G7 Summit Global Briefing Report 2019 by The Group of Nations

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THE ENVIRONMENT G7 FOCUSES ON PLASTIC POLLUTION

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G L O B A L B R I E F I N G R E P O RT CONTENTS

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CONTENTS

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Features

18 Education Policy Has the Ability to Address a Wide Range of Issues WISE Explains How Allyson Berri

The War on Democracy Fair Journalism Solutions

Social Media and the Concentration of Power Ulrik Brandes

Ana C.Rold

Cities, Networks and a New Cold War

ABAC: Three Priorities Full of Challenges and Opportunitie

Ian Klaus

Richard von Appen

24 A World Divided A Tale of Two Internets

Not Fake News Deepfake Technology is Moving at an Alarming Speed

Ana C. Rold

Allyson Berri

More Action Is Needed if the G7 Members Want to Tackle Plastic Pollution

Efforts in Biarritz Will Build on France’s Fight for Gender Equality Allyson Berri

Allyson Berri

Special Report

30 Mock G7 2016 Ise-Shima Summit and Role-Playing Leadership How Experiential Learning Empowers Generation Z

Bringing Inequalty Back on the Stage A collaboration between LSE and Sciences Po, along with other G7 universities, addressing the global challenge of growing inequalities within countries.

Chestley E. Talley and Kathy M. Graham

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Soft Skills will Make or Break Your Career Akustina Morni

Branded Stories

22 Tracit.org 34 The Coaching Educator 92 Taiwan Civil Government 98 DirectForce

If You Think Fighting Climate Change Will Be Expensive, Calculate the Cost of Letting It Happen

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Net Coop Takeshi Ito Professor of Osaka University Safety Net Linkage

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How Global Parental Leave Laws Perpetuate Inequality Allyson Berri

PUBLISHER/CEO & FOUNDER Chris Atkins EDITOR-IN-CHIEF Ana C. Rold editors@diplomaticourier.org CREATIVE DIRECTOR Christian Gilliham christian@cgcreate.co.uk (+44) 7951 722265 EDITOR (LSE) Erik Berglof

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COMMUNICATIONS OFFICER (LSE) Carolina Stern

SPECIAL THANKS

PROGRAMME DIRECTOR (LSE) Piroska Nagy-Mohacsi

Director of Communications

SciencesPO Jerome Guilbert Charlotte Landes

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Inc. EXECUTIVES Ray Baker, Phil Cook Anthony Leigh Jones, Delano Johnson & Tyrone Eastman

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Franz Waldenberger Michael Silva Eriya Unten Seiko Hashiba

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Philip Morris International Learning Economy RCCL Inc. Net Impact Jarvis Christian College

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Copyright 2019 the CAT Company. All rights reserved. The G7 Publication is a product of CAT Company. No part of this publication can be reproduced without written consent of the publisher Chris Atkins and the CAT Company. All trademarks that appear in this publication are the property of the respective owners. Any and all companies featured in this publication are contacted by CAT Company to provide advertising and/or services. Every effort has been made to ensure the accuracy of information in this publication, however, CAT Company makes no warranties, express or implied in regards to the information, and disclaim all liability for any loss, damages, errors, or omissions.

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PUBLISHER’S LETTER

Chris Atkins PUBLISHER, CEO & FOUNDER CAT COMPANY, INC.

Dear Readers, I am thrilled to welcome you to the 2019 G7 Summit publication. This edition is especially important for our company and global partners because it marks more than two decades since we produced the very first G7 Summit magazine. In 1997, our work earned us the trust of the host government and since then we have been honored to be the go-to publisher and consultant for host governments of the G7 and the G20 Summits for 22 years in a row. And for almost a quarter of a century our company’s own history and legacy are tied to these most important of global leadership gatherings. As we reflect on the past two decades and more, I wish to express my heartfelt thanks to France’s G7 Host Committee, and I commend you on making this Summit paperless. I also want to take this opportunity to thank the London School of Economics as well as Science Po for their editorial partnership. It’s been a true privilege to work with these two world-class academic institutions and their leadership, and to benefit from

the thought leadership of their faculty, students, and scholars. Since 1997 our company has grown and expanded exponentially. Our portfolio of publications, which also includes the leading editions for the APEC CEO Summit, G7 Leaders’ Summit, G20 Leaders’ Summit and B20 Summit respectively, have been recognized globally. Our company’s mission has been and continues to be to educate the global community on the most vital topics affecting our society and the agenda and leaders at the APEC, G7, G20 Leaders and G20 business summits. Through our award-winning publications, we have created an unprecedented opportunity for private sector leaders, IGO leaders, civil society, and other influencers to have a voice at these summits even when they don’t have a physical seat at the table. We look forward to the G7 Leaders’ Summit and to France’s presidency this year and we look forward to working with you all again in the years to come. Thank you for reading!

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BIG TECH WHY DATA IS NOT THE NEW OIL

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Women in Finance

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The New Gold Standard for Development

Embracing a Female Future

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G L O B A L B R I E F I N G R E P O RT EDITORIAL

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EDITOR’S LETTER

Ana C. Rold EDITOR-IN-CHIEF CAT COMPANY, INC.

Welcome to the 2019 edition of the G7 Summit global policy publication. We are thrilled to collaborate with the London School of Economics and the Global Policy Lab again as well as Science Po—two global leaders in academia and scholarly thought—to produce a publication focused on how leaders from the policy, diplomatic, business communities as well as civil society are offering solutions to some of the most intractable challenges facing the G7 members as well as our world at large. It has been exactly eight years since we were in France for then G8 Summit in Deauville. At the time, peace and security, internet and green growth, and food security were among the hot topics of the leaders’ agenda. This year’s agenda is ever more ambitious: France wants to use its powerful platform to tackle inequality. But can the G7, a tiny elite group of nations that represents almost half of the global GDP (46%) actually adequately—and genuinely—tackle inequality? The G7 was initially created in 1975 as a setting within which non-Communist nations could address the numerous economic concerns spurred by the Cold War. Historically, the G7 has been met with criticism for its failure to include emerging markets in its decision-making. But France’s decision to change the format of the G7 this year, to include African nations and key representatives of civil society, is certainly a bold step in the right direction.

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One could argue there are other platforms where inequality can be addressed with a bigger and more inclusive group—the UNGA through the Sustainable Development Goals and even the G20 Summit. Yet, even within these larger groups the impetus has been to bring in the support of the powerful players of the G7 who can also address the perennial issues of inequality—such as poverty, environmental degradation, and more. Will France’s presidency bring the historic solutions our world needs? It’s best not to look at just the family photo op moment on August 26, as that will not give us the full picture. Historically, the bulk of the work and negotiations happen between Sherpas and representatives year-round. The host is not simply there to throw a big party once a year, but to steer meaningful lasting initiatives all year long. And in that aspect France has already paved the way successfully. One need not look further than the convenings and resolutions France has steered when it comes to tackling gender inequality and plastics pollution—two issues we have covered in this edition. This work, of course, continues with a bigger group at other leadership forums where France is leading, such as the UNGA. We look forward to connecting the dots editorially from the G7 to the UNGA in September. Unitl then, we hope you enjoy reading the selection of articles for this edition and we always welcome your comments and feedback.

G L O B A L B R I E F I N G R E P O RT FA I R J O U R N A L I S M S O L U T I O N S C O V E R S T O RY

The world we will live in ten years from now will look very different if we don’t all take a stand right now. There is not a moment to waste. By Chris Purifoy

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GLOBAL POLICY LAB FA I R J O U R N A L I S M M A R K E T

News and information

have collided with an inflection point that has blurred the lines between truth and weaponization, this is the critical crisis of our age. It will determine our future elections and our global cultures, it will fuel our conversations and our outrages. The world we will live in ten years from now will look very different, authoritarian, if we don’t all take a stand right now. There is not a moment to waste. Instead of expounding on the existential issues at hand, which have already been covered in volume and with diligent intention by many others, this instead intends to be a humble open letter about solutions. And while I want to explore what happened, where we find ourselves, the perils and the digital bricks that built the beast, I will only say one brief point on the matter—our future hangs in the balance of solving our crisis with civic discourse and media thoughtfulness, the spires of which will climb to a Brave New World or Big Brother in time, if we, humans on this blue marble, do not stand together in the gap in agreement for a different way. →

Fair Journalism Solutions

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→ The Fair Journalism Market is a new economy of thoughtfulness, planted in the valleys between mountains and men and women, in our daily intentions and our diligent thinking.

I. Of Thoughtfulness If we are to solve this great dilemma, first we must weigh the merits of thoughtfulness. We are a society moving faster than any that’s come before it. Our young adults don’t recall a time before the cell phone, before the always on connected node in our pockets. For those of us that were alive before text messages and emails and Facebook, we have also been pulled into the breach. Information floods all of our senses, 24/7. When this train of information left the tracks 20 years ago with AOL, it felt as though the Internet was going to balance the scales of power and

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corruption, to free information from |the shadows and bring transparency to the world. And then social networks let every person on the planet add information to the web, trillions of pieces of content were just the beginning. Everything is indexed by Google, a fitting name for a company with so much information it can’t be counted. And now, the data deluge has been weaponized—Russian hackers and bots, the “Cambridge Analyticas” and entertainment media corporations. We will never be able to find truth in this information haystack without thoughtfulness. Critical thinking, processing, researching, debating, and considering—thoughtfulness has many lost features to reclaim. II. Of Journalism Journalism, like music and books and videos, has been digitalized into the

infinite flood of information, hiding truth like a diamond in a global haystack. Entertainment media rules the day because it rules the ratings. Journalism is funded and fueled by a market, an attention economy— click on headlines, consume ads, buy subscriptions (if they’re lucky), and survive (most don’t). Print is dead and digital is over saturated, so sensationalism pays the bills. Headlines have always been a way to sell papers. And in a dying business, there isn’t much room for integrity. When you’re competing in an attention economy, the market demands eyeballs. When the people want reality TV politics, when they eat up sensationalism, media groups have to feed them drama to keep the lights on. Facts don’t sell ads or papers. Cronkite wouldn’t get air time in the 24-hour news rating cycle either,

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When this train of information left the tracks 20 years ago with AOL, it felt as though the Internet was going to balance the scales of power and corruption, to free information from the shadows and bring transparency to the world.

the truth is never as enticing as the fiction. The reality TV networks would have canceled him a long time ago. And now many journalists find themselves caught in the middle of a great paradox. Media is the machine of propaganda, and we are either a part of the solution or we are a part of the virus. We are all realizing our role in this crisis. Civic discourse and truth have gone the way of alternative facts and opinions. If you take one thing from this whole letter hear this, without critical thinking and thoughtful civic discourse, twenty years from now no one will remember truth ever existed. Around 45% of people alive today don’t remember life before the Internet. Truth could become as foreign to our future generations as the cassette tape, a lost artifact of an older time. III. Of Economies An economy is a shared agreement. This is its most central and relevant definition. When people agree gold has value, a massive national economy can be created on top. When people come into a common agreement about value, remarkable things happen. Democracy. Human rights. Civilization. The Internet is an information economy—a way to share our content and information like a global nation, a way to trade directly between each other in a global marketplace. Blockchain does the same for value. Value technology will be just as prolific as information technology, and this new wave is only just beginning. The birth of value technology, in Bitcoin, saw almost $1 trillion in market value by the height of its first proof of concept in 2017. At the height of the first crypto bubble, without the help of institutions or centralized planning, one person at a time, from around the globe, organically came together to form a global market as large as a national GDP. $1T materialized a dollar at a time from the diaspora. How far has information technology evolved since AOL? Value technology is only on its first mile, a shiny new technology with endless promise but very little understanding. The attention market economy has one value, advertising. This leaves the

power to move markets totally in the hands of advertisers instead of readers and journalists. The two main stakeholders in the journalism market have no stake in it. This is a crisis of value. IV. Of Truth “Mirror in the sky, what is love?” Stevie Nicks, just like every one of us, sees into the mirror of the age her own reflection. We are all diverse trees in one forest of humanity, connected by the roots of our understanding, we are all just a reflection of a greater union. Communication was always the first value technology, language the first currency. With each breath we speak truth or fiction. Then our pens spoke for us, then the press, now the ones and zeros. Each new wave of communication comes at us quicker and leaves us with less time to be thoughtful, to consider. So who will be the arbiter of truth? The global media platforms? The blue chips? The media conglomerates? The government? Could we even regulate this? Any way you slice it the attention economy fails as it scales. Each of us must be our own arbiter of truth. We must take responsibility ourselves. We are all publishers online and news consumers. We all have unique conversations and ideas. It is up to each of us to take a stand in the gap for truth. It begins with our critical thinking. V. Of Critical Thinking Our age has more information and knowledge than any time in history combined, but we lack wisdom. We consume endless bits of information every second, but we don’t take time to consider any of it. We comment on our emotions. We share content on our emotions. We rant and rave and spread fake news on our emotions. Thoughtfulness has no place in social media news feeds or reality TV media journalism. Information technology functions with one core tenant, show you more of what you like. This common algorithm creates a machine of confirmation bias flooding you with more of what you engage—good, bad, or ugly. Over and over we consume topics that stir our emotions. We don’t take time to → BIARRITZ_FRANCE

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→ consider what we read. We barely read. We skim. We read headlines and repeat. We comment and like before we ever click the link. When is the last time you took time to read the same story from every source? The right and the left, the sensational and the objective? Chances are you haven’t. It’s not so easy. The media platforms show us only what we like, and Google only shows us ten random items, a tiny sample of an infinite info stream. And even if you did diligently read every article you could find about a story, analyzing it from every angle, still how can you know the facts? When’s the last time you took a moment to read every source document related to a story? To read the reports and find the facts, to find where the story began and how it evolved into bias? Chances are you haven’t, but don’t feel bad, this can barely be done. Getting to the bottom of any story would take all day, if ever, and you would have to have a very diligent and well strategized approach to research each headline. Our modern, always-on-demand lifestyle doesn’t allow for so much thoughtfulness.

The ingredients here in, are all letters in an alphabet, tenets of a shared agreement and common currency. Thoughtfulness and all its features play a role in this new future. A market is part economy and part agreement, part value and part quantification.

VI. Of Fair Journalism Journalism is a spear against corruption and a tool for propaganda. It can break chains just as much as it can make them. Journalism plays a critical role in the information age. It always will. It can make dictators or expose corruption, it can guide people to better understanding or deep into chaos and ignorance. It sits on a mountain of influence higher than most any other. Today, through social media, we are all journalists in the fray. We all have a role to play whether we write or read or share. We all deserve the truth, and most all of us want truth. We are not divisive on this issue. We are divided by ignorance, by no fault of our own, flooded with information and corporate agendas, drowned by a capitalist system that demands profit. Journalists and political leaders are to blame for sensationalism, and we are to blame for giving it our attention. We are each in a shared agreement for this attention economy. We give our attention to the animal of sensation and advertisers

pay the media for it. This demand for advertising value drives the whole ship. It wouldn’t be fair to tell the media they can’t make money. It wouldn’t be fair to tell the people they can’t enjoy a good drama. It wouldn’t be fair to tell the platforms they can’t sell ads. It wouldn’t be fair to force the journalists to report a certain way. It wouldn’t be fair to force the people to consume news a certain way. We need thoughtfulness innovation.

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VII. Of Thoughtfulness Innovation The thought of innovation for thoughtfulness is innovative to even think it. Shakespeare taught us words are powerful when they’re innovative, when they are intentional and diligently placed. Innovation in thoughtfulness will be a remarkable new wave to see. I can only predict pieces of this new value adventure. Critical thinking tools will pave the way to think better. To combat a flood of information, we need a breaker. A critical thinking toolbar could serve

up multiple perspectives for every headline, source links crowdsourced by experts and the diaspora, links to where the article began to take a pulse for bias, and drawers for debate that amplify sound civic discourse instead of sensationalism. Critical thinking analytics will show us how thoughtful we are being, how long we engaged with each article, how many perspectives we viewed, how many source links we explored, and how long we explored them, how much debate we engaged with and participated. Thoughtfulness analytics can evaluate how quickly we comment on any story, do we take time to read and learn, to think and consider before we post our opinion? Before we like or share? Thoughtfulness indexes can display like health scores, letting us know how low our threshold of thinking really is. If we only have a 10% thoughtfulness score, will that be a guidepost to think more? As we take the pulse of our circles of trust and realize many of them are not critically thinking before sharing, will we pay less attention to the media they broadcast into our feeds? Could a thoughtfulness health score be attached to the articles that are shared, so we can know how valid the source of our friend’s endorsement really is every time we engage with shared news? Thoughtfulness banks and tokens will innovate incentivizing critical thinking with equity and currency, and open modular models will allow any token to participate or innovate in the Fair Journalism sandbox. Each platform could innovate their own thoughtfulness token, earning transaction fees and incentivizing critical thinking on their network. Imagine the global advertising system connected to this new Fair Journalism Market, not disrupted and done away with, but shifted 90° and perpendicular into a new value standard that augments the attention market by providing it with new thoughtfulness data points to allow advertisers to join the Fair market in agreement. Imagine a world of responsible advertisers and platforms—committed to Fair Journalism and its tenants. Imagine innovation on the news stand— tools that award thoughtful

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right now. At the root of it, we all know this is good for our generation. This is the staying factor, a balancing inherent value that can stabilize a Fair Journalism Market into sustainability. A Thoughtfulness Economy. Successful economies match value with demand. This exchange creates an ecosystem of monetary value that can grow much larger than its currency market, that can appreciate like assets, intangible values in the software code, a market cap growing and multiplying many orders of magnitude more than the investment based on its shared value. Could this Fair Journalism Market be the killer use of Facebook’s Libra? And so, what of demand? The information attention economy demands eyeballs, while a Fair Journalism Market would demand thoughtfulness. If we could exchange thoughtfulness for attention, we would really have something. If we could transfer the journalism market’s value from attention to thoughtfulness, we could balance the scales and fix this crisis.

journalists with the most market attention over the largest buyer in silent advertising auctions. Imagine innovation on social media platforms that makes up for the marginal lost revenue of thoughtful advertising auctions with their own Fair Journalism token markets. Thoughtfulness innovation will pioneer value technology to the masses. Solving fake news and propaganda is the killer app for blockchain and machine learning. Innovation in quantifying thoughtfulness and providing critical thinking tools for our generation will be the infrastructures needed for a new balanced information and value economy for media and journalism, that provides us with everything we need to think critically everywhere we find the news. Fair Journalism plugins should be made for browsers, apps should be launched for social media, as well as integrated tools for media platforms and devices by the blue-chip tech

companies. Each of these stewards of the Fair Journalism Market should be incentivized by the protocols of the economy for bringing thoughtfulness innovation to the marketplace. VIII. Of A Fair Journalism Market The ingredients here in, are all letters in an alphabet, tenets of a shared agreement and common currency. Thoughtfulness and all its features play a role in this new future. A market is part economy and part agreement, part value and part quantification. It requires a decentralized community to join a common agreement about what they value, this drives the vision of the value machine and solves for market volatility. We all agree our world needs thoughtfulness. We already agree. This shared value is sitting latent like a gold mine unexplored. Bitcoin was a test. It is volatile because we don’t understand why we agree, but we have already agreed that we care about thoughtfulness. Even if we don’t know it yet, even if we aren’t being thoughtful

What if thoughtfulness was the new gold standard? A protocol to transfer those values, attention to thoughtfulness, is the start of it. A decentralized commonwealth advertising platform auctioning ads to responsible advertisers and journalists with high thoughtfulness indexes could set this market into motion. Critical thinking tools and thoughtfulness analytics will begin this, and the Fair Journalism Market will invite the people of the world to participate, to stand in the gap between the noisy information mountains and plant our agreements. One tree, thoughtful, in an orchard of trees, thoughtful. This document is just a seed. Challenge every assumption. Have discourse about it and innovate and pushback. It will take a brain trust of dedicated believers to bring the Fair Journalism Market to fruition. ◆ About the author CHRIS PURIFOY a storyteller living in Washington DC, is the Co-Founder and Chief Architect of Learning Economy and Senior Editor of the Diplomatic Courier magazine. BIARRITZ_FRANCE

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Education Policy Has the Ability to Address a Wide Range of Issues WISE Explains How By Allyson Berri

France

has picked a fight against inequality in its 2019 G7 Summit agenda. Increasing access to education is just one-way French President Emmanuel Macron imagines countries can improve equality of opportunity. And this year’s G7 host country isn’t the only voice proposing education as a solution to global challenges. The World Innovation Summit for Education (WISE), a global organization that is exploring innovative ways to reimagine the future of education is releasing a number of new research reports. Bringing together decision makers, teachers, and education experts from around the world, WISE sees education

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as a key tool for addressing global issues like poverty and inequality. Specifically, states around the world have already employed education as a tool for solving other national problems. For example, several countries have designed national education policies to attract the best students from across the globe in order to accommodate skills gaps and population decline. Additionally, the growing refugee crisis prompts countries to mold educational systems to meet a variety of language needs. In three 2019 reports, WISE explores the ways in which countries are making innovative education policy decisions to achieve their national goals.

Reimagining Language Policy The world’s growing number of displaced migrants combined with indigenous speakers of minoritized languages creates a need for countries to employ robust language policies to accommodate all students learning new languages at school. Current language policies in the classroom are inadequate as argued in a recent WISE report— research suggests that as many as 40% of students around the world may be studying in a language they do not fully understand. Language policy in schools should empower students to use new language tools building from language resources they already have available in the classroom and community. In Ottawa, Canada, for example, the Ministry of Education gives families an avenue to request school language support in the form of additional native language classes so long as the language has 23 or more student speakers. Global Competition for Talent “Unprecedented” is the word WISE uses to describe the scale and volume of migrants currently crossing borders with postsecondary degrees. Attracting international students has become a

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key goal of national-level policies in education. And though 50% of the world’s international students wind up in just five Anglophone host countries, other world powers are catching up. In countries within the East African Community, for example, a new initiative will encourage students to study at any of 100 universities across Kenya, Burundi, Tanzania, Rwanda, and Uganda through a program that allows students to transfer credits between institutions. Educating Elite Athletes Even physical education policy can be shaped to meet modern challenges. Globally, elite sport programs can be used to achieve a variety of nonsporting national objectives. WISE recently analyzed national elite sport programs to better understand corresponding state education programs. Russia, for example, strengthened its sports ministry in 2008. The result was the development of a peerless Russian physical education program that rewards physical activity in schools. This renewed educational commitment to physical education, in addition to several other policy changes in athletics, in contributing to a positive effect in Russia. Since 2000, increased investment in sport education and healthcare led to decreasing diagnoses in alcoholism and drug addiction between 2009-2011 for the first time since 1992. Education policy will definitely be a talking point at this summer’s G7 summit. However, around the world, states are already using education as tool to solve a wide variety of national problems. From an education system in Africa trying to attract interregional talent to a sports education that is working to improve health in Russia, education policy as the ability to solve many international issues. Only the future will reveal what world challenges education will meet next. ◆

About the author ALLYSON BERRI is a Washington-based Correspondent for Diplomatic Courier magazine.

The Education of Elite Athletes This research explores elite sport development systems and aspects of educational attainment and opportunities for elite athletes in n a variety of national sport development systems. The countries analyzed for this project are the United States, the United Kingdom, Russia, Senegal, and Qatar. These were selected by the researchers because of the heterogeneous social-political contexts, the diverse histories in relation to sport and education, and the expectation of a variety of approaches toward elite athlete development and education attainment. The objective of this research is to compare and contrast the examined systems to ascertain best practices and approaches for elite athletes to gain a viable education experience and career development for life after formal competitive sport. To learn more visit: https://www.wise-qatar.org/ research-reports/

Global Competition for Talent This research from our colleagues at the Institute of International Education (IIE) is a full portrait of the current state of global higher education for mobile students. The report focuses on the measures the key countries have taken to attract international students and the motivations that underpin these tactics and strategies. Drawing on IIE’s core collaborative research entitled Project Atlas, national policy documents, and broad literature on higher education mobility, the report taps a unique network of institutional expertise. To learn more visit: https://www.wise-qatar.org/ research-reports/

Language Policy in a Globalized Context With ever greater numbers of our fellow humans on the move across the globe, whether forced to flee conflict and poverty, or seeking better lives for their families, and for education, communities have new opportunities to embrace and learn from diversity, and to shape their societies. Surely migration poses core challenges for leaders and policy-makers and at all levels. How the education sector should address the linguistic diversity of populations that have grown increasingly multicultural has become a touchstone for controversy. In this report, Dudley Reynolds, our colleague at Carnegie Mellon University – Qatar, urges educators to raise awareness about how languages are actually used in societies. To learn more visit: https://www.wise-qatar.org/ research-reports/ BIARRITZ_FRANCE

G L O B A L B R I E F I N G R E P O RT ABAC F E AT U R E

ABAC: Three Priorities Full of Challenges and Opportunities By Richard von Appen, Chair of the APEC Business Advisory Council (ABAC)

In a modern

economy characterized by rapid change, an increasing degree of uncertainty as to the future of free trade and the labor market, and a number of opportunities associated with digitization, the need for international consensus building and understanding could not be more critical. It is crucial for every economy, large or small, to promote the benefits of free trade not only for economic reasons, but also to maintain permanent dialogue on common challenges and opportunities. The Asia Pacific Economic Cooperation forum (APEC) is one of the key institutions which enables this global collaboration to take place. APEC is composed of 21 economies that collectively represent 40% of the world’s population and 60% of the world’s total GDP. Its core purpose is to facilitate the ideal environment for market players in the Asia Pacific region to reach consensus on principles related to free trade. Every year a new economy acts as the APEC host, and a series of events are held where different actors engage in dialogue.

Richard von Appen, Chair of ABAC 2019

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ABAC is the private sector arm of APEC, and it acts as the voice of business in APEC. Each economy has six handpicked representatives sitting on ABAC, which makes it difficult to calculate time zones for conference calls, but also enriches the conversations we have and conclusions we draw. At the end of every APEC year, ABAC members formally meet with the Leaders and deliver a series of recommendations. These recommendations are at the core of ABAC’s work agenda throughout the year and represent the most significant opportunity for ABAC to deliver a strong message to the Leaders of 21 economies who wield enormous influence. After much robust debate and eventual consensus, ABAC has agreed on the key themes that form the basis of the letter containing its recommendations to the Leaders. These themes are at the top of the business agenda in the APEC region. WTO: do not take it for granted The current trade tensions between the two largest economies in the world and

their impacts on the global economy concern all ABAC members, regardless of which economy they represent. We fear the most under-served and vulnerable communities will be the ones most affected by further deterioration of global trade environment. The state of the World Trade Organization (WTO) is also a matter of great concern for us. The fundamental premise of the WTO system is to enforce rule and order in global trade so that economies can engage in the market on equal terms, and businesses and investors can be confident in the long term stability of the global market. It is urgent that we resolve the crisis in the WTO’s dispute settlement system specifically, the impasse involving the appointment of members of the Appellate Body. We also see a need to reform the rules to make sure that the WTO remains relevant and fit for purpose. These reforms should enable modern business models to flourish and ensure that women and MSMEs can access the opportunities and benefits of the global economy. ABAC reaffirms its support for the WTO and the global rules-based order of trade. Without the WTO, which provides invaluable dispute resolution services among its other roles, markets will become less resilient and less dynamic. Trust in the global market will plummet, and all progress we have made in driving a seamless, globalized trade system will be undermined.

APEC commissioned a report by the University of Southern California Marshall School of Business which crystalized these concerns about the ability of MSMEs to thrive in the modern economy.

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The bottom line is that we should not take the WTO for granted; in the current global environment it would be almost impossible to create a new organization with an equivalent mandate if the current one was to disappear. I believe this only highlights the need to continue with the critical work of deepening regional economic integration. A vital challenge of our age Climate change is a vital challenge of our age. This winter in Santiago, where I live, has been one of the warmest I can remember, which acts as a foreboding warning sign. Scientists recently pronounced July 2019 to be the hottest month that the world has seen since records began. The APEC region is facing rapidly rising tides, uninhabitable hot temperatures, fatal droughts, and dangerous storms. The business community can play a real role in helping to develop innovative ideas on climate change and supporting the transition to a sustainable, resilient and low-carbon economy not only for current, but more importantly for future generations. In our Letter of Recommendations to Leaders at the end of the year we will urge Leaders to support the transition to a sustainable and low carbon economy. There can be no argument that climate change is too expensive to address in the short term, because the long-term effects of climate change will be infinitely more devastating on the economy. Addressing climate change is also a matter of good business sense. Cop 25, the United Nations´ annual conference on climate change, will take place in Santiago only weeks after Chile´s APEC Week concludes. In the past, international platforms to discuss business and to discuss environmental issues have had little interaction with one another. I think we urgently need to start thinking together about how we can all work as a team to tackle the climate crisis. An enormous source of opportunities Many would argue that the economy we operate in today is almost entirely a digital economy. I believe that APEC’s big businesses understand how to

operate in the digital environment and how to take advantage of the opportunities that it brings, but many smaller market players are still excluded from these opportunities. At ABAC we support measures that encourage micro, small, and medium enterprises (MSMEs) to reach their full market potential in the digital economy. I admire every business owner running an MSME. It takes an incredible amount of work to get a business idea off the ground and then to persevere with it day in, day out. MSMEs owners are so preoccupied with this daily running of business that they often don’t have the time, or the ability to make long-term investments, required to upskill themselves and to digitize their businesses. The digital economy is flexible and fast-paced, and we need to support MSMEs to keep up. APEC commissioned a report by the University of Southern California Marshall School of Business which crystalized these concerns about the ability of MSMEs to thrive in the modern economy. While the report reiterated the importance of MSMEs in the APEC economy – indeed, it found that 97% of APEC businesses were MSMEs – it also found that leaders of MSMEs feel overwhelmingly disempowered to digitize their business models. At the same time, this report offered a beacon of hope. It found that digital MSMEs experience twice the growth rate of that of non-digital MSMEs, and that supporting MSMEs to digitize their businesses is one of the most effective ways to promote long term stability and growth of MSMEs. ABAC is dedicated to advocating for policy institutions which allow MSMEs to leverage the digital economy. Digitization is also an opportunity to boost gender equality in the economy. Women are chronically unrepresented in leadership positions in MSMEs and they have less access to the resources that can enable them to digitize their business models. The digital economy can be leveraged to boost the success of women in business. For MSMEs and entrepreneurs, and especially for women involved, digitization can be the gift that keeps on giving. I am proud that ABAC’s recommendations to Leaders this year represent a shift in

what is perceived as the traditional business agenda. At ABAC we are working for a more inclusive and sustainable world trade system. In 2019, a year when we face the erosion of the sanctity of the WTO, the vital challenge of climate change, and a swift-moving digital economy, businesses and Leaders alike need to be bold and to act. ◆

At APEC Business Advisory Council (ABAC), we are committed to encouraging the participation of MSMEs and entrepreneurs in the global economy. We believe that all market players should have access to importing and exporting, no matter how small. In November, we invite MSMEs and entrepreneurs from all over the APEC region to participate in our APEC MSMEs and Entrepreneurs Summit. The program features formidable networking opportunities, tailor-made workshops and panels, and VIP guests. At the Summit we will also launch Monde B2B Marketplace, a revolutionary digital platform that will give APEC enterprises unparalleled access to importing and exporting beyond national borders. With Monde B2B Marketplace, cross-border trade can be a reality for your enterprise. Participate in the 2019 APEC MSMEs and Entrepreneurs Summit (in person and via streaming) and sign up for the Monde B2B Marketplace. Overcome the challenges and take the opportunities!

www.smesummit2019.com www.mondeb2b.com BIARRITZ_FRANCE

G L O B A L B R I E F I N G R E P O RT TRACIT B R A N D E D S T O RY

TRACIT and UNCTAD Raise the Bar Against Illicit Trade

New Report Shows that Illicit Trade Impedes Progress on UN SDGs Government, private sector and NGOs rally behind initiative to stop Illicit Trade. By Louis Bonnier

Geneva, 18 July 2019 Today, the Transnational Alliance to Combat Illicit Trade (TRACIT) and the United Nations Conference on Trade and Development (UNCTAD) co-hosted a meeting on the negative impact of illicit trade on the UN Sustainable Development Goals (SDGs). The special UN dialogue exposed where and how progress on the SDGs is inhibited by illicit trade in some of the world’s most important economic sectors. “From smuggling, counterfeiting and tax evasion, to the illegal sale or possession of goods, services, humans and wildlife, illicit trade is compromising the attainment of all 17 of the UN SDGs,” stated TRACIT Director-General Jeffrey Hardy. “It is crowding out legitimate economic activity, depriving governments of revenues for investment in vital public services, dislocating millions of legitimate jobs and causing irreversible damage to ecosystems and human lives.” The intergovernmental meeting was designed to help governments understand the challenge of illicit trade and to consider policy measures that account for the negative impacts of illicit trade on the SDGs. During the meeting, TRACIT launched a report, Mapping the Impact on the Sustainable Development Goals of Illicit Trade, which maps the 17 UN SDGs against the following sectors: agri-foods, alcohol, fisheries, forestry, petroleum, pharmaceuticals, precious metals and gemstones, pesticides, tobacco, wildlife and all forms of counterfeiting and piracy. “The report shows that socioeconomic impacts of illicit trade G20G7.COM

present significant deterrence to SDGs,” said Mr. Hardy. “This is holding back progress, increasing costs and pushing achievement of the goals further away.” The meeting was attended by government officials representing countries from all regions of the world and featured a keynote presentation from Ambassador H.E. Silvia Elena Alfaro Espinosa, Permanent Representative of Peru to the UN Geneva. “International crimes across borders cannot be fought alone,” said Ambassador Alfaro. “The goals, the crimes and the solutions are interconnected so we need all countries to join efforts.” Ambassador H.E. Taonga Mushayavanhu, Permanent Representative of Zimbabwe also provided keynote remarks on the state of illicit trade in his country. “Illicit trade is a common problem in most developing countries,” he said. “UNCTAD and TRACIT must devise proper intervention measures to help countries develop action against illicit trade.” Speaking on behalf of the private sector, Ms. Monica Ramirez, Global Director, Regulatory & Public Policy, Anheuser- Busch InBev, explained how illicit trade constrains government tax collections, precludes employment opportunities and presents health and safety risks to consumers. “It’s important to help governments better understand the problem through more knowledge and raising awareness,” said Ms. Ramirez. “We are committed to be a progressive and effective partner with governments and society, and we have a responsibility to support SDGs in an effective way.” “Today’s discussion and this

The special UN dialogue exposed where and how progress on the SDGs is inhibited by illicit trade in some of the world’s most important economic sectors.

important report are just the beginning of our joint initiative to unite IGOs, NGOs and the private sector to fight illicit trade,” concluded Pamela Coke-Hamilton, Director, Division on International Trade and Commodities, UNCTAD. “Currently, no fewer than twenty intergovernmental organizations tackle this issue, largely on a sector or subject basis, and we must connect our initiatives to make a significant impact.” ◆ The report: Mapping the Impact on the Sustainable Development Goals of Illicit Trade may be found here: www.tracit.org/publications_illicittrade-and-the-unsdgs.html.

About TRACIT The Transnational Alliance to Combat Illicit Trade (TRACIT) is an independent, private sector initiative to drive change to mitigate the economic and social damages of illicit trade by strengthening government enforcement mechanisms and mobilizing businesses across industry sectors most impacted by illicit trade. Contact: CINDY BRADDON, Head of Communications and Public Policy, TRACIT Tel: +1 571-365-6885 cindy.braddon@TRACIT.org www.tracit.org Twitter: @TRACIT_org JEANELLE CLARKE, Office of the Director for International Trade and Commodities, UNCTAD, Tel: +41-22-917-4763 Jeanelle.clarke@unctad.org BIARRITZ_FRANCE

G L O B A L B R I E F I N G R E P O RT INTERNET F E AT U R E

A World Divided: A Tale of Two Internets The World Wide Web is a world divided. On one side there is a free and open net. On the other, isolated Internet systems are set up in nations that aim to control access and distribution of information. Ana C. Rold

With the creation

of the Internet in the 1990’s, the world as we know it was forever changed— and with it, a new era of global connectedness and shared human experience was ushered in. From the onset, the open nature of the Internet proved to be the catalyst needed to bring people closer together through social media and messaging platforms, while also allowing for the dissemination of news and information to occur in a free and uninhibited way that united humanity in times of both disaster and triumph. The Internet has been perceived up until now as one of the sole mechanisms

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through which so many traditional boundaries between nations, languages, cultures, and people have been erased. But the World Wide Web is a world divided. On one side there is a free and open net. On the other, isolated Internet systems are set up in nations that aim to control access and distribution of information. China is increasingly censoring outside content through “the Great Firewall.” Other nations such as India and Russia are increasing government censorship control and playing with the idea of completely isolated state-run Internet systems. The future of a global Internet has become uncertain—and with even Western countries struggling with reforms such as Net Neutrality and increases in proprietary Internet platforms, the free and open World Wide Web we take for granted may soon shatter into irreparable fragments. →

The Internet has been perceived up until now as one of the sole mechanisms through which so many traditional boundaries between nations, languages, cultures, and people have been erased.

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Clearly, the financial cost of censorship is no small matter, which raises the question: is complete isolation from the Internet even financially possible? → One of the most well-known nations leading the front is China, who for years has been increasing censorship of outside content in addition to removing and revising content posted by Chinese citizens. As Freedom of the Net’s worst abuser of the Internet for the fourth consecutive year in a row, new cyber security laws put into place in 2017 have increased censorship measures and created procedures that restrict the use of circumvention tools, such as VPNs, that many Chinese citizens use to bypass government filters. But China is hardly the only one. India has recently put forward a proposal that would allow Indian officials to demand search engines and social media websites such as Facebook, G20G7.COM

Google, and TikTok to remove posts they deem libelous, deceptive, or invasive of privacy. Perhaps more importantly, the proposal postulates that it would be the role of the internet companies to build automated screening tools to protect Indians from seeing content deemed unlawful, a request that’s logistically near impossible to fulfill for most companies. Similarly, a more drastic tactic that the Indian government has often employed in order to censor content in times of civil unrest is the slowdown or even complete shutdown of the Internet on a nationwide scale. In fact, Statista found that between January 2016 and May 2018, India shut down its Internet 154 times, the most out of any country

in the world—and even more concerning, a report by the Indian Council for Research on International Economic Relations found that between 2012 and 2017, 16,315 hours of intentional Internet downtime cost the Indian economy a whopping $3.04 billion. Clearly, the financial cost of censorship is no small matter, which raises the question: is complete isolation from the Internet even financially possible? Perhaps most worrisome of all is Russia, who plans to take Internet censorship one step further by completely cutting itself off from the World Wide Web. Indeed, a new law proposed in December would require the country’s Internet service providers to completely back the country’s independent Internet system Runet, as well as reroute all Internet traffic through Roskomnadzor, Russia’s media regulator, thereby effectively creating a self-sustaining Internet bubble. However, while a completely isolated state-run Internet may seem plausible in theory, the infrastructure that would need to be built and employed—Internet cables, satellite systems, and a number of other technologies the World Wide Web currently relies on to run—would require an astronomical amount of funding. And the likelihood that institutions that rely heavily on webbased systems—such as banking, aviation, and hospitals—could potentially experience disastrous systems failures would become much too risky. Ultimately, while countries such as China, India, and Russia may continue to play with the idea of closing themselves off from the global Internet, doing so will most likely result in cost and labor-intensive efforts that will likely not pay off in the end. The sheer prevalence and scale of the World Wide Web aided by advancing technologies such as 5G and blockchain, will make it increasingly difficult and costly for these nations to maintain the divide. ◆ About the author ANA C. ROLD is the Founder and Publisher of Diplomatic Courier. Rold teaches political science courses at Northeastern University and is the Host of The World in 2050–A Forum About Our Future. To engage with her on this article follow her on Twitter @ACRold.

G L O B A L B R I E F I N G R E P O RT PLASTIC POLLUTION F E AT U R E

More Action Is Needed if the G7 Members Want to Tackle Plastic Pollution By Allyson Berri

In 2018,

five of the G7 member countries signed the G7 Ocean Plastics Charter. Countries signing to the agreement pledged to work towards building better recycling infrastructure and innovating technology to tackle environmental challenges. The charter additionally asked countries to work towards making all plastics recyclable by 2030, to reduce the consumption of single-use plastics, and to encourage the use of recycled plastics. Signatures from the U.S. and Japan were notably absent from the charter, drawing worldwide scrutiny. Japan’s plastic consumption is currently the second highest in the world. In plastic bags alone, Japanese consumption is extremely high—the island nation uses 40 billion a year. And tucked into each of these 40 billion plastic bags are products likely to be surrounded in layers of plastic. Both Japanese G20G7.COM

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hygiene standards and pride in customer service dictate that consumer goods are obsessively wrapped in plastics. At some grocery stores, even potatoes and carrots are individually wrapped in the polluting petrochemical product. And despite the country’s claim that 86% of their plastics are being recycled, 58% of Japan’s plastic waste is incinerated to produce heat and electricity, while 14% is exported to poorer Asian countries, its ultimate destination undocumented. The Washington Post reports that only 14% of the country’s plastic waste truly ends up being recycled in Japan. The fallacies in Japan’s recycling claims, however, do not mean that the country isn’t trying to reduce its plastics problem. By 2030, the country has set a goal to reduce its production of single-use plastics by 25% . Japan also wants to begin charging customers for plastic bags, a charge that would go into effect in 2020. Several companies

in the country are already leading the way. The Japanese grocery chain Aeon notes that 1,700 of their grocery stores already charge extra for plastic bags, and their goal is to expand this initiative to 2,500 stores by February 2020. Further, Japanese 7-Eleven convenience stores intend to eliminate their plastic bag usage in the country by 2030. Whereas Japan has made efforts to reduce its plastics problem, however, the United States, the only other G7 country that failed to sign the 2018 Ocean Plastics Charter, has lacked the same initiative. As Quartz reports, the United States hasn’t set any national goals for plastics. Making matters worse, the actions the United States has taken in the area have likely exacerbated the country’s plastics problem. In 2017, the Trump administration reversed a ban that prohibited the sale of plastic bottles in American national parks. That same year, the United States left the 2015 Paris climate agreement.

G L O B A L B R I E F I N G R E P O RT PLASTIC POLLUTION

The fallacies in Japan’s recycling claims, however, do not mean that the country isn’t trying to reduce its plastics problem. By 2030, the country has set a goal to reduce its production of single-use plastics by 25%

The American issue with plastics, however, runs deeper than a lack of action. Recent American growth in the production of oil and natural gas has led to an increase in the production of natural gas liquids (NGLs) such as ethane. Ethane is the main component in plastic production, which has become a large American industry. On the global scale, the U.S. accounts for 1/3 of NGL production. And the industry is growing. Ethane investment has amounted to $202 billion since 2010, and domestic demand is growing as companies open more ethane-cracking facilities. Exxon Mobil hosts one of the world’s largest polyethylene facilities in Mont Belvieu, Texas, and Shell is currently building a massive plant in Appalachia as the ethane industry grows. As American plastics production ramps up, the U.S. must make tangible plans to control its growing stocks of plastic waste. Such legislative schemes,

however, seem unlikely if the Trump administration’s previous environmental actions can be any indicator of future initiatives. And in Japan, environmental experts argue that the country needs to make plans to reduce plastic usage if Japan wants to get a firm handle on its plastics problem. The nation’s efforts to reduce single-use plastic production and eliminate plastic bag use are only modest attempts to manage the country’s plastic problems. Clearly, Japan and the United States are the G7 countries with the biggest plastics problems, though their plight is shared by countries across the world. Reducing plastic pollution is a global concern, so much so that President Emmanuel Macron has made environmental concerns a key agenda item when France hosts the G7 Summit in Biarritz in August. However, in addition to prioritizing environmental issues, France plans to give several African countries a seat at

the table during August’s G7 summit to discuss economic inequality, health, and education. However, with the U.S. and Japan falling behind their fellow G7 countries in terms of tackling plastic pollution, perhaps the agenda should devote time to discussing environmental issues with the summit’s African partners. Across Africa, nations have banded together under a campaign known as Beat Plastic Pollution. Africa currently hosts 25 countries with nationwide plastic bag bans, making it the continent with the most countries banning plastic bags. Perhaps policy recommendations from the African countries mobilizing behind Beat Plastic Pollution could stimulate additional action from the G7 partners this summer. ◆

About the author ALLYSON BERRI is a Washington-based correspondent for Diplomatic Courier magazine. BIARRITZ_FRANCE

G L O B A L B R I E F I N G R E P O RT LEADERSHIP F E AT U R E

Mock G7 2016 Ise-Shima Summit and Role-Playing Leadership: How Experiential Learning Empowers Generation Z Relating complex global economic challenges to peoples’ everyday lives requires compelling narratives making an emotional connection about the impact on their lives and the importance of creating one’s own Agency. By Chestley E. Talley and Kathy M. Graham

What is Experiential Learning? Experiential Learning takes concepts about academic education out of classrooms into workspaces where knowledge, skills, and competencies are practiced, creating new solutions to tomorrow’s problems, or innovating today’s solutions from yesterday’s successes. Learning by doing starts with Aristotle1: “for the things we have to learn before we can do them, we learn by doing them.” John Dewey2, exponent of Educational Pragmatism, advocated, “Give the pupils something to do, not something to learn; and the doing is of such a nature as to demand thinking; learning naturally results.” Dewey’s Theory says human beings learn through a “handson approach”. Students interact with their environments infusing adaptability, flexibility, and creativity into decisionmaking. Andrew Meyers3, Global Head of Experiential Learning for the new Whittle School & Studios in Washington, D.C., describes experiential learning as “personal learning experiences [to] engage learners where they are and build motivation… [connecting] what is learned to what is felt…agency”. The “progressive” Whittle School combines interdisciplinary and experiential learning with personalized academic advising. Learning becomes relevant and meaningful because the community becomes a classroom more capable of linking local issues to global themes. When students work on projects, reflect on actions and outcomes, and seek feedback, multi-step challenges comprising the learning process build success skills: G20G7.COM

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collaboration, initiative, persistence, critical thinking, and problem-solving. Whittle School experiential activities include work-based and service learning along with “community-connected” simulations. What is Empowerment? Fetterman’s4 (1994) concept of an empowerment evaluation fosters self-determination, helping people learn how to help themselves. Empowerment is a change process to support people and communities improving their lives in the places where they live. This strategy has its roots in “community psychology”, a collaborative approach focusing on improvement enabling peoples to establish control over their own affairs, utilizing “training, facilitation, advocacy, illumination, and liberation”—learning how to create Agency. This is the same expected outcome for individuals engaging in experiential learning experiences. “Two years from now, more than a third (35%) of the desired core skills for most jobs will be those not yet considered crucial in the workplace. These are precisely the skills that Enactus students– our next generation of leaders – gain from Enactus’ experiential learning platform,” says Chris Mills, president, Enactus United States. “Enactus’ student impact studies reveal the Enactus Advantage, data-driven evidence that Enactus students outpace their peers as measured against credible, external benchmarks in key business skills, resilience and leadership. Experiential learning empowers students with new and strengthened skills that align with the top ten skills identified as necessary for work in 2020 and beyond, according to the World Economic Forum’s Future of Jobs Report.”

What is the connection between experiential learning and empowerment? David Kolb5, Professor of Organizational Behavior at Case Western Reserve University, is credited with launching the learning styles movement in the seventies. Kolb’s model shows how to understand individual learning styles, and an explanation of an experiential learning cycle for all learners. With the Kolb Experiential Learning Model6 students perform their own empowerment evaluation from conceptualization to implementation. 1. Learners enter the cycle at any of the four stages: Experience, Reflection/ Discussion, Conceptualization, and Application/Implementation. 2. Learning is most effective when the learner completes the full cycle. 3. The process and outcomes all depend on the learner’s [ascribing value, having a purpose, and setting a direction]: “meaning-making”. a. Without reflection experience does not teach. b. Without conceptualization reflection is just an exercise. c. Without experimentation concepts become knowledge without impact. What is Generation Z? Bruce Tulgan7, founder and CEO of RainmakerThinking, management research and training firm, introduces Generation Z (Gen Zers) in the workplace: • Workers were born between 1990 and 1999 [as late as 2000]. • Believe in self-expression and may not follow standard work rules or customs.

Friday Films & Photos

G L O B A L B R I E F I N G R E P O RT LEADERSHIP

Clockwise from left Bryson Scott: Prime Minister of Japan, Eric Clark: Prime Minister of Italy, Brayan Perez-Mendez: Prime Minister of the United Kingdom, Jordan Bradley: President of France, Corey Harris: Prime Minister of Canada, Pilar Makee Lule: Chancellor of Germany, Keilahn Garrett: President of the United States

Clockwise from left Joe Clark: Former Canadian Prime Minster; Mariclaire Urquidi: Former Mexican Deputy Minister of Foreign Affairs; Jennifer McCoy: Director of the Carter Center’s Americas Program; Elroy Johnson: SIFE President; Eduardo Stein: Former Vice President of the Republic of Guatemala

• Are less willing to measure themselves against accepted standards. In 2017, Sieva Kozinsky8, CEO at StudySoup social learning platform, says Gen Zers embrace social learning environments when they are hands-on and directly involved in the learning process. A study by Barnes and Noble College reported 51% of surveyed students said they learn best by doing, only 12% said they learn by listening: • Are career-focused earlier in their college careers. • Rebuff passive learning— sitting through a lecture and memorizing notes. • Thrive when given the opportunity of a fully immersive educational experience. Barnes and Noble College9 is partners with 736+ campus bookstores nationwide, serving 5+ million students. Their “Getting to Know Gen Z” Survey explored attitudes, preferences, and expectations about students’ educational and learning experience: • Prefer self-learning fueled by personal fulfillment and social impact. • Search for authentic and meaningful experiences. • Flourish in any learning environment

Eric Clark

where they can flex their aptitude for self-reliance and ability to self-educate [Agency]. • View learning as one continuous, multi-faceted, completely integrated experience—connecting social, academic, and professional interests. • Value collaboration. • Want to be empowered to make own decisions. What does Role-Playing Leadership mean? Role-Playing Leadership is a situational exercise with two or more participants characterizing pre-defined qualities, attributes, actions, or styles. Such interaction demonstrates competencies associated with a position, function, job, or responsibility. Role-playing promotes engagement that makes “thinking visible”10: encouraging open discussions and debates while supporting critical and creative thinking encompassing exploration, questioning, and reasoning. If it’s true we know a Leader when we see one, what are we seeing? In 2013, a Blog posting in Professional Development and Training highlighting Andrew J. DuBrin’s11 book of leadership research findings, practices, and skills, suggests: “the ingredients of true

leadership aren’t really a mystery… [consisting of] the qualities leaders possess, and …observed… commonalities”. Students embracing self-assessment “begin building the characteristics of a leader” based on general personality traits like selfconfidence, humility, trustworthiness, authenticity, enthusiasm, and a sense of humor. DuBrin (2013) lists five “task-related personality traits common to leaders”: passion, emotional intelligence, flexibility and adaptability, internal locus of control, and courage. Mock Summits and Role-Playing Leadership Relating complex global economic challenges like skyrocketing National Debt or Brexit ballot referendums to peoples’ everyday lives, requires compelling narratives making an emotional connection about the impact of global themes on local issues affecting individuals personally and grouped within communities. Glenn Best, Director, CareerWorks for the Newark Alliance (NJ) and Vice Chair, Jarvis Faculty-Employer Advisory Committee, affirms the importance of Experiential Learning:

“Experiential Learning affords students the opportunity to immediately apply knowledge to solve real world challenges in real time. This approach promotes teamwork and communication skills which are sorely needed in today’s 21st Century workplace. It also develops reflective practice habits where students are measuring their own performance and visualize their accomplishments, empowering the Generation Z population to be more fully engaged through active participation.” Replicating actual Nations economic summits by depicting recognized world leaders in settings where experimentation, learning from mistakes, and reflection are welcome, encourages adopting and internalizing transferrable aspects of leadership: personality traits, task-related competencies, styles, and shared demonstrations of leaders evolving individually and as a team.12 → BIARRITZ_FRANCE

G L O B A L B R I E F I N G R E P O RT LEADERSHIP

→ Mock G8 2010 Muskoka (Canada) Summit Before coming to Jarvis Christian College, (Hawkins, TX), our Saint Paul’s College (Lawrenceville, VA) Enactus Team (formerly Students In Free Enterprise, SIFE) conducted a Mock G8 2010 Muskoka (Canada) Summit responding to a community need for innovative ways to teach Virginia’s Standards of Learning for Economics and Personal Finance to high schoolers. Enactus is a global Experiential Learning platform. For the mock SPC G8 summit, students from George Mason University, Brunswick High School, Thomas Nelson Community College, Cross Land High School, South Side Virginia Community College, Hampton University, Saint Paul’s College, and foreign exchange students from China, Germany, Mexico, and Brazil attending Central High School, were the ‘nation leaders’. They discussed economic issues affecting global markets, such as the US recession, housing foreclosures, climate change, job loss, and the interplay between national rights and international responsibilities.

Mock G7 2016 Ise-Shima (Japan) Summit In 2019, for the sixth year, Jarvis students will participate in the Clinton Global Initiative University, CGI U. “CGI U works to empower the next generation of leaders in addressing a pressing global challenge or issue in their local campus or community,” said Alyssa Trometter, CGI U Deputy Director. “Each year, thousands of students from around the world come together and learn from each other and experts to develop and scale a Commitment to Action - a new, specific, and measurable social impact project, that creates change.” SPC’s success using a mock G8 summit to create an innovative way to teach economics to high schoolers was the inspiration for us to conduct a mock G7 to answer the challenge of G20G7.COM

the “Up to Us” National Competition, which “encourages students to create advocacy and awareness campaigns around civic issues like the national debt”, in collaboration with The Peter G. Peterson Foundation and CGI U’s partner organization, Net Impact13.

“Supported by Net Impact, the mission of the Up to Us Competition is to empower the next generation to use their voice to advocate for an economy they want to inherit; one that starts with conversation by bridging the partisan divide. Given our current fiscal outlook, it’s in every American’s interest to have the conversation about our long-term fiscal future. We hope to provide the next generation of leaders the skills and experiences they need to tackle the toughest global problems, including how to get our fiscal outlook back on track.” Hilary Allen, Senior Programs Associate Net Impact

Generation Z students, also known as the “The Sharing Generation”14, by embracing agency-making that motivates themselves and others— developing their own leadership qualities as a contributory outcome. The Jarvis CGI U Team recruited students from other Campus experiential learning programs to help represent the G7 Leaders: Millennium Fellows, Enactus, and National Association of Black Accountants. Experiential Learning Closes Soft Skills Gaps In 2014, after two-years collaborating with Bellevue University surveying 343 US executives familiar with their company’s workforce-development strategies, the Lumina Foundation and The Economist published a Corporate Learning Solutions White Paper entitled “Making the Business Case for Soft Skills”15.

“Soft skills need an integrated approach. Nothing works in isolation, and each needs careful design. The right sort of on-the-job learning and peer reflections on a shared experience is necessary.” Survey Respondent, Open Comments

The Jarvis CGI U Team conducted the Mock G7 2016 Ise-Shima (Japan) Summit to demonstrate the connections between the biggest economies in the world and the impact of national debt on everyday life by advancing the United Nations Sustainable Development Goal #8, Good Jobs and Economic Growth. Both the SPC Mock 2010 G8 and Jarvis Mock 2016 G7 are relatable in 2019 because we know unchecked exponential growth in a Nation’s budget deficits can trigger similar economic issues: recession, job loss, housing devaluations and foreclosures, trade imbalances, uncertainty and currency fluctuations in global markets. The after-effects spread through the economy touching aspects of ordinary lives in its wake—the cost of food, fuel, and clothing; availability, access, and quality of healthcare; cost and quality of education at all levels; and access to safety-net social services. Mock summits illustrate how this interactive hands-on exercise galvanizes

One finding: “The overwhelming consensus among employers is that too many graduates lack critical-thinking skills and the ability to communicate effectively, solve problems creatively, work collaboratively, and adapt to changing priorities.” 16 The structure of role-playing scenarios like mock summits contextually makes soft skills easier for Generation Z students to learn-bydoing. Success skills like interpersonal communication, teamwork, professionalism, public speaking, collaboration, and critical thinking are practiced when participants come together to analyze global and national economic data, compose scripts for each G7 Leader, perform the roles of recognized World Leaders, and create visual representations of issues, strategies, or policy directives. This interactive face-to-face multi-step process appeals to

G L O B A L B R I E F I N G R E P O RT LEADERSHIP

Gen Zers’ preferences for challenging projects, integrating social impact with academic self-education and meaningful experiences to build self-reliance. Tangible Outcomes Empower Generation Z Because of effective experiential learning initiatives, we are attracting Fortune 500 companies with empowering opportunities for Jarvis students, including: • Internships & Employment: Microsoft Corporation, Oncor Electric, PricewaterhouseCoopers, Grant Thornton, Johnson & Johnson. • Externships: Target Corporation, H-E-B Grocery Company, Fidelity Investments. • Leadership Programs: Goldman Sachs, Hallmark, Inc., RSM International, BNY Mellon. The synergy of experiential learning and student empowerment also was witnessed by Saint Paul’s College student Elroy Johnson, who participated in The State of Democracy in the Americas distinguished panel discussion at the Jimmy Carter Presidential Center after staging the Mock G8. So, what now? The answer is more experiential learning: internships, externships, career exploration field trips, career readiness workshops, and untold “new” opportunities! ◆

2017 ENACTUS USA NATIONAL EXPO JARVIS CHRISTIAN COLLEGE ENACTUS TEAM ― 1ST PLACE NATIONAL WINNER ROBERT WOOD JOHNSON FOUNDATION ‘STUDENTS FOR HEALTH’ COMPETITION

EXPERIENTIAL LEARNING J ARVIS C HRISTIAN C OLLEGE H AWKINS , T EXAS U.S.A. WWW . JARVIS . EDU

2018 CLINTON GLOBAL INITIATIVE UNIVERSITY ANNUAL MEETING

EXPERIENTIAL LEARNING COLLABORATION: MARY-PAT STEIN (CAL STATE) AND CHES TALLEY (JARVIS) WITH PRESIDENT CLINTON

JARVIS’ HALLMARK BRAND ADVOCATES: KEILAHN GARRETT AND COREY HARRIS DAVID E. HALL, PRESIDENT OF HALLMARK CARDS, INC.

r. Chestley E. Talley, Cell: (804) 721-7755, M Email: Chestley@aol.com https://www.linkedin.com/in/chestley-talley-9711333/ 1. Aristotle, www.google.com 2. John Dewey, www.google.com 3. www.experiencetolearn.com 4. Fetterman, D. M. (1994). Empowerment evaluation. Evaluation practice, 15(1), 1-15. 5. Source: http://www.nwlink.com/~donclark/hrd/styles/kolb.html 6. Source: https://www.experiencetolead.com/getting-maximum benefit-from-experiential-learning-1/ 7. Bruce Tulgan, author of “Bridging the Soft Skills Gap: How to Teach the Missing Basics to Today’s Young Talent” (Jossey-Bass, 2015). 8. Kozinsky, S. (2017). How generation Z is shaping the change in education. Retrieved 2nd August. 9. Zimmer, C. (2017). Getting to Know Gen Z–Exploring Middle and High Schoolers’ Expectations for Higher Education. 10. Ritchhart, R., Church, M., & Morrison, K. (2011). Making thinking visible: How to promote engagement, understanding, and independence for all learners. John Wiley & Sons. 11. Andrew J. DuBrin, www.google.com 12. Anderson, R. J., Adams, W. A., & Adams, B. (2015). Mastering leadership: An integrated framework for breakthrough performance and extraordinary business results. John Wiley & Sons. 13. https://www.netimpact.org/ 14. Kozinsky, S. (2017). How generation Z is shaping the change in education. Retrieved 2nd August. 15. https://corporatelearning.com/making-the-businesscase-for-soft-skills/

JARVIS MILLENNIUM FELLOWS INAUGURAL CLASS OF 2018 LAUNCHED BY THE UNITED NATIONS ACADEMIC IMPACT AGENCY & THE MILLENNIUM CAMPUS NETWORK ONE OF ONLY 30 INSTITUTIONS WORLD-WIDE ADVANCING UN SUSTAINABLE DEVELOPMENT GOALS

16. https://corporatelearning.com/power-skills/

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G L O B A L B R I E F I N G R E P O RT H I G H E R E D U C AT I O N B R A N D E D S T O RY

Idaho Businesswoman Conquers the Cost of Higher Education By Freon Holderlin

Peace of mind is for sale, and Rebecca M. Carroll of Boise, Idaho, USA has it in stock and cheap at the price. Carroll is the founder and president of The Coaching Educator, now in its 11th year of advising high school students in the U.S. and abroad about college admissions and financial aid. The cost of higher education in the U.S. has risen at a furious rate in recent years, but Carroll said her company routinely finds tens of thousands of dollars for an individual client, and sometimes hundreds of thousands, while also helping students select and pursue admission to the most suitable institutions. Show me the money, you say. Carroll is happy to oblige: “We’re not vague about our claims. It’s unethical to make guarantees, but on average our clients get 25 times as much in financial aid as they pay for our services. Some have gotten a return on investment as high as 89 times. On social media we regularly post specific figures about the money we’ve saved for particular families.” Carroll said The Coaching Educator offers multiple courses and hands-on advisory packages dealing with college selection, scholarships and grants, admissions test prep, interview coaching, academic success coaching, and career advising, plus special programs for athletic and performing arts scholarships. She said that one of the biggest

challenges is keeping pace with rapid change. “Everything related to college admissions gets more challenging over time, which is very difficult for families and even for the counselors in the schools,” Carroll said. “It’s especially confusing for international students. That’s where we come in, because we can specialize in keeping up with that change and making it work for our clients. This is all we do.” A New Hampshire native with two adult offspring of her own, Carroll has a master’s degree in education with school counseling specialty from Notre Dame College and taught at Landmark College, Keene State College and Park University at Malmstrom Air Force Base in Montana while also doing school counseling. She started The Coaching Educator in 2009. “I wanted to be more creative,” Carroll said. “and there are a lot of opportunities to be creative within education. Doing this allows me to fully support schools in the way I want to, because I love the school counseling career.” The Coaching Educator employs three, including Carroll, plus multiple interns. Though everyone in the firm is a generalist and wears multiple hats, Carroll brings counseling expertise -and the business acumen she acquired as the owner of a barber shop early in her career. IT ace Leigh Delano, a former TCE client,

“We’re not vague about our claims. It’s unethical to make guarantees, but on average our clients get 25 times as much in financial aid as they pay for our services. Some have gotten a return on investment as high as 89 times. On social media we regularly post specific figures about the money we’ve saved for particular families.” Rebecca M. Carroll G20G7.COM

is expert in math and the performing arts -- including the hunt for arts scholarships -- and Oxford-educated former humanities teacher and corporate ghostwriter Paul Culp is the writing guru. Carroll said that all three of them are certified in career advising, unlike many consultants who are credentialed in neither career services nor education. “I’m so lucky to have the team I have,” Carroll said. “I’ve really gone after creative, talented people. We’re a diverse little group, but it adds up to a specialized expertise that helps people take charge of their lives and finances.” Delano was a National Merit scholar whose parents sought Carroll’s help in maximizing her opportunities. She studied piano performance at the University of Oregon and then transferred to the Franciscan University of Steubenville, graduating with a theology degree in 2013. She joined TCE in 2017. “It’s really satisfying to be working with families that are trying to improve the lives of their children, especially with education having become so complicated recently,” Delano said. “It’s a privilege to help teens become more confident with what they want to do and who they are.” For those who want to be scholarship athletes or performing artists, Delano builds the websites that are among TCE’s services. Carroll said that Delano’s expertise with IT has been crucial to the company’s evolution into a national and international presence. “We’ve moved quickly in recent years to develop the necessary online tools,” Carroll said. “Our website, our online course offerings, and our podcasts all very much reflect Leigh’s grasp of strategy, tactics, and design.”

208.576.6947 boise-eagle.itex.com

Culp has an International Baccalaureate teaching credential in English to go with degrees in theology, history, and political science. He started his career in the family media consulting firm, then made a mid-career transition to teaching, beginning at a Middle Eastern university. After a decade in the classroom, a year in digital news media, and a stint in corporate life that saw his work appear in Forbes and Inc., he reunited with Carroll, whom he’d met when they worked in the same school. “Rebecca has vision and an encyclopedic knowledge of this field,” Culp said. “She’s put me in a position where I can draw on pretty much everything in my professional and academic history, including the international side.” Carroll said Culp’s varied background helps TCE considerably. “Paul is a professional communicator, and I saw what he could do in the classroom,”

Carroll said. “He’s also acquainted with the educational systems of other countries and has a command of English that works well abroad.” Technology makes the personal touch possible, with The Coaching Educator team being essentially bicoastal. Delano is in the Washington, D.C., area, where she and her actor husband are performing arts professionals, while Culp and his wife, a former journalist, are also on the East Coast, nearly a continent away from Boise. “We do see a lot of clients in our Boise office,” Carroll said. “The rest we see via Zoom. The geographic distribution of the team wasn’t planned, but it works well. In terms of time zones, we’ve got the U.S. pretty well covered and are well-positioned internationally.” Carroll said her personal experience with student debt and with the education of her own children

781.899.8441 208.576.6947 boise-eagle.itex.com www.itex.com

were highly motivating for her. “As a parent, I feel for families and the pressures they face,” Carroll said. “As a businesswoman, I see an opportunity to make a living helping people from all countries and walks of life address a major problem. It’s a calling. It’s really a very satisfying thing to be doing.” ◆

REBECCA M. CARROLL, M.ED. The Coaching Educator GDCF, CCPS, CPM, CPC T: 208-277-8310 E: rebecca@thecoachingeducator.com W: TheCoachingEducator.com HECA Member HECA Area Representative 3152 S Bown Way, Ste 202, Boise ID 83706 BIARRITZ_FRANCE

G L O B A L B R I E F I N G R E P O RT SOFT SKILLS F E AT U R E

Soft Skills will Make or Break Your Career Underrated soft skills are the foundation for a successful career in the next generation of jobs. By Akustina Morni, IOE Adviser

Peggy Klaus,

author of The Hard Truth about Soft Skills, has a point: soft skills get little respect. From the International Labour Organization to the International Monetary Fund and beyond, there are no shortage of studies on the Future of Work and its impact on work, employment and on society. Quite often their focus is on how reskilling, upskilling and lifelong learning can mitigate the negative effects and challenges of the future of work. However, the rising importance of soft skills is completely absent from these assessments. What are soft skills? How are they different to hard skills? References to these types of skills varies. Some refer to them as foundational skills, technical skills, human skills, and many others. Can this cause some confusion? Definitely. Despite these different terminologies though, let’s refer to them as soft skills and hard skills. Early references to soft skills go back to the 1970s which included a definition in the US Army, where a soldier would need hard skills to read a map, and soft skills to make a decision after reading the map. Therefore, both hard skills and soft skills are needed to effectively execute a task or job. Soft skills such as critical thinking, communication and complex problem solving are underrated. According to LinkedIn data, there are at least 50,000 professional skills in the world. Out of all of these, the top 5 soft skills companies are looking for the most in 2019 are:

Creativity Persuasion Collaboration Adaptability Time management ... in this order. G20G7.COM

And interestingly, the skills needed by employers do not remain static. Soft skills are constantly evolving, as demonstrated in the below chart, comparing the skills needed in 1972 and the required skills anticipated (by WEF) for 2020. The recently published joint study by the International Organisation of Employers and the International Labour Organization surveyed 500 companies globally on the future of skills. We found that employers are looking for quite different skills now in new recruits compared to 3 years ago – 70% (Brazil), 66% (India), 65% (Germany) and 61% (USA). But why should we care about soft skills? According to the World Bank report, machines replace workers most easily when it comes to routine tasks that are codifiable. If this is theoretically true, then soft skills are the workers’ ‘protection’ against the risk of losing

1972 In the workplace ‘soft skills’ were centered around being a good dutiful employee: 1. Deliver excellent Customer Service 2. Adapt to your workplace 3. Please your manager 4. Learn and know the skills of your job Fry & Whitmore 1972

2020 Top 10 Skills: 1. Complex Problem Solving 2. Critical Thinking 3. Creativity 4. People Management 5. Coordinating with others 6. Emotional Intelligence 7. Judgement and Decision Making 8. Service Orientation 9. Negotiation 10. Cognitive Flexibility

jobs. Why? Because machines have yet to codify complex, human, soft skills. That’s not the only reason why we should care about soft skills. Two out of three children who are in primary school today will work in a new job type that does not exist yet. It makes more sense, strategically, to prepare future generations with strong soft skills as it is impossible now, or at any stage, to forecast or predict the kind of hard skills needed in the immediate or long-term future. Another reason why we should care is that the skills gap is widening. The IOE/ILO survey found that it is becoming harder for companies to recruit people with the skills needed – 63% of Malaysian companies are struggling to hire people with the skills needed, in Bolivia 60% of companies are struggling, some 50% are in South Africa and 47% in China. The lack of relevant skills for the world of work is already creating hiring problems even at entry-level positions (40% of employers noted lack of skills as the main reason). We don’t need more data to be convinced that this is a big problem. And it is a problem for all for us. Employers. Workers. Governments. Therefore, we all should care about developing and strengthening soft skills. Making soft skills central One always cautions against one solution to fit all situations. However, research has shown that the following actions, when taken at the right time within the right context, can work: 1. Positive engagement with employer organisations in your country Employer organisations represent the interests of the private sector and depending on the national circumstance, can be in the form of a Chamber of Commerce and Industry or a business federation. Employer organisations are the closest to the labour market, understand what the private sector needs in the country, region or local area, and provide top guidance on social and labour issues. They have access to the latest data on skills needs and, in many cases, work side by side with recruitment agencies. A national skills mapping exercise

G L O B A L B R I E F I N G R E P O RT SOFT SKILLS

would not be complete and effective without inputs from national employer organisations. 2. The promotion of lifelong learning Proactive learning should not necessarily stop when school ends. In fact, when one thinks about it, lifelong learning (LLL) is no longer optional. LLL is to do with the ongoing, voluntary and self-motivated pursuit of knowledge for personal and professional reasons, also known as learning from ‘cradle to grave’. It is different to traditional learning 50-60 years ago. The unfortunate reality is… a ‘job for life’ is scarce these days. Workers nowadays need more than just a single degree or school certificate. There needs to be a continuous effort and motivation to reskill and upskill oneself, not just for employability’s sake, but also for social inclusion and personal satisfaction in learning something new. There are only two countries in the world which have institutionalised LLL in their labour policies: France and Singapore. Singapore was dubbed by the WEF as the most ‘future ready’ country in the world. Could this be more than sheer coincidence?

the workplace, but for life. And in most cases, who are the first people they meet outside the home, other than family? They are the teachers at kindergarten, the creche, or pre-school institutions. It would be remiss of us to ignore the important role that kindergarten teachers play in the child’s skills development. Soft skills start there, where children spend a lot of time during the week, and without giving these teachers any incentives to guide children on basic skills such as manners, communications, child conflict resolution and others, parents and guardians will need to look at other ways to teach these skills. 5. No entity can do it alone Like many global issues, there is a need for regular effective coordination efforts. The governments, workers and employers all need to act. This is where the ILO has shown its worth; and this is where ILO tripartite cooperation works best. What needs to expand

is the political will to make this coordination a reality. 6. And just as important as soft skills is the attitude towards work Your attitude is a form of expression of yourself. You can choose to be happy, positive and optimistic, or you can choose to be pessimistic, suspicious and critical, with a negative outlook on your workday. A positive attitude helps you cope better under stressful situations at work, and in fact, helps you to acquire the soft skills needed. A positive attitude to embrace new technologies and techniques is very much valued by employers. The IOE is ready to embark on a major project in 2019 to help its members navigate through the fastchanging skills needs by looking at governance, anticipation and development. Watch out for this space. Let’s show more respect for soft skills. And let’s work together to develop the skills of today to meet the needs of tomorrow. ◆

3. Reforming the education system Youth unemployment is on the rise and there are no signs of this abating. More than 63 million youth today do not have a job. The good news is that, based on the joint survey published by the International Organisation of Employers and the International Labour Organization (ILO), 72% of employers would welcome changes to make it easier to play a more active role in developing skills by influencing educational systems. It is just a matter of governments inviting employers, through employer organisations, to give their views on what is needed by the labour market. This is a crucial approach to address the problems of skills mismatches and gaps. 4. Ensuring kindergarten teachers receive good salaries Acquiring soft skills naturally start at a very young age, and it is important for children to acquire these skills effectively, in preparation for not just BIARRITZ_FRANCE

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Global Affairs

Bringing Inequality Back on the Agenda A collaboration between LSE and Sciences Po, along with other G7 universities, addressing the global challenge of growing inequalities within countries.

Photography: Caio Pederneiras G20G7.COM

LSE GLOBAL POLICY LAB

CONTENT

40 Introduction Inequality Matters to the G7

Erik Berglof

46 Why a More Systematic Approach to Assessing and Addressing Inequality Is Required Abigail McKnight

If You Care About Poverty, Do You Have to Worry About Inequality Too?

John Hills

50 Is It Possible to Make Capitalism Fairer and More Sustainable?

Rana Zincir Celal

52 Ebola Inequalities

Tim Allen & Melissa Parker

42 A University Alliance To Weigh in on the G7 Agenda 56 The Trust Crisis

Yann Algan

57 Inequality in Education

Carlo Barone, Denis Fougère & Agnès van Zanten

58 More and Better Education to Face New Inequalities

Enrico Letta

62 Globalization Requires an Ambitious Reform of International Taxation

Philippe Martin

64 Corporate Tax Justice

Cornelia Woll

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LSE GLOBAL POLICY LAB

Introduction Inequality Matters to the G7 Erik Berglof

Professor, Director, Institute of Global Affairs, London School of Economics and Political Science

Inequality within countries has not traditionally made it to the tables of international cooperation. Rather, individual countries have to determine the extent to which unequal distribution of income and wealth should be tolerated, and within countries the topic was politically divisive. There has also been little agreement within the social sciences on the drivers of inequality and the impact it has on economic growth and development but also on general wellbeing. Rising populism in both advanced and emerging economies has now catapulted inequality onto the agendas of the G7 and the G20. There is a growing consensus that we need to better understand the distributional dimension of economic policies and how inequality affects the effectiveness of different policies. We are only now beginning to seriously consider how inequality and perceptions of inequality affect people’s sense of wellbeing. It is against this background that researchers from London School of Economics and Political Science and Sciences Po in Paris have come together in this issue of the LSE Global Policy Lab to discuss research on inequality and what it says about the impact of unequal distribution of outcomes, but also of opportunity, on different parts of the population. In this series of articles, they discuss the implications of their findings for policymakers at the national as well as the global level. The engagement on inequality is part of a broader commitment of these institutions along with 25 other universities across the G7 countries and beyond to address important global challenges. In June 2019 the

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While the world with some glaring exceptions has been quite successful in reducing differences in income and wealth across countries, inequalities within countries have been growing, in some cases at unprecedented speeds and to combustible levels.

leaders of these institutions signed the U7+ initiative identifying a set of urgent topics and a division of labour (the document is presented in this issue). While the world with some glaring exceptions has been quite successful in reducing differences in income and

wealth across countries, inequalities within countries have been growing, in some cases at unprecedented speeds and to combustible levels. These inequalities in outcome reflect and produce large inequalities in opportunity. There is a wide range of views on what inequality of income and wealth are acceptable but most people agree that factors beyond the control of an individual, like gender, ethnicity and place of birth, should not affect success in life. In the opening article Abigail McNeal advocates a broader approach to inequalities. She argues that we need |a framework that goes beyond just economic consequences and considers differences in people’s needs and ability to convert resources into valuable things they can do or be. Such a framework should also help select the dimensions on which to focus – gender and ethnic inequalities appear particularly important. But McNeal also identifies drivers of and policies to address inequalities. It is tempting to suggest that high income inequality is necessary to generate economic growth which can alleviate poverty. But John Hills argues that there is no support for this idea, at least not in industrialised countries. On the contrary, countries with high income inequality also tend to have high poverty, with often the same underlying variables driving each. He also points out that labour market discrimination correlates strongly with both poverty and inequality. It is hard to tackle poverty without addressing inequality. Rana Zincir Zelal points to the need for a new language and new measures to address inequalities. We also need to engage much

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Global Affairs

more those with lived experience of inequality in shaping that language and those measures. Only then, she suggests, can we make capitalism fairer and more sustainable. One could say the same thing for democracy. She points to examples from Africa, like Cape Verde, Mauretania and Senegal to show that it is possible to tackle inequalities. We know that inequalities in wealth and income often amplify inequalities in access to health care and life expectancy. In an extreme example Tim Allen and Melissa Parker look at access to treatment in the West African Ebola epidemic in 2014-15. Western governments were much more willing to intervene in parts of the region that were more connected to their own interests. This does not bode well for the current outbreak in eastern DRC where the stakes of the West are much smaller. But how is the issue of inequality linked to rise of populism and nativism. In an attempt to understand this link Yann Elgan suggests that inequality feeds lack of trust in institutions along with elites and experts that fail to deliver improvements in living standards. In the absence of widely trusted institutions and a society where citizens share common interests also general trust between individuals break down further feeding populist tendencies. Inequalities must be addressed through many different policies. Education is a prime candidate, according Carlo Barone and coauthors. A wide range of inequalities can be tied to variation in higher education achievement, and the [propensity] to attend university is very much determined by social

background. To promote equalisation it is not enough to encourage highschool students to go to university. Intervention has to come much earlier – counselling in secondary schools can encourage students to make more ambitious choices in high school, but what really matters is early child care and targeted measures to support parents. Another anchor in the fight against inequality has been taxation. In discussions about economic growth and inequality it is often claimed that we should first find the most efficient solutions and then use taxation and other forms of redistribution to compensate “losers”. Philippe Martin refers to overwhelming evidence suggesting that these compensation schemes rarely work. Tax evasion, particularly by corporations, as Cornelia Woll shows, is an important part of the explanation. Recent global efforts have helped reduce evasion and some progress has also been

made in the G7 to impose minimum tax rates for tech companies. All this leads us back to the U7+ initiative and the role of universities in helping to inform the public debate and ensuring that political decisions are based on careful academic research. In the agreement LSE and Sciences Po have agreed to champion different aspects of the broader agenda. With respect to inequality Sciences Po will focus on broader community engagement as a selection criterion for higher education and how to encourage students’ international experience, while LSE will take leadership on widening recruitment. As Enrico Letta puts it in the context of international exchanges between universities an increasing number of students can now benefit from spending time at universities abroad, but we must ensure that these students come from all parts of society. ◆

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A University Alliance To Weigh in on the G7 Agenda University alliances, be they national or regional -- much like airline company alliances, are common within their own realm -- that is, the realm of higher education. But an alliance of world universities whose mission is to weigh in on the agenda of an inter-governmental summit such as the G7, did not exist until June 2019, when 47 university leaders from 18 different countries came together to create the U7+ Alliance. In the scope of the G7, there are a number of active engagement groups dedicated to providing specific input and recommendations within their relevant fields: Youth7, Women7, Business, and several more. However, until the U7+, never has such an international crosssection of universities representing a total of 2 million students and some of the highest-end research worldwide come together as a collective force for action on this multilateral scale. On July 9 & 10, 2019, the U7+ Alliance gathered for its own inaugural summit at Sciences Po in Paris, under the high

2019

patronage of French President Emmanuel Macron, who would later be given the final conclusions in person. Opening with a statement by Frédéric Vidal, French Minister of Higher Education, Research and Innovation, the mission of these 47 university leaders was made clear: “The U7+ summit (...) will be a unique space for debate on the global roles of universities beyond academia.” Frédéric Mion, President of Sciences Po, reminded fellow university leaders that this meeting would not be yet another academic symposium, nor a place to advocate for increased support. “This summit is a circle for group reflection and action on the future and development of higher education in the world, and our role as global players,” he said. At the closing of the U7+ Summit, the participants presented the final U7+ conclusions to President Emmanuel Macron during a dinner at the Elysée Palace. In preparation for the summit, five major global challenges had been identified to structure the debate:

universities as global actors, climate and energy transition, inequality and polarized societies, technological transformation, and community engagement and impact. Over the two days, university rectors, deans and presidents formalised a Mission Statement and collectively drafted 6 founding principles. Once they were voted, university leaders signed 247 individual commitments to actions to tackle global issues within their own communities. The universities of the U7+ Alliance are already proving to be a pioneering civil society network dedicated to addressing global challenges and to educating the future generation of responsible global citizens. Thanks to an invitation for 2 representatives of the U7+ Alliance, the summit conclusions were presented at the final under-Sherpas meeting in preparation for the G7. The hope now is that the U7+ will continue to prosper, and that their combined impact will be the influence and change we need to see in the world.

Presidential Declaration Mission Statement

The U7+ brings together universities from G7 countries and beyond, who are committed to academic freedom and scholarly values and convinced of the key role of universities as global actors, to engage in discussions leading to concrete action to address pressing global challenges. Our students, faculty and staff are instrumental in the definition and implementation of the U7+ actions. The first summit, held in Paris in the context of the G7, is a unique opportunity for 47 university leaders from 18 countries to discuss a common agenda and establish a framework for universities’ action in today’s global landscape. BIARRITZ_FRANCE

PRINCIPLE 1

We recognize that the U7+ embodies our common will to identify and address the global challenges our contemporary societies face in order to accelerate the development of solutions. We commit to pursuing joint action through the U7+, including meeting each year in the context of the G7 process, so that our actions can weigh in the discussions and contribute to making positive change a reality.

PRINCIPLE 2

We recognize that our universities have a distinctive responsibility to train and nurture responsible and active citizens who will contribute to society, from the local to the global level. As illustrations of this voted principle, we are pleased to announce that below are examples of actions that several universities have chosen to implement and to champion: › Increasing the scope of our partnerships so that our institutions work with a wide variety of actors in their communities and beyond. To that end, we will ensure that we partner not just with universities and Colleges but with Citizens, Community organizations and NGOs, with Corporations and Cities, with Countries and supra-country organisations that are all critical to helping build a more just, sustainable and prosperous world. Our universities may seek to map their existing relationships in this expanded 6Cs framework and measure progress throughout the year with the idea of building a common monitoring and measurement platform. Championed by: University of British Columbia. 16 U7+ universities will take part in this action.

› Emphasizing the educational and civic value of community engagement. To that end, we will strongly value and vigorously promote that prior community engagement experience is included as a highly sought after quality for admission. As a direct consequence of this, we as universities will be incentivized to provide or extend opportunities for community engagement to our undergraduate student body. Championed by: Sciences Po and University of British Columbia. 12 U7+ universities will take part in this action. › Underlining the importance of exposure to an international experience for our students and to cultural diversity for future generations. To that end, we pledge to recognize the importance of an internationalization indicator of our student experience. This indicator will include the ratio and the distribution across programs and schools of: a. international students within the university; b. the diversity of nationalities represented; c. the level of student mobility including study abroad programs, international dual degree programs, as well as alternative international experience (ex: global virtual classrooms to connect our students with students from international partner institutions to facilitate interactive learning sessions, and co-create projects with partners based on this agenda); d. international diversity within Faculty members. Championed by: Università Bocconi and Sciences Po. 29 U7+ universities will take part in this action.

In preparation for the summit, five major global challenges had been identified to structure the debate: universities as global actors, climate and energy transition, inequality and polarized societies, technological transformation, and community engagement and impact.

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PRINCIPLE 3

We recognize that our universities have a major role to play in addressing the environmental issues and challenges to sustainability such as climate change, biodiversity and energy transition. This should include leading by example on our own campuses. As illustrations of this voted principle, we are pleased to announce that below are examples of actions that several universities have chosen to implement and to champion: › P romoting that, at the latest by 2025, all students of our universities, beginning with the undergraduates, will have access to courses related to climate, biodiversity and sustainability during their studies (be it in traditional format or online), as a way of enabling exposure to the key challenges and mitigation strategies with regards to the Earth. Such courses might include experiential learning opportunities on our campuses and/or in the community. Championed by: University of Toronto and Paris Sciences et Lettres. 28 U7+ universities will take part in this action. › Each university commits to improving energy efficiency and reducing their level of GHG emissions from 2018 levels by 2030, and at a minimum, commits to developing and publishing a specific target for this reduction by 2020. Examples of how we might do so include developing international travel policies, encouraging more environmentally benign forms of transportation to campus, reducing GHG emissions from our facilities and operations. Sustainability goals might also include reduction of waste such as plastic bags or bottles, or other sustainability goals which are relevant to particular contexts/ cities/countries. Championed by: University of Edinburgh and University of Toronto. 18 U7+ universities will take part in this action.

PRINCIPLE 4

We recognize that universities have a distinctive and major responsibility in widening access to education and promoting inclusion and opportunity. We will also foster respectful and evidence-based public debate, in order to combat polarization in our society. As illustrations of this voted principle, we are pleased to announce that below are examples of actions that several universities have chosen to implement and to champion: › Widening access and success for students by promoting routes to university and accompanying students from marginalized backgrounds in their curricula, in order to facilitate social mobility. Championed by: The London School of Economics and Political Science (LSE). 27 U7+ universities will take part in this action. › Developing students’ inclusive leadership and global citizenship competencies by expanding the offer and giving access to relevant courses in the matter. Championed by: Université d’Ottawa and Université de Bordeaux. 13 U7+ universities will take part in this action.

PRINCIPLE 5

› E nsuring that our universities continue to reach beyond the scope of academia, to engage with the wider public in local communities and organisations, and focus on sharing research results on key societal challenges. Championed by: McGill University. 23 U7+ universities will take part in this action.

To engage with stakeholders and solve complex issues of global relevance we recognize that universities must promote interdisciplinary research and learning, in particular bridging in our research and teaching between social sciences, humanities, the life sciences and STEM disciplines. As illustrations of this voted principle, we are pleased to announce that below are examples of actions that several universities have chosen to implement and to champion:

› Leveraging our existing capacities in entrepreneurship, social innovation and incubation in order to create economic value and ensure societal impact. We are in a unique position to share practices within our universities to empower future generations of entrepreneurs to create economic impact and social well-being. Championed by: HEC Paris. 24 U7+ universities will take part in this action.

›Collectively pursuing and creating interdisciplinary and cross-border research projects that have a societal impact on the areas captured by the UN Sustainable Development Goals, in particular Food and Health, Climate and Energy transition, Sustainability, Equal rights and opportunities. Championed by: University College London. 29 U7+ universities will take part in this action.

› Creating pluridisciplinary core technology competency curricula, |open to all students across our programs, and that will be counted towards pre-requisites within a degree. These curricula should ensure not just an understanding of technology but of the impact of technology on people and society, seeking to create critical learners and engaged citizens who leverage technology for social good. To that end, our universities will implement new courses, and aim at improving significantly the number of students taking such courses defining clear targets and measurable indicators. Championed by: Ecole Polytechnique. 11 U7+ universities will take part in this action. Convening objective-driven forums using various mediums to explore research-driven actionable options to manage the impact of technology on society, the economy, and the labor market, among academia, government, employers and the broader public. The results of these forums will be accumulated to create a U7+ “agenda for action” to be reviewed by member schools at the end of 2020. Championed by: HEC Paris. 7 U7+ universities will take part in this action. › Exercising strong leadership, alongside tech companies and governments, in developing and promoting guidelines about how data sciences and digital innovation should be handled. To that end, our universities may seek to establish a first version of a position paper by 2020, that shall be built on the universities’ best practices and whose aim is to shape technological transformations for the broad benefit of society and individual wellbeing. Championed by: Université de Montréal. 11 U7+ universities will take part in this action.

PRINCIPLE 6

We recognize that the U7+ has the power to serve as a lab to consolidate best practices that can be shared both within our network and more broadly with universities and similar institutions worldwide for inspiration.

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LSE GLOBAL POLICY LAB

Why a More Systematic Approach to Assessing and Addressing Inequality Is Required Abigail McKnight

Associate Director and Associate Professorial Research Fellow, CASE, LSE

The recent focus on inequality by a number of important international bodies and organisations is a welcome development for those who have been concerned about the deep and profound divisions that exist between people around the world. However, although our knowledge and understanding of inequality has grown, there continues to be too narrow a focus. We now know a fair amount about inequalities in income, earnings, wealth, health, life expectancy, and education. But these measures only provide a partial picture of inequality. It is true that inequalities in the financial resources that people have available are important, as are inequalities in life expectancy. Nevertheless, there is a concern that the choice of outcomes which inequality studies have focused on is somewhat arbitrary, and often has more to do with the availability of data than theoretical consideration. We argue that first, it is important to be clear about what aspects of peoples’ lives we should be concerned about. When we assess the outcomes of people’s lives we think about the quality of their lives and their overall well-being. Attempts have been made to estimate holistic measures of well-being but from a quality of life perspective, the most common approaches are problematic. This is because, on the one hand, measures based on economic outcomes fail to consider differences in need between individuals or differences in individuals’ ability to convert these resources into valuable things they can do or be (such as going on holiday, being well-nourished, feeling physically secure, or having friends).

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We now know a fair amount about inequalities in income, earnings, wealth, health, life expectancy, and education. But these measures only provide a partial picture of inequality.

On the other hand, subjective outcomes such as happiness are shaped by people’s expectations of life, and these expectations are influenced by social and cultural norms as well as upbringing. In response, the eminent economist and philosopher Amartya Sen, developed a capability approach to evaluating the quality of people’s lives in terms of a set of valuable things that people can be or do (like being physically secure,

well-nourished, having self-respect, or having influence over decisionmaking), and the freedom they have to choose the kind of life they value. Adopting this approach to assessing the quality of people’s lives provides a clear direction on which inequalities we should focus on. The Multidimensional Inequality Framework (MIF) is designed specifically to provide a framework for measuring and analysing these inequalities. The MIF is organised around seven key life domains: life and health; physical and legal security; education and knowledge; financial security and dignified work; comfortable, independent and secure living conditions; participation, influence and voice; and, individual, family and social life. Its focus is not simply on deprivation but on broader inequalities and it operationalises the concept that it is possible for some individuals to have ‘too much’ (for example, too much power and influence) while others don’t have enough. Through the use of systematic disaggregation, the MIF can help identify a number of key types of inequality, such as gender and ethnic inequality. Using the capability approach to measure and assess inequality not only provides a comprehensive picture of inequality but leads us to develop a more complete understanding of the drivers of these inequalities and identify the most effective inequality reduction policies. For example, applying the theory to identify inequality drivers we see how social and cultural norms, particularly gender norms, have to be addressed to achieve gender equality. We also find a number of key global drivers of inequality which cannot be

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tackled without international collaboration, such as the rise and power of global corporations, dominant narratives, ineffective global taxation, and climate change and environmental degradation. A systematic approach to assessing and addressing inequality, like that offered by the MIF, means that we focus on the inequalities that matter most and can develop a more comprehensive policy response, that in some case will require collaboration between countries. ◆ About: The Multidimensional Inequality Framework was developed as part of a collaboration between academics at the London School of Economics and the School of Oriental and African Studies (SOAS), and practitioners at Oxfam. It is free to download from a dedicated website http://sticerd.lse.ac.uk/inequality/ where there are additional resources designed to help adapt and apply the MIF, identify drivers, and policy solutions.

Dr Abigail McKnight is Associate Director at the Centre for Analysis of Social Exclusion (CASE), LSE. Her research interests span multidimensional inequality, low wage employment, evaluation of active labour market programmes, earnings inequality and mobility, through to the graduate labour market, household wealth inequality and household debt. She is a co-editor of two volumes published by Oxford University Press in 2014 covering the findings from a major international study of inequality across thirty countries spanning a period of thirty years Changing Inequalities in Rich Countries and Changing Inequalities and Societal Impacts in Rich Countries.

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LSE GLOBAL POLICY LAB

If You Care About Poverty, Do You Have to Worry About Inequality Too? John Hills

Richard Titmuss Professor, Social Policy and Chair of the Centre for Analysis of Social Exclusion (CASE) and at the London School of Economics

While some people see reducing inequality as important in itself, for others eradicating poverty is what matters, and inequality in itself is unimportant. But can one, in fact, be concerned about poverty but indifferent to inequality? As a corollary, does tackling poverty also require policies to reduce inequality? For some in the philosophical debate, inequality is in fact the prime concern, with poverty a consequence. But for others, poverty is the starting point and inequality of concern just for instrumental reasons, if it leads to or exacerbates poverty. For many, though, the concerns are not exclusive. Both are relevant for human deprivation and violate human dignity. They can also reinforce each other. A pluralist approach suggests one can prioritise poverty while also allowing that inequality matters, both in itself and instrumentally. There is therefore a core empirical issue: in practice are poverty and inequality linked? There are two competing propositions: › That high inequality is associated with high rates of poverty, either through a causal relationship, with higher inequality leading to greater poverty, or through the same factors driving both, so tackling one is likely to reduce the other. › T hat high inequality is good for poverty reduction, measured against a fixed standard at least, through the incentives it creates leading to economic growth, benefiting poor people in absolute terms, even if they are left behind relative to others. China over the last 30 years could be an example.

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Across the EU and other industrialised countries, higher income inequality is also associated with higher relative poverty. We do not see countries with high income inequality and low relative poverty.

Precise definitions matter, so you need to look at a variety of measures of both inequality and poverty—any observed relationship could simply be the mechanical result of the definition used. That said, the empirical evidence LSE colleagues and I review in recent research shows an association between higher income inequality and higher poverty in industrialised countries that is not the result of a simple arithmetical link.

Over the last fifty years in the UK, years with comparatively low inequality had lower relative poverty, and those with high inequality had higher poverty rates (although falls in relative poverty from the early 1990s to 2010 were not matched by similar falls in inequality). Across the EU and other industrialised countries, higher income inequality is also associated with higher relative poverty. We do not see countries with high income inequality and low relative poverty. However, there is no consistent pattern in how the income shares of the very top of the distribution relate to poverty. Wider indicators of material deprivation and multi-dimensional poverty are also significantly associated with income inequality in EU countries. These relationships are not simply the result of the other underlying factors separately associated with both poverty and inequality. We also looked at the evidence for the competing proposition—that income inequality may be good for poverty reduction, against fixed standards. But we saw the opposite. In Europe recent increases in inequality were associated with slower reductions (or faster increases) in poverty against even an anchored standard. Maybe this should not be a surprise. While one economic tradition suggests a trade-off between equality and growth, given the incentives for work, investment and risk-taking that go with wider inequalities, other economists suggest reasons why inequality damages growth. The empirical evidence is also divided, with some studies suggesting inequality helps growth, but many

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finding the opposite. This suggests that the positive links between greater inequality and greater poverty should remain the main focus, rather than concerns that lower inequality would reduce growth. There are several explanations supported by other evidence. Labour market factors, such as discrimination, may drive both poverty and inequality. Inequality at one time—and especially in one generation—reinforces both inequality and poverty in the next. Even if market incomes are unequal, governments can break the link with poverty, but there are limits to what redistribution can achieve when inequality is high. If inequality means less knowledge of how others live and geographical polarisation, popular demands for something to be done about poverty may be reduced. Media control and political funding are often dominated by those with greatest

resources, while high inequality and lack of involvement may lead to lower turnout amongst those who might gain from redistribution. The range of potential drivers means that public policies matter, not just social security, taxation and anti-discrimination legislation, but also education, housing, regional investment, policy rhetoric, and factors affecting culture and social norms, and democratic safeguards. The evidence suggests that for those whose primary concern is to tackle poverty, it is hard to do this without simultaneously reducing inequalities, given the strong empirical associations between them, and the ways in which inequality can itself drive of poverty. At the same time, for those for whom both poverty and inequality are concerns, the links between them mean policies to tackle either can have a double dividend. ◆

John Hills is Richard Titmuss Professor of Social Policy and Chair of the Centre for Analysis of Social Exclusion (CASE) and at the London School of Economics. His research interests include the distribution of income and wealth, the welfare state, social security, pensions, housing and taxation. Recent books include Good Times, Bad Times: The welfare myth of them and us (Policy Press, second edition 2017), Social Policy in a Cold Climate (co-editor, Policy Press, 2016) and Wealth in the UK (co-author, Oxford, 2013). He was a founding Co-Director of the LSE’s International Inequalities Institute, Chair of the UK government’s National Equality Panel (20082010), and was one of the three members of the UK Pensions Commission from 2003 to 2006.

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LSE GLOBAL POLICY LAB

Is It Possible to Make Capitalism Fairer and More Sustainable? Rana Zincir Celal

Lead, Atlantic Fellows for Social and Economic Equity programme, LSE’s International Inequalities Institute

Making capitalism fairer and more sustainable.1 With this bold statement, the G7 is embarking on a highly relevant agenda, driven by the 2019 French Presidency’s focus on tackling inequalities. But how will the leaders of the world’s largest economies actually deliver this ambitious goal? To what extent can capitalism offer this broader vision: will it be able to generate bold and imaginative responses, and how will it credibly pursue them, given the dispossession and debt it has brought to the vast majority of the world’s citizens? For the first time in the G7’s history, the table at its annual meeting has expanded to include a few non-G7 countries and international organisations. This act recognises the wider leadership context required to achieve change within the key focus areas of the G7 programme: addressing inequalities between countries and within advanced economies, climate breakdown, gender inequities, and technological change. Despite the scale of these challenges, there are grounds for hope in the range of significant proposals already on the table for G7 leaders to consider. The most critical and effective actions involve instituting fiscal policies that favour social spending and progressive taxation, in tandem with curtailing tax havens and overhauling corporate taxation. But more must be done. Oxfam’s Commitment to Reducing Inequality Index2 offers policy-makers a useful roadmap to these and other measures that produce greater equality. Their most recent report on West Africa revealed an underreported yet deeply disturbing finding that “five of Nigeria’s richest men have a combined wealth

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During their year at the London School of Economics, our Atlantic Fellows for Social and Economic Equity have shared many memorable insights drawn from their work advancing equity through social change. of US$29.9 billion – more than the country’s entire national budget for 2017. However, about 60 per cent of its citizens live on less than US$1.25 a day, the threshold for absolute poverty.”3 With figures as stark as these, there can be no doubt that world leaders must play a decisive role in putting equality at the top of the global policy agenda. The report also found that Cape Verde, Mauritania and Senegal have shown the most commitment within the region to tackling

inequalities, in testimony to the importance of political leadership. However, while it is both tempting and timely to focus on solutions, emphasis must also be placed on the principles and values guiding policy discussions. When the term “fairness” is applied in framing a policy agenda, it inevitably raises questions of what is fair and who gets to decide. What does it really mean to advance fairness and sustainability against a backdrop of the centuries of wealth accumulation that have made G7 countries what they are today? What is a just response to the structures and systems that have enabled power and privilege to be amassed by such a narrow segment of the world’s population? These questions point to the ethical dimensions to policy discussions on inequality. Without a broader reframing grounded in vision and values, proposed solutions will remain contested, robbed of their potential to support those struggling to overcome inequality. If world leaders are serious about fairness and sustainability, then we must find ways to talk about the real scope of the social and economic transformation required to move us in that direction. This cannot be done without new language, new measures and new voices. Addressing the entrenched divisions produced by deep-seated social and economic inequalities demands moral leadership that bridges and connects rather than excludes and exploits.4 This bridging and connecting can only be done with a broader vision for a just and inclusive society, where all human beings belong, are valued and have a role to play in our collective success. A compelling case needs to be put

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forward, grounded in values and supported by evidence, about how everyone should and will benefit from a transformed social and economic system. G7 leaders should join with the young people of Friday for the Future and the many others who are already speaking the language of tomorrow. This new language also needs an updated and expanded vocabulary, one in which prosperity and performance are defined in terms of social, economic and environmental well-being. Narrow and outdated metrics such as GDP distort perspectives and deflect attention away from areas essential to livelihood, hampering the ability of countries to pursue policies that make a positive difference to the lives of ordinary citizens. Many countries and global institutions have already upgraded their systems to do so, such as those within the Wellbeing Economy Alliance, and the OECD, which produces the Better Life Index. These new measures are the result of decades of work by policy-makers and scholars, including the economist and Nobel laureate Joseph Stiglitz. Crucially, they are not only sound and sensible, but also offer a sightline to our common aspirations as a global community. During their year at the London School of Economics, our Atlantic Fellows for Social and Economic Equity have shared many memorable insights drawn from their work advancing equity through social change. One that has stayed with me comes from the Malian writer Amadou Hampâté Bâ: “Have you heard about the river? Have you seen the river? Have you swum in the river?” It is a reminder that the leadership required

to confront inequality and build sustainable responses must be shaped by the insights and voices of those with lived experience of inequality. Rather than replicating patterns of inequality which enable a few to have a seat at the table and exclude countless others, the trajectory towards fairness and sustainability must honour the achievements and aspirations of those living at inequality’s frontlines. Who are the leaders who will deliver this ambitious goal? ◆ 1 h ttps://www.elysee.fr/en/g7/2019/07/20/g7finance-ministers-meeting-what-are-theoutcomes, accessed 8 August 2019. 2 https://policy-practice.oxfam.org.uk/publications /the-commitment-to-reducing-inequality-indexa-new-global-ranking-of-governments-620316 3 https://www.oxfam.org/en/pressroom/ pressreleases/2019-07-08/west-africangovernments-are-least-committedreduce-inequalities 4 For more on this, see the work of john a. powell at Berkeley’s Haas Institute for a Fair and Inclusive Society https://haasinstitute.berkeley.edu/

Rana Zincir Celal leads the Atlantic Fellows for Social and Economic Equity programme at the LSE’s International Inequalities Institute. She has spent the past 20 years advocating for social change through engagements in academia, philanthropy, arts and culture, and peace-building and citizen diplomacy. Before joining the LSE in 2018, she was based at Columbia Global Centers Istanbul and the Chrest Foundation, where she channelled philanthropic resources to champions of social change. In Cyprus, she was instrumental in establishing the Home for Cooperation, developing educational programmes with The Elders and the International Center for Transitional Justice, and advocating for a gender perspective in the peace process. Before relocating to Turkey and Cyprus, Rana worked with the Ford Foundation and with Domini Social Investments in New York. Rana is a Greenpeace International trustee and Greenpeace Mediterranean board member. She served on the Greek Turkish Forum and Anadolu Kültür’s Executive Committee and was an advisor to the European Cultural Foundation, where she also served on its jury for the Princess Margriet Award for Culture. She holds degrees from Columbia University and the LSE.

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LSE GLOBAL POLICY LAB

Ebola Inequalities Tim Allen (LSE)

Professor of Anthropology at the London School of Economics and Political Science

Melissa Parker (LSHTM)

Professor of Medical Anthropology at the London School of Hygiene & Tropical Medicine Ebola responses highlight chronic problems with public authorities and multiple inequalities in health assessments and responses. Our team’s research has explored the implications (http://www.lse.ac.uk/ africa/centre-for-public-authorityand-international-development/ Public-authority-and-Ebola). With respect to the 2014/15 epidemic in West Africa, the problems were extreme, and apparent to anyone who cared to notice. A basic statistic underlines the point: the estimated amount spent on Ebola was 150% more than the annual government budgets of the three most affected countries combined. This was primarily because West Africa is situated relatively close to Europe, and the affected populations have close connections with both Europe and the United States. There were serious concerns about infection spreading to rich countries. Containment was the priority, and protection of international staff shaped events on the ground. Indeed, unprecedented steps were taken. Unlike previous Ebola epidemics, the West African epidemic was categorised by the UN Security Council as ‘a threat to international peace and security’. In Sierra Leone, an expensive British operation involved deploying hundreds of military medics and logistical personnel. Many were based offshore on HMS Argos, and others in protected locations near the site of a treatment centre they helped construct and run in Kerrytown, at the edge of Freetown. The centre took so long to complete that the worst of the epidemic was over by the time it was effective. Noteworthy, too, is that care was initially provided for infected

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In Sierra Leone, an expensive British operation involved deploying hundreds of military medics and logistical personnel. Many were based offshore on HMS Argos, and others in protected locations near the site of a treatment centre they helped construct and run in Kerrytown, at the edge of Freetown. expatriates in a separate space to Sierra Leonean citizens. However, the numbers coming forward were small. Rumours abounded, including stories about soldiers collecting body parts. The situation was not helped by the fact that infected expatriates were, in practice, evacuated to their home countries. Upcountry, Médecins Sans Frontiers (MSF) and other NGOs were on the front line, working with national colleagues. Speaking to some of those involved, it is clear that the situation in mid 2014 was harrowing, and involved making troubling

choices. It was decided that it was too dangerous to attempt intravenous rehydration of infected people arriving in crowded ambulances at Bo and other large treatment centres. Instead, those sent there were triaged and the infected segregated and quarantined – such that relatives could not access them to administer intensive individual care. Most patients died quickly, and were then buried in ways that set aside local customs, thereby preventing infection from corpses. Independent assessments of the Ebola programmes have been highly critical. Evaluations of the World Health Organisation are scathing, and MSF, which was instrumental in calling for military deployment, has openly expressed doubts that it was useful. Overall, there is a prevalent view that neither soldiers, nor medics were particularly influential in containing the epidemic – even if they were important in finding and treating the last recorded cases. So, what worked? The answer is far from clear. Acquired immunity may have been a factor, and probably also the behavioural responses of the population. The latter is often misleadingly referred to as ‘community mobilization’. It suggests that social changes are externally directed, and begs the question of what the word ‘community’ implies. In Sierra Leone, like everywhere else, communities are far from homogeneous or cohesive – and they have contested hierarchies. Here, too, inequalities are a crucial factor in assessing events, in so far as there is evidence. It has been argued that paramount chiefs were key. These are a legacy of British indirect colonial rule, and were rehabilitated with support from the UK

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government after Sierra Leone’s civil war. They took responsibility, it is maintained, for quarantining and reporting patients. That was surely the case in some circumstances, but to equate claims made about (or by) paramount chiefs with pervasive experiences across the country is absurd. Our research shows that chiefly authority is very variable, and location specific. In places where we have carried out fieldwork, notably Ribbi Chiefdom, there were many surprises. To begin with, far more people were diagnosed with Ebola than was officially reported. Moreover, the majority were treated by their families in secret. Everything was done to hide what was happening from the paramount chief, and information from the radio and from educated friends and relatives was used to protect those looking after patients, and to bury those that died. Intensive oral rehydration was attempted from the outset, and the majority of those with suspected Ebola survived. People are proud of how they acted towards one another, and how they resisted efforts to control them. They successfully prevented loved ones being taken away to die with strangers. The prevalence of such procedures is unknown. Indeed, the number of people who died from Ebola in Sierra Leone can only be guessed. The 3,955 deaths officially reported are based on data from the treatment centres, which people tried to avoid, and often did so successfully. Ebola control measures required families to make decisions that potentially violated moral norms. For many, that was not a choice at all. Social inequalities do not mean that hierarchies are unquestioned or resisted. On the contrary, they are

likely to encourage the rejection of public authorities associated with political office in favour of public authorities grounded in mutual social relations. When it comes to matters of life and death, it is predictable that systems associated with maintaining social stratification are subverted. Given the dreadful symptoms of Ebola, the lack of trust towards outsiders, histories of exploitation, and experiences of oppression, conspiracy theories are likely ways of trying to make sense of things. Those who most compellingly interpret events are unlikely to be government agents or aid workers, unless they engage very seriously with understanding local dynamics, and work sensitively in that context. It is a lesson that has not been learned, as evidenced by the aggressive, exclusionary, poorly communicated and socially divisive responses being applied to the ongoing epidemic in eastern Democratic Republic of Congo. Efforts at control, treatment and vaccination continue to make every effort to co-opt, exploit and reinforce existing hierarchies. Political realities of the region make it a risky strategy. ◆

Home-made Ebola protection equipment, used to protect a secret burial team, Ribbi Chiefdom, Sierra Leone. Photo: Melissa Parker

Tim Allen is professor of Anthropology in Development, Department of International Development, London School of Economics. He is Director of the Economic and Social Research Council Centre for Public Authority in International Development, and is the inaugural Director of the Firoz Lalji Centre for Africa. He has carried out extensive ethnographic research various parts of Africa since the 1980s. This has mostly focused on health, healing, war, security, and justice. His books include the wildly use textbook, Poverty and Development, and a much-cited study of the International Criminal Court and the Lord’s Resistance Army. Melissa Parker is a professor of Medical Anthropology at the London School of Hygiene & Tropical Medicine. Since the 1980s, she has carried out research in Sudan, Uganda, Tanzania, Sierra Leone and the United Kingdom on a wide range of global health issues. In 2014, she established the Ebola Response Anthropology Platform with colleagues from Sierra Leone and the UK, which was awarded the UK’s Economic and Social Research Council ‘Celebrating Impact Prize’ for ‘Outstanding International Impact’.

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Scholars on Rising Inequalities Sciences Po deans and scholars assess the challenges of tomorrow’s society.

Inégalités Croissantes Chercheurs et doyens de Sciences Po évaluent les défis de la société de demain.

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The Trust Crisis Yann Algan Dean, School of Public Affairs, Sciences Po Full Professor, Department of Economics

he rise of antisystem forces and populism testifies to a deep trust crisis of citizens, both towards their institutions and others, as we show in a new book “The origins of populism” (with D. Cohen, E. Beasley, M. Foucault). The votes for antisystem parties is fueled first and foremost by a sharp deterioration of citizens’ trust in their institutions, experts and elites over the last three decades. According to the World Values Survey, the share of people who do not trust Parliament has increased from 47% to 77% in the United States, from 37% to 64% in France, and from 60% to 77% in Britain since the early 80s.

The erosion of trust in institutions seems closely linked to the deterioration of the living conditions of the middle and lower classes, hit by economic insecurity and rising inequalities, especially since the 2008 economic crisis. The financial crisis provoked an immense resentment towards the traditional parties, considered to be incapable of protecting the popular classes from the disturbances of contemporary capitalism. Beyond the financial crisis, the failure of governments and institutions to protect people from more structural risks such as the expansion of inequalities, globalization or the digital transition, has fueled distrust. As an illustration,

The votes for antisystem parties is fueled first and foremost by a sharp deterioration of citizens’ trust in their institutions, experts and elites over the last three decades. According to the World Values Survey, the share of people who do not trust Parliament has increased from 47% to 77% in the United States, from 37% to 64% in France, and from 60% to 77% in Britain since the early 80s.

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in a series of articles analyzing the “China Shock”, David Autor, and his co-authors, highlight the effects of globalization on the destruction of employment in American industrial strongholds, leading to a strong resentment towards institutions and a political radicalization. The digital revolution and rising inequality have had the same effect in Europe and the United States But the rise of antisystem forces tells us something more about trust: it also refers to the feeling of loneliness of individuals and more generally to a degraded relationship to others. This is where another essential dimension of trust is at work: trust in others. This distrust crisis seems to be also linked to a civilizational crisis: the emergence of a society of isolated individuals in our post-industrial world. Industrial society and the Fordist model were based on enterprises organizing the socialization of workers within the enterprise, including the presence of powerful unions. The post-industrial society has exploded this structuring of common spaces: the development of services and new ways of working has been accompanied by greater social loneliness. The same loneliness is at work in our territories. Driven out from cities and large metropolises, the middle and lower classes are overrepresented in mid-size units where local services, whether public services or bakeries, have collapsed. To paraphrase Hannah Arendt in The Origins of Totalitarianism, we have moved from a class society, not to a mass society, but to a society of individuals. In the post-industrial society, interpersonal trust is what remains for individuals to develop a common social project, which implies urgent policies to rebuild trust. ◆

Inequality in Education Carlo Barone, Full Professor, Sciences Po Denis Fougère, Agnès van Zanten, Research Directors, Observatoire Sociologique du Changement (CNRS), Science Po

n mass education societies, participation in primary and secondary education is quasiuniversal. Hence, social inequalities are most visible in the continuation to Higher Education and in the length and quality of tertiary programmes selected by students from different social backgrounds. Therefore, it seems natural to promote educational equalization by focusing on economic and cultural barriers faced by high school seniors. This is an optical illusion. Inequalities become visible in Higher Education, but they are generated much earlier. Secondary education is everywhere tracked into academic and vocational curricula. These often take the form of school tracks in Continental Europe, while in Anglo-Saxon and Scandinavian countries the model of subject choice prevails. But the pattern is everywhere the same: academic curricula offer much better training for Higher Education, thus enhancing the chances of enrollment in (and completion of) tertiary programmes, and into the best ones. Upper class, native students are hugely overrepresented in classes offering these curricula. To be sure, equalization measures at the end of secondary education are important, particularly outreach interventions combining academic support with the provision of information on Higher Education. But the problem is that they arrive too late, when students differ already too much in their skills and aspirations. Late interventions can have effects at the margins, but we have now increasing evidence that earlier counseling programmes targeting curricular choice in secondary education are more effective. There are just too many students with good school performances from disadvantaged

families that fail to make ambitious choices in secondary and tertiary education. They, and their parents, tend to overestimate their risks of failure in the academic path. They thus adapt their ambitions downwards and end up selecting shorter, applied programmes. Light-touch counseling interventions can correct their misperceptions and sustain their aspirations, before it’s too late. But we can take one more step back. Many working-class children fail to access academic curricula because they underperform in primary and lower secondary education. And our final step backwards is easily taken: when students enter the school system, they are already highly unequal. Longitudinal evidence on skill gaps through the life course is unequivocal: these gaps rapidly increase in the preschool years, and later stabilize or keep on growing (the less you know, the less you can learn). Inequalities in the cognitive and language stimulation received in early childhood, when our brain is particularly plastic, are a key driver of later inequalities in educational attainment. Less educated households fail to provide enough stimulation to their children. Sure, fostering childcare is important. And, even more important, fostering high-quality, economically accessible childcare. Evidence on the effectiveness of such public policy is now quite strong. Long-term studies of large publicly

To be sure, equalization measures at the end of secondary education are important, particularly outreach interventions combining academic support with the provision of information on Higher Education.

funded programs in the U.S., Europe and Latin America, and newer studies on state and local prekindergarten programs, find that these early interventions do improve outcomes for young children, particularly for those from disadvantaged families. But here comes a second, fundamental optical illusion: the idea that we can equalize education while leaving the home environment of low-educated families unchanged. This is just illusory, not the least because even children attending early childcare on a full-time basis spend no less than 40% of their time under the supervision of their parents. That is why the policy debate in the last decade has paid increasing attention to parenting interventions, which encourage parents to provide a more enriching environment to their children, explaining in simple terms what to do, why and how. Informal learning activities at home have an enormous potential to boost school success, but many low-educated parents just don’t know it. Reading storybooks to children, singing nursery rhymes together, even just talking to them and inviting them to explain why they do things. And yes, even finding the right videogames when they are at least 4 or 5. The good news is that sociologists, economists and psychologists have developed several cost-effective, light-touch parenting interventions that impact on the skills of disadvantaged children. Technology helps: text messaging programmes, parental book reading interventions based on video-sharing on the web, for instance. We have rigorous, impact evaluations showing what works and what doesn’t to reduce these early inequalities. So, policymakers have no excuse: they just have to choose, fund, monitor and evaluate effective programs. ◆

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More and Better Education to Face New Inequalities Enrico Letta Dean, School of International Affairs, Sciences Po President, Association of Professional Schools of International Affairs (APSIA)

ccess to education has always been one of the main criteria for assessing levels of inequality and inclusiveness in a community. Numerous studies have focused on the topic in the past. It is interesting to highlight the impact that increased global mobility has had and is having in this field. Due to major changes over the last two decades the resulting growth in mobility opportunities has profoundly altered the world of education, both in secondary and above all in university education. Before the mobility revolution that began years ago and which has accelerated since the beginning of the century, the option of studying abroad was limited to a small number of people. There were few exceptions to the widespread norm of cycles of studies carried out in the local area or at the furthest elsewhere within the same country. The times we are living in have radically changed this pattern. Nowadays there is a global education market that is no longer exclusively available to small minorities or limited to individual countries. A subset of educational supply and demand

has been formed on a global scale and is rapidly and continuously growing. It travels the planet breaking down the limits and barriers of the past and even provoking competition between distant and different locations. Something which was once limited to only a few people, today extends on a global scale like never before. There are many causes for this revolution. These dynamics are strongly affected by the growth of the middle classes in the countries that would once have been called developing countries, thanks to which today, for the first time in history, half of the world’s population is part of the middle class, a demographic event unimaginable only a generation ago. These countries, in addition to now being widely developed, have led the main growth in demand for education on a global scale. The main acceleration started in Asia in many of its largest countries, but now other countries in Africa and Latin America are also contributing to this impressive growth. It is mainly middle and upper middle classes with increasing purchasing power who are revolutionising and

There are many causes for this revolution. These dynamics are strongly affected by the growth of the middle classes in the countries that would once have been called developing countries, thanks to which today, for the first time in history, half of the world’s population is part of the middle class, a demographic event unimaginable only a generation ago.

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have already partially radically changed the world education market. They have certainly altered the criteria and facilitated the creation of quantitatively and qualitatively very different options than those available last century. On the other hand, the increased ease of travel is undoubtedly one of the main drivers for the birth and growth of this new global phenomenon. The opening up of borders within the European Union and the birth and development of low-cost flights have undoubtedly been two impressively effective drivers in increasing the number of people with mobility opportunities. In just over twenty years, the free movement of people has become a reality in Europe and has perhaps been the most important success of the entire integration process. The impact has been so impressive because it is not simply limited to making the different European countries accessible to other European citizens. The idea of the Union as a single area in which people are able to freely move around in, making it possible to consider living one’s life or parts of it in another country other than one’s own, has now been consolidated. Migration affected European countries in the past, but it was different to in the current area of free movement in the EU born of the Schengen Agreement. Intra-European migration in the past was usually permanent movements, one-way tickets, so to speak. It mainly concerned migration of low-skilled workers for work reasons. The current intraEuropean movement is very different. It generally depends on the type of population and the countries affected. It is much more flexible and potentially fragmented.

The movement rarely becomes permanent, just as today people’s working lives are based on flexibility. In this sense, the European area fits well with the very flexible way in which people - especially the younger generations - live today. The possibility of living in another country, not far from one’s country of origin for a short period of time, with the idea of returning or moving to another country when life choices make it possible, represents an opportunity for freedom that exceeds the constraints of borders from the past; especially during the second half of the twentieth century. Mobility has become a mass phenomenon, especially in Europe, which affects more and more people and which has above all become multigenerational. It often concerns young people, but it is growing even amongst older people, especially pensioners. And, of course, the number of people working in countries other than their countries of origin is growing. The area of free movement is becoming increasingly popular among the European population as a way to broaden horizons and of opportunities. It is therefore natural that the younger generations are the most natural beneficiaries of this enlargement. And it is natural that studying is the first activity to be affected and revolutionised by these changes. The numbers speak for themselves: according to UNESCO data, the number of international university students in the world rose from 800,000 in 1975 to over 4 million in 2013. The application of the principles of free movement from the Schengen Agreement and the European Union’s Single Market are probably enough alone to account for this increased mobility in studies. But there is no doubt that the great success of the Erasmus programme - 9 million young people involved over thirty years - is the other factor which has triggered something which has become a mass movement. The use of this term “mass” must not, however, be misleading. The Erasmus programme is limited to small numbers of young people when compared to the entire populations of our countries. However, in absolute terms, it has affected millions of people in Europe

and even outside Europe. And above all it is something very visible, which has managed to reach the public awareness and make education something internationally available, no longer seen as something exceptional for only a privileged few or for brave pioneers. Erasmus has made something normal that was previously seen as a rarity. In addition to the reasons mentioned above, there is undoubtedly another factor that has driven such impressive growth of a global education space. The world of work has changed and today’s education can no longer follow the same patterns it has always followed. This is not the time or place to examine these changes in depth. However, it is clear that work and jobs have changed so much that very different forms of preparation are needed. Greater flexibility, more adaptability to move between different sectors, the impact of new technologies and the need for

ever greater multilingualism are just some of the challenges that new training schemes need to adapt to. In particular, one of the most significant transformations concerns the system of organisation by study subject which is being totally called into question. Twentieth-century education was built around specialisations that began with secondary studies and continued on to university studies with insurmountable walls between one subject and another. It was unimaginable, except in exceptional cases, to consider multisubject study paths on a large scale. Today the trend goes in the opposite direction. The world of work, and life itself, today push for ever greater interactions between different sectors and subjects. The need to combine knowledge and make this combination bear fruit is one of the new, fascinating, but complex challenges of the new world of education. →

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→ As a result, modern training is moving towards innovations in which openness, flexibility and mobility are fundamental. It is precisely these characteristics that define the challenge of renewal, but simultaneously the great risk of social exclusion and the growth of inequalities brought on by the rapid changes in the world of education. Though it is true that a global market is forming based on a growing demand for higher education with a consequent growth in courses meeting these challenges; it is also true that the distance between this world and that of mass education, based only nationally or locally, is also growing impressively. It is no longer a question of the historical separation between a very small minority and the majority of young people in different countries; between the exception and the rule; between a small number of individuals - the cosmopolitan and globalised elite who had access to advanced education and studies abroad - and the mass of all the other students on the other hand. 1% of the population on the one hand and 99% on the other hand, if we were to massively simplify. This used to be the norm. Today the world of education is moving towards a separation between students who take advantage of the new opportunities offered by mobility and the rest who do not. But the first group, those who are mobile, are no longer the tiny minority of the past. They are becoming a more substantial part of the world of education, while remaining a minority. Large and growing, but still a minority. In most countries throughout the world the majority of students stick to educational paths that are not very open, not at all mobile and extremely rooted in the local area. The futures of people emerging from these two different worlds is increasingly divergent. It is difficult for the type of training received, whether it be a modern education, open to innovation and movement or training lacking these characteristics, not to have an impact on the rest of your life. Inequalities will grow instead of shrinking if the education world fails to meet the

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challenges of this growing gap. And the inequalities that are created or accentuated while training are the most rigid and difficult to break down later. As I have tried to describe before, it is not just a question of increasing the number of students who have access to modern, mobile and innovative forms of education. If it were this simple, we would be able to successfully fight inequalities. The issue is much more complex. In our societies, due to the impact of new technologies, increasing automation and imbalances due to globalisation, the bar has been raised for the training requirements necessary to obtain and perform certain types of jobs. Automation has destroyed and is destroying large numbers of decent, secure jobs which required little training. The crisis the middle classes in western countries are experiencing is partly due to these issues. And the violence of the social upheaval affecting our societies is partly the consequence of the speed with which these changes have arrived, depriving the welfare systems and the world of work of the transition times necessary to adapt to these changes. A sense of insecurity, growing nostalgia for the past, a feeling of inadequacy with respect to the requirements necessary

to keep up with the changes in progress, are all issues that can be explained by these changes and the speed with which they are happening. Therefore, if the world of work is changing so rapidly, it is not enough that only a minority of students - even though this is now fairly large - can access the most advanced, mobile and innovative forms of education. Because the gap that is created is becoming wider than those of the past and because the majority of students are in danger of finding themselves trapped in a tunnel of frustrations and inadequacies, given that it does not seem like the transformations underway in the labour market are set to change. Added to this is another fundamental consideration which is the cost of

education. If we look at the matter in the extremely simplistic terms of two large training groups - one mobile and innovative, the other traditional and domestic - then the question of cost takes on great importance. The average cost of educational courses for the first group is on average much greater than for the second. And the cost factor obviously has a significant impact on the social inequalities that are generated as a result. This growing division is also partly the explanation for the radicalisation present in societies. Frustration leads to rejection and growth of resentment against the system. Some recent political trends which are now deeply rooted in the societies of advanced countries can also be explained by looking at these changes.

The most ambitious, and at the same time, most necessary goal nowadays is setting ourselves the enormous challenge of creating an educational system capable of facing these forms of inequality and providing equal opportunities to truly everyone in our societies. First of all, we need to recognise what a central position the problem has. This would already appear to be a complex and ambitious challenge in itself. It is then necessary to remove the prejudices and inertia which lead to setting up tired schemes and giving the same old answers, relevant to a time long in the past that, as I have tried to argue, has nothing to do with the challenges that technological innovation and globalisation hold today. National and multifaceted responses

based on public policies need to be arranged, both in the fields of education and fiscal and social policies. Above all, we need to build responses that can bring the public and the private sectors together effectively, because it is clear that the scale of the challenge is so great that this is the only way there can be any chance of yielding positive results. Everyone needs to be involved. It is European countries and in general those in the West that are the most affected and it is they who need to be the main drivers for change. For this reason, the G7, the organisation that represents most of all what was once called the Western world, seems like it could be, together probably with the EU and the OECD, to be a major player in an huge effort to address these new and growing inequalities. ◆

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Globalization Requires an Ambitious Reform of International Taxation Philippe Martin Full Professor, Department of Economics, Sciences Po

he multilateral trading system is now under attack by the country which has been its main inspirer, the United States. The current view of the US administration of trade as a zero sum game where some countries (with trade surpluses) gain at the expense of others (with trade deficits) marks a stark departure from previous administrations as well as from the consensus of economists. It is therefore important to have in mind the losses that a trade war would entail. A simulation of a trade war (see Jean, Martin and Sapir, 2018 and Vicard 2018) shows large permanent losses (around 3% to 4% of GDP for the EU, US and China and much larger for smaller countries) that are similar to the estimated permanent effect of the Great Recession. Benefits of trade (and losses of a trade war) should not be overestimated (there are also decreasing returns to trade liberalization) but they do exist. This is not to say that benefits of trade liberalisation are evenly distributed. In fact, it has been known for a long time that international trade can not only increase inequalities but also create losers (be they individuals or regions inside countries).

This may partly explain the striking contrast between economists support to trade and public opinion. 60% of French people have a negative opinion of globalisation and only 13% are favourable to a deeper trade openness. The French are more critical of trade integration than the Germans: 75% of the French and 57% of Germans are favourable to greater protection against foreign competition. Also, 68% of the French and 55% of Germans consider that globalisation increases social inequalities. Economists broadly share these concerns on inequality and point out that over the last thirty years increasing globalisation in trade has increased competition between markets, often at the expense of certain categories of workers in developed countries. This is in particular the case for the impact of Chinese imports, (see Author D.H., D. Dorn and G.H. Hanson (2013) for the US case and Malgouyres C. (2017) for the French case). Several empirical studies have assessed the impact of increased imports from emerging and developing countries (mainly China). The increase in inequalities and the effects on wages and employment in developed countries

The standard response of economists is that if trade generates aggregate gains but with winners and losers, it should always be possible to transfer some of the gains from the winners to compensate the losers or to use increased resources to improve (through retraining for example) the fate of those who lost their jobs. However, with the possible exception of the Scandinavian countries, industrialised countries have failed to redistribute the benefits of globalisation.

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can be partly attributed to the increase in imports from emerging and developing countries. The studies found that the regional employment areas most exposed to competition from Chinese imports –intensive in unskilled work– are the ones that have experienced the greatest decline in manufacturing jobs. The standard response of economists is that if trade generates aggregate gains but with winners and losers, it should always be possible to transfer some of the gains from the winners to compensate the losers or to use increased resources to improve (through retraining for example) the fate of those who lost their jobs. However, with the possible exception of the Scandinavian countries, industrialised countries have failed to redistribute the benefits of globalisation. This is true both in the US and in the EU. Instruments seeking to mitigate the negative consequences of trade liberalisation exist (for example the European globalisation adjustment fund), but the tasks and resources assigned to these instruments are manifestly insufficient. It may be that trade is a positive sum for countries as a whole but we have failed to make it a positive sum gain for all inside countries. Why? Political reasons exist but financial ones should also be mentioned. At the same time as trade globalization should have led to more redistribution from winners to losers to make it socially and politically sustainable, financial liberalization made it more difficult for governments to tax the winners. The mobility of capital, of production and of the taxable base indeed makes this redistribution more difficult because it means that

the gains of globalization and of technology by individuals and multinational firms can more easily be shifted to low tax countries. In practice, along with competition and tax optimisation (or even tax evasion) it puts an unprecedented pressure on our redistribution systems. Trade integration also acts as an incentive to play the game of tax competition as it facilitates the relocation of production in response to tax advantages. Trade integration (in particular in services which is a key vector of profit shifting towards tax heavens) and trade liberalization make it more difficult for countries to tax the winners (for example large multinationals) and redistribute efficiently to the losers. Moreover, profit shifting by multinationals reduces the willingness of ordinary citizens to pay taxes (a clear issue of fairness during the recent “gillets jaunes” crisis in France) which puts even more strain on public finances. Assessments of the magnitude of profit shifting are subject to uncertainty due to the lack of detailed and comprehensive information at the firm level and comparable data across countries. By comparing profit to wages ratios of multinational firms in tax heavens and in high tax countries, it is still possible to identify the “abnormal” profits attributable to profit shifting. Globally, in 2015, recent work by economists (see Torslov, T., L. Wier et G. Zucman, 2018) estimates that 600 billion euros of profits were placed by multinational companies in tax havens, nearly 40% of their foreign profits, a large increase since the mid-1990s. Multinationals not only shift profits to tax heavens, they also shift sales so as to further disconnect sales and production to avoid paying corporate taxes (see Laffitte and Toubal, 2019). This is amplified by digitalization of the economy but the international taxation problem is not limited to the digital sector. Governments have been slow to react but the present G20-OECD project on Base Erosion and Profit shifting (BEPS) is a promising avenue. The international tax system is in a deep crisis and must indeed be urgently reformed. Reducing

profit shifting not only would increase tax revenues for most countries, it would also reduce the global incentive to reduce taxes on corporate profits. The period where the sole objective of the international tax rules was to facilitate the development of international trade and investment through the elimination of double taxation is over. An equity objective (so that countries get their “fair” share of tax revenues but also that mobile factors pay their “fair” share) should now be at the core of the reform of the international tax system. Only if the perceived lack of fairness on the contribution of the winners of globalization and technological progress is addressed, will globalization itself be politically and socially sustainable. ◆

Author D.H., D. Dorn and G.H. Hanson (2013): “The China Syndrome: Local Labor Market Effects of Import Competition in the United States”, American Economic Review, vol. 103, no 6 Jean, Sébastien Philippe Martin and André Sapir, International Trade Under Attack: What Strategy for Europe? Les notes du conseil d’analyse économique, no 46, July 2018 Laffitte, S. et F. Toubal. (2019) : “A Fistful of Dollars? Foreign Sales Platforms and Profit Shifting in Tax Havens”, CEPII Malgouyres C. (2017): “The Impact of Chinese Import Competition on the Local Structure of Employment and Wages: Evidence from France”, Journal of Regional Science, vol. 5, no 3, pp. 411-441. Torslov, T., L. Wier et G. Zucman (2018): “The Missing Profits of Nations”, NBER working paper, n°24701 Vicard V. (2018): “Une estimation de l’impact des politiques commerciales sur le PIB par les nouveaux modèles quantitatifs de commerce”, Focus du CAE, no 22, July.

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Corporate Tax Justice Cornelia Woll Full Professor, Political Science, Sciences Po (CEE, MaxPo & LIEPP)

ax cooperation seems to be more difficult to achieve through multilateralism than any other economic issue, despite growing consensus about the detrimental effects of corporate tax competition for both market integration and economic inequalities. Repeated attempts to harmonize corporate taxation have gained momentum since the financial crisis, with important proposals made by the OECD and the European Union. Yet failure to implement or even reach agreement on these proposals shows the need for leadership of the G7 in order to address the concerns of those countries that stand to lose most from corporate tax harmonization. Detrimental effects In the past, proponents of tax competition have underlined its positive effects on government efficiency, which were supposed to improve the provision of public services to respond to fleeting income. This argument generally does not hold for corporate taxation, since companies are much more mobile than Figure 1: Decrease in corporate tax rates

Statuatory corporate income tax rates (Federal and subnational combined, %)

Source: OECD.Stat

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citizens. As a result, we can observe a “race to the bottom” of corporate tax rates. Public choices are distorted in favor of the most mobile companies, with an increasingly important part of the tax burden born by the least mobile parts of a country’s population. In addition, tax competition places administrative burdens on companies operating in more than one country, where they have to adjust to often changing and diverse tax regimes, without the possibility to consolidate profits and losses at the company level. Initially, the desire to avoid double taxation on companies and thus discrimination against foreign subsidiaries was a principal driver of early calls for European corporate tax harmonization. The diagnosis of a problem changed in the last decade, not least in response to revelations about the extent of tax evasion or optimization by multinational companies. Moreover, the sovereign debt crisis in Europe brought fiscal capacity into sharp focus, either when countries with low levels of corporate taxation required international assistance to

avoid sovereign default or when countries with high corporate tax rates saw their public budgets dwindle. It is instructive to look at the increasing importance of tax havens in the profits of American companies. While profits have barely moved in the major economies where their consumers are located, they have grow more than seven times in only twenty years in seven low-tax nations: the Netherlands, Ireland, Bermuda, Luxembourg, Switzerland, the British Caribbean and Singapore, as Brad Setser showed in a NY Times Op-Ed on 6 February 2019. Today, Ireland alone is as important for US corporate profits as Italy, France, Germany, Japan, India and China combined. It comes as no surprise that the tax privileges for large multinational companies creates an outrage among ordinary citizens that do not have the same options to reduce their legal tax obligations. Fighting inequalities requires upholding social cohesion between the shareholders of companies, workers and consumers. Fair corporate taxation is crucial to achieving it. Difficult agreement This realization has pushed governments to seek multilateral solutions to stop the downward spiral of corporate taxation. Most centrally concerned is the European Union, whose integrated and non-discriminatory market is now being exploited by small member states using taxation as a means to attract foreign direct investment. Taxation as a key attribute of national sovereignty has always been a difficult issue for the member states and is bound by unanimity requirements until this day. As a result, proposals to accompany the single market with corporate tax harmonization were unsuccessful until the end of the first decade of the 2000. In 2016, the Juncker Commission – under pressure from the recent Lux Leaks scandal – proposed a two-step scheme f,or a Common Consolidated Corporate Tax Base that provides a single set of mandatory rules for corporate taxation, allowing national variation, but redistributing tax revenue among the

member states where revenue was generated. The adoption of these schemes in the Council is still pending, but one can expect opposition by the member states that stand to lose an important part of their tax revenue. The tensions were visible this spring, as the Council was unable to reach a consensus on the digital tax proposal that would have allowed taxing corporate giants such as Google, Amazon or Facebook. Fearing effects on other aspects of their digitalized economies, Ireland and the Scandinavian countries rejected even a watered-down version of the proposal France and Germany had tried to push for. When it comes to corporate taxation, which goes to the heart of economic development models within Europe, the EU is unable to find a common stance. Not only does it fail to become a global rule marker, the current fragmentation is also bad for European member states, companies and citizens. Moreover, it impedes moving forward on integration in much needed areas, such as banking union or capital market integration, and thus hampers the single market. Without corporate tax harmonization, the European Union stands to lose on all fronts. A more promising route might be the OECD’s Base Erosion and Profit Sharing (BEPS) initiative launched by the G20 in Kyoto in 2016. By trying to improve the coherence of international tax rules, enforcing information sharing and closing loopholes for tax avoidance, BEPS counts 125 voluntary member countries today from both the OECD and the developing world. With minimal standards against harmful tax practices and tax treaty abuse, country-bycountry reporting and mutual agreement procedures, BEPS paves the ground for coordination of corporate tax policies in a more transparent way. The effectiveness of such coordination is already visible in the area of offshore accounts. Through the Automatic Exchange of Information initiative of the OECD, tax information is now transferred through 4500

bilateral agreements. As a result of this sea-change, bank deposits by individuals and companies in international financial centers has dropped by 34% over the past ten years, which represents 489 billions euros, and led to an additional tax revenue of 95 billion euros worldwide. As tax coordination and informationsharing within the OECD advances, countries and multinational companies are getting used to a new environment of global tax rules that will impact foreign investment strategies and define the rules for taxing the digital economy. This paved the way for a rare moment of consensus among the G20 this June to endorse a minimum tax rate for big tech companies and a framework on how taxes should be calculated, despite earlier concerns from the United States that the Franco-British proposal targeted in particular US companies. With the ambition to publish a work plan for implementation by 2020, the OECD has emerged as the most central coordination sight in global tax competition. G7 leadership needed The recent OECD agreements and Japan’s decisive role in facilitating this agenda need to be saluted as one of the most promising paradigm changes in global Figure 2: Country of origin of US corporate profits Source: New York Times, analysis of Bureau of Economic Analysis data by Brad Setser and Cole Frank Profits as a percentage of U.S. USD

tax governance that would go a far step in fighting inequalities. But everything now hinges on the actual steps undertaken to get there. All the benefits of a multilateral consensus can be dashed in the implementation process. This is why G7 leadership is crucial to pave the way for the ambitious G20 objectives. It is paramount that the G7 as well as the EU work in parallel to the OECD recommendations to facilitate cooperation between tax authorities. For all countries involved in the negotiations, the key question will be what will happen in the absence of agreement. If that default position allows the countries that benefit from the current lack of regulation to continue reaping benefits, agreement will be more difficult to come by. Countries most eager to move forward, however, have underlined that they are willing to take unilateral steps. The United Kingdom for example has already announced a 2% levy on sales of digital services starting in April 2020. This is a strong signal that a return to the past is not likely. To avoid a myriad of country-by-country solutions that companies could again seek to play against one another, the G7 will need to lock shoulders and move ahead on this important issue together. The G7 has the opportunity to send a clear message about global inequalities by further strengthening the fight against corporate tax optimization. It should bolster minimum tax rates jointly, reiterate the central principles that will guide implementation and be pioneers in tax authority cooperation that will make abuse less and less likely in the world’s major economies. Strong support by the G7 will help set a standard for the G20 work plan and facilitate a European agreement on a common and consolidated corporate tax regime. The alternative is a world were multinational companies benefit from global markets and governments fight a losing battle within their much smaller political jurisdictions. In such as setting, the fight against global inequalities would be doomed. ◆

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La Crise de confiance Yann Algan Professeur d’économie et Doyen de l’École d’affaires publiques, Sciences Po

’essor des forces antisystèmes et populistes témoigne d’une profonde crise de confiance des citoyens à l’égard de leurs institutions et de leurs concitoyens, comme nous le montrons dans notre nouveau livre Les origines du populisme (avec D. Cohen, E. Beasley, M. Foucault). Le vote pour les partis antisystèmes est alimenté avant tout par une nette détérioration de la confiance des citoyens envers leurs institutions, les experts et les élites sur les trois dernières décennies. Selon le World Values Survey, la part des individus qui n’a pas confiance en son Parlement est passée de 47% à 77% aux

États-Unis, de 37% à 64% en France, et de 60% à 77% au Royaume-Uni depuis le début des années 80. L’érosion de la confiance dans les institutions semble étroitement liée à la détérioration de la qualité de vie des classes moyennes et inférieures, frappées par l’insécurité économique et les inégalités croissantes, en particulier depuis la crise économique de 2008. La crise financière a provoqué un ressentiment immense à l’égard des partis traditionnels, jugés incapables de protéger les classes populaires des turbulences du capitalisme contemporain. Au-delà de la crise financière, l’incapacité des gouvernements et des institutions à protéger

Le vote pour les partis antisystèmes est alimenté avant tout par une nette détérioration de la confiance des citoyens envers leurs institutions, les experts et les élites sur les trois dernières décennies. Selon le World Values Survey, la part des individus qui n’a pas confiance en son Parlement est passé de 47% à 77% aux États-Unis, de 37% à 64% en France, et de 60% à 77% au Royaume-Uni depuis le début des années 80.

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les populations d’autres risques structurels tels que l’accroissement des inégalités, la mondialisation ou la transition numérique, a nourri la défiance. Par exemple, dans une série d’articles qui analysent le « China shock », David Autor et ses co-auteurs mettent en évidence les effets de la mondialisation sur la destruction de l’emploi dans les bastions industriels américains, menant à un fort ressentiment à l’égard des institutions ainsi qu’à une radicalisation politique. La révolution numérique et l’accroissement des inégalités ont eu un effet similaire en Europe et aux États-Unis. Mais la montée des forces antisystèmes nous indique un autre élément relatif à la confiance : elle renvoie au sentiment de solitude des individus, et plus généralement à la dégradation des liens avec les autres. C’est là qu’une autre dimension essentielle de la confiance est à l’œuvre : la confiance en autrui. Cette crise de défiance semble être également liée à une crise civilisationnelle : l’émergence d’une société d’individus isolés dans notre monde post-industriel. La société industrielle et le modèle fordiste étaient basés sur des entreprises qui organisaient la socialisation des travailleurs au sein de l’entreprise, notamment par la présence de puissants syndicats. La société postindustrielle a démoli cette structure d’espaces communs : le développement des services et de nouvelles méthodes de travail se sont assortis d’un isolement social plus important. Ce même isolement est à l’œuvre sur nos territoires. Expulsés des villes et des grandes métropoles, les classes moyennes et inférieures sont surreprésentées dans les ensembles intermédiaires où les services de proximité, que ce soit des services publics ou des boulangeries, se sont effondrés. Pour paraphraser Hannah Arendt dans Les origines du totalitarisme, nous sommes passés d’une société de classe à une société d’individus, et non pas à une société de masse. Dans la société post-industrielle, la confiance interpersonnelle est ce qui reste aux individus pour pouvoir pour développer un projet social commun. Il est donc urgent d’adopter des politiques en vue de rétablir la confiance. ◆

Les Inégalités dans l’éducation Carlo Barone, Sciences Po, Full Professor Denis Fougère, Agnès van Zanten, Directeurs de recherche au CNRS, Sciences Po, OSC (Observatoire Sociologique du Changement)

ans les sociétés d’éducation de masse, la scolarisation dans le primaire et le secondaire est quasiment universelle. Les inégalités sociales sont par conséquent plus visibles lors de la transition vers l’enseignement supérieur, ainsi que dans la durée et la qualité des programmes de troisième cycle choisis par des étudiants d’origines sociales différentes. Dès lors, il semble naturel de promouvoir l’égalité dans l’éducation en se concentrant sur les barrières économiques et culturelles auxquelles sont confrontés les titulaires du baccalauréat. Or il s’agit là d’une illusion d’optique. Les inégalités deviennent visibles dans l’enseignement supérieur, mais elles sont créées bien plus tôt. Partout, l’enseignement secondaire se divise entre filières générales et professionnelles. En Europe continentale, cette division correspond à des différences de profil entre les établissements, tandis que dans les pays anglo-saxons et scandinaves, elle est apparente dans des différences entre les programmes d’enseignement d’un même type d’établissement. Mais la configuration est la même partout : l’enseignement général offre une bien meilleure formation pour accéder à l’enseignement supérieur, favorisant ainsi les chances d’admission (et de réussite) dans les meilleurs programmes d’enseignement de troisième cycle. Les étudiants des classes supérieures et d’origine nationale sont largement surreprésentés dans les filières générales. Certes, les mesures visant à favoriser l’égalité à l’issue du cycle d’enseignement secondaire sont importantes, en particulier l’accompagnement qui conjugue soutien pédagogique et des informations relatives à l’enseignement supérieur. Mais le problème réside dans le fait que ces mesures arrivent trop tard, au moment où les aptitudes et les aspirations des étudiants diffèrent déjà de façon très significative. Les interventions tardives peuvent avoir des effets à la marge, mais il est désormais de plus en plus clair que les programmes d’orientation précoces aidant l’élève à choisir son cursus dans l’enseignement secondaire sont plus efficaces. De trop nombreux étudiants ayant de bons résultats scolaires et issus de familles

défavorisées échouent à faire des choix ambitieux en deuxième et troisième cycles. Ces étudiants, ainsi que leurs parents, tendent à surestimer les risques d’échec scolaire. Ils limitent donc leurs ambitions et finissent par choisir des cursus plus courts et plus appliqués. Les actions d’orientation par petites touches peuvent corriger leur perception et soutenir leurs aspirations avant qu’il ne soit trop tard. Mais nous pouvons prendre encore d’avantage de recul. De nombreux enfants issus de la classe ouvrière échouent à accéder aux filières d’enseignement général parce qu’ils ont des résultats insuffisants à l’école primaire et au collège. Et il est possible d’aller encore plus loin : quand les élèves entrent dans le primaire, les inégalités sont déjà très prononcées. Les données longitudinales sur les écarts d’aptitudes tout au long de la vie sont sans équivoque : ces écarts se creusent rapidement pendant les années précédant l’école primaire, avant de se stabiliser ou de continuer à se creuser (moins on a acquis de connaissances, moins on peut apprendre). Les inégalités relatives à la stimulation linguistique et cognitive reçue durant la petite enfance, lorsque le cerveau est particulièrement plastique, sont un facteur-clé d’inégalités ultérieures pour ce qui est du niveau d’instruction. Les foyers les moins éduqués échouent à stimuler suffisamment leurs enfants. Certes, il est important de favoriser la garde d’enfants. Et il est encore plus important de favoriser un accueil de la petite enfance qui soit de bonne qualité et financièrement abordable. Les résultats des études sur l’efficacité de ce type de politique publique sont aujourd’hui plutôt

Les interventions tardives peuvent avoir des effets à la marge, mais il est désormais de plus en plus clair que les programmes d’orientation précoces aidant l’élève à choisir son cursus dans l’enseignement secondaire sont plus efficaces.

convergents. Des suivis de long terme relatifs à de grands programmes publics aux États-Unis, en Europe et en Amérique latine, mais aussi des études plus récentes sur les crèches publiques, montrent que ces mesures précoces améliorent la situation des jeunes enfants, notamment ceux qui sont issus de familles défavorisées. Mais il y a une deuxième illusion d’optique, qui est fondamentale : il s’agit de l’idée selon laquelle il serait possible d’atteindre l’égalité dans l’éducation tout en laissant inchangé l’environnement familial des familles peu instruites. C’est tout simplement une illusion, notamment parce que même les enfants pris en charge à temps plein de manière précoce passent moins de 40% de leur temps sous la surveillance de leurs parents. C’est pourquoi le débat durant la dernière décennie a de plus en plus porté sur les mesures mobilisant les parents, les encourageant à fournir à leurs enfants un environnement plus enrichissant, en leur expliquant de manière simple que faire, pourquoi et comment. Les activités éducatives informelles au sein de la famille favorisent grandement la réussite scolaire, mais nombre de parents peu instruits l’ignorent. Il peut s’agir, par exemple, de lire des histoires aux enfants, de chanter des comptines ensemble, et même de leur parler et de les pousser à expliquer pourquoi ils font certaines choses. Il peut également s’agir de trouver les jeux vidéos adéquats quand ils ont quatre ou cinq ans. La bonne nouvelle, c’est que les sociologues, les économistes et les psychologues ont mis au point un certain nombre d’actions en direction des parents, légères et abordables, qui ont un impact sur les aptitudes cognitives des enfants défavorisés. La technologie peut aider, avec par exemple des programmes de messagerie téléphonique ou des lectures de livres basées sur le partage de vidéos sur le web. Nous disposons d’analyses d’impact rigoureuses qui montrent ce qui fonctionne et ne fonctionne pas en vue de réduire les inégalités précoces. Les décideurs politiques n’ont donc pas d’excuses : ils doivent simplement sélectionner, financer, superviser et évaluer des programmes efficaces. ◆

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L’éducation contre les inégalités Enrico Letta Doyen de l’École d’Affaires Internationales, Sciences Po (PSIA) Président de l’APSIA (Association of Professional Schools of International Affairs)

’accès à l’éducation a toujours été l’un des principaux critères d’évaluation des niveaux d’inégalité et d’inclusion dans une communauté. De nombreuses études ont porté sur le sujet par le passé. Il est intéressant de souligner l’impact que la mobilité internationale croissante a eue et continue d’avoir dans ce domaine. En raison d’importantes évolutions au cours des deux dernières décennies, l’accroissement des mobilités a profondément altéré le monde de l’éducation, dans le secondaire, et surtout dans l’enseignement universitaire. Avant la révolution de la mobilité, qui a débuté il y a des années et s’est accélérée depuis le début du siècle, la possibilité de voyager à l‘étranger était limitée à un petit nombre. Il y avait alors quelques exceptions à la norme généralisée de cycles d’études effectués au niveau local, ou au plus loin, autre part à l’intérieur du même pays. L’époque que nous vivons a radicalement modifié cette configuration. De nos jours, il existe un marché mondial de l’éducation qui n’est plus exclusivement réservé à une petite minorité, ni réservée à certains pays. Offfre et demande d’éducation se sont développées à une l’échelle mondiale, et croissent de façon rapide et continue. Le marché global éducatif parcourt la planète, franchit les limites et fait tomber les

barrières du passé, engendre même une concurrence entre des zones différentes et éloignées les unes des autres. Ce qui était autrefois réservé à quelques personnes seulement s’étend aujourd’hui au monde entier comme jamais auparavant. Il y a de nombreuses causes à cette révolution. L’émergence des classes moyennes dans les pays qu’on nommait autrefois pays en développement, a eu une forte incidence sur ces dynamiques. En effet, pour la première fois dans l’histoire, la moitié de la population mondiale fait partie de la classe moyenne, un phénomène démographique encore inimaginable lors de la génération précédente. Ces pays, en plus d’être désormais largement développés, ont provoqué l’essentiel de la croissance de la demande en éducation à l’échelle planétaire. La principale accélération a débuté en Asie, dans la plupart de ses plus grands pays, mais désormais, d’autres pays en Afrique et en Amérique latine contribuent également à cette impressionnante croissance. Ce sont principalement les classes moyennes et moyennes supérieures, au pouvoir d’achat grandissant, qui sont en train de transformer le marché mondial de l’éducation. Elles ont sans aucun doute modifié les critères de choix et facilité la création d’options quantitativement et

Il y a de nombreuses causes à cette révolution. L’émergence des classes moyennes dans les pays qu’on nommait autrefois pays en développement, a eu une forte incidence sur ces dynamiques. En effet, pour la première fois dans l’histoire, la moitié de la population mondiale fait partie de la classe moyenne, un phénomène démographique encore inimaginable lors de la génération précédente.

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qualitativement différentes de celles existantes au siècle passé. D’autre part, la facilité des déplacements est incontestablement l’une des principales causes de l’émergence et de l’expansion de ce phénomène mondial. L’ouverture des frontières dans l’Union européenne et l’apparition des vols low-cost ont sans aucun doute été deux moteurs formidablement efficaces dans l’augmentation du nombre d’individus ayant des possibilités de mobilité. En à peine un peu plus de vingt ans, la libre circulation des personnes est devenue une réalité en Europe, et est probablement le succès le plus notable de l’ensemble du processus d’intégration. Son impact a été particulièrement impressionnant, parce qu’il ne s’est pas limité à rendre accessibles les différents pays européens aux autres citoyens européens. L’idée de l’Union en tant qu’espace unique au sein duquel les individus peuvent se déplacer librement, qui permet d’envisager de passer sa vie ou une partie de sa vie dans un autre pays que le sien, est désormais consolidée. Les migrations avaient déjà touché les pays européens par le passé, mais la situation était différente de celle de l’actuel espace de libre circulation dans l’UE qui est né de l’accord de Schengen. Les migrations intra-européennes d’autrefois étaient en général des déplacements d’ordre permanent, des allers simples pour ainsi dire. Elles étaient principalement constituées de travailleurs peu qualifiés, qui migraient pour des raisons professionnelles. Le mouvement intra-européen actuel est tout à fait différent. Il varie généralement en fonction du type de population et des pays touchés. Il est bien plus flexible et potentiellement fragmenté. Le déplacement est rarement permanent, puisque la vie professionnelle des individus repose aujourd’hui sur la flexibilité. À cet égard, l’espace européen correspond bien à la souplesse avec laquelle les personnes vivent aujourd’hui, en particulier les générations les plus jeunes. La possibilité de vivre dans un autre pays, peu éloigné du pays d’origine, pour une courte période, avec l’idée d’y retourner

ou d’aller dans un autre pays quand les choix de vie le permettent, offre des perspectives de liberté qui outrepassent les contraintes frontalières d’autrefois ; notamment au cours de la seconde moitié du vingtième siècle. La mobilité est devenue un phénomène de masse, essentiellement en Europe, concerne de plus en plus d’individus et surtout, est multi-générationnelle. Elle concerne souvent les jeunes, mais elle augmente même parmi les personnes plus âgées, en particulier les retraités. Et, bien sûr, le nombre de personnes travaillant dans des pays autres que leur pays d’origine est en hausse. L’espace de libre circulation est de plus en plus apprécié de la population européenne comme moyen d’élargir les horizons et les possibilités. Il est par conséquent normal que les jeunes générations soient les bénéficiaires les plus naturels de cet élargissement. Et il est naturel que les études soient la première activité à avoir été touchée et révolutionnée par ces changements. Les chiffres parlent d’eux-mêmes : selon les données de l’UNESCO, le nombre d’étudiants universitaires internationaux dans le monde est passé de 800 000 en 1975 à plus de quatre millions en 2013. L’application des principes de libre circulation de l’accord de Schengen et du marché unique de l’Union européenne suffisent à eux seuls à expliquer cette hausse de la mobilité dans le cadre des études. Mais il ne fait aucun doute que le succès du programme Erasmus – neuf millions de jeunes y ont participé en 30 ans – est l’autre facteur ayant déclenché ce qui est devenu un mouvement de masse. L’usage de ce terme « masse » ne doit cependant pas induire en erreur. Le programme Erasmus est limité à un petit nombre de jeunes individus comparé aux populations entières de nos pays. Toutefois, en termes absolus, il a touché des millions de personnes en Europe, et même en dehors. Et surtout, c’est un phénomène particulièrement visible, qui a réussi à sensibiliser le public, et à faire de l’éducation quelque chose d’accessible internationalement, qui ne soit plus vu comme quelque chose d’exceptionnel uniquement destiné à quelques privilégiés et à de courageux pionniers. Erasmus a rendu normal ce qui était auparavant une rareté. En plus des raisons mentionnées ci-dessus, un autre facteur a indéniablement conduit à cette croissance si spectaculaire de l’espace de l’éducation mondiale. Le monde du travail a changé, et l’éducation d’aujourd’hui ne peut plus suivre le schéma qu’elle a toujours suivie. Ce n’est ni le lieu ni le moment d’examiner ces transformations en

profondeur. Toutefois, il est clair que travail et emploi ont tellement changé que de nouvelles formes de préparation sont nécessaires. Une plus grande flexibilité, plus d’adaptabilité pour pouvoir passer d’un secteur à un autre, l’impact des nouvelles technologies et un besoin de toujours plus de multilinguisme sont quelques uns des enjeux auxquels les nouveaux programmes de formation doivent s’adapter. L’une des transformations les plus importantes concerne notamment le système d’organisation par discipline d’étude, qui est totalement remis en question. L’éducation du vingtième siècle a été construite à travers des spécialisations qui débutaient au cours des études secondaires et se poursuivaient lors des études universitaires, avec des murs insurmontables entre chaque discipline. Il était inimaginable, sauf cas exceptionnel,

d’envisager des filières d’études pluridisciplinaires à grande échelle. Aujourd’hui, la tendance est à l’opposé. Le monde du travail, et la vie elle-même, poussent désormais à davantage d’interactions entre différents secteurs et disciplines. La nécessité de combiner les savoirs et de faire en sorte que ces combinaisons portent leurs fruits, fait partie des nouveaux défis, fascinants mais néanmoins complexes, du nouveau monde de l’éducation. Par conséquent, la formation moderne s’achemine vers les innovations, pour lesquelles l’ouverture, la flexibilité et la mobilité sont fondamentales. Ce sont précisément ces caractéristiques qui définissent l’enjeu de cette rénovation, et, simultanément, le risque élevé d’exclusion sociale et la montée des inégalités provoquées par les mutations rapides du →

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→ monde de l’éducation. Bien qu’il soit avéré qu’un marché mondial est en train de se former sur la base d’une demande croissante d’enseignement supérieur et de l’augmentation correspondante du nombre de formations répondant à ces défis ; il est également avéré que la distance entre ce monde et celui de l’éducation de masse, établi uniquement nationalement et localement, se creuse de manière impressionnante. Il ne s’agit plus de séparation historique entre une toute petite minorité et la majorité des jeunes de différents pays ; entre l’exception et la règle ; entre un nombre limité d’individus - l’élite cosmopolite et mondialisée ayant eu accès à un enseignement supérieur et aux études à l’étranger - et la masse de tous les autres étudiants d’autre part. 1% de la population d’un côté et les 99% restants de l’autre, pour schématiser. C’était la norme. Aujourd’hui, le monde de l’éducation se dirige vers une séparation entre les étudiants qui tirent parti des nouvelles opportunités offertes par la mobilité et ceux qui ne le font pas. Mais ceux du premier groupe, ceux qui sont mobiles, ne sont plus la toute petite minorité d’autrefois. Ils sont en train de devenir une part bien plus substantielle du monde de l’éducation, tout en restant une minorité. Importante et allant croissant, mais tout de même une minorité. Dans la plupart des pays à travers le monde, la majorité des étudiants s’en tiennent à des parcours pédagogiques peu ouverts, pas mobiles du tout et profondément enracinés à l’échelle locale. L’avenir des personnes issues de ces deux mondes différents est de plus en plus divergent. Il est difficile que le type de formation reçue, qu’il s’agisse d’une éducation moderne, ouverte à l’innovation et au mouvement, ou d’une formation dépourvue de ces caractéristiques, n’ait aucune incidence sur le reste de notre vie. Les inégalités vont s’accroitre au lieu de diminuer si le secteur éducatif échoue à relever le défi de cet écart grandissant. Et les inégalités qui sont générées ou accentuées au cours de l’enseignement sont celles qui sont les plus rigides et les plus difficiles à briser plus tard. Comme j’ai déjà tenté de l’expliquer, il ne s’agit pas seulement d’accroitre le nombre d’élèves ayant accès à des formes d’éducation modernes, mobiles et innovantes. Si c’était si simple, nous serions capables de lutter efficacement contre les inégalités. Le problème est bien plus complexe. Dans nos sociétés, en raison de l’impact des nouvelles technologies, de l’automatisation et des déséquilibres dus à la mondialisation, la

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L’objectif le plus ambitieux, mais aussi le plus nécessaire aujourd’hui, consiste à nous atteler à l’immense défi que représente la création d’un système éducatif capable de faire face à ces formes d’inégalités et d’offrir des chances égales à tous dans nos sociétés.

barre a été relevée en ce qui concerne les exigences de formation nécessaires pour parvenir à certains types d’emplois. L’automatisation a détruit et continue à détruire un grand nombre d’emplois stables et décents qui nécessitaient peu de formation. La crise que traversent les classes moyennes des pays occidentaux est notamment liée à ces questions. Et la violence du bouleversement social qui touche nos sociétés est en partie la conséquence de la vitesse à laquelle ces changements ont eu lieu, privant les systèmes de protection sociale et le monde des périodes de transition nécessaires pour s’adapter à ces changements. Le sentiment d’insécurité, la nostalgie grandissante du passé, le sentiment d’inadéquation face aux exigences nécessaires pour arriver à suivre les changements en cours, sont des problématiques qui peuvent être expliquées par ces transformations et la rapidité avec laquelle elles surviennent. Par conséquent, si le monde du travail change si vite, il ne suffit pas que seule une minorité d’étudiants – même si elle est désormais assez importante – puisse accéder aux formes d’éducation les plus avancées, mobiles et innovantes. Parce que le fossé qui est en train de se creuser est plus profond

que celui d’autrefois, et parce que la majorité des étudiants risque de se retrouver prise au piège d’un tunnel de frustrations et d’insuffisances, étant donné qu’il ne semble pas que les transformations enclenchées sur le marché du travail ne semblent pas être sur le point de changer. À cela s’ajoute une autre considération fondamentale, qui est le coût de l’éducation. Si nous examinons le problème dans les termes extrêmement simplistes de deux grands ensembles de formation – l’un mobile et innovant, l’autre traditionnel et local – la question du coût revêt alors une grande importance. Le coût moyen des parcours de formation pour le premier groupe est globalement beaucoup plus élevé que celui

du second. Et le facteur coût a évidemment un impact significatif sur les inégalités sociales qui en découlent. Cette division croissante explique aussi en partie la radicalisation en cours dans nos sociétés. La frustration mène au rejet et à un fort ressentiment à l’égard du système. Certaines tendances politiques récentes, désormais profondément enracinées dans les sociétés des pays développés peuvent également s’expliquer par l’observation de ces changements. L’objectif le plus ambitieux, mais aussi le plus nécessaire aujourd’hui, consiste à nous atteler à l’immense défi que représente la création d’un système éducatif capable de faire face à ces formes d’inégalités et

d’offrir des chances égales à tous dans nos sociétés. Tout d’abord, nous devons reconnaitre le caractère central du problème. Cela semble déjà être un défi complexe et ambitieux en soi. Il est donc nécessaire de se débarrasser des préjugés et de l’inertie qui conduisent à des dispositifs usés et aux mêmes vieilles recettes, qui étaient pertinentes il y a longtemps, mais qui, comme j’ai tenté de l’expliquer, n’ont rien à voir avec les défis que posent aujourd’hui l’innovation technologique et la mondialisation. Des réponses nationales et multiformes reposant sur des politiques publiques doivent être mises en place, à la fois dans les domaines de l’éducation, de la fiscalité

et du social. Nous avons surtout besoin d’élaborer des réponses qui associent efficacement le secteur public et le secteur privé, car il est évident que l’ampleur de la tâche est telle qu’il n’y a pas d’autre moyen d’obtenir des résultats positifs. Tout le monde doit être impliqué. Il revient aux pays européens, et plus généralement à ceux d’Europe occidentale, qui sont les plus touchés, d’être les principaux moteurs du changement. Ainsi, le G7, organisation qui représente la plupart de ce qui fut un jour appelé le monde occidental, semble pouvoir être, conjointement avec l’UE et l’OCDE, un acteur majeur de l’immense effort nécessaire pour remédier à ces nouvelles et grandissantes inégalités. ◆

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La Mondialisation impose une ambitieuse réforme de la fiscalité internationale Philippe Martin Département d’économie, Sciences Po

e système commercial multilatéral est aujourd’hui menacé par le pays qui fut son principal inspirateur, les ÉtatsUnis. La position actuelle de l’administration américaine sur les échanges commerciaux - vus comme un jeu à somme nulle au sein duquel certains pays (avec un excédent commercial) gagnent au détriment des autres (déficitaires) - marque une rupture flagrante vis-à-vis des gouvernements précédents et du consensus des économistes. C’est pourquoi il est essentiel de garder à l’esprit les coûts qu’engendrerait une guerre commerciale. La simulation d’une guerre commerciale (voir Jean, Martin et Sapir, 2018 et Vicard 2018) révèle des pertes importantes et permanentes (de 3% et 4% du PIB pour l’UE, les États-Unis et la Chine et beaucoup plus pour les plus petits pays) comparables à l’estimation de l’impact à long terme de la grande récession. Les avantages du commerce (et les pertes dues à une guerre commerciale) ne doivent pas être surestimées (il y a également des rendements décroissants liés à la libéralisation des échanges) mais ils existent. Cela ne signifie pas que les avantages de la libéralisation des échanges soient également répartis. En fait, nous savons depuis longtemps que le commerce international peut non seulement accroitre les inégalités mais également produire des perdants (que

ce soient des individus ou des régions à l’intérieur des pays). Ceci pourrait expliquer en partie le contraste frappant entre l’appui des économistes au commerce international et l’opinion publique. 60% des Français ont une opinion négative de la mondialisation et seulement 13% d’entre eux sont favorables à une plus large ouverture des échanges commerciaux. Les Français sont plus critiques vis-à-vis de l’intégration commerciale que ne le sont les Allemands : 75% des Français et 57% des Allemands sont favorables à une meilleure protection contre la concurrence internationale. Par ailleurs, 68% des Français et 55% des Allemands pensent que la mondialisation accroit les inégalités sociales. Les économistes partagent largement ces préoccupations sur les inégalités et pointent le fait que sur les trente dernières années, la mondialisation croissante des échanges a accentué la concurrence entre les marchés, souvent au détriment de certaines catégories de travailleurs dans les pays développés. C’est particulièrement le cas en ce qui concerne l’impact des importations chinoises (voir Author D.H., D. Dorn et G.H. Hanson, 2013, pour le cas américain et Malgouyres C., 2017 pour le cas de la France). Plusieurs études empiriques ont évalué l’impact des importations issues des pays émergents et

La réponse type des économistes consiste à expliquer que si les échanges génèrent globalement des bénéficies mais aussi des gagnants et des perdants, il devrait être possible de transférer une partie de ces profits afin de dédommager les perdants, ou d’utiliser le surcroit de ressources pour améliorer - par la requalification par exemple - le sort de ceux qui ont perdu leur emploi. Cependant, à l’exception possible des pays scandinaves, les pays industrialisés ont échoué à redistribuer les bénéfices de la mondialisation.

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en développement (principalement la Chine). L’accroissement des inégalités et ses effets sur les salaires et l’emploi dans les pays développés est partiellement imputable à l’augmentation des importations issues des pays émergents et en développement. Les études ont permis de constater que les bassins d’emploi les plus exposés à la concurrence des importations chinoises intenses en travail non qualifié – sont ceux qui ont subi les plus fortes baisses d’emploi industriel. La réponse type des économistes consiste à expliquer que si les échanges génèrent globalement des bénéficies mais aussi des gagnants et des perdants, il devrait être possible de transférer une partie de ces profits afin de dédommager les perdants, ou d’utiliser le surcroit de ressources pour améliorer - par la requalification par exemple - le sort de ceux qui ont perdu leur emploi. Cependant, à l’exception possible des pays scandinaves, les pays industrialisés ont échoué à redistribuer les bénéfices de la mondialisation. Ce constat est valable à la fois pour les États-Unis et l’Union européenne. Il existe des instruments visant à atténuer les conséquences néfastes de la libéralisation des échanges (par exemple le Fonds européen d’ajustement à la mondialisation), mais les missions et les ressources assignées à ces instruments sont manifestement insuffisantes. Il se peut que le commerce représente une somme positive pour les pays dans leur ensemble, mais nous avons échoué à faire en sorte que ce soit le cas pour tous à l’intérieur des pays. Pourquoi ? Des facteurs d’ordre politique existent, mais il faut également mentionner ceux d’ordre financier. Au moment même où la mondialisation des échanges devrait avoir conduit à plus de redistribution des gagnants vers les perdants afin de la rendre viable sur le plan social et politique, la libéralisation financière a compliqué la tâche des gouvernements pour taxer les gagnants. La mobilité du capital, de la production et de la base imposable a en effet rendu cette

redistribution plus difficile. Elle a permis que les gains liés la mondialisation et aux technologies, réalisés par des individus et des entreprises multinationales, puissent être plus aisément transférés vers des pays à faible fiscalité. Dans les faits, à l’instar de la concurrence et de l’optimisation fiscale (ou même de l’évasion fiscale), elle exerce une pression sans précédent sur nos systèmes de redistribution. L’intégration commerciale incite également à jouer le jeu de la concurrence fiscale, car elle facilite la relocalisation de la production en échange d’avantages fiscaux. L’intégration (en particulier les services, qui sont un facteur clé de transfert des bénéfices en direction des paradis fiscaux) et la libéralisation des échanges commerciaux, empêchent les pays d’imposer les gagnants (les grandes multinationales par exemple) et de redistribuer efficacement vers les perdants. En outre, les transferts de bénéfices effectués par les multinationales diminuent le consentement des citoyens ordinaires à payer leurs impôts (un problème évident de justice et d’équité au cours de la récente crise des « gilets jaunes » en France), ce qui pèse encore d’avantage sur les finances publiques. L’évaluation de l’ampleur des transferts de bénéfices reste sujette à incertitude, en raison du manque d’informations détaillées et exhaustives au niveau des entreprises, ainsi que de données comparables entre les pays. En comparant les rapports bénéfices-salaires des entreprises multinationales dans les paradis fiscaux et dans les pays à fiscalité élevée, il est tout de même possible d’identifier les profits « anormaux » imputables au transfert de bénéfices. À l’échelle mondiale, les travaux récents d’économistes (voir Torslov, T., L. Wier et G. Zucman, 2018) estiment qu’en 2015, les entreprises multinationales ont placé 600 milliards d’euros de profits dans des paradis fiscaux, soit environ 40% de leurs profits étrangers, ce qui représente une forte hausse depuis le milieu des années 90. Les multinationales ne transfèrent pas seulement leurs bénéfices vers les paradis fiscaux, elles y transfèrent également leur chiffre d’affaires, afin de déconnecter d’avantage le chiffre d’affaires de la production, et d’éviter de payer l’impôt sur les sociétés (voir Laffitte et Toubal, 2019). La numérisation de l’économie accentue ce phénomène, mais le problème de la fiscalité internationale ne se limite pas au secteur numérique. Les gouvernements ont tardé à réagir, mais le projet actuel Érosion de la base d’imposition et transfert de bénéfices (BEPS), mené par le G20 et l’OCDE, est prometteur. Le système d’imposition internationale est en crise profonde et doit effectivement être

réformé en urgence. La baisse des transferts de bénéfices n’aurait pas seulement pour effet d’accroitre les recettes fiscales de la plupart des pays. Elle atténuerait également la tendance globale visant à réduire l’imposition sur les sociétés. La période durant laquelle le seul et unique objectif des règles de la fiscalité internationale était de faciliter le développement du commerce et des investissements internationaux par la suppression de la double imposition est révolue. L’objectif d’équité (de sorte que les pays obtiennent leur « juste » part de recettes fiscales mais aussi que les facteurs les plus mobiles paient leur « juste » part) doit désormais être au cœur de la réforme du système d’imposition internationale. La mondialisation ne sera viable socialement et politiquement que si l’on s’attaque à la perception d’une absence d’équité relative à la contribution des vainqueurs de la mondialisation et du progrès technologique. ◆

Author D.H., D. Dorn et G.H. Hanson (2013) : « The China Syndrome : Local Labor Market Effects of Import Competition in the United States », American Economic Review, vol. 103, n°6 Jean Sébastien, Philippe Martin et André Sapir, « Avis de tempête sur le commerce international : quelle stratégie pour l’Europe ? » Les notes du conseil d’analyse économique, n°46, Juillet 2018 Laffitte, S. et F. Toubal. (2019) : « L’évitement fiscal des multinationales : le rôle clé des plateformes de vente installées dans les paradis fiscaux », CEPII Malgouyres C. (2017) : « The Impact of Chinese Import Competition on the Local Structure of Employment and Wages : Evidence from France », Journal of Regional Science, vol. 5, n°3, pp. 411-441. Torslov, T., L. Wier et G. Zucman (2018) : « The Missing Profits of Nations », NBER working papers, n°24701 Vicard V. (2018) : « Une estimation de l’impact des politiques commerciales sur le PIB par les nouveaux modèles quantitatifs de commerce », Focus du CAE, n°22, Juillet.

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Justice fiscale des entreprises Cornelia Woll Professeure de Science Politique, Sciences Po (CEE, MaxPo et LIEPP)

algré un large consensus pour dénoncer les effets néfastes de la concurrence en matière d’impôt sur les sociétés, le multilatéralisme peine à être efficace en matière de coopération fiscale. Les tentatives répétées visant à harmoniser la fiscalité des entreprises, si elles ont pris de l’ampleur depuis la crise financière (avec des propositions importantes de la part de l’OCDE et de l’Union européenne), n’ont pas vraiment débouché sur une mise en oeuvre, ni même un accord entre les partenaires sur ce qu’il faudrait faire. Cet échec démontre qu’il est nécessaire que le G7 fasse preuve de leadership afin de répondre aux préoccupations des pays qui ont le plus à perdre d’une harmonisation de l’impôt sur les sociétés. Effets néfastes Dans le passé, les partisans de la concurrence fiscale ont souligné ses effets positifs sur l’efficacité gouvernementale, supposée améliorer les services publics pour pallier le caractère fluctuant des revenus. Cet Graphique 1: Baisse des taux d’imposition sur les sociétés

Statuatory corporate income tax rates (Federal and subnational combined, %)

Source: OECD.Stat

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00 74

argument ne tient généralement pas pour ce qui est de l’impôt sur les sociétés, étant donné que les entreprises sont beaucoup plus mobiles que les citoyens. Par conséquent, nous pouvons observer un « nivellement par le bas » des taux d’imposition sur les sociétés. Les choix publics sont détournés au profit des entreprises les plus mobiles, avec une part de plus en plus importante de charge fiscale assumée par les composantes les moins mobiles de la population d’un pays. En outre, la concurrence fiscale fait porter le fardeau administratif sur les entreprises qui interviennent dans plus d’un pays, puisque ces dernières doivent s’adapter à des régimes fiscaux variés et changeant fréquemment, sans avoir la possibilité de consolider les profits et les pertes à l’échelle de l’entreprise. À l’origine, la volonté d’éviter la double imposition des entreprises, et donc la discrimination des filiales étrangères, a été le principal moteur des premiers appels à harmoniser l’impôt sur les sociétés en Europe. Le diagnostic du problème a changé au cours de la dernière décennie, auquel les

révélations sur l’ampleur de l’évasion et de l’optimisation fiscale des entreprises multinationales ne sont pas étrangères. La crise de la dette souveraine en Europe a par ailleurs braqué les projecteurs sur la capacité fiscale des pays, soit quand ceux à faible niveau d’imposition sur les sociétés ont réclamé une aide internationale pour éviter un défaut souverain, ou quand des pays à taux élevé d’imposition sur les sociétés ont vu le budget de l’État s’amenuiser. Il est intéressant de constater l’importance grandissante prise par les paradis fiscaux dans les bénéfices des entreprises américaines. Alors que les bénéfices ont à peine évolué dans les grandes économies où sont situés les consommateurs, ces derniers ont été multiplié par plus de sept en seulement 20 ans dans sept nations à faible fiscalité : aux Pays-Bas, en Irlande, aux Bermudes, au Luxembourg, en Suisse, dans les Caraïbes britanniques et à Singapour. C’est ce qu’a montré Brad Setser dans une tribune publiée dans le New York Times du 6 février 2019. L’Irlande seule est aujourd’hui aussi importante pour les bénéfices des entreprises américaines que l’Italie, la France, l’Allemagne, le Japon, l’Inde et la Chine réunis. Le fait que les privilèges fiscaux des grandes entreprises multinationales indignent les citoyens ordinaires n’ayant pas les mêmes possibilités d’alléger leurs obligations fiscales légales n’est pas étonnant. La lutte contre les inégalités nécessite de préserver la cohésion sociale entre les actionnaires des entreprises, les travailleurs et les consommateurs. Une fiscalité équitable des entreprises est essentielle à sa réalisation. Un accord difficile Cette prise de conscience a poussé les gouvernements à chercher des solutions multilatérales afin de stopper la spirale négative de l’imposition des entreprises. L’Union européenne est la plus directement concernée, puisque son marché intégré et non discriminatoire est aujourd’hui exploité par de petits États membres qui utilisent la fiscalité pour attirer les investissements étrangers directs. L’imposition comme attribut essentiel de la souveraineté nationale a toujours été une question délicate pour les États membres et est encore à ce jour tenue au principe d’unanimité. Les propositions pour assortir le marché unique d’une harmonisation de l’impôt sur les sociétés ont par conséquent été infructueuses jusqu’à la fin des années 2000. En 2016, la commission Juncker – sous pression depuis le récent scandale des Lux Leaks –

a proposé une directive en deux étapes pour une Assiette commune consolidée pour l’impôt sur les sociétés (ACCIS), qui prévoit un ensemble unique de règles fiscales pour l’imposition sur les sociétés, en permettant des variations au niveau national, mais qui répartit les recettes fiscales parmi les États membres concernés. L’adoption de ces dispositifs au Conseil est encore en suspens, mais on peut s’attendre à un refus des États membres qui risquent de perdre un part importante de leurs recettes fiscales. La tension était palpable au printemps dernier, quand le Conseil a été incapable de parvenir à un consensus concernant la taxe sur le numérique, qui aurait permis d’imposer des géants comme Google, Amazon, ou Facebook. Par crainte des conséquences sur d’autres aspects de leur économie numérique, l’Irlande et les pays scandinaves ont même rejeté la version édulcorée pour laquelle plaidaient la France et l’Allemagne. Quand il s’agit d’imposition sur les sociétés, qui touche au coeur des modèles de développement économique en Europe, l’Union européenne est incapable de définir une position commune. Non seulement elle échoue à devenir une référence pour la réglementation mondiale, mais la fragmentation actuelle est également néfaste pour les États membres, les entreprises et les citoyens. En outre, cette situation entrave l’intégration dans des domaines essentiels tels que l’union bancaire et l’intégration du marché des capitaux, et nuit donc au marché unique. Sans harmonisation de l’imposition sur les sociétés, l’Union européenne risque de perdre sur tous les fronts. Une voie plus prometteuse semble se dessiner par l’initiative Érosion de la base d’imposition et transfert de bénéfices (BEPS) de l’OCDE, lancée par le G20 à Kyoto en 2016. En essayant de rendre plus cohérentes les règles fiscales internationales, en imposant l’échange d’informations et en éliminant les failles permettant l’évasion fiscale, le BEPS comptabilise 125 pays membres volontaires issus de l’OCDE et des pays en développement. Grâce à des normes minimales contre les pratiques fiscales nocives et les abus des conventions fiscales, la déclaration pays par pays et les procédures d’accord mutuel, le BEPS ouvre la voie à une coordination plus transparente des politiques en matière d’impôt sur les sociétés. L’efficacité d’une telle coordination est déjà visible dans le domaine des comptes offshore. Grâce à l’échange

automatique d’information de l’OCDE, les données fiscales sont désormais transmises par l’intermédiaire de 4500 accords bilatéraux. En raison de ce bouleversement, les dépôts bancaires des particuliers et des entreprises dans les centres financiers internationaux ont chuté de 34% au cours des dix dernières années, ce qui représente 489 milliards d’euros, et a généré une recette fiscale supplémentaire de 95 milliards d’euros dans le monde. Tandis que la coordination fiscale et l’échange d’informations progressent dans l’OCDE, les pays et les entreprises multinationales se familiarisent avec un nouvel environnement de règles fiscales internationales qui vont influer sur les stratégies d’investissement et définir les règles pour imposer l’économie numérique. Cela a ouvert la voie à un rare moment de consensus au sein du G20 en juin dernier, sur l’adoption d’un taux minimum d’imposition pour les grandes entreprises de technologie et d’un cadre pour le calcul de l’impôt, malgré les inquiétudes exprimées précédemment par les États-Unis quant au fait que la proposition franco-britannique visait particulièrement des entreprises américaines. Ayant pour ambition de publier un plan de travail à mettre en œuvre d’ici 2020, l’OCDE s’est imposée comme le pôle de coordination central de la concurrence fiscale mondiale. Un leadership nécessaire du G7 Les récents accords de l’OCDE et le rôle déterminant joué par le Japon pour faciliter Graphique 2: Pays d’origine des bénéfices des entreprises américaines Source: New York Times, analyse des données du Bureau of Economic Analysis par Brad Setser et Cole Frank Profits as a percentage of U.S. USD

la réalisation de ce programme doivent être salués comme l’un des changements de paradigme les plus prometteurs dans la gouvernance fiscale mondiale, qui contribuerait grandement à la lutte contre les inégalités. Mais tout dépend maintenant des mesures concrètes qui seront prises pour y parvenir. Tous les avantages d’un consensus multilatéral peuvent être anéantis pendant le processus de mise en œuvre. C’est la raison pour laquelle le leadership du G7 est essentiel pour ouvrir la voie aux ambitieux objectifs du G20. Il est primordial que le G7 et l’UE travaillent main dans la main sur les recommandations de l’OCDE afin de faciliter la coopération entre les autorités fiscales. Pour tous les pays impliqués dans les négociations, la question clé sera de savoir ce qui adviendra en l’absence d’accord. Si cette position par défaut permet aux pays qui profitent de l’actuelle absence de réglementation d’en tirer des avantages, il sera plus difficile de parvenir à un accord. Les pays les plus désireux d’aller de l’avant ont toutefois souligné qu’ils étaient disposés à prendre des mesures unilatéralement. Le RoyaumeUni a par exemple déjà annoncé une taxe de 2% sur les ventes de services numériques à partir d’avril 2020. C’est un signal clair qu’un retour en arrière est peu probable. Afin d’éviter une myriade de solutions pays par pays que les entreprises pourraient de nouveau chercher à monter les unes contre les autres, le G7 devra resserrer les rangs et prendre les devants collectivement sur cette question d’importance. Le G7 a l’opportunité d’envoyer un message fort sur les inégalités mondiales en continuant à renforcer la lutte contre l’optimisation fiscale des entreprises. Il devra stimuler conjointement les taux minimum d’imposition, réaffirmer les principes centraux qui guideront sa mise en œuvre, et être pionniers dans le cadre d’une coopération des autorités fiscales qui rendra les abus de moins en moins probables dans les principales économies du monde. Le ferme soutien du G7 aidera à l’instauration d’une norme pour le plan de travail du G20 et favorisera un accord européen pour un régime commun et consolidé de l’impôt sur les sociétés. L’alternative serait un monde dans lequel les entreprises multinationales tirent profit des marchés mondiaux et où les gouvernements aux compétences politiques bien moindres mèneraient une bataille perdue d’avance. Dans un tel contexte, la lutte contre les inégalités mondiales serait vouée à l’échec. ◆

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G L O B A L B R I E F I N G R E P O RT C L I M AT E C H A N G E F E AT U R E

If You Think Fighting Climate Change Will Be Expensive, Calculate the Cost of Letting It Happen Climate change is bad for the economy and investing in climate resilience is not only a national security priority, but an enormous economic opportunity. By Dante Disparte

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G L O B A L B R I E F I N G R E P O RT C L I M AT E C H A N G E

With the Trump

Administration’s surprising U-turn on the COP21 Paris Agreement, the U.S. finds itself with some strange bedfellows, joining Nicaragua and Syria in abstaining from this important treaty. The White House’s argument for leaving the treaty is based on economic nationalism: President Trump, in his speech announcing the decision, cited primarily the “lost jobs, lower wages, shuttered factories, and vastly diminished economic production” that he thought meeting the agreement’s voluntary targets would cause. This echoes a common political talking point: that fighting climate change is bad for the economy. I’d like to point out the flip side: that climate change itself is bad for the economy and investing in climate resilience is not only a national security priority, but an enormous economic opportunity. The share of national GDP at risk from climate change exceeds $1.5 trillion in the 301 major cities around the world. Including the impact of human pandemics—which are likely to become more severe as the planet warms—the figure increases to nearly $2.2 trillion in economic output at risk through 2025. For recent examples of what climate disruptions will look like in practice, consider Superstorm Sandy, which devastated the Eastern Seaboard in 2012, causing $68 billion in damages, making it the second most costly weather event in the U.S. after Hurricane Katrina. Record snowfall in Boston of more than 100 inches in the winter of 2015 shut down transit systems for weeks and made it difficult, if not impossible, for some employees to get to work. The “rain bomb” that imperiled the Oroville Dam in California earlier this year threatened the displacement of more than 250,000 downstream residents. A similar rain bomb effectively destroyed historic downtown Ellicott City in 2016, just outside of Washington DC Air quality and smog red alerts and the complete →

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G L O B A L B R I E F I N G R E P O RT C L I M AT E C H A N G E

bans on vehicle traffic in major cities → around the world highlight how traditional commerce and supply chains can and do grind to a halt because of climate risks. Record flooding in Thailand in 2011 severely impacted air travel, tourism, and one of the major regional airports in Asia. Climate change is also a critical geostrategic issue over which the prospect of war and social upheaval cannot be ruled out. How will the country of Panama be affected by the likelihood of Northern open ocean sea routes? How will the undersea landgrab play out under the dwindling polar ice caps, as Arctic nations race to lay claim to untapped natural resources? Indeed, the prospects of the Larsen B ice shelf breaking off—a mass of ice roughly the size of Delaware—will profoundly affect global shipping routes, as well as herald a major tipping point in global sea levels, which already plague many low-lying areas of the world, from Louisiana and the Florida panhandle to the Maldives. Military leaders in both the U.S. and the UK have argued that climate change is already accelerating instability in some parts of the world, drawing direct links between climate change and the Arab Spring, Syrian civil war, and Boko Haram insurgency. The destabilizing migrations caused by the climate and related events will only become more pronounced as the effects of global warming become more severe; climate change refugees already exist in the United States, China, and Africa, among other places. When people can’t get to work, or goods can’t be shipped to where they need to be, or customers can’t get to stores, the economy suffers. Insidiously, already-strained public budgets tend to be the “suppliers of first resort” when absorbing both the acute and attritional economic costs of climate change. Unfunded losses, such as post-Katrina repairs in the Gulf region, that ultimately get picked up by tax payers have the consequence of raising the specter of sovereign risk. Funding “slow burn” climate impacts, such as the urban heat island effect that is projected to make many urban centers unbearably hot, including the already sweltering Las Vegas, Santa Fe, and Dallas areas, risk the dislocation of G20G7.COM

When people can’t get to work, or goods can’t be shipped to where they need to be, or customers can’t get to stores, the economy suffers. Insidiously, alreadystrained public budgets tend to be the “suppliers of first resort” when absorbing both the acute and attritional economic costs of climate change.

millions of people, imperiling countless industries over the long range. With rising temperatures comes an increase in vector-borne diseases, which have been traditionally relegated as subtropical threats. Today, mosquito-borne West Nile virus is already endemic in much of the U.S., which does not bode well for containing the risk of Zika. While the Zika epidemic is over in Puerto Rico, reports that it would affect one in five people on the island hurt the island’s tourism industry—at a time when the local economy is struggling to emerge from a municipal debt crisis. The correlation between climate change, human pandemics, and economic and other risks, cannot be isolated; they’re all connected. That makes the shift away from a carbon-based economy as inexorable as the rising tide and temperature. Indeed, the renewable energy sector

is one of the fastest growing employers in the U.S., with solar alone accounting for nearly 400,000 jobs, proving that investing in climate resilience not only makes for good policy, it makes for good business. The business opportunities of investing in climate change, renewable energy, and human adaptation are big enough to create a new generation of billionaires — I call them Climate Robber Barons — regardless of what politicians in Washington or other capitals choose to do. Climate change and climate resilience are not zero-sum propositions, as evidenced by the near unanimous support for COP21 from more than 190 countries. While the U.S. turning its back on climate change is clearly a global policy and diplomatic setback, this is also an opportunity for leaders to prove that values matter most when it is least convenient. Indeed, the response from U.S. state and city leaders underscores how many leaders are remaining steadfast to the Paris Agreement notwithstanding the short-term setback. Business leaders have also been swift in their rebuke, including Elon Musk, Tesla’s CEO and very likely the first climate robber baron, and Bob Iger, Disney’s CEO, both of whom immediately stepped down from the President’s economic advisory council. New York’s former mayor and the renowned business leader, Michael Bloomberg, looks decidedly like a head of state rather than a captain of industry, as he steps into the UN funding breach left behind by the U.S. with a $15 million pledge. While the official U.S. seat at the climate change table may have been shorted, parallel leadership can show the world that the U.S. is going long on climate change. ◆ About the author DANTE DISPARTE is the head of policy at Libra, Facebook’s new Blockchain initiative. He is also the founder and CEO of Risk Cooperative, a specialized strategy and risk advisory firm focused on risk, readiness and resilience. He serves on the board of the American Security Project, where he founded and chairs the Business Council for American Security. He is a member of the Bretton Woods II Council and a fellow at New America and co-authored the acclaimed book “Global Risk Agility and Decision Making.”

Helping businesses navigate climate change

Chartered Professional Accountants (CPAs) can help your organization make more informed decisions — and increase resilience — in the face of climate change. How? By identifying climate-related risks and opportunities. By estimating financial impacts and performing scenario analyses. By advising on long-term business performance. Need a strategic response to climate change? Enlist a CPA. FIND OUT MORE AT cpacanada.ca/ClimateChange 17-0683

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How Global Parental Leave Laws Perpetuate Inequality Though parental leave programs are widespread around the world, their efficacy does not depend simply on their existence. By Allyson Berri

Countries

have long since seen parental leave programs as an opportunity to give working parents the chance to spend more time at home. The majority of OECD countries offered paid maternity leave programs in 1970, though some countries enacted leave policies much sooner. In Japan, paid maternity leave was introduced as part of the Labor Standard Law in 1947, and Germany has been offering maternity leave since 1883. Across the world, paid parental leave programs are widespread. For parents of infants, 43 of the 44 OECD countries (only excluding the United States) offer maternal leave, and 32 countries offer paid leave to fathers. Though parental leave programs are widespread outside of the U.S., their efficacy does not depend simply on their existence. Countries that introduced paid maternity leave programs earlier, for example, are more likely to have maternal leave policies that offer new mothers a generous amount of time off today. However, the efficacy of paid leave policies largely depends on salary replacement rates. With adequate salary replacement rates, paid parental leave policies can be important safeguards to family health, economic wellbeing, and gender equality. However, parents are

less likely to take leave if a policy’s salary replacement rate isn’t high enough. Countries looking to tackle widespread global problems, such as poverty or gender inequality, miss out on the opportunity to do so through parental leave programs when income replacement rates are inadequate. High income replacement rates are especially vital when drafting paid leave policy to address poverty. Lower income parents that need paid leave the most cannot afford to take it when leave is either unpaid or low paid. Specifically, research suggests that a wage replacement rate of at least 80% is necessary if paid leave programs are expected to combat poverty. A 2012 study of the FMLA, the U.S. legislation that allows for 12 weeks of unpaid family and medical leave, found that 46% of American parents who needed to take family or medical leave didn’t because they couldn’t afford to do so. And even when state policies in the United States make up for the country’s lack of paid federal leave, the replacement rates are insufficient. In California, for example, one third of workers reported not being able to take leave because they couldn’t afford to do so under a 55% wage replacement rate. One study even provided evidence that

High income replacement rates are especially vital when drafting paid leave policy to address poverty. Lower income parents that need paid leave the most cannot afford to take it when leave is either unpaid or low paid. G20G7.COM

unpaid maternal leave policies might be a contributor to wage inequality, since only mothers that can afford to take unpaid leave are able to benefit. In a similar vein, high income replacement rates can also be instrumental in drafting paid leave policies that contribute to greater gender equality. When income replacement rates are low, the lowerearning parent oftentimes chooses to take leave. Oftentimes, due to genderbased wage disparities, the lowerearning parent is a woman. Thus, paternal participation in leave programs is substantially affected by leave programs’ pay rates. A 2013 study in Luxembourg found that the larger the wage gap between a father and a mother’s income, the less likely he was to take leave. And a 2011 study of German dual earner couples found that men were three times more likely to take leave when they earned less than their female partners. However, when earning replacement is higher, fathers are much more likely to take leave. A 2000 cross-study of paid leave policy in Sweden, Norway, and Denmark found that in Denmark, where earning replacement was only 56%, only 2% of fathers took leave, compared to 40% of fathers in Norway and Sweden, where

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income replacement was 80%-100% and 72%, respectively. Similarly, in Germany, one study revealed that the percentage of fathers taking leave increased by 30.5% after the country enacted better paid leave legislation. The new 14-month paid parental leave policy started offering fathers two months of bonus leave at 67% wage replacement when they simply signed up for at least two months of time off for caregiving. Earlier this month, Connecticut became the U.S. state with the most generous paid leave policy when it introduced a new policy that offers 12 weeks of paid leave at 95% wage replacement. Though the U.S. has a long way to go in enacting adequate parental leave policies, state law is a small start towards establishing paid leave policies that can tackle global issues through high earning replacement rates. Ultimately, the future of leave policies across the globe must lie in the laws’ ability to adequately compensate parents. After all, the efficacy of paid leave legislation depends on it. ◆ About the author ALLYSON BERRI is a Washington Correspondent at Diplomatic Courier magazine.

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G L O B A L B R I E F I N G R E P O RT SOCIAL MEDIA F E AT U R E

Social Media and the Concentration of Power Network effects promote an alarming concentration of power within social media. Standards offer an alternative but require user initiative, explains Ulrik Brandes. By Ulrik Brandes

Within just

a few years, social media has risen from a peripheral phenomenon to an integral part of our everyday lives. In contrast to what followed the mass availability of cars, televisions and the internet, this rise is accompanied by a strong tendency toward monopolization. If we exclude Chinese services such as WeChat, QQ or Tik Tok, Facebook (including Instagram and WhatsApp), YouTube, LinkedIn and Twitter have achieved primacy within their respective product niches. Network effects and monopolization These services may well face competition in the early stages. However, the appeal of a platform increases with the number of people who can be reached there. Economists refer to the phenomenon where both the provider and the customer benefit from a higher market share as a network effect. A concentration on the largest provider is then virtually inevitable. Even Google with Google+ was no longer able to assert itself against Facebook and will be ceasing the service in April. But what is the problem with a monopoly if the product is offered for free? Or if – as shamelessly asserted, for example, by Mark Zuckerberg, the founder, main shareholder and chairman of Facebook—the aim of a company was simply “to help people stay in touch with family, friends and communities”. This then begs the question of why Facebook and other services have recently faced such bad press. Advertising, manipulation and price discrimination The business models of (Western) social media channels depend primarily G20G7.COM

on advertising. It is therefore fitting that, again according to Zuckerberg, users enjoy receiving targeted messages. Surveys may arrive at different conclusions, but personalized advertising is still easier to sell. Turnover has been increasing at double-digit rates for years and will exceed CHF 100 billion by next year at the latest. Two factors drive this growth: the extent of media usage and the effectiveness of advertising. Both factors are served by knowing as much as possible about user behavior, and better yet, being able to control it. The fact that short messages can be sent and read alongside or in between other activities leads to imminent rewards and thus higher usage. The right product presentation at the right time is more likely to trigger a buying stimulus. And both effects are strengthened by social incentives. However, the attention economy and targeted advertising are only the beginning. Behavior-related information such as search queries, preferences or movement profiles are analyzed as well, and sold on to other interested parties. Political influence, for instance, takes place via micro targeting, whereby personally tailored messages are created based on inferred inclinations. Interestingly, the outrage surrounding Cambridge Analytica was focused less on the influence on the American presidential campaign than on the fact that the company had unlawful access to data from millions of Facebook profiles. Data to which Facebook itself naturally always has access. You don’t need to be a cynic to have fundamental doubts about the consistently benevolent intentions of profit-making companies. It should also

come as no surprise if the knowledge gained through behavioral observation is soon used on a large-scale basis to develop premium pricing for insurance offers. Although regulation could replace trust, it does not keep pace with the rapid development of social media. Protocols and standards The well-known social media channels benefit from network effects because

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This includes protocols and formats for the exchange of content and activities such as those customary in social media. In federated systems, different providers can supply variants of the same services because they are based on open standards. There may thus exist differences in the rules when it comes to access, deleting content, and even taking your own data to another provider. Standards therefore keep market access as well as options for changing providers open. While problems such as spam and data security are not removed, they are no longer in the hands of a single provider.

they are isolated systems to which you either belong or don’t belong. Mobile phones, email and the World Wide Web show that this needn’t be the case. Communication is possible here through a range of providers because it is carried out via a standardized exchange instead of a central platform. The World Wide Web Consortium (W3C) is the international body for continuous advancement of the Web and develops proposals for open standards.

The World Wide Web Consortium (W3C) is the international body for continuous advancement of the Web and develops proposals for open standards.

Alternatives and acceptance For network effects to act in reverse, a critical mass of users would first need to switch to open systems. The most successful software of this type at present is Mastodon, a service comparable to Twitter but adhering to W3C standards. Mastodon instances play the same role as servers do for websites, wikis or email, and several thousand are now in use following its launch in 2016. These interact with one another in the same way as with other servers such as GNU social. This federated system has now greatly exceeded the first one million accounts. Whether the trend toward open systems will last or end with a group of pioneers remains to be seen. At the very least, a lack of alternatives is no longer an excuse. ◆

Editor’s Note This article was originally published by ETH Zurich and republished here with permission. BIARRITZ_FRANCE

G L O B A L B R I E F I N G R E P O RT CITY DIPLOMACY F E AT U R E

Cities, Networks, and a New Cold War With Simmering tensions over territorial disputes around maritime borders and new trade wars, the U.S. and China have moved quickly from cooperation to competition, and cities are at the center of this new cold war. By Ian Klaus

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G L O B A L B R I E F I N G R E P O RT CITY DIPLOMACY

The seeming

disarray of this particular moment in foreign affairs results not only from the potential unwinding of long-standing alliances and relationships, but also the intertwining of seemingly discrete geopolitical shifts and megatrends. Russia’s increased election interference is enabled by the spread of digital networks. The rise of global middle class inhibits progress on climate change. And so too, now, does the return of heightened geopolitical rivalry between the United States and China threaten to complicate the rise of cities on the global stage. Recognizing Global Competition In a much-noted 2014 essay in Foreign Affairs, the international relations scholar Walter Russell Mead highlighted “the Return of Geopolitics.” A year later, in those same pages, UN Special Envoy for Climate Change and Cities and former mayor Michael Bloomberg announced the arrival of the “Metropolitan Generation.” While seemingly at odds with each other, with Mead’s piece foreseeing a future shaped by heightening tensions between states and Bloomberg’s identifying the power and importance of cities, both essays have worn well since publication. Heightened geopolitical tensions have demonstrated that the state is here to stay and friction between states is not in recess. Meanwhile, urban areas continue to grow, both in terms of population and land cover, and cities have become increasingly active voices on the world stage. These parallel tracks threaten to converge, however, with increasing tension in the U.S.China bilateral relationship. For decades, U.S. policy sought to integrate China into the existing world order. Diplomats and policymakers encouraged a peaceful rise of China as a regional player and, eventually, a global power within the constraints provided by international organizations and long-standing alliances. “The U.S. has supported China’s global integration,” wrote Joshua Meltzler and Neena Shenal in a February, 2019, Brookings Institute report, “with the expectation that as China benefited from the international economic system, → BIARRITZ_FRANCE

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→ including WTO membership, it would become a responsible stakeholder— where China would work with the United States.” This approach led to a strengthening of the economic relationship, and also of links between educational institutions and subnational governments, both state and municipal. But despite significant cooperation on issues like climate change, the limits of this approach were becoming apparent during the Obama Administration. Bill Burns, the former U.S. deputy secretary of state, recently observed that by Obama’s second term, “China’s ambition to recover its accustomed primacy in Asia had already upended many of our comfortable post-Cold War assumptions about how integration into a U.S.-led order would tame, or at least channel, Chinese aspiration.” This growing realization among policymakers was codified in the Trump Administration’s National Security Strategy, released at the end of 2017. Economic, political and military competition, including with Russia and China, the report observed, will “require the United States to rethink the policies of the past two decades—policies based on the assumption that engagement with rivals and their inclusion in international institutions and global commerce would turn them into benign actors and trustworthy partners. For the most part, this premise turned out to be false.” With simmering tensions simmering over territorial disputes in around maritime borders and the South China Sea, and fueled by a new trade wars, the relationship’s dynamic moved quickly from one of integration and cooperation to outright to one of competition. By summer 2019, a new Cold War seemed to be afoot, supposedly leaving little untouched. “The United States and China are contesting every domain, from semiconductors to submarines and from blockbuster films to lunar exploration,” led a May 2019 cover story for the usually level-headed Economist. Among the domains for which the shift in U.S.-China relations is going to be tricky are U.S. cities and the city networks to which they belong. A protracted trade war undoubtedly has implications for the economies of many American cities, whether they G20G7.COM

are structured around information and communications technology, manufacturing, or ports and shipping. On a trip to China in 2018, Los Angeles mayor acknowledged as much, observing in the face of heightening trade disputes, “We have closely integrated economies, closely integrated cultures and closely integrated geography … We hope to be the leading Chinese city in America for investment, tourism and students. We already are in terms of make-up of the population.” The decisions American mayors are forced to take among the deepening of tensions will in fact reach beyond their obvious economic interests. Over the last decade, mayors have established themselves as policy advocates-cumdiplomats. They petition international organizations, attend United Nations summits, and organize in support of and around international agreements. Mayor Garcetti, for instance, has elevated Los Angeles as a global leader in the collective efforts of cities to confront global challenges, including around both climate change and cyber issues. And Los Angeles has become a leading voice in international networks and platforms such as C40 Climate Cities and the Urban 20. Notably, these platforms, and many others, include both American and Chinese cities. C40 Climate Cities, for instance, includes more than twenty American and Chinese cities in one way or another, as does the global network Local Governments for Sustainability. And understandably so. Any transnational effort focused on climate change and the reduction of carbon emissions in particular would seek impact in the United States and China. The pivotal roles of the United States and China in meeting global challenges also means, however, a more treacherous diplomatic terrain for cooperating cities amid a chillier bilateral relationship. Remembering Global Cooperation The Cold War comparison, deployed so quickly these days, may well have its limits, but for mayors and city networks facing an increasingly tense international environment, Cold War history may also provide useful guidance. International urban-

The Cold War comparison, deployed so quickly these days, may well have its limits, but for mayors and city networks facing an increasingly tense international environment, Cold War history may also provide useful guidance.

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focused efforts did suffer for in the twentieth century for geopolitical competition and ideological divides. The Congrès internationaux d’architecture moderne (CIAM), led by among others Le Corbusier, Josep Lluís Sert, and Richard Neutra, was perhaps the most influential international urban planning effort of the mid-twentieth century, but by the mid-1930s was banned in both Germany and the Soviet Union. But while CIAM may well have suffered for ideological divides - both before and after the war - international nongovernmental organizations in fact increased during the first years of the Cold War, with the number of such organizations increasing from 477 in 1940 to nearly 800 in 1950. From 1945 to 1950, a significant number of these organizations focused on development and the environment, policy arenas

familiar to city networks today. “Despite the unmistakable signs of geopolitical tensions, individuals and organizations from the United States and the Soviet Union, as well as from other countries, were continuing to meet,” wrote the Harvard historian Akria Iriye, who outlined the history of such cooperative efforts in Global Community, “They shared information and exchanged ideas, thereby confirming the persistence of transnational endeavors in the immediate postwar years.” Of note is not simply the existence of such endeavours, but their policy focus. While a large number of the notable cooperative efforts focused on education and reconstruction in the wake of World War II, others, particularly those among the scientific community, focused on global threats. The Pugwash Conferences on Science and World

Affairs, for example, founded in 1957, included scientists and experts from both sides from both sides of the Cold War divide focused on the elimination of nuclear weapons. Today, the most pressing of those goals is climate change, and just because the relations across the Pacific are getting chillier, does not mean the oceans are not warming. To be sure, examples of ongoing transnational cooperation come with a serious historical warning label. That the global community persisted amid the Cold War does not mean, Iriye points out, “that great power rivalries and tensions did not intrude on the activities of international organizations.” Nations expelled relief organizations for fear of influence campaigns. Intelligence agencies sought influence within IOs or, at times, funded the establishment of new ones. Such efforts are all the more tempting today as the amplification power of networks provides the opportunity for both shared progress and great power influence. In other words, cooperation on global goals might be more important than ever, but practitioners of city diplomacy will have to so with a heightened awareness for international and national politics. Mayors and city diplomats are fond of quoting global figures around advancing urbanization, but are shy as it comes to heightened tensions between states or superpowers. But they can’t be avoided entirely. China, Bill Burns observed, is a power “whose moment had come.” To the degree that the chilling of U.S. – China relations influences cooperation on issues such as trade and climate change, the effects will be felt in cities in both countries and beyond. And while rivalry, even bellicosity, need not mean the end of networked cooperation, it likely requires that the players understand that the terms of the great game have changed. ◆

About the author IAN KLAUS is Senior Fellow at the Chicago Council on Foreign Affairs and a Diplomatic Courier magazine contributor. He was previously Senior Adviser for Global Cities at the U.S. Department of State. BIARRITZ_FRANCE

G L O B A L B R I E F I N G R E P O RT D E E P FA K E S F E AT U R E

Not Fake News: Deepfake Technology is Moving at an Alarming Speed By Allyson Berri

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By U

Ulrik Brandes

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Within just

The podcast Radiolab referred to him as the “Sherlock Holmes of digital misdeeds.” As a computer scientist at Dartmouth, Dr. Hani Farid is often hired as an expert to determine whether photos and videos have been distorted. When asked in 2017 about what has come to be known as deepfake technology, software that allows people to make “fake videos…that look and sound just like the real thing,” Farid’s message was ominous. “Yes, you should [be terrified]…the ability of technology to manipulate and alter reality is growing at a breakneck speed.” At an Adobe Max event in 2016, Adobe demonstrated a prototype of a new video-editing software they referred to as VoCo. The software allows users to edit speech by overtyping a transcript of a given video. Though Adobe has yet to even announce the commercial release date for VoCo, the November 2016 demo sparked much controversy. Experts warned that it could pose security threats and further reduce trust in journalism. Though deepfake videos have only existed for a few short years, machine learning has rapidly advanced since the first deepfake videos popped up on Reddit in 2017. And in 2019, machine learning technology can

produce videos and images that extend beyond the wildest nightmares of what VoCo’s critics could have predicted in 2016. The first deepfakes built upon technology that allowed animators to lend human likeness to movie characters. When filming movies such as Toy Story or Avatar, animators used sensory markers to record actors’ expressions and lend their characters human likeness. Deepfake technology built on this concept, using a collection of pictures and videos to create fake videos. In 2016, researchers at the University of Erlangan-Nuremberg, the Max Planck Institute for Informatics, and Stanford University developed a video reenactment software known as Face2Face that allows people to use a webcam to modify existing videos through “real-time face tracking.” In other words, the program allows users to edit the words and expressions of people in other videos with words and expressions of their own. That following year, at the annual computer graphics conference known as Siggraph, researchers from the University of Washington, as well as the VISITEC institute in Thailand, presented a project entitled, “Synthesizing Obama: Learning Lip Sync From Audio.” →

The first deepfakes built upon technology that allowed animators to lend human likeness to movie characters. When filming movies such as Toy Story or Avatar, animators used sensory markers to record actors’ expressions and lend their characters human likeness. BIARRITZ_FRANCE

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2019’s deepfake technology has moved at an even faster pace. In May 2019, researchers at Samsung’s AI lab in Moscow unveiled “one-shot learning,” a process by which they taught a computer to make “living photographs” from just a single image.

→ In the video presented at the 2017 conference, a deepfake video of President Obama was formed to match a real audio recording. The researchers trained a computer on hours of Obama’s weekly addresses to create the video. The computer learned to map mouth shapes from just Obama’s audio files; the resulting mouth shapes were then grafted onto the head of a person from another video. Later that same year, fake videos emerged on social media. A Reddit user going by the name “deepfakes” began sharing porn videos featuring celebrities like Gal Gadot and Taylor Swift that had been modified with machine-learning software based on open-source software libraries, such as Keras or TensorFlow. Reddit quickly caught on. The user deepfakes named a subreddit after himself, which gained over 15,000 subscribers in a two month period, and dozens of other Reddit users began making and posting deepfake pornography. By 2018, deepfake technology had exploded. Another Reddit user, deepfakesapp, created FakeApp, a smartphone application that allows anyone, not just the tech savvy, to G20G7.COM

create deepfake videos. By August 2018, Stanford researchers innovating machine learning technology had debuted a technology known as Deep Video Portraits at the Siggraph conference. Deep Video Portraits can render an entire synthetic person and background, and the technology allows users to swap faces or change a person’s actions “without explicitly modeling hair, body, or background.” Whereas earlier technologies, such as the one used to synthesize President Obama just a year earlier, modeled a head from another video to produce a deepfake, Deep Video Portrait’s powerful AI “takes care of everything by itself.” Following her first story covering the deep fake phenomenon, Vice writer Samantha Cole spoke with a computer scientist, Peter Eckersley, about the future of deepfake technology. In January 2018, following the November 2017 release of Reddit user deepfakes’ fake pornography videos on Reddit, Eckersley’s predictions were modest. He argued that while a closer look at 2017 deepfakes revealed that they were fake videos, he predicted that within “a year or two” the production would be more advanced. Cole noted that this

prediction didn’t even hold for two months. Soon after the release of user deepfakes’ first videos, similar fake porn videos were popping up all over Reddit. 2019’s deepfake technology has moved at an even faster pace. In May 2019, researchers at Samsung’s AI lab in Moscow unveiled “one-shot learning,” a process by which they taught a computer to make “living photographs” from just a single image. To do this, Samsung researchers trained their algorithm on a large set of talking-head videos to generate realistic facial expressions from single images. Through one-shot learning, researchers were able to animate famous portraits like the Mona Lisa. This is a giant leap ahead for machine learning technology, which previously relied on a whole catalogue of images to animate the subject at hand. And at this year’s Siggraph conference in July, researchers from Princeton, Stanford, and the Max Planck Institute of Informatics will present a speech editing study they conducted using Adobe VoCo. But it’s mainstream news that has revealed what is perhaps deepfakes’ most impactful role to date. Recently, a fake video was released of U.S. House Speaker Nancy Pelosi which made it seem like she was drunk while giving a speech—to be clear, that was a cleverly edited video, not a deepfake. The Pelosi video was followed by a fake video of Facebook CEO Mark Zuckerberg—an artist’s clever response to Facebook’s refusal to take down the fake Pelosi video. In a country where “fake news” was already a problem before fake videos were technologically possible, the deepfake revolution ushers in frightening political prospects and a new era of civic discourse erosion. And with the technology developing faster than experts predicted just two years ago, it seems that machine learning manipulation is getting harder and harder to control. In light of the rapid progress in machine learning technology over the last three years, it seems wise to heed Dr. Farid’s 2017 warning. About the author ALLYSON BERRI is a Washington Correspondent at Diplomatic Courier magazine.

G L O B A L B R I E F I N G R E P O RT TA I WA N C I V I L G O V E R N M E N T B R A N D E D S T O RY

Fighting Inequality Means an Internationally Recognized Taiwan The G7 should discuss Taiwan at its Biarritz meeting and consider free trade agreement By Neil Hare

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G7 meeting in Biarritz will focus on reducing inequality throughout the world – a commendable goal. One of the first places the G7 nations should look to achieve a tangible result to this end is the Taiwan islands with normal international status. With 25 million people, Taiwan boasts the 22th largest economy in the world by GDP. It is the United States 11th largest trading partner with $76.0 billion in total goods traded in 2018 (US Trade Representative), and trade between Taiwan and the EU reached $58.5 billion in 2018 (European Commission). Taiwan is a global leader in industries such as telecommunications, electronics, biotechnology and chemicals. And, despite this robust economy, it is a nation not recognized by the G7, the United Nations or most of the countries of the world. The inequality agenda put forth by French President Emmanuel Macron, states: “Combating inequality within our societies and worldwide is a matter of justice, just as it is an urgent task we must address if we are to win back the trust of our citizens in our international governance system.” Around the theme of inequality, the G7 will specifically address topics including poverty, healthcare, violence against women, gender equality, and exposure to climate change. In April when the foreign ministers of the G7 met in advance of the meeting, they also discussed protecting democracies addressing the issue of, “Strengthening our democracies in the face of new threats, mainly arising from the digital revolution and attempted foreign interference.” Taiwan faces these new threats every day. The issue of Taiwan’s international recognition is complex to be sure. Most notably, it sits in a position of “strategic ambiguity,” due to the “One China Policy,” agreed to by the United States and China in 1979. The policy is still in place, but like many global dynamics that have been in place for decades it is starting to shift. Chinese President Xi Jinping announced earlier this year the “one country, two systems” policy, which he directed at both Hong Kong and

Taiwan. The policy has hit some roadblocks in Hong Kong, which is officially part of China with some legal exceptions. The inhabitants of Hong Kong hit the streets in mass protests recently over a proposed extradition law that would have made it easy for anyone accused of a crime in Hong Kong to be sent to mainland China for prosecution. This would open the door for trumped up charges of fraud or political crimes that would land people in the Chinese legal system, which does not equate to Western, democratic jurisprudence. The law was promulgated under the “one country, two systems,” as well, but it appears the protests have caused the Hong Kong authority to table the bill. Surely the nations of the G7 do not want to see Taiwan head in this direction. In addition to the lack of diplomatic recognition, Taiwan is also denied access to free trade agreements, the World Health Organization and the International Civil Aviation Organization, where they should have every right to participate. The G7 can and should pursue a free trade agreement with Taiwan. →

With 25 million people, Taiwan boasts the 22th largest economy in the world by GDP. It is the United States 11th largest trading partner with $76.0 billion in total goods traded in 2018 (US Trade Representative), and trade between Taiwan and the EU reached $58.5 billion in 2018 (European Commission). BIARRITZ_FRANCE

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→

→ One Taiwanese political and educational group is working for both international recognition and stronger economic ties to the world. The Taiwan Civil Government, headed by respected businessman Dr. Roger Lin, has worked peacefully and tirelessly for over 10 years to achieve this result.

The U.S. has a vital interest in cross-strait stability, and that can only be assured if the people of Taiwan believe they will not be overwhelmed economically by Beijing.

As Dr. Lin points out, Taiwan has close ties with both Japan and the United States that should serve as building blocks for future relations with all nations of the G7 and the world. Relations with the United States in particular have improved dramatically in the last several years. The U.S. signed into law the Taiwan Travel Act, the Asian Reassurance Initiative Act and a $2 Billion arms deal is pending, including the sale of 108 M1A2 Abrams tanks. The U.S. built a much larger American Institute of Taiwan – a quasi-embassy in Taipei – and several high-ranking U.S. officials have recently visited Taiwan. These are all positive developments, but they don’t go far enough. As President Macron quoted on the G7 website from the French Declaration of Rights of Man and Citizens, from the French Revolution. “Men are born and remain free and equal in rights.” Until Taiwan is recognized by the G7, the United Nations and the world, this fundamental freedom will be denied the people of Taiwan. ◆

Editor’s Note This material is produced by Global Vision Communications on behalf of the Taiwan Civil Government. Additional information can be found at the U.S. Department of Justice. G20G7.COM

Fighting inequality

means an internationally RECOGNIZED

Taiwan... NOW.

As the G7 nations gather in France to discuss global inequality, freedom and justice, Taiwan should be on top of the agenda. With close ties to the United States and Japan, Taiwan is a peaceful nation with a vibrant economy and yet is not recognized by the United Nations and most countries in the world, including the G7. The time for an internationally recognized Taiwan is now.

TAIWAN’S ECONOMY AND STATURE

US’s eleventh largest trading partner with $76 billion in total goods traded in 2018.

22nd largest economy in the world by GDP.

Trade between Taiwan and the EU-28 reached US$ 58.5 billion in 2018.

U.S. trade in services to Taiwan totaled $18.5 billion in 2018.

Learn more: TaiwanCivilGovernment.com

Materials distributed by Global Vision Communications on behalf of the Taiwan Civil Government. | Additional information is available at the Department of Justice, Washington, DC.

G L O B A L B R I E F I N G R E P O RT GENDER EQUALITY F E AT U R E

Efforts in Biarritz Will Build on France’s Fight for Gender Equality France has made gender equality a key part of its G7 presidency, having already hosted two meetings of the G7 Gender Equality Advisory Council. By Allyson Berri

“No country in the world has achieved gender equality, and no country can achieve it alone.”

Such words

were spoken by Marlene Schiappa, France’s Minister for Gender Equality, at May’s G7 Gender Equality Advisory Council meeting. Schiappa had the pleasure of hosting May’s meeting on behalf of her native France, which will be chairing August’s 2019 G7 Summit in Biarritz. France has made gender equality a key part of its G7 presidency. The country has set five goals for fighting inequality in general during its turn at the helm of the G7, including fighting against gender inequality, specifically. Further, France has already hosted two meetings of the G7 Gender

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Equality Advisory Council, which brings together a diverse group of experts and policymakers from across the world devoted to discussing issues of gender inequality. President Macron has encouraged the Gender Equality Advisory Council to help bring these discussions to this summer’s G7 summit. Gender equality has been a large focus of Macron’s administration in general; in November 2017, the president announced that gender equality was “the great cause of his five-year term.” Macron’s personal efforts to promote gender equality have been received with mixed results. Though half of his party’s candidates were women in France’s June 2017 elections, some feminists felt let down when the young president failed to

select a female prime minister. Still, Macron found a firebrand feminist in his Minister for Gender Equality, Marlene Schiappa. Schiappa, a former blogger and author, spares few words when fighting for feminism. When responding to an open letter chastising the #MeToo movement (and French equivalent #BalanceTonPorc) as “puritanism,” she wasn’t afraid to cite class issues, arguing that women who don’t understand the dangers of street harassment likely can afford vehicles and avoid harassment on public transportation. She’s been vocal about a gamut of feminist issues both at the podium and on paper. The 18 books Schiappa has authored cover topics such as rape culture; one such volume edited by Schiappa is known simply as “Letters To My Uterus.” In 2018, she made headlines when she performed in a rendition of the popular feminist play The Vagina Monologues. And she’s not just talk. Since joining President Emanuel Macron’s cabinet in 2017, Schiappa has wasted little time tackling gender equality issues through legislation. One of Schiappa’s first initiatives as gender equality minister was to tackle gender-based violence, specifically in the form of street harassment, in France. Though street harassment is a problem across the globe, its especially prevalent in France, where 2018 data found that 80% of French women had experienced street harassment, as compared to 65% of American women and 64% of British women. Schiappa’s solution to the problem? Legislation that fines street harassers on the spot. First offenses carry a 90-euro fine if paid immediately that changes to 750 euros if paid later. And for second offenders? Catcalling can carry a whopping 3000-euro charge. In spite of criticism that questioned the legislation’s efficacy, 447 fines were handed down in the first eight months following the law’s passage. In France, Schiappa’s other equalitydriven efforts more closely align with the gender equality initiatives her country has prioritized for this year’s G7 Summit. As part of their focus on ending gender-based violence, the G7 Ministers that met as part of May’s Gender Equality Advisorty Council focused on finding solutions for cyber

G L O B A L B R I E F I N G R E P O RT GENDER EQUALITY

harassment. Similarly, a component of Schiappa’s harassment legislation focuses on online “group harassment,” working to punish groups of offenders who deliberately target one victim. In another recommendation stemming from May’s meeting, G7 Ministers urged online platforms to remove illegal content on their sites quickly; while working to pass her harassment legislation in France, Schiappa reached a similar conclusion, arguing that tech companies needed to be cooperative in government measures to police the internet. In the wake of her law’s passage, Schiappa identified cyberspace as an area where more work needed to be done to stop harassment. Other equality-driven recommendations that came out of May’s Gender Equality Advisory Council meeting focus on threats to gender equality felt outside of France. Women’s entrepreneurship was a prominent focus of the meeting, concentrated especially on stimulating women’s economic development in Africa and the Sahel. Additional discussion revolved around supporting women’s education around the world and fighting genderbased and sexual violence, including female genital mutilation. Ultimately, Macron hopes that members of the Gender Equality Advisory Council propose tangible solutions for improving gender equality across the globe. Prior to this year’s G7 summit, the Gender Equality Advisory Council will meet again to finalize their recommendations for implementing laws designed to combat gender inequality. G7 states will then be invited to implement at least one piece of legislation from the “Biarritz Partnership” a collection of laws identified by the Council to best advance gender equality worldwide. Hopefully, August’s summit sees the dawn of several legislative methods for advancing women’s rights worldwide. ◆

Gender equality has been a large focus of Macron’s administration in general; in November 2017, the president announced that gender equality was “the great cause of his five-year term.”

About the author ALLYSON BERRI is a Washington Correspondent at Diplomatic Courier magazine. Photoraphy All photos courtesy of the French Government, DICOM, by Lewis Joly. Working session and meeting with the Gender Equality Advisory Council. BIARRITZ_FRANCE

G L O B A L B R I E F I N G R E P O RT DIRECTFORCE B R A N D E D F E AT U R E

Legendary Senior Group in Japan 2002 by retired higher positioned people from various companies and organizations like senior executives of manufacturers, trading companies, banks and lawyers, doctors and all sorts of industry. It utilizes its members’ knowledges and personal connections for social contribution. The Association is quite unique group of legendary business fighters in Japan. Nearly 1400 people joined DFA from the start and now 650 members are actively engaged in various activities under the motto ‘Challenge for 100-year Life’. The following are main activities:

Japan now faces a new age of population decline and a super-aging society and falls into shortage of manpower. There is an association we want keenly introduce. DIRECT FORCE Association (DFA) whose members’ average age is 72. The Association was established in

1. 21 Clubs of the same hobbies and sports for enjoying the second life 2. Academic Activities (passing knowledges and experiences to young people for their future) Visiting Lectures of Science Experiments for elementary schools (over 240 times annually) Visiting Lectures for high schools

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Lecturers (part-time, temporary) at universities (over 140 lectures) Company Tour Arrangements for overseas universities, graduate schools etc. 3. Study Groups for studying professional activities 4. Business Support Activities (business consulting activities for 50 companies mainly venture companies for their sales, overseas expansion) 5. Executive Recruitment like advisors, auditors, executives etc. 6. Support Business for realty business and fund management 7. Social Contribution Activities like environment protection, medicalrelated activities 8. Business Matching Support between Japanese and overseas companies The above activities are highly appreciated year by year and member applicants are increasing.In addition to the above famous people’s lectures are held. Lecturers are like Nobel prize winner, politicians, people from culture and business world. From now onwards tie-up with other companies and organizations will make the Association develop stronger and the Association will do contribute to the society widely and be expected as a group of legendary seniors. ◆

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Hiroshi Mase Representative Director of Direct Force directforce.org Chairman of Nihon CIO (Chief Information Officer Association) Work history • Managing Director of IBM JAPAN, Ltd • Chairman of Pasona Inc., • Vice president of NI+C (Nihon Joho Tsushin Corporation) • President of Net system.com

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G L O B A L B R I E F I N G R E P O RT NET COOP B R A N D E D F E AT U R E

Introducing a union to support SMEs in Japan

The National Information Network Cooperative Association “NET COOP” was established in 1996 as a union to support SMEs. The Union has been approved by nine ministries, and currently approximately 3,300 SMEs and individual business owners in various industries across Japan are members.

The Union’s features include a low membership fee, improvements in welfare benefits that are difficult for small and medium enterprises to achieve alone, new customer development, and the provision of a place for networking that utilizes the strengths of the different industries. Additionally, the Union provides timely information for major insurance companies that are clients and serves as a bridge connecting us to their major clients. The Union also contributes to support for the sales activities of union members. By incorporating the support of major companies into business development that cannot be achieved by the Union alone, our Union aims to build a unique union platform that can be realized only through the aggregation of different industries. Through unions companies connect, people connect, they grow together with union members, and thus they connect to the future. Through our work, we will continue to contribute to society. ◆

Hidemi Eto Executive Director, NET COOP net-coop.jp

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G L O B A L B R I E F I N G R E P O RT TA K E S H I I T O , P R O F E S S O R O F O S A K A U N I V E R S I T Y B R A N D E D F E AT U R E

Our Role and Contribution to Create a Sustainable Market Economy

The scope for companies and consumers to fulfill their roles and responsibilities is expanding. In the past, companies and consumers were only responsible for their own actions, and goods and services have been traded with the “visible value” of the quality and price of their goods and

services. Now that society has matured and ICT has developed, “invisible values” such as the working environment in the supply chain have begun to be visualized. Consumers can use products and services with sufficient information on market economy. This means that the consumer has the power to influence the future of the market economy. While this power and authority involve responsibility, the fulfillment of responsibility is a contribution to society. It leads to the happiness of people and society. The ‘sustainable’ movement has begun over 30 years ago. Some companies try to eliminate exploitation in the supply chain and some consumers are doing ethical consumption. However, the movement is still insufficient. We work in companies to make products and services, and at the same time, we consume products and services as consumers. If we, as workers, manufacture products and services that meet the needs of consumers, and if we, consumers, purchase and consume

in consideration of the happiness of workers, then we ourselves are ourselves. You will be able to make yourself happy. We, not governments or leaders, can create a good market economy for a sustainable future. ◆

Consumers can use products and services with sufficient information on market economy. This means that the consumer has the power to influence the future of the market economy.

Takeshi Ito Professor of Osaka University. His research focuses on building a sustainable market economy to acheive the SDG s and beyond in the newly established Social Solutions Initiative, SSI He has networks of Japanese government, companies and several communities in his activities for more than 10 years.

The capabilities, roles and responsibilities of Companies and Consumers

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