homepage 3 11 2022

Despite the rapid proliferation of artificial-intelligence chatbots and virtual assistants, finding an answer to a question that a company’s software is not programmed to address can be frustrating. Searching through countless options on price-comparison websites for the best insurance policy or airline ticket can be equally exhausting. Yet, we tend to view this “time tax” as the cost of doing business in today’s digitised global economy.To be sure, we already spend much of our time online for both work and leisure. Internet users in the US spend roughly eight hours per day online on activities like video meetings, shopping, or watching shows and movies on streaming services. But digital technologies also consume our waking hours in subtler ways, allowing companies to offload onto users tasks that their employees previously performed.Consider, for example, the automated checkouts that allow us to scan and bag our groceries. This reduces the need to hire cashiers, enabling supermarket chains to save on wage costs, boost revenues, and enhance productivity. It might even save consumers some time by shortening queues. Still, this represents a shift from paid labour to unpaid work by customers.Or consider filing a tax return. Many Americans today use software like TurboTax to file their annual taxes. While this might save consumers time and money, enabling them to avoid paying for an accountant or tax expert, it also represents a shift away from paid professionals to self-service.These trends may provide an early indication of the potential labour-market disruption caused by large language models and machine learning. A 2023 study suggests that nearly 20% of US workers, particularly high-income earners, are vulnerable to automation. But a comprehensive assessment of the AI revolution’s costs and benefits must also account for its impact on what economists call the “household account”: our personal (unpaid) time and valuable but non-monetised domestic work.Moreover, while AI may help companies reduce costs and boost profit margins, these gains are not necessarily shared with consumers. For example, are stores using automated checkouts charging lower prices or providing better service than their less automated counterparts?In fact, there seems to be little evidence that these technologies have actually benefited consumers. While the digital economy has provided us with valuable free services, it has also enabled companies to extract money from users by obscuring prices and quality through overly complicated designs, “dark patterns” – interfaces meant to manipulate users into making poor decisions – and potentially collusive algorithmic pricing models.But the real question is why digital innovation has not led to meaningful improvements in domestic productivity. The washing machine, as the late physician and statistician Hans Rosling famously argued, was one of humanity’s greatest innovations because it saved caregivers – the vast majority of them women – a huge amount of time and effort. So far, the digital revolution has not produced a similar time-saving breakthrough.One possible explanation is that it is difficult to quantify the care economy. While it is well established that demand for care workers is growing across OECD countries, economic statistics do not capture the amount of time devoted to care work. The US Bureau of Economic Analysis and the United Kingdom’s Office for National Statistics publish household production figures occasionally, but policymakers and the media rarely pay attention to these data.Fortunately, researchers are working to bridge this gap. University of Kansas economist Misty Lee Heggeness, for example, is currently developing a “dashboard” of indicators on care work in the US. Similarly, the London-based Economic Statistics Centre of Excellence is exploring ways to analyse time-use data to measure household activity.As MIT economist Erik Brynjolfsson has argued, a new “GDP-B” metric is required to capture the benefits of free digital services such as online search and email. Similarly, we need a measure – let’s call it “GDP-H” – that accounts for activity in the unpaid economy. The goal of such a metric would be to provide an accurate picture of economic activity. At present, we overlook much of the value that technology creates or destroys simply because it is not monetised.While measuring the frictions created by today’s digital technologies remains challenging, they take up an increasingly large portion of our daily lives. With AI-powered automation looming on the horizon, it is crucial to ensure that technological advances simplify life rather than complicate it and that the benefits are accessible to all.To achieve this, the AI industry must generate more value than it destroys. While major new technologies are always disruptive, their social acceptance hinges on their ability to improve people’s lives in meaningful ways. – Project SyndicateDiane Coyle, Professor of Public Policy at the University of Cambridge, is the author of Cogs and Monsters: What Economics Is, and What It Should Be (Princeton University Press, 2021) and the forthcoming The Measure of Progress: Counting What Really Matters (Princeton University Press, Spring 2025).

Germany is extremely concerned about rising violence on Israel’s border with Lebanon and the growing risk of a full-blown regional conflict, Foreign Minister Annalena Baerbock said on a visit to the region yesterday.Speaking at a security conference, Baerbock also warned Israel, that it could “lose itself” in the war against Hamas and that rising anger at the plight of civilians in Gaza undermined Israel’s security.Fears are growing that a war that has already killed tens of thousands in Gaza could spill into neighbouring countries.Prime Minister Benjamin Netanyahu signalled on Sunday that Israel could move more troops to the north, where fighting against the Hezbollah militia has escalated on the border with Lebanon. Hezbollah began trading fire with Israel on October 8, a day after its Palestinian ally Hamas, which administers Gaza, stormed southern Israel. Tens of thousands have fled both sides of the border.“We are extremely concerned about the increase in violence at the northern border. I will pay a visit to Beirut tomorrow again exactly for this reason,” Baerbock said, according to prepared remarks.“Together with our partners, we are working hard on finding solutions that can prevent more suffering. The risk of an unintended escalation and of all-out war is growing by the day.” As in other Western countries, the war in Gaza has stirred popular opposition as the Palestinian death toll - now over 37,600 - has mounted, and Chancellor Olaf Scholz’s government has sharpened its rhetoric about Israel’s conduct.Baerbock highlighted the humanitarian situation in Gaza, saying at least 17,000 children there were orphaned or separated from their parents. She flagged reports of human rights violations including the torture of detainees, and extremist settlers driving Palestinians from their homes in the West Bank. Images from Gaza have sparked disbelief, sadness and anger, she warned.Israel’s campaign in Gaza was triggered when Hamas-led fighters stormed southern Israel in the first week of October.The Israeli military has said it is investigating allegations of mistreatment of detainees. A number of countries, including the United States, have imposed sanctions on violent Jewish settlers in the occupied West Bank and urged Israel to do more to stop the violence.

Ivory Coast’s cocoa regulator plans to implement a reform of the domestic cocoa marketing system that will, within a year, eliminate middlemen to prevent risk and overpayment, an official and sources told Reuters.The reform will target intermediaries who act as scouts and buyers, sourcing cocoa beans from farms in the hinterland and reselling to exporters.According to the Coffee and Cocoa Council (CCC) regulator, independent intermediary buyers represent around 80% of the volumes purchased from farms and delivered in the ports of Abidjan and San Pedro, while cooperatives account for around 20% of volumes in the world’s top cocoa producing nation.The reform will rely on Ivory Coast’s new cocoa traceability and certification system that is being deployed by the CCC, and will be operational by October at the start of the 2024/25 cocoa season. The system will digitise payment for all cocoa bean sales or purchase transactions from the farmer to the exporter.“The intermediaries who collect the product to resell to other intermediaries will disappear because they will not benefit from this system,” Arsene Dadie, director of domestic marketing at the CCC, who is leading the reform, told Reuters. Dadie said the new system based on the farmers identification cards, which also serve as payment cards, will essentially rely on cocoa cooperatives that will be the only intermediaries between exporters and farmers.The CCC has identified 1.05mn cocoa farmers, and issued around 900,000 cards of which around 800,000 have been distributed. The regulator has said that 580 out of nearly 2,000 cooperatives are participating in a test deployment of the new sales system, as well as 22 exporters out of 100.“At the same time as we distribute the cards, we are gradually rolling out the traceability system among the cooperatives,” Dadie said, adding that the system will ensure that farmers are paid directly without any intermediary from next cocoa season.The CCC also aims to exclude intermediary scouts and buyers by reducing the number of permits issued to them, and introduce more restrictions which will eliminate those who fail to comply.“We have already identified all those who are responsible for the current overpayments, they will be excluded from the permits. We’ll also introduce severe measures including limiting the number of permits to better control them,” a source at the CCC with knowledge of the planned reform said, requesting anonymity to speak candidly.According to the CCC, around 40,000 metric tonnes of beans are being hoarded in farm warehouses by independent intermediary buyers who are delaying deliveries to ports, demanding up to 1,800 CFA franc ($2.96) per kilo for deliveries compared with the official farmgate price of 1,500 CFA franc.This has slowed down supply to exporters, forcing the CCC to suspend cocoa bean exports to enable local cocoa grinders to buy the necessary volumes for the factories.“Today, middlemen buyers and scouts control 80% of purchases in the farms but with the new marketing system that is coming, the cooperatives will take power. We clearly want to exclude the buyers,” the source at the CCC said.

Globally, democracies appear fragile and on the defensive. Comparisons with the 1970s and the interwar period abound. In the United States, Donald Trump’s strong showing in recent polls has triggered another wave of fear about authoritarian nationalism. To many of those who closely followed the 2016 and 2020 US presidential elections, his lead in the key swing states is downright alarming.The worst strategy for democrats around the world, and for the Democrats in the US, would be to imitate their opponents. That is a game they cannot win. Yet that is precisely what many are doing. Consider US President Joe Biden’s new package of China tariffs, which is a more radical reversal of traditional US trade policy than anything Trump himself embraced during his presidency.While headlines have emphasised the 100% tariff on Chinese electric vehicles (EVs), the real story concerns batteries, steel, aluminium, and semiconductors. Though the public doesn’t buy these goods directly, they are inputs in many US-made products and appliances. Presumably, the Biden administration is hoping that Americans will feel hardly any economic effect, and will only see it getting tough with China.We know what the tariffs won’t do. They won’t create (or “bring back”) many jobs in the US, because if America were to manufacture EVs or solar panels on a large scale, it would rely almost entirely on automated factories. Nor will the tariffs improve relations with US allies, such as by encouraging “friend-shoring.” Instead, European producers are likely to lose markets for engineering products sold to China, as Chinese domestic industrial production ramps up.The tariffs also won’t accelerate decarbonisation. On the contrary, by making essential green technologies more expensive (thus delaying their mass uptake), Biden will make the world warmer. Moreover, as a recent European Bank for Reconstruction and Development report shows, it remains the case that the minerals and rare earths (gallium, germanium) needed for the expensive parts of battery technology are mostly sourced from China.Lastly, the tariffs will not improve China’s human-rights record. They will merely encourage those who already believe that American rhetoric on human rights is pure hypocrisy and can safely be ignored.But the tariffs will have an impact: they will help Biden lose the election. No matter how high the current administration sets them, Trump will always be able to claim that he would set them even higher. Biden will continue to look like he is merely responding to Trump’s challenge – and in a half-hearted, geriatric way.Moreover, the tariffs have validated the argument by Chinese President Xi Jinping and Russian President Vladimir Putin that the old international order is broken because America plays fast and loose with the rules. And most importantly (in the context of an election), the tariffs will aggravate the problem of increased costs for ordinary Americans. The Trump campaign has already made inflation one of its major issues. At his rallies, Trump claims (mendaciously, to be sure) that he can no longer have bacon on his sandwiches, because it costs too much.The inflation debate is widely misunderstood. Like all Western governments, the Biden administration can point out that inflation has fallen rapidly and is within range of the old 2% target. But that doesn’t matter to ordinary people. They see that costs have risen dramatically since the Covid-19 pandemic, ending a long period of price stability.While cumulative inflation might be around 20% since 2020, the perception is even worse, because consumers and the media tend to focus on just a few extra-inflationary items, like Trump’s bacon. Housing and food have become much more expensive. A gallon of milk that cost $3.25 at the beginning of 2020 cost more than $4 by 2022; a dozen eggs went from $1.45 at the beginning of the pandemic to $4.82 in January 2023, before falling to $2.86. At the same time, voters don’t think about clothing and other items whose prices have remained relatively stable – or even declined, as in the case of EVs. But they probably will notice an increase in prices for a wide range of consumer products as a result of the new tariffs.Here, the 1970s offer some lessons. Back then, the US tried to exclude Japanese cars and other manufactured goods that were cheaper and more efficient. The result was only momentarily beneficial for US producers. In the medium term, they lost markets and credibility; and in the long run, they had to adapt belatedly to new techniques. Protectionism cost US carmakers valuable time in making changes, and ultimately destroyed rather than created jobs. It also alienated consumers who were worried about inflation, ultimately contributing to President Jimmy Carter’s defeat in the 1980 election.In 2023, the Biden administration took great pains to explain that it wasn’t decoupling from China, only “de-risking.” But now, in a fit of panic, it has adopted an aggressive policy of conscious decoupling.A government will not suddenly inspire voters because it decided to “decouple,” nor will it make any meaningful progress combating climate change by shifting the costs to others. In 1944, US secretary of the treasury Henry Morgenthau observed that “prosperity, like peace, is indivisible. We cannot afford to have it scattered here or there among the fortunate or to enjoy it at the expense of others.”That message was correct then, and it is correct now. Political leaders inspire confidence when they can show that their policies are benefiting ordinary people, lowering prices, and making better products available. That is what effective government would look like, and many democracies currently are not delivering the goods. — Project SyndicateHarold James, Professor of History and International Affairs at Princeton University, is the author, most recently, of Seven Crashes: The Economic Crises That Shaped Globalization.