Topic: International Economics and Development

Some Post-Thanksgiving Reasons To Be Thankful

In this post-Thanksgiving atmosphere, here is another installment in Human Progress’s series of posts on incremental (and sometimes revolutionary) ways in which our world is becoming a better place. This week we look at anti-aging drugs, falling maternal mortality deaths and death rates, prosthetic hands with a sense of touch and a potential breakthrough in air travel. 

British Company to ‘Transform’ Air and Space Travel with Pioneering New Engine Design 

BAE Systems has recently bought a minority stake of a small technology company called Reaction Engine. The support of BAE will allow Reaction Engine to continue working on its breakthrough engine, known as Sabre. This versatile engine can be used for both air and space travel, reaching up to five times the speed of sound for air travel and twenty-five times the speed of sound for space travel. Using these high rates of speed, it could be possible to fly anywhere in the world in four hours within the next ten to fifteen years. Reaction Engine hopes that the first Sabre engine will be tested within the decade. 

World’s First Anti-Aging Drug Could See Humans Live to 120 

The aging process is not inevitable. Our cells contain a DNA blueprint that can, theoretically, keep our bodies functioning forever. However, overtime our cells divide rapidly, leading to an increased likelihood of “errors” occurring. These “errors” cause diseases like cancer and dementia. Recently, the FDA approved a human trial for a drug called Metformin, which has been proven to increase the lifespan of animals. The trial contains around 3,000 people who are between the ages of 70 and 80. If similar results occur with humans as with animals, the human lifespan could increase by up to 50 percent. 

Maternal Mortality Falls by Almost 50% - UN Report 

The United Nations has been monitoring maternal mortality, which is defined as the number of mothers who die during pregnancy or shortly thereafter, for a number of decades. According to a recent report, global maternal mortality has dropped from 532,000 deaths in 1990 to 303,000 in 2015. That’s a reduction of 44 percent. Eastern Asia made the most substantial progress, with maternal mortality rates dropping from 95 deaths for every 100,000 live births to 27. Maternal mortality, once ubiquitous throughout the world, is now almost exclusively (99 percent) found in poor countries. Once again, economic development and income growth are the keys to further progress. 

A Prosthetic Hand that Can Feel 

Researchers at Case Western Reserve University have recently created a prosthetic hand that allows the patient to not only grip objects more accurately, but also enjoy a sense of touch. The technology works by creating a connection between the artificial hand and the brain. When the prosthetic hand senses pressure, it sends a neural code to the brain through an artificial pathway. Igor Spetic, who lost his hand about five years ago due to a workplace accident, is one of the first patients to receive the artificial hand. Because of his newly acquired treatment, Igor is now able to cut up fruits and vegetables, confidently grip cups, and open bags and containers. Researchers are currently developing a wireless version of this technology, which they hope to have finished within the next five years.

Singapore: the Power of Economic Freedom

The Telegraph ran a fascinating collection of photos from different statges of development of the Asian city state of Singapore. The first photo is from 1900, the second is from the 1970s and the last photo is contemporary. The incredible transformation of Singapore from a sleepy outpost of the British Empire to a global commercial and technological hub was partly facilitated by a very high degree of economic freedom. In 1970, the first year for which data is available, Singapore had the third freest economy in the world (behind Hong Kong and Canada). Singapore maintained a high degree of economic freedom over the next 45 years and ranks as the second freest economy in the world today (behind Hong Kong). As late as 1970, per person income in Singapore was 54 percent of the global average. Today it is 321 percent of the global average.

What to Expect of Argentina’s New President

The election of Mauricio Macri as the new president of Argentina brings to a close 12 years of populist, interventionist and increasingly authoritarian Peronist rule by Cristina Fernández and her late husband Néstor Kirchner. Here are some observations of what’s ahead for Macri’s Argentina:

The meaning of “change”: Argentines were adamant ahead of the election that they wanted change. However, polls reflected that voters were tired of the confrontational governing style of President Fernández de Kirchner and her cadre, but not necessarily of her economic policies. The government successfully sold its so-called “narrative” regarding the wisdom of many of its interventionist policies, such as the nationalization of industries, the implementation of subsidies, prices freezes on public services, etc. This forced Mauricio Macri to either downplay the need for reforms in some areas or to outright discard them (such as reversing nationalizations). The new president will have to implement some painful measures (like scaling back subsidies that amount to 6% of GDP) that he didn’t explicitly explain to voters during the campaign.

The one area of economic policy that Argentines most rejected was the high inflation rate (around 26% now but it reached nearly 40% a year ago) and the related exchange controls. This is where Macri’s proposals were bolder: he promised to stop the doctoring of the inflation statistics and to lift exchange controls on his first day in office. He also said that the official exchange rate will reflect the reality of the market, although he didn’t specify how long it will take for the official rate and the black market rate to converge.

Can Open Market Operations Save Puerto Rico?

With Puerto Rico’s continuing fiscal strains, some commentators have suggested that one avenue to give Puerto Rico breathing room would be the purchase of Puerto Rican municipal debt as part of Open Market Operations by the Federal Reserve.  The most prominent proponent of this plan is Rensselaer Tech Economics Professor Arturo Estrella.  His proposal can be found here.  The governance of Open Market Operations, which is the buying and selling of securities by the Federal Reserve System, is found in Section 14 of the Federal Reserve Act.

A threshold question is: does the debt of Puerto Rico qualify as allowable investments?  There are essentially three categories of allowable purchases under Section 14:  state/local government debt in the continental United States, foreign government (or agency) debt;  and U.S. Treasury or agency debt.  Professor Estrella spends considerable effort arguing that Puerto Rico is within the definition of “continental” United States and hence qualifies.  Unfortunately, his efforts are in vain as the Federal Reserve Act in Section 1 defines the “continental United States” to mean “the States of the United States and the District of Columbia” which obviously excludes territories like Puerto Rico.

How does Professor Estrella attempt to overcome the very clear language of the Federal Reserve Act?  He argues that “the preponderance of regulatory language in Federal Reserve regulations shows that Puerto Rico is treated in the same way as a state…”  The good professor offers plenty of examples, such as the Truth in Lending Act, carried out by the Fed’s Regulation Z.  What he fails to mention is that the cited regulations are not carried out pursuant to the Federal Reserve Act.  For instance, the Truth in Lending Act actually defines Puerto Rico as a state, which explains why Regulation Z as implemented does so.  Congress regularly chooses different definitions of the same words for different statutes, and it does so intentionally.  That, however, does not allow an agency to pick and choose.  The definitions contained in a statute govern the regulations promulgated under that statute only.

Can China’s Authoritarians Keep the Economic Miracle Going?

BEIJING—Mao Zedong, China’s “Great Helmsman,” died four decades ago. Only after his murderous reign finally ended could his nation move forward. The old dictator and his cronies wouldn’t recognize China’s capital today. Beijing has become a sprawling metropolis with night clubs and fast food restaurants. Shanghai’s transformation is equally dramatic. Always more international and commercial than Beijing, it has become a world financial center.

There’s a lot more to the People’s Republic of China, including a vast rural territory which remains poor, with average incomes well below urban PRC. But extreme poverty has given way to a genuine, if modest, prosperity.

As China has advanced on the global stage, there’s been discussion of the “Beijing consensus” or China Model. Who needs free markets and democracy if managed capitalism and autocracy can deliver sustained, even faster, economic growth? Dictators around the world want to convince themselves–and more importantly, their subjects–that oppression pays.

Yet the China Model is looking a bit frayed. China has slowing growth, a property bubble, ghost cities, inefficient state enterprises, a stock market crash, badly skewed demographics, overextended banks stuffed with political loans, and unbelievable official statistics.

Putting Income Inequality in Perspective

Debates about income inequality, “the top 1 percent,” and poverty typically examine those issues within the context of a single country. But, consider a global perspective. This web tool lets you find out which income percentile you belong to relative to all the other people in the world. If you make more than $32,400 per year, you are in the top 1 percent of the richest people in the world! 

And, bear in mind that the world is more prosperous than it has ever been in the past. Compared to you, the vast majority of people who have lived on this planet were desperately poor. Poverty, as Cato’s David Boaz put it in this online lecture, used to be ubiquitous. “Why are some people poor? That’s always the wrong question. The question is why are some people rich? Poverty is the natural condition of mankind, but it’s easy to forget that.” 

Fortunately, prosperity is rising and global inequality decreasing. Even as the world population has exploded, the number of people living in poverty has fallen. As a result of spreading prosperity, infant mortalityilliteracy, and malnutrition are in decline, and people are living longer. Extreme poverty’s end is in sight.

Exciting New Technological Developments

In another installment of our series on how science and technology are working to improve lives and solve problems, we sum up some exciting new developments in robotics and 3-D printing, and even news on a sonic tractor beam right out of Star Wars.

The Robots Chasing Amazon

In 2012, Amazon bought the warehouse robot maker, Kiva Systems, in order to keep the technology away from its competitors. This created a gap in demand for warehouse robots, giving Fetch Robotics and Harvest Automation a chance to enter the market. Both of these companies have created robots that follow warehouse employees around for the purpose of collecting and moving the inventory items that they take off the shelves. These robots have greatly improved efficiency and are cheaper than hiring more workers or introducing more infrastructure, such as conveyor belts. Fetch Robotics currently sells these robots for $25,000, while Harvest Automation will sell them for $15,000 or rent them for $1,000 a month beginning next year. Currently these robots are designed to work alongside warehouse employees, but Fetch Robotics has already begun working on warehouse robots that grab the items from the shelves themselves.

Robot Builder Designed for Construction Sites

Recently at ETH Zurich, a robot that is able to lay bricks in various designs was created. It is the first robot that can lay bricks without rigid design constraints, which could make construction sites much more efficient. The robot consists of a robotic arm attached to a mobile base unit and two computer systems. The first computer controls the arm, while the second generates a 3D version of the construction site, allowing it to envision its location. It is hoped that in the future, construction workers and these robots will be able to work together in order to efficiently erect various structures. ETH Zurich is also working on two other projects. One is a robot that can analyze pieces of rubble and then assemble them into a structure. The second robot uses the 3D-printing of mesh, along with the use of concrete filler, to replace older methods of using molds for making concrete pieces. A new robotic fabrication facility will hopefully open by September of 2016. 

3D-printed hip and knee joints coming to a hospital near you

A new breakthrough has occurred in the world of hip and knee surgery. Dr. Clarke has created a technique where virtual models of patient’s bodies are generated for two purposes: One being so surgeons are able to practice the procedure beforehand. The second being so precision instruments for the surgery can be made. Currently, because the size and shape of everyone’s hip and knee joints are different, surgery involves a “trial and error” procedure in order to discover the correct fitting of instruments for an individual’s joint. But Dr. Clarke’s cutting-edge technique allows surgeons to know the size and shape of the patient’s joint beforehand, which lets them use 3D-printing to create surgical instruments that perfectly fit the specific person. This technique diminishes recovery time, allows for smaller incisions, and reduces blood loss.

Star Wars style sonic tractor beam invented by scientists              

It has been portrayed in movies like Star Wars and Star Trek, but now it is a reality. Researches have created a tractor beam that can move, rotate, and suspend a four millimeter plastic bead in mid-air. It uses sixty-four miniature loud speakers that emit high frequency sound waves, which the human ear cannot detect. However, in order to lift larger objects, lower frequencies that humans can detect would have to be used, which poses an unfavorable sound problem. Other implications of this technology include performing surgical procedures inside the human body without making any incisions.