Photo: James Duncan Davidson

Political philosopher Michael Sandel — the second “Michael from Harvard” this session — returns to TED in the last session of TEDGlobal, “All Together Now,” to address the marketization of our culture.

These days there’s very little money can’t buy. If you ever wind up in jail in San Diego, CA, and you find your cell uncomfortable, don’t fret; simply pay $82 and you’ll be upgraded. Or if you find yourself in Washington, DC, en route to a Congressional hearing, but you hear that the line is around the block, don’t give up; you can pay someone through a line-standing company to wait in line for you. You just have to show up at the last minute and take your seat.

Michael Sandel: The lost art of democratic debate

In the past three decades, says Sandel, we’ve undergone a quiet revolution, drifting without realizing from a market economy to a market society, where almost everything is up for sale. In a market society, market values dominate every aspect of life: personal relationships, family life, health, education, politics, law, civil life.

Why is this a problem? According to Sandel, two reasons: First, inequality. As money becomes increasingly important to access to the essentials of the good life — decent healthcare, the best education, political voice and influence, etc. — inequality becomes more and more important. And the second reason is that when market thinking and values enter the sphere of certain social goods and practices, they change the meaning of those practices — and crowd out attitudes and norms worth caring about.

Sandel gives the example of cash incentives in schools. Some schools in New York, Chicago and Washington DC have begun programs to motivate students from disadvantaged backgrounds by offering money for grades: $50 for an A, $35 for a B, and so on. A program in Dallas offers students $2 for every book they read.

Photo: James Duncan Davidson

Sandel, famous for engaging his students in lecture, asks the audience whether, as the head of a major school system, they would consider experimenting with cash incentives. Most of the audience votes against the incentives, but there’s also a sizable number in favor. One attendee, Heike Moses from Switzerland, says this kills intrinsic motivation for students to want to learn and wonder about the world. What happens when you stop paying them? From the audience, Elizabeth Loftus, who spoke on Tuesday about the fiction of memory, says, “Why not try it?” She is in favor of experimentation, saying she would measure how many books students read while she paid them and after she stopped.

Indeed, says Sandel, that’s what experts disagree on as well: Will cash incentives drive out the higher motivation, to learn and read? It turns out the cash for good grades programs had very mixed results, while the $2 to read books was successful. Sort of. Students did read more books — but they read shorter ones.

What this illustrates is a false assumption held by many economists, says Sandel: that markets are inert and don’t taint the goods they exchange. This may very well be true with material goods, but not so with goods like teaching, learning, engaging in civic life. Market thinking can actually change the character of these social practices, so we have to really think about where markets belong and where they don’t.

But this debate may never happen. As Sandel says, “Over the past 30 decades, as market reasoning has gathered prestige, our public discourse has become hollowed out and empty.” Public discourse and collective reasoning about the value and meaning of the social practices we prize is deteriorating, as we shun controversial questions for fear of disappointment.

Photo: James Duncan Davidson

The problem of market thinking, says Sandel, is the illusion of commonality against the backdrop of rising inequality. Marketizing every aspect of life leads to a condition where those who are affluent and those who aren’t live separate lives — and this is terrible for democracy, says Sandel. Though democracy doesn’t require perfect equality, it does require that citizens share in a common life, brushing up against different social backgrounds and people from different walks of life. This is how, he concludes, we come to care for the common good. Which is something money can’t buy, and can actively work against.

After rousing applause and a standing ovation, Curator Chris Anderson calls Michael Porter (Harvard Michael #1) back on stage to respond to Sandel. Porter on the one hand believes fully in the power of markets to solve social problems, while Sandel is quite skeptical about their promise, says Anderson. Porter, though, says he doesn’t disagree with Sandel, but that business per se isn’t the problem. There are all kinds of social good areas where the market can help but where it hasn’t gone far enough, like with food security, healthcare for all, and so on. Sandel responds, “I’m not against markets, but I am in favor of keeping markets in their place,” to enthusiastic applause. With a laugh, Anderson says, “Well, I for one am all for the ‘Michael v Michael Market Enlightenment Roadshow’ happening.”

Photo: James Duncan Davidson

“Give me liberty or give me death,” says global economist Dambisa Moyo, quoting Patrick Henry from 1775. In Western ideology, freedom is the most cherished value of all, and its government and economic systems have freedom deeply embedded in them. Over the past century, these systems have delivered prosperity and innovation: US incomes have increased 30 times, hundreds of thousands have been lifted from poverty, and US ingenuity has helped spur global industrialization. So there’s an understandably deep-seated presumption among Westerners that the whole world wants to embrace an ideology that holds sacred private capitalism, liberal democracy and prioritizing political rights over economic rights.

But there’s an ideological schism emerging between developed and developing countries, and it is widening. Ninety percent of the world’s population lives in emerging markets, and to them, the obsession with political rights is beside the point, taking a backseat to food, shelter, education and healthcare. When you’re earning less than $1 a day, says Moyo, you’re far too busy trying to feed your family to worry about defending democracy.

It’s not that these people wouldn’t ideally like to pick their own presidents and leaders, says Moyo, but on balance, they worry more about where life improvements will come from, and how quickly — not whether the governments that will deliver what they need got put there by democracy. What would you choose if you had to choose between the right to a roof over your head and the right to vote?

Now, for the first time in a long time, a real challenge to Western ideals is emerging — the system embodied by China, which values state capitalism, deemphasizes democracy and prioritizes economic rights. China’s system is gathering momentum as the system to follow because it promises the fastest improvements in living standards in the shortest period of time. Moyo cites China’s astonishing record of poverty alleviation and improvement in living standards. While the US and China have vastly different political and economic systems, they have an identical Gini coefficient — the measure of income inequality. In fact, China’s income inequality is improving while the US’s is getting worse.

And then there’s China’s legendary infrastructure — 85,000 kilometers of roadwork, surpassing the United States. And it extends beyond their own borders; for instance, China has tarred the 9,000 miles between Cape Town and Cairo. China has also used state-owned enterprises to deliver healthcare to previously unreachable areas. No surprise, then, that in a 2007 Pew survey, Africans in 10 countries said China was doing amazing things to improve livelihoods. “People are pointing at China and saying ‘I like that, I want that. That’s a system that seems to work.’”

Photo: James Duncan Davidson

Moyo points to another shift in perception: people are starting to doubt that democracy is a prerequisite to growth. She argues a different angle, that economic growth is a prerequisite for democracy, citing a study that suggests that only after a country achieves $6,000 per capita income can you expect your democracy to last forever “come hell or high water.” This suggests that the key for a solid democracy is a solid middle class — and raises doubt about rushing around shoehorning democracy into countries that are not ready for it. This runs the risk of ending up with illiberal democracies, those with restricted freedom of speech and movement — worse than the governments they seek to replace.

There’s evidence that this schism in ideology will likely widen, espeically as China becomes the largest economy in the world, which it’s set to do in 2016. Moyo gives us a glimpse of what kind of world we’ll be living in: one with a bigger state role, more state capitalism, increasing protectionism, and fewer political rights and individual freedoms.

How should the West respond? Moyo says it can choose to compete with the Chinese model or cooperate. If the West chooses to compete, it would have to convince many countries in the emerging world to take its side, which is likely to widen the schism. Cooperation would mean allowing emerging countries to make their own choices for what works for them. Could this be considered ceding to China? Moyo suggests cooperation is the best way for the US and Europe to maintain their influence in a changing world, and compete in the long term.

So what should the West be doing? It should be expanding trade and investment around the world, demonstrating how western liberal democracy and free markets are a good choice, and allowing other countries to decide which political and economic systems work best for them. In short, it needs to take a page from its own history and practice patience — after all, it took the US almost 170 years from signing the Constitution to achieving universal suffrage.

Moyo argues that people naturally pivot towards economics and politics in a rational way, seeking better living standards in a short amount of time. As individuals, it’s up to us to be open-minded, she says. To illustrate, she tells the story of her birth in 1968, in Zambia, where, at the time, black people were not issued birth certificates. In 40 years, if Moyo could go from being unrecognized as a human being to standing here delivering her ideas to the world, it’s possible to tear up preconceived structures and strictures, and instead look at options and seek the truth. “It’s about transforming the world and making it a better place.”

Here are the speakers in this session. Click on their name to read a full recap of their talk:

A former two-term governor of Michigan, Jennifer Granholm makes the case for empowering states to create jobs through a Clean Energy Jobs Race to the Top.

Robert J. Gordon is among the most influential macroeconomists in the world. And the big picture he sees is not altogether rosy.

Erik Brynjolfsson examines the effects of information technologies on business strategy, productivity and employment.

What happens when Robert J. Gordon and Erk Brynjolfsson debate? Read here.

Born in Havana, Cuba, Pedrito Martinez spent his youth steeped in rumba and the music of the Santería religion. His music had become an intoxicating blend of Cuban tradition and African-American styles.

Rodney Brooks builds robots based on biological principles of movement and reasoning. The goal: a robot who can figure things out. Get ready to meet Baxter.

The founder and CEO of Romotive, Keller Rinaudo creates robots that use smart phones and are designed for interaction.

Nilofer Merchant thinks deeply about the frameworks, strategies and cultural values of great businesses new and old, large and small.

Bono, the lead singer of U2, uses his celebrity to fight for social justice worldwide: to end hunger, poverty and disease, especially in Africa. His nonprofit ONE raises awareness via media, policy and calls to action.

How are China, Estonia and Germany different from India, Greece and the UK? To an economist, one answer is obvious: savings rates. Germans save 10 percentage points more than the British do (as a fraction of GDP), while Estonians and Chinese save a whopping 20 percentage points more than Greeks and Indians. Economists think a lot about what drives people to save, but many of these international differences remain unexplained. In a recent paper of mine, I find that these countries differ not only in how much their residents save for the future, but also how their native speakers talk about the future.

Keith Chen: Could your language affect your ability to save money?

In late 2011, an idea struck me while reading several papers in psychology that link a person’s language with differences in how they think about space, color, and movement. As a behavioral economist, I am interested in understanding how people make decisions. Could a person’s language subtly affect his or her everyday decisions? In particular, could the way a person’s language marks the future affect their propensity to save for the future?

In a nutshell, this is precisely what I found. After scouring many datasets with millions of records on individual household savings behavior—along with a number of peculiar health performance metrics like grip strength and walking speed—I find that languages that oblige speakers to grammatically separate the future from the present lead them to invest less in the future. Speakers of such languages save less, retire with less wealth, smoke more, practice more unsafe sex and are more obese. Surprisingly, this effect persists even after controlling for a speaker’s education, income, family structure and religion.

Back when my first paper on this topic circulated, many linguists were appropriately skeptical of the work. Their concerns are concisely explained in two well-thought out posts (here and here) by the linguists Mark Liberman and Goeffrey Pullum on the blog they founded, Language Log. Mark and Geoffrey also invited me to write a guest post explaining the work. In that post, I discuss which of their possible concerns are unlikely given the patterns I find across the world in people’s savings and health behaviors, and also try to clarify which of their concerns I was not yet able to address.

This exchange prompted a broad set of discussions as to what different types of data, analyses and experiments could, in principle, answer the questions raised by the patterns I find. Cross-disciplinary discussions took place in a subsequent post by Julie Sedivy and followup posts by Mark Liberman, and also at the Linguistic Data Consortium’s 20th Anniversary Workshop. Several new avenues of investigation and work came out of these interactions, three of which are now ongoing projects.

One new idea that I’ve begun to explore entails measuring a language’s time reference by scraping the web—to search for natural patterns in language—in addition to using linguistic classifications. This led me to search the web for the simplest form of writing about the future I could find: weather forecasts. Why weather forecasts? Well, forecasts rarely talk about the past, so they’re a natural place to look for speech about the future. Weather forecasters also generally communicate in natural, straightforward language, and often convey similar content across different settings. Can patterns in weather forecasts measure how languages structure the future, and can these differences predict how people save for the future? Amazingly, they do.

A team of linguistics and economics students assisted with this analysis, and managed to scrape the web for weather forecasts in 39 languages from around the world. The figure below summarizes what we found: wide variation in how often, when talking about future weather, forecasts in a particular language grammatically mark the future as something distinct from the present. In English, for example, this comes down to the relative frequency of sentences like:

Rain is likely this weekend.                (present tense “is”)

It will likely rain this weekend.          (future tense “will rain”)

What’s surprising is that when I repeat the statistical analysis I did in the paper, I find an incredibly strong relationship between how forecasters talk about weather and how much people choose to save. Essentially, a 20 percentage point increase in the frequency of future tenses results in 1% less of GDP saved. This finding holds even after taking into account a country’s level of development, rate of growth, demographics, social security protections and major religions.

What does this mean? I don’t believe it demonstrates extreme weather forecaster persuasion. Rather, I think it shows that many different ways of measuring how languages mark time share a strong and striking relationship with how speakers of those languages save. In short, I believe more than ever that the data suggests a strong and robust relationship between linguistic and economic data, a relationship that leaves us at an exciting crossroads: one where economists have a tremendous amount to learn from linguists.

The figure below measures the percent of time weather forecasts use future vs. present tenses (download a larger version as a PDF). See the paper here for details.

Occupy Wall Street’s slogan “We are the 99%” had been echoing through the United States and the world for just over a month when James B. Glattfelder and his co-authors released the study “The Network of Global Corporate Control” in October 2011. The study was a scientific look at our global economy, revealing how control flows like water through pipes — some thin, some thick — between people and companies. The finding: that control of our economy is highly tightly concentrated into a small core of top players, leaving us all vulnerable to fast-spreading economic distress.

James B. Glattfelder: Who controls the world?

In today’s talk, filmed at TEDxZurich, Glattfelder reveals that the impetus of the study wasn’t at all to validate global protesters. Instead, the study was conducted out of a desire to understand the laws that govern our economy, in the same way that we understand the laws that govern the physical world around us. Glattfelder and his co-authors Stefania Vitali and Stefano Battiston are complex systems theorists, meaning that they study a whole — for example, an ant colony or the human brain — as more than just the sum of its part. Complexity theory examines interactions between parts, looking for the simple rules that emerge when viewed en masse.

“Ideas relating to finance, economics and politics are very often tainted by people’s personal ideologies. I hope that this complexity perspective allows for some common ground to be found, “ Glattfelder says in today’s talk. “It would be great if it has the power to help end the gridlock of conflicting ideas, which appear to be paralyzing our global world. Reality is so complex — we need to move away from dogma. But this is only my personal ideology.”

To hear more about how the study was conducted, watch this talk. And to learn more about the results, and how they were received, keep reading.

To answer the question, “Who controls the world?” the study looked at ownership networks, breaking it down to nodes (such as firms, people, governments, foundations), links (the percentage of ownership) and value. Overall, the study looked at:

• 13 million ownership relations
• 43,000 transnational corporations
• 600,000 nodes
• 1 million links

At the top of this post is a 3D rendering of all the connections in this study. The dots represent the transnational corporations, nodes and links. Any section of it looks something like this.

As Glattfelder explains, in this ecosystem of transnational corporations, there is a periphery and there is a center — a connected network that contains about 75% of all the players. Nestled in this center is what the study calls the core. This core contains 1,300 highly connected nodes. While only 36% of transnational corporations are in this core, they make up 95% of the value of the entire network. This image will help to illustrate the core.

The authors of this study also assigned each player in this system a degree of influence. And overall, they found that the 737 top shareholders have the potential to control 80% of all the transnational corporations’ value. These top shareholders are mostly financial institutions in the US and UK. The first 10 on the list:

1. Barclays plc
2. Capital Group Companies Inc.
3. FMR Corporation
4. AXA
5. State Street Corporation
6. JP Morgan Chase & Co.
7. Legal & General Group plc
8. Vanguard Group Inc.
9. UBS AG
10. Merrill Lynch & Co Inc.

Download the full list here »

But their findings get even more extreme. The 146 top players in the core — representing just .024% of all the nodes studied — have the ability to control about 40% of transnational corporations’ value. This high degree of interconnectivity means that not only are we all highly influenced by a few — but that their distress is able to spread like wildfire.

The study, published in PLOS ONE at just the right time, quickly went viral. Read the study in its entirety »

Or check out some of the stories that ran about it:

• The New Scientist: Revealed — the capitalist network that runs the world (Oct. 24, 2011)
• The Montreal Review: Decoding Complexity (April 2012)
• Public Intelligence: Network of 147 companies control nearly 40% of global economic value of transnational corporations (Oct. 21, 2011)
• Science News: Financial world dominated by a few deep pockets (Sept. 24, 2011)
• Huffington Post: ‘Super-Entity’ of 147 companies at center of world’s economy, study claims (Oct. 24, 2011)
• Media Freedom International: Small network of corporations run the global Economy (April 4, 2012)
• Global Research: Bankers rule the world (Dec. 16, 2011)

As the story spread, Glattfeld and his co-authors took on the issue of whether their study was a proof of a conspiracy.

“Our study does NOT claim that the actors in the core are colluding. NOR does it claim that this structure is the result of some intentional design. We actually think that it probably emerges ‘naturally,’ as a result of simple mechanisms that are at work in the market,” they write here. “What we claim is that further studies are needed to investigate the implications of such a structure, because it is very well possible that it is [endangers] market competition and financial stability.”

Al Gore: Averting the climate crisis

Al Gore posits an intriguing question in his newest book, on shelves tomorrow, January 29: can we change the future? But this book isn’t about peering into a crystal ball.  In The Future: Six Drivers of Global Change, Gore — who’s spoken at TED multiple times — breaks down the factors that are changing our world at an unprecedented pace, leaving many of us feeling something akin to temporal whiplash. As Gore outlines, these forces are: ever-increasing economic globalization, the development of a “global mind” via instant communication, a global balance of power with multiple centers, an economic compass pointing toward unsustainable growth, Al Gore: New thinking on the climate crisisrevolutions in the field of genomics and biotech, and a disruption of the relationship between people and the earth’s ecosystems.

“What do you think about when you hear the phrase ‘the future?’ Is it a hopeful place? Is it a little scary? Does it seem like things are speeding up more than in the past?” Gore asks in a trailer for the book, above. “Well, they are. There are large forces that are shaping and reordering the world we’ve always known.”

Al Gore warns on latest climate trends

But he promises that the tome isn’t all doom and gloom.

“No matter where in the world we live, we face a choice—either to be swept along by the powerful currents of technological change and economic determinism into a future that may threaten our deepest values. Or shape the future in ways that protect human dignity and reflect the aspirations of people and nations throughout the world,” he says. “Mapping the future is a risky undertaking. Perhaps the only thing riskier is doing nothing.”

The term “fiscal cliff” is controversial. So Adam Davidson, the New York Times Magazine columnist and co-host of NPR’s Planet Money, prefers to call it “the self-imposed, self-destructive arbitrary deadline about resolving an inevitable problem.”

In today’s talk, filmed in TED’s New York office on Monday, Davidson explains what the fiscal cliff is and why it is so contentious. The easiest way to understand the fiscal cliff is to look at the graph below. In it, the Congressional Budget Office projects two future scenarios, the solid line showing what will happen if Bush-era tax cuts are allowed to expire in January and if government spending on everything other than major programs were cut significantly. The dotted line is what would happen if Congress opts to extend Bush-era tax cuts and does not curb government spending.

“Sometime in the next 20 years, if Congress does absolutely nothing, we’re going to hit a moment where the world’s investors and bond-buyers say, ‘We don’t trust America anymore. We’re not going to lend them any money except at really high interest rates.’ And at that moment, our economy collapses,” says Davidson. “We’re there in 20 years — we have lots of time to avoid that crisis. The fiscal cliff is one more attempt at getting the two sides to resolve the crisis.”

The crudest breakdown of the disagreement: Democrats see the way to solve the crisis as increasing taxes, especially on the rich. Meanwhile, Republicans see the key to ending the crisis as lowering government spending, to the point where taxes can be lowered too.

“When you think about the economy through these two different lenses, you understand why this crisis is so hard to solve,” says Davidson. “The worse the crisis gets, the higher the stakes, the more each side thinks they know the answer and that the other side is just going to ruin everything.”

There is hope, though, says Davidson. While Congress is embroiled in this battle, the American people are in general “moderate, pragmatic Centrists” when it comes to fiscal policy. By large, Davidson says Americans agree on the major government expenditures — Social Security, Medicare, Medicaid — though they see room for tweaks to make these systems more stable. (Defense spending, that’s another issue.) “We get to fight about all sorts of other issues — we get to hate each other on gun control, abortion, the environment — but on these fiscal issues, we are not as nearly divided as people say,” says Davidson.

In fact, when it comes to the American population at large, party identification isn’t as strong as it seems, says Davidson.

“We tend in this country to talk about Democrats and Republicans, and think there’s little group over there called Independents that’s maybe 2%,” says Davidson. “That is not the case and it has not been the case for most of modern American history.”

So, will Congress be able to diffuse the ideological butting-of-heads and solve this crisis, or will the United States drop off the edge of the fiscal cliff?

If history is any indicator, a compromise will emerge. As Davidson points out in his talk, deep-rooted battles about money have been a regular feature of American history. Alexander Hamilton and Thomas Jefferson battled about whether there should be a central bank. In 1913, there was a battle over the Federal Reserve. And then came disagreement about the gold standard, which was abandoned in 1933.

“Each of those times, we were on the verge of collapse, and nothing happened at all,” says Davidson. “Throughout it all, the dollar has been one of the most long-standing, stable, reasonable currencies — no matter how scared we’re supposed to be.”

To hear Davidson’s powerful metaphors for how both American political parties think about the economy, watch his talk. And below, some of our favorite Adam Davidson stories from Planet Money, “It’s the Economy” and more.

The ‘Mad Men’ Economic Miracle, The New York Times Magazine (Dec. 4, 2012)

Cliffhangers may have been around for more than a thousand years — since at least the composition of “One Thousand and One Nights” — but no one has monetized them as brilliantly as cable networks. In order to get paid, Charles Dickens had to sell the next chapter of his serialized novels; in order to sell advertising, ABC had to order more episodes of its hit show “Lost.” But for the next several months, AMC is converting our eagerness into millions of dollars without showing a single new episode.

Cable TV has developed one of the most clever business models in our modern economy.

Read the full column >>

The Giant Pool of Money, This American Life (May 8, 2008)

This American Life producer Alex Blumberg teams up with NPR’s Adam Davidson for the surprisingly entertaining story of how the U.S. got itself into a housing crisis. They talk to people who were actually working in the housing, banking, finance and mortgage industries, about what they thought during the boom times, and why the bust happened. And they explain that a lot of it has to do with the giant global pool of money.

Listen to this classic episode >>

This Man Makes Beautiful Suits, But He Can’t Afford To Buy One, Planet Money (Sept. 7 2012)

Peter Frew is one of a tiny number of people left in the United States who can — entirely on his own, using almost no machinery — make a classic bespoke suit. He can measure you, draw a pattern, cut the fabric and then hand-stitch a suit designed to fit your body perfectly.

Frew spent more than a decade as an apprentice for a remarkable tailor in his native Jamaica. He now sells his suits for about $4,000. Since New York is filled with very rich people who see their suits as an essential uniform, Frew has all the orders he can handle.

When I first heard about Frew and his remarkable skill, I thought: That guy must make a fortune. I was wrong.

Listen to the episode >>

Skills don’t pay the bills, The New York Times Magazine (Nov. 20, 2012)

Earlier this month, hoping to understand the future of the moribund manufacturing job market, I visited the engineering technology program at Queensborough Community College in New York City. I knew that advanced manufacturing had become reliant on computers, yet the classroom I visited had nothing but computers. As the instructor Joseph Goldenberg explained, today’s skilled factory worker is really a hybrid of an old-school machinist and a computer programmer. Goldenberg’s intro class starts with the basics of how to use cutting tools to shape a raw piece of metal. Then the real work begins: students learn to write the computer code that tells a machine how to do it much faster.

Nearly six million factory jobs, almost a third of the entire manufacturing industry, have disappeared since 2000.

Read the full column >>

What Do the Dow’s Daily Swings Mean? Not Much, Planet Money (Feb. 9, 2012)

Turn on the news on any given day, and you’re likely to hear about the Dow Jones industrial average. It is the most frequently checked, and cited, proxy of U.S. economic health. But a lot of people — maybe most — don’t even know what it is. It’s just the stock prices of 30 big companies, summed up and roughly averaged. That’s it.

And what does the daily movement of this number have to do with the lives of most Americans? Not much.

Listen to the episode >>

The Haiti Aid Dilemma, Frontline (June 2010)

Read more on this story >>

My Big Fat Belizean, Singaporean Bank Account, The New York Times Magazine (July 24, 2012)

Earlier this month, I decided to see how hard it would be to set up my own offshore bank account. I figured it would be pretty difficult, because I’m not rich and don’t have a team of tax lawyers to oversee my money and because the E.U. and U.S. governments have been cracking down on tax havens by imposing stricter tax-sharing requirements. So I proceeded with some caution.

Read the full column >>

Looking for a High-Tech Job? Try Cotton, Planet Money (May 27, 2011)

Unemployment is still at 9 percent, leaving more than 12 million Americans without work. But there are bright spots in the U.S. economy. Planet Money and Wired Magazine have spent the last six months scouring economic data and interviewing people around the country to find out what areas of our economy are doing well. It’s part of a series called Smart Jobs.

Let me boil our findings down to one quick tip. If you want a job — a good job, a job that will be around for a while and pays well — find a company that creates some new product or service that nobody else has.

For example: a greenhouse in Memphis, Tennessee.

Listen to the story >>

The term “fiscal cliff” has gained traction in the U.S. news in the past few months, at least in part because it paints a vivid metaphorical picture. Popularized by Federal Reserve Chairman Ben Bernanke, the term refers to the ill economic consequences that could occur if Congress does not change its course on several policies by January 1, 2013 — including the expiration of Bush-era tax cuts and automatic spending cuts that were agreed to in 2011. But for Congress to act, Democrats and Republicans need to find some general agreement on how to bridge the gap between the federal government’s revenues and spending. Let’s just say that’s been slow to come.

As the deadline nears, we invited three speakers — social psychologist Jonathan Haidt, data visualizationist Jer Thorp and “Planet Money” co-host Adam Davidson — to our New York office for a TED@250 salon, part of a new program to reimagine the headlines. The idea: to give us a deeper understanding of the issue and why it has been so darn difficult for American political parties to work together in recent times.

First to the stage was Jonathan Haidt, who explored “The moral roots of liberals and conservatives” at TED2008. Haidt began his talk with a dramatic statement: Four asteroids are headed for the United States, and they will hit within 50 years.

These, of course, are allegorical asteroids — climate change that could flood many of our major cities, the federal debt rising to the point where a welfare state may become untenable, a growing rise in inequality which is making us deeply distrustful of each other, and the breakdown of marriage which feeds into disparity in income. The problem, as Haidt explains it, is that the current American political climate makes it very difficult to see all four as true problems.

“In our hyper-politicized time, one person says, ‘Look! An asteroid is coming.’ And the other person won’t even look up,” says Haidt. “Retiring members of Congress say that it’s become like gang warfare.”

In his talk, Haidt looks at the social underpinnings that create this type of polarization, where fingers are pointed while real data is ignored. And he also presents several ideas for what could help relieve these tensions and get politicians working together to solve problems. One of his simplest ideas is to shift Congress’ schedule to three weeks on, one week off. This way, members of Congress will be forced to make homes in Washington, D.C., instead of flying home every week. With more politicians living in the Capitol, they’d socialize and meet each other’s families, allowing them to build common ground where the idea, “Hey, the other guy might have a point,” could surface.

At TEDxVancouver, Jer Thorp urged us to “Make data more human.” Today, he shared a fascinating project, “The Colour Economy,” in which he gave screen pixels a very human ability — to trade their red, green and blue values in pursuit of a profit. As the colored bits moved on a screen, stratifications emerged — a situation which feels all too familiar.

Thorp’s point is that data visualization can help us understand how and why things happen, and can inspire new realizations. Currently, says Thorp (shown above), there are a mishmash of images and metaphors that cloud our understanding of the economy. Could creative uses of data — data fiction, data poetry, data theater — gives us new ways of thinking?

Finally, Adam Davidson spoke, describing the fiscal cliff as “a self-imposed arbitrary deadline,” that both parties need to resolve, though neither wants to make the first move and be seen as weak. In other words, it’s a game of chicken, fueled by partisan anger.  “The worse the crisis gets, the more each side thinks they have the answer,” says Davidson.

But what’s so curious, he explains, is that the American population isn’t as polarized as one would think, and people even tend to agree — for the most part — on what kinds of decisions we should make about the federal budget. For example: When asked, people want Social Security and Medicare to stay strong.  “The American people tend to be moderate, pragmatic centrists,” says Davidson. “You’d think that if you add up Democrat and Republican, you get the American people, but that’s not what the data shows … Forty percent of people consider themselves independent.”

American history, says Davidson, is full of skirmishes about money. And yet the dollar has remained one of the most stable currencies. So when it comes to the fiscal cliff, he urges, “Instead of talking about it in vague terms that feed partisanship, let’s talk about it as what it really is — a really solvable math problem. Though not one where we’re all going to get what we want.“

After an election that seemed to bring partisanship to a fever pitch, there seemed to be a pulling together this weekend as the nation mourned those killed in the school shooting in Connecticut on December 14. When asked if he thought the same polarization would happen with gun control that has been happening over the economy, Haidt shared enthusiasm that this could be an issue that highlights commonality and brings across-the-divide cooperation. As we arrived back at our desks from the salon, a new headline appeared on NYTimes.com that suggested this may be the case: “Newtown Shooting May Cool Washington’s Partisan Passions.”

When we hear the phrase “the economy,” often the first images that pop to mind are crisp bills being printed in a government treasury, or suited traders wheeling and dealing on the floor of a stock exchange, or a mall where suburban shoppers buy T-shirts and sneakers before grabbing a Cinnabon. But as journalist Robert Neuwirth pointed out at TEDGlobal 2012, while the luxury economy is responsible for $1.5 trillion a year, there are currently 1.8 billion people across the globe toiling in the informal, unregulated economy.

“If it were united in a single political system — one country, call it the United Street Sellers Republic, the U.S.S.R., or Bazaaristan — it would be worth $10 trillion every year. That would make it the second largest economy in the world after the United States,” said Neuwirth in his illuminating talk. “All of this is happening openly and aboveboard — there’s nothing underground about it. It’s our pre-judgment that it’s underground.”

For his book Stealth of Nations, Neuwirth spent four years researching what he calls “System D,” spending time with street hawkers, wholesale shopkeepers, smugglers, and sub-rosa import/export firms. To hear the details of what he found, listen to his talk. Below, check out six more talks that explore different corners of the informal economy.

Vinay Venkatraman: “Technology crafts” for the digitally underserved
In most parts of the world, buying the latest iPhone isn’t an option. However, as designer Vinay Venkatraman noted at TEDxSummit, there is a growing economy of salvaged computer and phone parts, as well as tinkerers who know how to work with them, cropping up in markets around the developing world. In this talk, Venkatraman explains his work with “technology crafts,” using the parts and skills available in tinkerers’ stalls to make useful products — like a digital projector for a village school made from a lunchbox, or a medical triage device constructed from an alarm clock.

Robert Neuwirth on our “shadow cities”
In this talk given at TEDGlobal 2005, Robert Neuwirth peeks into the enormous squatter cities growing in Kenya, India, Brazil, Turkey and many other countries around the world. Rather than simply places of squalor, Neuwirth says, these cities are also hotbeds of innovation, where people set up restaurants, markets, salons and clinics, effectively self-organizing without the constraints of government control.

Steven Levitt: The freakonomics of McDonalds vs. drugs
Believe it or not, drug dealers don’t actually make a lot of money. They generally only earn minimum wage, says Freakonomics author Stephen Levitt, who, with the help of a fearless grad student, spent 10 years researching the financials of inner-city gangs. In this fascinating talk from TED2004, Levitt delves into the informal — and illegal — economy of crack cocaine.

George Ayittey on Cheetahs vs. Hippos
In this impassioned talk from TEDGlobal 2007, economist George Ayittey gives a rousing critique of government corruption in Africa, which he says costs the continent $148 billion a year. Ayittey explains that there are three sectors to the African economy — the modern, the informal and the traditional. While aid pours into the modern sector, run by elites, the people of Africa — who overwhelmingly deal in the informal and traditional sectors — are left behind. Ayittey sees the future of Africa in the young movers and shakers who are focusing on improving Africa’s indigenous institutions like farms, markets and the ship-building industry.

Misha Glenny: Hire the hackers!
Journalist Misha Glenny makes a plea at TEDGlobal 2011 for companies and governments to recruit hackers — who are often teenagers developing their moral compass — and guide them toward using their skills for productive ends rather than having to treat them as criminals later. Glenny stresses that the world’s most famous hacker collective, Anonymous, doesn’t mobilize for financial gain. However, he also describes the economy of “carders,” who use illegal online marketplaces to buy and sell credit stolen credit card details.

In 2007, at TEDAfrica, Euvin Naidoo gave an opening talk about investing in African countries — laying out 10 markets and metrics to watch as African nations gained capacity.

Today, in a follow-up post, investor Ryan Hoover looks at these 10 metrics that Naidoo laid out — and charts how much has changed in the past five years. It’s a fascinating post. A sample:

7. Africa’s Booming Banks

2007: Naidoo next remarked on the potential of the banking sector and the reforms taking place in Nigeria that consolidated that country’s 85 banks into 25. He noted that only 10% of Nigerians were banked.

2012: Five years later, and 36% of the Nigerian population is now served by the formal financial sector. Analysts at Bain Capital expect the sub-Saharan banking industry to continue growing at 15% annually all the way to 2020.

Read all 10 metrics >>