saez.
  • According to the report, the bottom half of the world population is reaping its biggest share of the global pie since Ronald Reagan was elected president of the United States.
  • However, the respite is unlike to last, because growing inequality within almost every country will drive a further concentration of income around the globe.
  • Incomes have become very much concentrated in both China and India. However, China’s strategy based on low-skill manufacturing for export, and underpinned by aggressive investment in infrastructure, has proven more effective at raising living standards for the bottom half of the population than India’s more inward-looking strategy.
  • If economic catch-up by developing nations shrinks the income gap between rich and poor countries faster than inequality increases inside each country, the global disparity of income will narrow. But developing countries are not growing fast enough for that to happen. In addition, once the income of the average Chinese exceeds the world average, China’s fast growth will start adding to inequality, rather than mitigating it.

Foreign Policy—Colum Lynch & Robbie Gramer / Haley’s ‘smoking gun’ on Iran met with skepticism at U.N.

  • Nikki Haley, the US ambassador to the United Nations, claimed yesterday that the international body has obtained “undeniable” evidence that Iran supplied Yemeni insurgents with missiles and other arms.
  • But UN Secretary-General António Guterres reached no such conclusion in his report about the matter this month.
  • A UN panel of experts noted in a confidential report that a missile aimed at Riyadh contained a tail component that bore the logo of an Iranian company targeted by US and UN sanctions.
  • However, the panel, which reported that the missile also contained an American-made component, concluded it “has no evidence as to the identity of the broker or supplier.”
  • Iran immediately hit back at Haley, denying it has provided Yemen’s Houthi fighters with any weapons, and likening the American ambassador’s presentation to that of then-Secretary of State Colin Powell, before the 2003 invasion of Iraq.

The Economist/ What could happen to net neutrality

  • Yesterday, the Federal Communications Commission (FCC) voted 3-2 to rescind “net neutrality” regulations, imposed by the same body under Barack Obama in 2015, that were designed to ensure that internet-service providers do nothing to privilege some types of online content over others.
  • “Net neutrality” is the principle that all internet traffic is treated equally by the “pipe” companies carrying that traffic. Activists in favour of net-neutrality argue that if providers could discriminate between different types of traffic, they would have far too much power over the internet.
  • In the end the argument about net neutrality boils down to whether internet-service providers should be regulated before they have shown they might abuse their power, or only after they have actually done so. The current FCC has just opted for the latter.
  • Broadband companies have long argued that if they could charge more for some traffic, they would be able to offer the internet more cheaply to consumers who are less bandwidth-hungry. The hole in this argument is that most broadband providers in America enjoy regional monopolies and high pricing; they are not forced by competition to improve their infrastructure or pricing.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo.

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