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A Shift in the Climate

How much can the Trump administration impact efforts to slow climate change? The New York Times has an interactive visualization of plans to meet Paris Accord levels by 2025 and which ones can be weakened or abandoned by Trump.

Even without government action, market forces are making the economy less carbon-intensive. Yale Environment 360 says that, Trump’s campaign promises notwithstanding, coal jobs are not coming back to West Virginia.

Businesses could benefit in the short term from a hands-off approach to climate change, but many are taking a longer view. More than 350 companies signed a pledge supporting the Paris Accord. According to the Wall Street Journal, “[M]any big corporations appear to see the transition to less carbon-intensive energy as a foregone conclusion—and ultimately good for business.”

Repeal and…

For years, Republicans have vowed to “repeal and replace” Obamacare, and now they have the power to do so. But when it comes to healthcare policy, the devil is in the details, and the details come from countless painful tradeoffs. What might new healthcare legislation look like?

Vox studies seven plans put forward by Republicans and conservative think tanks.

A New York Times discussion notes that one way out of “replace” is to pass the thankless task to the states.

And New York magazine plays out several scenarios in which Obamacare is repealed and replaced with something not entirely different—but definitely not named Obamacare.

Now what?

The election last night clearly answered one question: who will be the next president of the United States of America? But it raises a whole series of new questions, a fact that’s reflected in high volatility across global financial markets.

Responses from politicians around the world ranged from elation to deep concern.

 The Financial Times assessed seven likely policy shifts in Trump’s presidency. 

Forecasting the Vote

The media has traditionally avoided releasing voting results for battleground states until polls close. That will change on November 8 when a startup, VoteCastr, partners with Slate to publish real-time projections, based on turnout, like those in presidential campaign war rooms.

While instantaneous data gratification is increasingly the norm, one of the most respected polling organization, the Pew Research Center, is slowing things down. Noting the effective coverage of the pre-election “horse race” by poll aggregators, Pew wants to focus on “questions that others are not asking, at a depth that others may not have the resources to investigate.”

There is no shortage of polls, but they may be getting less reliable. The Harvard Business Review examines the technological and cultural shifts that make polling more challenging than even a few years ago.

What Counts as Good News?

The Census Bureau reported that median household income jumped 5.2% in 2015, and 3.5 million people rose out of poverty. The Washington Post called it “a spike that broke a years-long streak of disappointment for American workers.”

Bloomberg columnist Barry Ritholtz said that the numbers showed that the recovery from the Great Recession is finally taking hold. “Unlike in recent years, when much of the gains went to an increasingly narrow group at the top of the economic strata, last year’s improvements were broad and deep.”

The New York Times noted the “eye-popping improvement in economic fortunes” but put it in context: “real incomes of most American households still are smaller than in the late 1990s. And large swaths of the country—rural America, industrial centers in the Rust Belt and Appalachia—are lagging behind.” A few days later, though, the Times said that a reported finding that incomes had actually fallen in rural areas was wrong, a result of a definitional change; incomes rose 3.4% in rural areas in 2015.

After the Vote

When will Brexit actually start? No one quite knows. The new government under Prime Minister Theresa May insists that Brexit will proceed, but seems in no hurry to invoke the EU’s Article 50 and begin the process of negotiating the U.K.’s exit.

“Businesses could be forgiven for being fearful of protracted Article 50 negotiations, but the reality is, a longer wait to get things right will be very much in their best interests,” London lawyer Ros Kellaway told Bloomberg.

The FT talked with some small businesses about how they deal with the uncertainty. A toy company is thinking of moving part of its operation to Poland to be sure of access to EU markets, and a language school is seeing cancellations from Japanese students who don’t think they will be welcome in Britain. "The biggest problem is the image that this is giving of Britain abroad,” said Val Hennessy of International House Bristol.

Remaking markets?

Major financial markets have become increasingly automated over recent decades, leading to an arms race focused on shaving nanoseconds off trade executions. Now there are also signs of a pushback.

The newly-approved IEX stock exchange aims to encourage long-term liquidity in public markets by discouraging high-frequency trading strategies, in part, with a 350 millionth of a second “speed bump.”  

Another proposed exchange goes further. LTSE would only list companies that accept specified compensation and information-sharing standards aimed at encouraging long-term thinking.

Meanwhile traders that specialize in block trades—buying or selling big chunks of stock—are in demand because they appear to outperform computer programs.

Quantitative investing pioneer Robert Litterman highlighted the importance of judgment in shaping any strategy in a conversation with Yale Insights in 2014.

What Would Brexit Mean?

Brexit once seemed unlikely, but new polls indicate that Britain’s referendum on staying in the European Union on June 23 could go either way. The New York Times' assessment of the potential impact of a “Leave” vote: “It could batter global markets, weigh on economic growth, alter the balance of power in Europe, and affect the United States’ relations with the Continent.”

Looking beyond short-term impacts, the British Treasury estimated that upon leaving the EU, “Britain would be permanently poorer by the equivalent of £4,300 per household by 2030 and every year thereafter.”

Why risk such economic upheaval? Frustration with immigration, terrorism, the refugee crisis, and the cost of funding a union that is perceived as lurching from crisis to crisis. The Guardian sees many in Britain and around the EU wondering, “What if the European project is an edifice with fatally flawed foundations?”

What’s Driving Populist Flare-ups?

Why are populist candidates getting so much attention in the U.S. and Europe? A common explanation is that low-skill workers hurt by globalization are fed up. Daniel Gros questions that explanation in Project Syndicate, pointing out that, in Europe, the number of low-skill workers is shrinking as more people complete their education.  And in the U.S., Donald Trump’s success is widely attributed to struggling blue collar workers. But FiveThirtyEight finds that his supporters have a much higher median income than Clinton supporters.  

Jill Lepore, writing in the New Yorker, proposes an an alternate theory: that the new populism is a result of social media. Political parties’ ability to shape the vox populi has diminished with so many people broadcasting their opinions. 

The Free Trade Debate, 2016

Trade has become a weapon in the in the current U.S. election cycle, with both Donald Trump and Bernie Sanders decrying free-trade pacts. But Miriam Sapiro argues in a New York Times op-ed that with less than 5% of the world’s population, the U.S. needs trade for a healthy economy. She credits trade agreements with prying open foreign markets to allow a $200 billion trade surplus for U.S. services.

But the story is full of complexity. Manufacturing jobs have certainly been lost, and local economies can take a long time to rebound. According to a study by MIT economist David Autor and coauthors, “Adjustment in local labor markets is remarkably slow, with wages and local labor-force participation rates remaining depressed… for at least a full decade.”  

Global Network Perspectives talked with experts around the world for a view on trade agreements in other countries.