China must draw the right lessons from the failures of its one-child policy — Yasheng Huang

MIT Sloan Prof. Yasheng Huang

MIT Sloan Prof. Yasheng Huang

From South China Morning Post

In 1983, the UN gave China and India awards for their efforts to control the population. The recipient for India was its then prime minister, Indira Gandhi. She famously pushed for a compulsory sterilisation campaign and even suspended elections in order to enforce it. Her programme failed miserably, and one of its enduring effects is a pervasive distrust of India’s health care system, which still plagues public health efforts today.

By contrast, China’s one-child policy was in place for 35 years until this October, when the government announced a shift to a “one couple, two children” policy.

The contrast in duration between the Chinese and Indian population control policies cannot be sharper, and it is this, among other differences, that prompted some Western observers to argue that the authoritarian Chinese system is more capable of enforcing politically tough but economically rational policies.

The reality is much more complicated. It is true that India has a higher fertility rate than China and it is also true that India could not enforce population controls as effectively as China has. But there are many other differences between China and India that would account for a lower fertility rate in China, regardless of policies. Chinese women enjoy a higher socio-economic status than Indian women. Chinese basic education and public health are far superior to those in India. All these factors would have led to a declining fertility rate in China even if China did not have the one-child policy in place.

Read the full article at South China Morning Post.

Yasheng Huang is the International Program Professor in Chinese Economy and Business and a Professor of Global Economics and Management at the MIT Sloan School of Management.

The blind spot: Uncovering the grammar of the social field — Otto Scharmer

MIT Sloan Senior Lecturer Otto Scharmer

MIT Sloan Senior Lecturer Otto Scharmer

From The Huffington Post

This post is a bit longer than usual. But if you are interested in the invisible dimension of leading profound social change — and in a blend of action science and consciousness to illuminate that blind spot — it may be worth the read.

My father is a farmer. As one of the pioneers of bio-dynamic farming in Germany, he devotes all his attention to cultivating the quality of the soil in his fields. That’s exactly what I find myself doing today, though in a very different type of field. My colleagues and I, along with countless change makers, leaders, action researchers and facilitators, are cultivating the quality of the social field. By social field I mean the structure of the relationship among individuals, groups, organizations and systems that gives rise to collective behaviors and outcomes.

When people experience a transformational social shift, they notice a profound change in the atmosphere, in the texture of the social field. But in trying to explain it, they tend to fall back on vague language; and even though people can agree on a surface description of what happened, they don’t usually know why it happened or what words to use to describe it.

Today, in most social systems, we collectively produce results that no one wants. These results show up in the form of environmental, social, and cultural destruction. The ecological divide (which disconnects self from nature), the social divide (which disconnects self from other), and the spiritual divide (which disconnects self from self) shape the larger context in every large system change today.

The intention of this paper is to uncover the grammar of the social field — the key variables that make it possible for the operating logics and modes (states and stages) of a social field to shift.

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Helmut Schmidt and the narrative of the Eurozone crisis — Athanasios Orphanides

MIT Sloan Professor Athanasios Orphanides

MIT Sloan Professor Athanasios Orphanides

From The Journal of Turkish Weekly

Helmut Schmidt’s European vision as Germany’s chancellor during the Cold War, and his subsequent contributions, helped shape the continent and promote European integration.  With his passing in 2015, Europe lost a great leader. Germany’s Schmidt and France’s Valéry Giscard d’Estaing were the grandfathers of the euro, a project finalised by their successors in Germany and France, Helmut Kohl and François Mitterrand.  Franco-German cooperation and leadership for Europe has been crucial to the advancement of the European project.  Similarly, leadership voids have been at the crux of Europe’s failings.

Schmidt’s insights are especially missed at a time when the future of Europe is in question, not least due to the mismanagement of the Eurozone Crisis, where his advice went unheeded. Six years after the Crisis began, it remains unresolved. And worse yet, Europe’s elite disputes its true causes.

Understanding the EZ Crisis

Understanding why the Crisis occurred is critical for a consensus on remedies, which is a prerequisite for salvaging the European project.  Recent analysis has identified key economic factors that contributed to the Crisis (Baldwin et al. 2015). Establishment of the euro fuelled current account imbalances and made a number of Eurozone member states vulnerable to a sudden stop.  Greece became the first victim in early 2010. Economic analysis also explains the risks of fiscal profligacy, which was an important aspect of the problem in Greece but—contrary to a narrative prevalent among the European elite—was not the main cause of the Crisis overall.  Although these points are important, economic analysis alone cannot explain the gross mismanagement of the Crisis in the six years since early 2010. It also cannot explain the actions taken by European governments and institutions that caused a small initial shock to turn into an existential crisis for the Eurozone.  This requires understanding the political dimension.

Read the full post at The Journal of Turkish Weekly.

Athanasios Orphanides is a Professor of the Practice of Global Economics and Management at the MIT Sloan School of Management. 

How IoT changes decision making, security and public policy – Erik Brynjolfsson

Professor of Information Technology, Director, The MIT Initiative on the Digital Economy


Professor of Information Technology,
Director, The MIT Initiative on the Digital Economy

We’re in the early stages of a management revolution. The upheaval is based on our unprecedented ability to collect, measure and digitally record information about human and systems activities, particularly with the finely tuned data sets available through IoT. One of the hallmarks of this new era is the acceleration of data-driven decision making within businesses, which has tripled in just five years, according to a recent study I conducted with Kristina McElheren, a professor at University of Toronto.

Accompanying the progress anticipated in this increasingly digital age, however, will be thorny challenges and broader issues for society at large. This is particularly true as organizations begin to feed the large data sets available from IoT into systems that use machine-learning algorithms—at which point they will begin making predictions and decisions in an increasingly automated way, and at large scale.

Machine-learning and artificial intelligence (AI) technologies have advanced greatly in recent years; the implications range much further than the attention they get for winning competitions with “Go” champions and chess masters. The real significance of these technologies will be found in their ability to automate and augment complex decision making.

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Opinion: Brexit could be great for the U.S. – Simon Johnson

MIT Sloan Prof. Simon Johnson

MIT Sloan Prof. Simon Johnson

From MarketWatch

The British vote to leave the European Union has shaken world financial markets. The immediate and medium-term prospects for economic growth in the United Kingdom are severely diminished, and the impact on the rest of Europe will be negative.

Some of the obvious political winners from Brexit are people who do not like Western Europe and what it stands for. Ironically, the United States — Europe’s greatest ally and the EU’s largest trading partner — may also end up as a beneficiary, though not if Donald Trump, the presumptive Republican nominee, wins the presidential election in November.

Britain has a population of just over 65 million people and what was, at least until Thursday, the world’s fifth-largest national economy, with annual GDP totaling nearly $3 trillion. In the context of a $75 trillion global economy, Britain’s is a relatively small, open one that relies heavily on foreign trade — annual exports are typically in the range of 28%-30% of economic activity.

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