Fareed speaks with Michael Porter, a professor at the Harvard Business School, about a groundbreaking new social progress index – and how the United States is lagging on many indicators. Watch the video for the full interview or on GPS this Sunday at 10 a.m. and 1 p.m. ET on CNN.
You were shocked at what you learned about America.
Yes, I think this wasn’t the picture of America that I think many of us Americans have – that we are a leader, a social leader, that we've advanced the ball in terms of opportunity and the needs of our citizens. And it shows anything but that.
So if you look at the Social Progress Index, on the whole, what's striking is the top countries are New Zealand, Switzerland, Iceland, these small countries. But basically then a lot of European countries and Canada beat the United States.
The United States is 16, Ireland is ahead of it, Japan is ahead of it, Britain is ahead of it, Germany is ahead of it.
What does that tell us? What does that measure?
So this effort tries to really, for the first time ever, take let's call it the social or community or quality of life dimensions of a society, and capture those in a rigorous measurement framework – using the best data available in the world. That's the best and objective measures of these various multiple things. But of course, social progress is a broad concept.
Right. And that's where you break it down into these subcategories. Health and wellness, Japan is number one, Italy is number two, Switzerland is number three. You have to go all the way to 70 to get to the United States.
It's an area where the U.S. – if you actually look objectively, we're just not delivering. We actually spend the most money on this of any country in the world, probably in all of recorded history, in terms of our health care budget every year. But in terms of the actual outcomes – and by the way, the Social Progress Index measures the outcomes you achieve, not how much you spend, not how much you care, not whether you have a big heart…
For more What in the World watch Sundays at 10 a.m. & 1 p.m. ET on CNN
By Global Public Square staff
If Dick Cheney were arrested…and his assets seized…all in an anti-corruption effort by President Obama…you might say "What in the World," right? Well, as the New Yorker's Evan Osnos points out, that scenario is a rough analogy for what is going on in China today.
Some of you will remember that in the first week of 2014, we began the show suggesting that this would be "the year of China," meaning that the country was likely to go through enormous changes that would make or break its rise.
But even we have been surprised at how much has happened on almost all fronts. China is now being ruled by a new generation, spearheaded by President Xi Jinping who has consolidated power and appears to be the strongest and most ambitious Chinese leader since Deng Xiaoping. Consider what he has been doing in just one year in office.
First and most significantly is the anti-corruption drive. And at the forefront of that is the expansive investigation into Zhou Yongkang, China's former domestic security tsar, once head of China's National Petroleum Corporation and a former member of China's "untouchable" Politburo Standing Committee. Zhou is the man who has been called China's Dick Cheney by Osnos.
By Michael Green and Matthew P. Goodman, Special to CNN
Editor’s note: Michael Green is senior vice president for Asia at the Center for Strategic and International Studies and a professor at Georgetown University. He served on the National Security Council staff in the George W. Bush administration. Matthew P. Goodman, a former member of the NSC staff in the Obama administration, is chair in political economy at CSIS. The views expressed are their own.
Barack Obama has described himself as America’s first Pacific president. Prime Minister Shinzo Abe has pledged that Japan “is not now and will never be a tier-two country.” Before they meet in Tokyo this month, the two leaders have a unique opportunity to prove these words true by resolving their differences over the Trans-Pacific Partnership (TPP).
The 12 Asia-Pacific economies in the TPP negotiations are working toward a comprehensive, high-standard, “21st century” trade agreement. A TPP deal among a group of countries representing some 40 percent of the world economy would give a significant boost to global growth and jobs and help shape the rules of the international trading system for years to come.
The United States and Japan are by far the largest participants in TPP, accounting for three-quarters of the group’s economic heft. A TPP deal would effectively amount to a bilateral free trade agreement – a prize that has eluded the two countries for decades as they have sparred over trade and, more recently, pursued FTAs with other countries.
By John Cookson
Fareed’s ‘Book of the Week’ is Zachary Karabell’s The Leading Indicators: A Short History of the Numbers That Rule Our World. GPS's John Cookson spoke with him about trade with China and the troubles of telling just how well an economy is doing.
Last year the United States imported $314 billion more in goods and services from China than it exported to the country. This trade deficit is cited by some as an example of America’s economic decline and China’s ascendency. You say in the book, "not so fast."
I do say, "not so fast" because I think we are calculating the way goods and products are made in a way that goods and products are no longer made. The assumption that every product comes from one country is simply not true. It's something that many people who know this world better than I do have recognized and have tried to show the ways in which an iPhone and iPad are made up of multiple components from many different countries. If you were able to break down where the value of each of these products goes you would find that it goes to lots of different places, and it especially goes to whoever has created the intellectual property in the first place. But most of that is invisible for trade numbers. Because there isn't a system of breaking down every manufacturing good in the world into its component parts, we end up ascribing all the value to a country that has the factory, that did the final assembly, missing out on all these other aspects of how goods are made.
You mentioned the iPhone, which of course advertises itself as being "Designed by Apple in California" and "Assembled in China."
The reality is that from a trade perspective and official trade figures there is no "designed in."
You write that there are problems not only with measuring trade, but also with measuring the overall size of the economy. Should gross domestic product (GDP) and other economic measurements be replaced with something different, such as a poll of how happy we are?
I don't think replacing our numbers with other numbers is really the answer. A happiness index is appealing to people because it purports to measure the value of things, the value of life and the quality of life. But all it does is look at a different set of variables than GDP. There's no one number that can capture our experience of are we collectively and individually doing well. The kind of will-o'-the-wisp of we are going to find a number, a really simple number, and if it goes up that means we are all doing well and if it goes down we are doing badly – that's just silly on the face of it.
Considering all the shortcomings of the measurements that are intended to tell us how an economy is doing, how is the U.S. economy really doing?
There's no one answer to that question. And granted, the world is full of "one answers" to that question. What I try to do in the book is help us understand that, first of all, the economy is just a creation of numbers. It isn't a physical, tangible entity that we can easily measure.
If by "the economy" one means GDP, which is usually the default number that people go to to answer the question of how the economy is doing, GDP only measures how much stuff we are making and how much stuff we are consuming at market prices, that we can measure. And those last two parts are probably the most crucial – at market prices, that we can measure.
There's a lot that GDP doesn't include. The limitations of GDP have long been understood, but the degree to which we continue to cleave to it remains pretty much unmitigated.I don’t think there's an answer to how the U.S. economy is doing unless one starts becoming more specific. What is the earning potential of most people relative to their cost of living? How do we even decide what cost of living is? Companies are doing really well. People who are wage earners are not doing so well. Both of those things are true, while simultaneously the GDP could be growing. So, I don’t think there are the answers we would like, which I know is not nearly as satisfying as if I could come up with the perfect other number that would then answer that question. But I think that's a dream world rather than the real world.
By Rep. Alan Lowenthal and Michael Shank, Special to CNN
Editor’s note: U.S. Rep. Alan Lowenthal (D-Calif) serves on the House Foreign Affairs and Natural Resources Committees. Michael Shank is associate director for legislative affairs at the Friends Committee on National Legislation and a senior fellow at the JustJobs Network. The views expressed are their own.
The partisan picking apart of last month’s Congressional Budget Office report on the minimum wage – and the debate over its impact on employment – was just the latest missed opportunity to find bipartisan solutions for this country’s problems. Sadly, in this case, the failure strikes at the very heart of the American Dream – economic mobility.
Despite what many Americans assume, the United States actually has some of the lowest and longest-stagnating rates of economic mobility in the rich world – significantly lower than many European countries. This fact should be of concern to both Democrats and Republicans as it hinders this country’s economy.
How has this happened? For a start, the minimum wage has lost much of its purchasing power, and hasn't kept pace with inflation. Indeed, the minimum wage, adjusted for inflation, is lower now than it was in the late 1960s, while wages at the bottom end of the scale have fallen in recent decades, even as worker productivity has grown.
By Dalibor Rohac, Special to CNN
Editor’s note: Dalibor Rohac is a policy analyst at the Center for Global Liberty and Prosperity at the Cato Institute. You can follow him @daliborrohac. The views expressed are his own.
It’s now a decade since Ukraine’s “Orange Revolution” brought hope that the country could be liberated from its post-Soviet legacy and join the ranks of the successful transitional countries of Central and Eastern Europe. The question now, of course, is whether Ukrainians do better this time around. But to really understand where Ukraine is headed, it’s important to understand the roots of the unrest that led to the ousting of President Viktor Yanukovych.
First, the country’s oligarchic elite, which ruled the country for the past two decades, cared little about the prosperity of ordinary Ukrainians. The evidence is not just in the tacky mansions of President Yanukovych and his men, but also in the fact that the average income in Ukraine is roughly one third of that in Poland even though both countries started from around the same point in 1990.
Second, the change of government in Ukraine follows a miscalculation on the part of the Kremlin, which long considered Ukraine as its client state, dependent on imports of natural gas from Russia. Ukrainians simply lost patience after their government effectively followed instructions from Moscow and canceled the broadly popular association agreement with the EU. Now that the plan to bully Ukrainians into submission has backfired, Russian President Vladimir Putin is likely to leverage the situation to push claims to parts of Russian-speaking Eastern Ukraine – most prominently Crimea and the port of Sevastopol.
For more What in the World watch Sundays at 10 a.m. & 1 p.m. ET on CNN
By Global Public Square staff
Last week, Jimmy Fallon took over as host of “The Tonight Show.” More than 11 million Americans tuned in at midnight to watch his debut – that's about 3.5 percent of the population.
Americans love their late night TV. But there's one country that loves it even more: Spain. An estimated 25 percent of Spaniards are up watching TV at midnight, according to Jim Yardley in a great piece in the New York Times.
And it’s not just TV – staying up late is part of the culture. Restaurants rarely serve dinner until after 10 p.m. According to one survey, Spaniards sleep on average 53 minutes less than other Europeans. During the day, Spaniards are known for taking long lunches and breaks – and of course, siestas.
Well, a number of Spanish economists are saying this needs to stop. By some accounts, Spain loses 8 percent of its GDP to reduced productivity. So, what can be done? One suggestion is that Spain should turn its clocks back.
Fareed speaks with former U.S. Treasury Secretary Larry Summers about U.S. economic policy and developing economies. Watch the full interview on GPS this Sunday at 10 a.m. and 1 p.m. ET on CNN.
If you look at what happened a couple of weeks ago, when there were some indications that the Fed might start reversing its course – you know, either raise interest rates or end what is called the quantitative easing policy. What happened was the stock markets here swooned. Markets around the world crashed and countries like Turkey found themselves in very big trouble, very fast growing countries. Does that suggest that the world is not ready for a return to what would frankly be very normal interest rates?
They are now so abnormally low, that many people believe they have to come up to some kind of historical norm and when that happens, we will see another financial crisis, because assets and markets around the world have got inflated and they're going to get punctured again.
I think there’s no question that in a number of countries, a period when it's been very easy to attract capital because capital could only earn a zero return on U.S. Treasury bills, has bred a kind of complacency and a kind of over borrowing. And the sense that it was going to get a little more challenging in the competition for capital has raised a set of fears and brought a set of problems to light. That’s really the story of the so-called fragile five countries – Turkey and India, South Africa and Indonesia, and Russia, each of which, in their own way, probably has become more complacent than would have been ideal during this period of quite extraordinary financial conditions.
But I think the Federal Reserve is going to have to do all the things that it judges to be appropriate in the context of U.S. economic expansion. And developing countries will need to find ways of standing on their own two feet without the spur of the extra investment that comes from extraordinarily low interest rates.
Watch "Fareed Zakaria GPS," Sundays at 10 a.m. and 1 p.m. ET on CNN
On GPS this Sunday: Asia's war of words – Why China has been engaging some heated rhetoric with so many of its neighbors, and whether things could get more serious. Fareed speaks with China experts Elizabeth Economy and The New Yorker's Evan Osnos.
Then, a 1-on-1 interview with former U.S. Treasury Secretary Larry Summers to discuss new Federal Reserve Board Chair Janet Yellen and the state of the U.S. economy.
“I have college-aged children. And occasionally, we have a difference of opinion about how much money they've spent,” Summer says. “And in our family, we discuss whether they're going to pay or whether I'm going to pay. But we don't discuss whether or not Visa should get stiffed, because we know that would be terrible for our family's credit rating and that's just not what we would do.”
And later, is the U.S. safe from cyber crime? Peter Singer of the Brookings Institution explains how the online world is very much like the real one.
By Cornelius Adebahr, Special to CNN
Editor's note: Cornelius Adebahr is an associate at the Carnegie Endowment for International Peace, and author of Tehran Calling: Understanding a New Iranian Leadership. He taught political science at the University of Tehran in Iran from 2012 to 2013. The views expressed are his own.
Iran may be continuing its global charm offensive, but the U.S. government is still having trouble selling changes in Iran policy to an American audience.
The latest example came late last month, following Iranian President Hassan Rouhani's trip to Davos, Switzerland. During his appearances at the World Economic Forum, Rouhani invited gathered world and corporate leaders to take advantage of the opportunities that the opening up of Iran offers. But such encouragement is only likely to provoke ire in Washington, a point underscored just days later when U.S. Undersecretary of State Wendy Sherman was grilled by the Foreign Relations Committee over fears that the foreign firms lining up to do business with Iran could diminish Washington's leverage in negotiations over Iran's nuclear program.
It's a compelling argument on the surface. But it is also one that belies a misunderstanding of the reality on the ground – and how the situation is viewed from within Iran.
"Fareed Zakaria GPS," Sundays at 10 a.m. and 1 p.m. ET on CNN
GPS Digital Producer Jason Miks speaks with Zanny Minton Beddoes, economics editor for 'The Economist,' and Canadian member of parliament Chrystia Freeland about rising inequality – and how the West should respond.
You were elected as a member of parliament in Canada last year. How do you think the big debate going on over inequality in the United States compares with how it is unfolding in Canada?
Freeland: Basically, these are global phenomenon that are driving the surge in inequality. It’s globalization. It’s technological change. And there’s a political aspect, a set of political changes – deregulation, weakening of unions, privatization, changes in taxes. So this is really something that is happening in all of the Western industrialized countries, and also in a lot of the emerging markets – you see income inequality surging in China, Russia, India. So it’s a big issue in Canada.
Interestingly, I think it’s becoming a truth universally acknowledged, which it wasn’t before the crisis. Things have changed. Income inequality is higher than it has been. So if you think back pre-2008, people were still debating that. Now, we all get that this is the new reality, and I think what you are starting to see is people focusing on what part of all this is bad, and what can we do about it. And I think the focus rightly is narrowing in on really the big problem of the hollowed out middle class, the stagnant middle class jobs and there not being enough middle class jobs.
I think what you’re going to see increasingly is people saying that this is the thing we need to focus on, and also how do we improve social mobility?
Watch "Fareed Zakaria GPS," Sundays at 10 a.m. and 1 p.m. ET on CNN
On GPS this Sunday: In the wake of President Obama's State of the Union address, Fareed convenes a panel looking at the issue of inequality in the United States. Zanny Minton Beddoes, economics editor of The Economist, Steve Rattner, the Obama administration’s “car czar,” Canadian member of parliament Chrystia Freeland and former IMF Chief Economist Ken Rogoff offer their takes on this and more.
Then, our “What in the World?” segment looks at the economic costs of smoking – and whether obesity could be next in line for intervention by policymakers.
Later, a look at the ongoing political crisis in Ukraine – and why Kiev can't shake off Moscow’s influence. Former Secretary of State Henry Kissinger explains the nature of Russia’s role.
Also, an insider's perspective on Russian President Vladimir Putin, from a close friend: the famous conductor Valery Gergiev.