MIT Sloan Visiting Lecturer Irving Wladawsky-Berger
From The Wall Street Journal
The World Economic Forum in mid-September released a report examining how blockchain technologies could be harnessed to address serious environmental issues, better manage our shared global environment and help drive sustainable growth and value creation. The report outlined some of the world’s most-pressing environmental challenges and highlighted eight blockchain-based game changers that could lead to transformative solutions to these pressing problems.
“The majority of the world’s current environmental problems can be traced back to industrialization, particularly since the ‘great acceleration’ in global economic activity since the 1950s,” notes the report. “While this delivered impressive gains in human progress and prosperity, it has also led to unintended consequences… research from many Earth-system scientists suggests that life on land could now be entering a period of unprecedented environmental systems change.”
True, blockchain is still in its early stages of development and deployment. Its capabilities have been often oversold, as is the case with just about all promising technologies. But, as the WEF report argues, if blockchain one days lives up to its promise, it could “transform how society operates, becoming one of the most significant innovations since the creation of the internet. The opportunity to harness this innovation to help tackle environmental challenges is equally significant.”
Naghmeh Momeni, Postdoctoral Fellow, Management Science
From Scientific American
As any economist well versed in game theory will tell you, there are plenty of good reasons to cooperate—and plenty of good reasons not to do so. (Of course, any self-respecting kindergartner could tell you the same thing.)
The fundamental problem with cooperation is that the incentives are askew. While the act of cooperating results in the best collective outcome, it’s not always clear whether it will yield the best individual outcome. There’s tricky cost/benefit analysis involved: If I cooperate and you don’t, you get a benefit and I pay a cost. If you cooperate and I don’t, I gain the advantage and you pay a cost. The prisoner’s dilemma is the most famous example of this predicament.
Certain groups and societies are structured in ways that promote cooperation. Others are not. In these societies, spite can become the norm: individuals are willing to pay a cost for others to lose.
Since cooperation is optimal—if everyone cooperates for the greater good, everyone is better off—we are left with the question: what will it take to promote cooperation in an otherwise uncooperative society?
My colleagues Babak Fotouhi and Martin A. Nowak at Harvard University and Benjamin Allen at Emmanuel College and I set out to find the answer. Through mathematical analysis, simulations and examples from real-world social networks, we found that the key to cultivating cooperation lies in the creation of sparse connections—similar to bridges and brokers—between disparate groups. Our study is published in the July issue of Nature Human Behavior.
Thomas Kochan, MIT Sloan professor & co-founder, Employment Policy Research Network.
From The Irish Times
The future of work is in hot debate all over the world. The World Economic Forum, the ILO, the International Confederation of Trade Unions, consulting firms, and universities like MIT have task forces asking what work will look like in the years ahead.
There are two problems with much of these debates. The first is an over-fixation with technology. The second is the view that technology has a trajectory all its own as if there is some iron law of physics that will determine its shape and effects. I challenge both of these premises: Technology will of course be important; it is one of the big “megatrends” that will influence work of the future. But how it, and four other megatrends I will outline below will influence the future depends on the actions we take now. So I want to re-frame discussion in forums about the future of work from one of predicting the consequences of megatrends to one of how to engage the megatrends to produce better work, more inclusive societies, and a broader sharing of future prosperity.
Maryam Farboodi, Assistant Professor of Finance, MIT Sloan Management
From MIT Sloan Management Review
As technology improves, larger companies continue to gain disproportionate shares of the processing power and financial value big data offers.
Because of big data — a term that has come to refer to the immense amount of digital material we generate, store, and manipulate with increasing ability — managers can measure more about their companies and then use that information to drive performance. Need to heighten the productivity of your workforce? Big data can help. Want to analyze customers’ preferences and purchase patterns? Big data can do that, too. Looking for ways to cut costs and increase profitability? Big data: At your service.
But not all companies are flourishing in this new era. Small companies are struggling. Over the last three decades, the annual rate of new startups has fallen from 13% to less than 8%. During that time, the percentage of employment at companies with fewer than 100 workers has decreased by 5%. Meanwhile, big companies are thriving. The share of revenue of the top 5% of businesses has increased by 10% since the 1980s. Large companies also employ a greater share of the U.S. labor force: from one-quarter in the 1980s to about one-third today. What accounts for this discrepancy?
MIT Sloan Professor John Van Reenen
Members of Parliament will vote on Prime Minister’s Theresa May’s Brexit deal to on 11 December. Without hesitation, they should vote it down.
More and more people have realised that Brexit was built on a fantasy that we could keep all the benefits of being in the European club without paying any of the membership fees – what leading Brexiter Boris Johnson called the ‘Have Your Cake and Eat It Strategy’. Well, it turns out that having a cake after you have already eaten it once is not so tasty after all. Theresa May has brought back an unpalatable deal that no one likes because it crystallises the reality of what leaving the European Union (EU) actually means. To get easy access to European markets you have to play by the rules of the club – and once a country leaves the club, it no longer gets a vote on what those rules are. So much for taking back control.
The argument for remaining in the EU is fundamentally moral and political, not economic. However, it is important for lawmakers to know that Brexit will make their constituents poorer. Whereas the wealthier can ride this out, it is families on middle incomes and the less well off who will feel the financial pain most sharply. The economics of Brexit are very simple. Being outside the EU inevitably means higher costs of doing business with our nearest neighbours – so there will be less trade, and less trade will make us poorer. The more distant a relationship we have with the EU, the bigger will be our pay cut. This will be hugely painful if there is a disorderly ‘No Deal’; it will hurt to a lesser degree with a softer approach. The formal amounts that the UK pays into the EU disappear in the rounding error compared with these economic losses. (The section at the end of this blog goes into the gory economic details for the truly dedicated reader).
Oh, why EU?