chart of the weekMobile Money Spreads to Asia [feedly]

Interesting post on the spreading phenomenon of "mobile money"

chart of the weekMobile Money Spreads to Asia
https://blogs.imf.org/2019/09/30/mobile-money-spreads-to-asia/

By Esha Chhabra and Bidisha Das

Thanks to mobile money, any person with a basic phone can now make cash transfers, pay bills, and send money to family members abroad without having a bank account. This is a game-changing innovation, particularly for the world's poor as it is easy and cheap.

Our chart of the week from the IMF's Financial Access Survey shows the growth in mobile money accounts across regions. While mobile money continues to grow in its epicenter in Africa, it's also taking off in Asia. Mobile money is just one aspect of the survey, which also provides a wealth of information on the access to and use of basic financial services, including breakdowns by gender.

Asia's mobile money uptake

Over the past five years, mobile money has gained traction in South Asia, which is experiencing an average annual growth rate of 46 percent in mobile money accounts—the highest across all regions. Bangladesh, Indonesia, and Pakistan are a few examples of countries experiencing high mobile money growth in Asia.

Over the past five years, mobile money has gained traction in South Asia.

Mobile money services grew early on in sub-Saharan Africa because some countries lacked deep banking penetration. The launch of M-PESA in Kenya in 2007 completely transformed the way the unbanked access financial services.

After a rapid expansion in Kenya, Tanzania, and Uganda, mobile money has spread to other parts of the region. In fact, sub-Saharan Africa still leads in the number of mobile money accounts and in some countries, mobile money accounts now surpass bank accounts.

Mobile money also continues to grow in some fragile states.

Factors behind rapid uptake in new frontiers

In Afghanistan, for example, where only 200 out of 1,000 adults have bank accounts but more than 80 percent of the population has access to a cellular phone, mobile money is picking up. The value of mobile money transactions grew by a factor of four in the past five years—to 1.2 percent of GDP in 2018.

The ability of mobile money services to reach remote customers has contributed to this growth. Mobile network operators employ agents—typically small, local retail stores—to offer services even in remote areas where banks have limited reach.

In Afghanistan, there are, on average, three mobile money agents compared to one or less automated teller machine or commercial bank branch every 1,000 square kilometres. This expansion in mobile money services has helped meet a significant pent-up demand for financial services.

With mobile money becoming more pervasive, governments will need to create regulations to protect new customers against fraud and liquidity risks—the inability of service providers to return funds on demand.

Related Links:
2019 Financial Access Survey Results
2019 Financial Access Survey Trends and Developments

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Barry Eichengreen : The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era http://books.g... [feedly]

Excerpts from Eichengreen's book, and Interesting take on "populism" and "bellicose nationalism", and political economy conclusions one may draw on its bourgeois remedies in the face of "revolutionary Marxism" as opposed to where the latter had no established base. 

The excerpt below is from Brad DeLong's Blog.

Barry Eichengreen : The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era http://books.g...
https://www.bradford-delong.com/2019/09/barry-eichengreen-_the-populist-temptation-economic-grievance-and-political-reaction-in-the-modern-era_-in-the-unite.htmlBarry Eichengreen: The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era http://books.google.com/?isbn=0190866284: "In the United States, the United Kingdom, and Europe... the reaction of voters against the political establishment, nationalist and racialist sentiment directed against foreigners and minorities, and a yearning for forceful, charismatic leadership, this something, whatever we call it, is not new...

...The characteristic economic policies of populist leaders are damaging and destructive, and the impact of populists on political institutions is corrosive. The attitudes they animate bring out the worst in their followers. Populism arrays the people against the intelligentsia, natives against foreigners, and dominant ethnic, religious, and racial groups against minorities. It is divisive by nature. It can be dangerously conducive to bellicose nationalism...

Populism is activated by the combination of economic insecurity, threats to national identity, and an unresponsive political system, but... can be quelled by economic and political reforms that address the concerns of the disaffected... reinvigorate economic growth... hope that their lives will be as good as those of their parents... that their lifetime of labor is respected and rewarded. Populist revolts rarely arise in good economic times...

Equally important is that the fruits of that growth be widely shared and that individuals displaced by technological progress and international competition are assured that they have social support and assistance on which to fall back.... This is not a novel formula. But if its elements are commonplace, they are no less important for that..

Modern societies show disturbingly little capacity to respond... struggle to develop a political consensus around the desirability of implementing and, no less important, adequately financing programs that compensate the displaced and help them adjust to new circumstances...

The United States glorifies income disparities. With a culture that celebrates the entrepreneur and decries government intervention, it does little to restrain market forces. But at the same time as it encourages creative destruction, it provides little assistance to the casualties of what is destroyed. It insists that workers displaced by globalization and technical change should fend for themselves and leave government out of it. When times are tough, this mix of policies and attitudes is all but guaranteed to produce high anxiety about income security, discomfort about prevailing levels of inequality, and anger at the political class. In part these attitudes are a product of the distinctive American ideology of individualism and market fundamentalism...

Resistance to federal government intervention also reflected the country's historic division between black and white and between North and South. From Reconstruction through the civil rights movement, southern businessmen and farmers opposed federal government involvement in the economy for fear that it would compromise control of their black labor force. In the 1930s they opposed New Deal programs out of concern that these would interfere with their established way of doing business and the prevailing social order. White southerners were not opposed to the decentralization of social programs or to receiving federal matching funds so long as the design or at least the administration of those programs devolved to the states. Such devolution was consequently a legacy of the New Deal, one that endures even today, for example in the power of states to decide whether to expand Medicaid to cover low-income households under the Affordable Care Act, or Obamacare...

The contradictory nature of populism in the United States is no anomaly. People displaced by globalization and technical change are distressed about not sharing in the benefits of an expanding economy and by their government's failure to do more about it, leaving them susceptible to the siren song of populism. But their views are also informed by an ideology that tells them government is the problem, not the solution. One can't help but think of the constituent who allegedly warned Representative Robert Inglis of South Carolina, at a town hall meeting, to "keep your government hands off my Medicare," not realizing that Medicare was a government program. Herein lies the appeal of Donald Trump, who gives voice to the anger of the masses over their economic condition and the failure of government to address their problems, all in the manner of a populist, but who also opposes more spending on social insurance, more trade adjustment assistance, and higher taxes on the rich, all in the manner of a committed Randian. This is not a combination that bodes a happy ending...

This idea that the fundamental goal of policy is to regulate the economy in order to correct its visible defects and alter the distribution of income in ways that make for solidarity and social justice is not something that is spoken out loud by the leaders of either U.S. political party, much less by their more Randian followers. It developed in Europe as an alternative to more radical working-class movements hostile to the market economy and to representative democracy, notably revolutionary Marxism—movements that never gained the same foothold in the United States. It was an effort to get European societies to pull together in order to avoid splintering apart...

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Trade: The Perils of Overstating Benefits and Costs [feedly]

Trade is important, but still only 15% of US GDP

Trade: The Perils of Overstating Benefits and Costs
http://conversableeconomist.blogspot.com/2019/09/trade-perils-of-overstating-benefits.html

A vibrant and healthy economy will be continually in transition, as new technologies arise, leading to new production processes and new products, and consumer preferences shift. In addition, some companies will be managed better or have more motivated and skilled workers, while others will not. Some companies will build reputation and invest in organizational capabilities, and others will not.  International trade is of course one reason for the process of transition.

But international trade isn't the main driver of economic change--and especially not in a country like the United States with a huge internal market. In the world economy, exports and imports--which at the global level are equal to each other because exports from one country must be imports for another country--are both about 28% of GDP. For the US economy, imports are about 15% of GDP and exports are 12%, which is to say that they are roughly half the share of GDP that is average for other countries in the world.

However, supporters of international trade have some tendency to oversell its benefits, while opponents of international trade have some tendency to oversell its costs. This tacit agreement-to-overstate helps both sides avoid a discussion of the central role of domestic policies both in providing a basis for growth and for smoothing the ongoing process of adjustment.

Ernesto Zedillo Ponce de León makes this point in the course of a broader essay on "The Past Decade
and the Future of Globalization," which in a collection of essays called Towards a New Enlightenment? A Transcendent Decade (2018, pp. 247-265). It was published by Open Mind, which in turn is a nonprofit run by the Spanish bank BBVA. He writes (boldface type is added by me):

The crisis and its economic and political sequels have exacerbated a problem for globalization that has existed throughout: to blame it for any number of things that have gone wrong in the world and to dismiss the benefits that it has helped to bring about. The backlash against contemporary globalization seems to be approaching an all-time high in many places including, the United States.

Part of the backlash may be attributable to the simple fact that world GDP growth and nominal wage growth—even accounting for the healthier rates of 2017 and 2018—are still below what they were in most advanced and emerging market countries in the five years prior to the 2008–09 crisis. It is also nurtured by the increase in income inequality and the so-called middle-class squeeze in the rich countries, along with the anxiety caused by automation, which is bound to affect the structure of their labor markets.
Since the Stolper-Samuelson formulation of the Heckscher-Ohlin theory, the alteration of factor prices and therefore income distribution as a consequence of international trade and of labor and capital mobility has been an indispensable qualification acknowledged even by the most recalcitrant proponents of open markets. Recommendations of trade liberalization must always be accompanied by other policy prescriptions if the distributional effects of open markets deemed undesirable are to be mitigated or even fully compensated. This is the usual posture in the economics profession. Curiously, however, those members of the profession who happen to be skeptics or even outright opponents of free trade, and in general of globalization, persistently "rediscover" Stolper-Samuelson and its variants as if this body of knowledge had never been part of the toolkit provided by economics.

It has not helped that sometimes, obviously unwarrantedly, trade is proposed as an all-powerful instrument for growth and development irrespective of other conditions in the economy and politics of countries. Indeed, global trade can promote, and actually has greatly fostered, global growth. But global trade cannot promote growth for all in the absence  of other policies. 

The simultaneous exaggeration of the consequences of free trade and the understatement—or even total absence of consideration—of the critical importance of other policies that need to be in place to prevent abominable economic and social outcomes, constitute a double-edged sword. It has been an expedient used by politicians to pursue the opening of markets when this has fit their convenience or even their convictions. But it reverts, sometimes dramatically, against the case for open markets when those abominable outcomes—caused or not by globalization—become intolerable for societies. When this happens, strong supporters of free trade, conducted in a rules-based system, are charged unduly with the burden of proof about the advantages of open trade in the face of economic and social outcomes that all of us profoundly dislike, such as worsening income distribution, wage stagnation, and the marginalization of significant sectors of the populations from the benefits of globalization, all of which has certainly happened in some parts of the world, although not necessarily as a consequence of trade liberalization.

Open markets, sold in good times as a silver bullet of prosperity, become the culprit of all ills when things go sour economically and politically. Politicians of all persuasions hurry to point fingers toward external forces, first and foremost to open trade, to explain the causes of adversity, rather than engaging in contrition about the domestic policy mistakes or omissions underlying those unwanted ills. Blaming the various dimensions of globalization—trade, finance, and migration—for phenomena such as insufficient GDP growth, stagnant wages, inequality, and unemployment always seems to be preferable for governments, rather than admitting their failure to deliver on their own responsibilities. 
Unfortunately, even otherwise reasonable political leaders sometimes fall into the temptation of playing with the double-edged sword, a trick that may pay off politically short term but also risks having disastrous consequences. Overselling trade and understating other challenges that convey tough political choices is not only deceitful to citizens but also politically risky as it is a posture that can easily backfire against those using it.

The most extreme cases of such a deflection of responsibility are found among populist politicians. More than any other kind, the populist politician has a marked tendency to blame others for his or her country's problems and failings. Foreigners, who invest in, export to, or migrate to their country, are the populist's favorite targets to explain almost every domestic problem. That is why restrictions, including draconian ones, on trade, investment, and migration are an essential part of the populist's policy arsenal. The populist praises isolationism and avoids international engagement. The "full package" of populism frequently includes anti-market economics, xenophobic and autarkic nationalism, contempt for multilateral rules and institutions, and authoritarian politics. ... 

Crucially, for globalization to deliver to its full potential, all governments should take more seriously the essential insight provided by economics that open markets need to be accompanied by policies that make their impact less disruptive and more beneficially inclusive for the population at large.

Advocates of globalization should also be more effective in contending with the conundrum posed by the fact that it has become pervasive, even for serious academics, to postulate almost mechanically a causal relationship between open markets and many social and economic ills while addressing only lightly at best, or simply ignoring, the determinant influence of domestic policies in such outcomes.

Blaming is easy, and blaming foreigners is easiest of all. Proposing thoughtful domestic policy with a fair-minded accounting of benefits and costs is hard. 

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Tim Taylor: Employment Patterns for Older Americans [feedly]

Employment Patterns for Older Americans
http://conversableeconomist.blogspot.com/2019/09/employment-patterns-for-older-americans.html

Americans are living longer, and also are more likely to be working in their 60s and 70s. The Congressional Budget Office provides an overview of some patterns in "Employment of People Ages 55 to 79" (September 2019). CBO writes:

"Between 1970 and the mid-1990s, the share of people ages 55 to 79 who were employed—that is, their employment-to-population ratio—dropped, owing particularly to men's experiences. In contrast, the increase that began in the mid-1990s and continued until the 2007–2009 recession resulted from increases in the employment of both men and women. During that recession, the employment-to-population ratio for the age group overall fell, and the participation rate stabilized—with the gap indicating increased difficulty in finding work. The ensuing gradual convergence of the two measures reflects the slow recovery from the recession. The fall in the employment of men before the mid-1990s, research suggests, resulted partly from an increase in the generosity of Social Security benefits and pension plans, the introduction of Medicare, a decline in the opportunities for less-skilled workers, and the growth of the disability insurance system. Although those factors probably also affected women, the influence was not enough to offset the large increase in the employment of women of the baby-boom generation relative to those of the previous generation, most of whom were not employed."

Here are some underlying factors may help in understanding this pattern. If one breaks down the work of the elderly by male/female and by age groups, then it becomes clear that while men ages 55-61 are not more likely to be working, the other groups are. An underlying reason here is that women who are now ages 55 and older were more likely to be in the (paid) workforce earlier in life than women who were 55 and older back in 1990. Thus, part of the rise in work of older women just reflects more work earlier in life, carried over to later in life.  But

One possible reason for people working older in life can be linked to rising levels of education: that is, people with more education are more likely to have jobs that are better paid and involve less physical stress, and thus more likely to keep working. However, it's interesting that the rise in employment share for males ages 62-79 is about the same in percentage point terms for different levels of education; for females, the increase in employment share for this age group is substantially  higher for those with higher levels of education.

There's an interesting set of questions about whether working longer in life should be viewed a good thing. If the increase is due to those have jobs that they find interesting or rewarding and who want to continue working, then that seems positive. However, it's tempting to feel that if people who had their jobs but work longer primarily just because they need or want the money, and they would otherwise be financially insecure, then working longer in life is potentially more troublesome.

From this perspective, one might argue that it would be more troubling if the rise in employment among the elderly was concentrated in those with lower education levels --who on average may have less desirable jobs. But if the rise in employment among the elderly is either distributed evenly across education groups (males) or happens more among the more-educated (females), then it's harder to make the case that the bulk of this higher work among the elderly is happening because of low-skilled workers taking crappy jobs under financial pressure.

It's also true that the share of older people reporting that their health is "very good/excellent" has been rising in the last two decades, and the share reporting only "good" has been rising too. Conversely, the share reporting that their health is "fair/poor" has been falling for both males and females. Again, this pattern suggests that some of the additional work of the elderly is happening because a greater share of the elderly feel more able to do it.

One other change worth mentioning is that Social Security rules have evolved in a way that allows people to keep working after 65 and still receive at least some benefits. The CBO explains:

"Changes in Social Security policy that relate to the retirement earnings test (RET) have made working in one's 60s more attractive. The RET specifies an age, an earnings threshold, and a withholding rate: If a Social Security claimant is younger than that age and has earnings higher than the specified threshold, some or all of his or her retirement benefits are temporarily withheld. Those withheld benefits are at least partially credited back in later years. Over time, the government has gradually made the RET less stringent by raising earnings thresholds, lowering withholding rates, and exempting certain age groups. For instance, in the early 1980s, the oldest age at which earnings were subject to the RET was reduced from 71 to 69, and in 2000, that age was further lowered to the FRA. (In 2000, the FRA was 65, and it rose to 66 by 2018.) Lowering the oldest age at which earnings are subject to the RET allowed more people to claim their full Social Security benefits while they continued working."

The question of how long in life life someone "should" work seems to me an intensely personal decision, but a decision that will be influenced by health, job options, pay, Social Security rules, rules about accessing retirement accounts and pensions, and more. But broadly speaking, it seems right to me that as Americans live longer and healthier, a larger share of them should be remaining in the workforce. The pattern of more elderly people working is also good news for the financial health of Social Security and the broader health of the US economy.  

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The News Media’s Blind Spots Covering the Working Class [feedly]

An interesting take on "working class" mainstream news stories internal bias that feeds the "white workers for Trump" memes and links whenever the "working class" term comes up.  

However, I am not sure this article does commit a comparable error. The export of capital and factory operations was ongoing long before NAFTA. The poverty of Latin America from a century of corruption, exploitation and extraction was reaching revolutionary boiling points in numerous places. Trade agreements replaced raw imperial intervention techniques. US working class interests were never safe from globalization by right wing nationalism in any form. Mexican auto workers have a different view.

The News Media's Blind Spots Covering the Working Class
https://workingclassstudies.wordpress.com/2019/09/23/the-news-medias-blind-spots-covering-the-working-class/

At midnight on Sept. 15, 49,000 UAW-GM workers walked out on strike at locations across the country, a day after their 2015 collective bargaining contract with General Motors expired and the union declined to extend the provisions of the agreement.

In a statement, UAW Vice President Terry Dittes said "While we are fighting for better wages, affordable quality health care, and job security, GM refuses to put hard-working Americans ahead of their record profits of $35 billion in North America over the last three years. We are united in our efforts to get an agreement our members and their families deserve."

The President promised then punted on saving the GM jobs, and never seemed to imagine that the UAW would later be leading the fight. Given their news coverage from earlier this year, neither did the New York Times imagine the UAW would take on GM.

While the auto industry is increasingly profitable, autoworkers have been suffering. Ground zero of that story is the iconic GM Lordstown plant in northeastern Ohio, which lost the discontinued Chevy Cruze and was shuttered when GM moved production of the revived Chevy Blazer to a Mexican assembly plant.

Beyond its regular reporting, the New York Times committed an amazing level of resources to the story of the Lordstown closing, producing an episode of The Dailypodcast on July 5, an episode of The Weekly (on FX and Hulu) on July 7, and an earlier New York Times Magazine interactive piece with photos and text (May 1, 2019).

I have watched The Weekly episode on Lordstown several times, listened to The Daily podcast many more times, and re-read the multimedia piece. I've also gone back to review the Times' 1992-1993 editorials and opinions on NAFTA, the trade deal that eventually caught up with Lordstown and many other manufacturing plants.

The Times's impressive investment and multiple stories across multiple formats cover the human injury of GM's boardroom decisions and note that the unwritten rules of the "social contract" have changed. These workers are victims of changing times, and the story is told with drama and great empathy.

Still, this is both a story we have heard before, and, as I discuss I my recent book, the kind of narrative that emerges with the built-in blind spots of a news organization focused on stories for upscale readers, listeners, and viewers.

The Times' stories are mostly framed as national political stories, even as they acknowledge that the workers they interview are weary of that angle. The Dailymakes this clear, stating "There's got to be some political fallout from [the Lordstown closing]. What is the consequence for Trump in this scenario?" In framing the issue this way, The Daily and The Weekly focus on white, male workers who voted for Trump.

To understand the politics of this and so many other "working class" stories since Trump's election 2016, imagine that The Daily interviewed a black woman worker from Lordstown who didn't vote for Trump. The political angle would vanish in such a story. But the national media is more interested in politics than in people. They would rather feature a white male worker who voted for Trump and who now (presumably) struggles with the cognitive dissonance of his beloved president not saving his job. This means ignoring the wide range of people who are working class – including those at this plant.

Conversely, the multimedia piece, featuring interviews and photos by an African-American freelancer, takes a different perspective. Not framed as a political story, it is also the only part of New York Times coverage of Lordstown that includes multiple representations of African American workers and women workers.

"The system" that the Times says is broken extends beyond their limited political framing of the story. It includes a blind spot about the paper's complicity with that system. The nation's newspaper of record ran  many editorials in favor of NAFTA in 1992-93, labeling workers and their unions as "protectionist," and stating that there would be only "a few visible losers," with "many in low-paid occupations." The Times' economics columnist wrote pieces with headlines such as "Job Loss in Pact Is Seen as Small" and "Trade-Pact Fears Seem Overstated," which supported its editorial position.

In its recent reports on Lordstown, the New York Times fails to acknowledge how its editorial support of NAFTA contributed to what has happened to America's "losers." In fact, a number of negative outcomes for Lordstown and the Mahoning Valley extend from NAFTA: the pressure for concessions and givebacks to save jobs, the export of jobs to Mexico (where GM assembly plants grew from one to four after NAFTA), the granting of millions in tax breaks and incentives to keep jobs (but draining needed public funds for schools and municipal infrastructure).

The New York Times failed to be a countervailing power (to use John Kenneth Galbraith's term) for working people in 1992-93, precisely at the time when it was most needed, as government (with majorities in both parties lined up in favor of NAFTA) had failed to be a countervailing power for working people. Government and the mainstream news media were in the corner of GM and other corporations. No one was in labor's corner.

Because of this, the Times also failed to recognize the UAW as a solution in their coverage. In the early 1990s, the union was a protectionist loser, and in 2019 it was an institution down for the count, whose members' only remaining power was their individual ballots for Democratic or Republican presidential candidates with whom they could place their faltering hope.

So, in 2019 there is a poetic justice for the UAW-GM workers themselves, all 49,000 of them, who decided to take a stand and be a countervailing power to the auto industry, despite the lack of support from the government or the news media.

Their audacity elicited a rarity from the pages of the Times a few days later: an opinion piece that avoided framing the UAW's actions in the politics of Trump. David Leonhardt's column "Why I'm Rooting for the G.M. Strikers," in a story long overdue for the working class.

Yes, Lordstown and the working class are political stories, but they are stories so much larger than that, too. They are even stories about journalism itself, and the role it has in "the system" that it often fails to see.

Christopher R. Martin

Christopher R. Martin is author of No Longer Newsworthy: How the Mainstream Media Abandoned the Working Class (Cornell University Press). He is professor of Digital Journalism at the University of Northern Iowa.

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Wage Trends: Tell Me How You Want to Measure, and I'll Give You an Answer

http://conversableeconomist.blogspot.com/2019/09/wage-trends-tell-me-how-you-want-to.html

More than eight million workers will be left behind by the Trump overtime rule: Workers would receive $1.4 billion less than under the 2016 rule [feedly]

First rule of the Higher Wages Party: IF IT CUTS LABOR INCOME, ITS BAD!

More than eight million workers will be left behind by the Trump overtime rule: Workers would receive $1.4 billion less than under the 2016 rule
https://www.epi.org/blog/more-than-eight-million-workers-will-be-left-behind-by-the-trump-overtime-rule-workers-would-receive-1-4-billion-less-than-under-the-2016-rule/

Yesterday, the U.S. Department of Labor announced its final overtime rule, which will set the salary threshold under which salaried workers are automatically entitled to overtime pay to $35,568 a year. The rule leaves behind millions of workers who would have received overtime protections under the much stronger rule, published in 2016, that Trump administration chose to abandon.

For quick details on the history of this rulemaking, see this statement. The two tables below show just how many workers this administration is turning its back on with this rule, and how much money workers will lose. Using the same methodology used by the Department of Labor in their estimates of the economic impact of the rule, I estimate that 8.2 million workers who would have benefited from the 2016 rule will be left behind by the Trump administration's rule, including 3.2 million workers who would have gotten new overtime protections under the 2016 rule and 5.0 million who would have gotten strengthened overtime protections under the 2016 rule. As the table shows, this administration is turning its back on 4.2 million women, 2.7 million parents of children under the age of 18, 2.9 million people of color, and 4.6 million workers without a college degree.

Table 1

With this rule, the Trump administration is cheating workers out of billions. The annual wage gains from this rule are $1.4 billion dollars less than they would have been under the 2016 rule—and these annual earnings losses balloon over time because the Trump administration neglected to include automatic indexing in their rule. Once again, President Trump has turned his back on the working people of this country.

Table 2

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