Dubai Keynes Society Newsletter March 2019

DUBAI KEYNES SOCIETY NEWSLETTER MARCH 2019 ISSUE

contents

debate 1

rhea kale, tiya bhatia, aryan mehta

3 the economic impact of immigration tiya bhatia

editorial As Aanya, Jaahnvi and I entered our second term as the heads of the Dubai Keynes Society, our goal was not only to continue along the same upwards trajectory the Society experienced in 2018, but to broaden the scope of the club. Our newly introduced debates garnered the most engagement the DKS has ever seen, both in attendence and in the depth of discussion that ensued. Breaking away from our traditional lecturer-viewer dynamic proved to lengthen our attendees’ attention spans!

This theme of innovation and disruption extended to our student talks this term. Talks about the global healthcare crisis from an aspiring medic and the attention economy (and its relevance to social media) from a hopeful computer scientist demonstrated the wide interdisciplinary applications – and pervasiveness – of economics in everyone’s lives.

On the other hand, seasoned experts such as Mr. Sameer Lakhani from Global Capital Partners and D.C’s own Mr. Sheridan Teasel had much to offer the Society. Mr. Lakhani described scarcity, opportunity, and what it means to be a young person in the contemporary job market in one of the most free-form talks the club has ever seen. Mr. Teasel chronicled his involvement in the worst global economic correction of a lifetime- the 2008 financial crisis- as the maganging director of an insurance company.

The DKS, which had previously gained noteriety for being a club for solely Sixth Form economists, has enjoyed participation spanning from the Lower School to Year 13, and from economists and non-economists alike. This has translated into the varied approches and opinions regularly shared in our weekly sessions, and as heads, we could not have asked for better.

We have attempted to capture the atmosphere for this term. Happy reading!

diptasri gupta editor

when boeing planes crash, 5 so do stock prices anavi madhani

7 how women rise

jaahnvi shastri and aanya gardi

creative destruction- 9 a necessity of capitalism?

11 the economic sustainability of global healthcare

hannah dawson

suryansh loya

debate This term saw the official introduction of Dubai Keynes Society Debates. Amassing the largest audience (over 80 people!) the DKS has ever seen, topics ranged from Trump’s economic policy to Brexit. The following are a few snapshots of our debaters’ personal experiences:

ˮThis House Believes that the British people were right to vote to leave the EU ˮ As the fateful outcome of the UK’s decision to leave the European Union looms closer, Keynes Society conducted a debate in regard to whether the right decision was made. The debate centred around the economic impacts of leaving the EU, including immigration, trade deals with other nations and the benefits that the UK reaps from the European Union.

The premise of the pro-Brexit argument was on the premise of the EU being a failed state, and that leaving unnecessary red tape regulations of the EU is the best interest of the EU. Furthermore, the free flow of labour was discussed and whether this was beneficial or at the detriment of the EU. Other stakeholders, such as India and China were also bought into the discussion as the proposition argued that in the long term, Britain would be able to forge better and less restrictive deals with such nations. The long term and short term impacts of Brexit were debated, with the opposition arguing that the UK would suffer from too much economic damage by losing trade with the EU to recover. The debate was also opened up to the floor, in which other impacts of Brexit were considered, such as the Northern Ireland Border and the economic and safety impact that this could have on the UK. Furthermore, the ethical impact of the decision was also discussed. In the end, team proposition took the debate.

ˮThis house believes that Donald Trump has had a negative impact on the wellbeing of the USA. ˮ

Embroiled in a battle of opinion, the Dubai Keynes Society held a debate on one of the most controversial topics since 2016: this house believes that Donald Trump has had a negative impact on the wellbeing of the USA. Having witnessed a large part of his presidency, the debaters analysed the economic ramifications of his policies and the net impact they have had. Team Proposition (Gaurav Singh and I) presented a new perspective on this debate, discussing the socio-economic effects of his trade and environmental policies in the broader context of America. They were met with equally strong arguments from Team Opposition (Wajih Zaman and Yash Bhansali) who addressed his ethos and the possible media bias against him by raising factual points that proved the positive influence he has had. This debate was ultimately won by Team Opposition, but in order to reach this judgement some key questions regarding the sustainability of his policies and the ethics behind it were raised therefore allowing us to gain a deeper understanding of the reasoning and long-term impacts of his policies.

rhea kale

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tiya bhatia On Tuesday afternoon, Diptasri and I embarked on a debate for the Dubai Keynes Society to fight against the decision of Brexit against very worthy opponents, Tiya and Yash who believed that Brexit was the correct decision for the British People. The debate went back and forth with Tiya defending Brexit for the protection of its citizens and many counter points being presented by our side through my focus on economic losses that the country would incur. However, Yash came in sealed the debate with his charisma and points that helped bring the argument of Brexit being a positive factor.. Diptasri made a valiant effort to retaliate and recover the argument however it was the pro-Brexiteers that ended up on top. The debate was ended with a few questions from the audience and was an overall enjoyable experience.

aryan mehta

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A program that Trump has ended has been “DACA”, Deferred Action for Childhood Arrivals. The DACA, created in 2012, was a program that had allowed work authorization to approximately 800,000 undocumented young people across the country. The majority of data illustrats that DACA recipients continue to make positive and significant contributions to the economy, including earning higher wages, which translates into higher tax revenue and economic growth that benefits all Americans.

the economic impact of immigration An infamous phrase lies on the Statue of Liberty,

“Give me your tired, your poor, your huddled masses yearning to breathe free”.

However, in modern day politics, in places like America, the borders are being closed rather than opened.

Throughout both his candidacy and presidency, President Donald Trump has fueled anti-immigration rhetoric. He has continuously threatened to revoke programs such as DACA immigration and birthright citizenship, something which would be considered unconstitutional by both sides of the spectrum.

While much of his has surrounded illegal immigration, his policies have also been at the detriment of legal immigration as well. Trump signed an executive order tightening restrictions on HB1 visas for skilled immigrants and his administration has proposed cutting public benefits to legal immigrants.

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tiya bhatia

Intrinsically, international migration is good for the economy and Trump’s characterization of immigrants as people who drain public resources and cost the U.S. economy billions of dollars each year, however, is not backed by the data.

Possibly one of the most controversial arguments is Trumps criticism of the 14th Amendment, which was ratified after the Civil War and guaranteed citizenship to “all persons born or naturalized in the United States,” including people who were formerly enslaved, believing that it is a “lunatic policy” supported by Democrats that today allows “hundreds of thousands of children born to illegal immigrants” to become citizens each year.

However, research into repealing birthright citizenship shows that it would lead to a massive slowdown in the US Economy. Immigrants and their children are expected to count for 93 per cent of the growth in America’s working-age population through 2050. Productivity is actually higher when people have legal status because citizens are more likely to get the appropriate match for their employment. If it is harder for people in the United States, especially high skilled immigration, then, in turn, this will reduce future innovation and output.

It was expected that in the next 10 years if DACA recipients were allowed to remain in the United States, that would add an extra $350 billion to the economy compared to excluding them from being able to work legally. It was also estimated that this would result in an additional $90 billion of tax revenue, just for the federal government.

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share price in USD

when boeing planes crash, so do stock prices anavi madhani Boeing and Airbus have been categorised by many as a duopoly (a market dominated by two main suppliers for a commodity or service); both are crucial in the aviation industry. However over the past five months, there have been at least two Boeing 737 Max crashes. Instilled within these planes is automation, which can go wrong in two main ways: either a malfunction causes the autopilot itself to not work, or the pilot is confused does not act rationally when flying. The Boeing 737 Max specifically has new engines which are larger than other planes, hence Boeing added a M.C.A.S (manoeuvring characteristics augmentation system) that would help push the nose of the plane downwards. In the situations where the planes were close to crashing, a damaged sensor incorrectly detected that the plane needed to be lifted up and pointed the nose of the plane upwards. The M.C.A.S is designed to work when the plane is not in autopilot and many pilots were unaware of this, hence the Boeing 737 Max planes have been grounded as they have the potential to be very dangerous.

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The Ethiopian Airlines crash killed 157 of its passengers, and pilots warned President Donald Trump that “certification and work on safety-related airworthiness directives” had been stalled by the recent US government shutdown. During the shutdown, according to the pilots association “airline and aircraft manufacturing oversight activities that either stop or are significantly reduced”, but regardless of which entity is to blame, Boeing share price plummeted greatly (on March 11th, it declined by 12%), which thereby reduced Boeing’s market capital by $12.7 billion. This has had an impact on some airlines too, such as Norwegian Air Shuttle which decreased by 4.8%. As a whole, safety concerns need to be improved and addressed in order to ensure that Airlines that predominately use Boeing planes remain safe.

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#Habit 3: overvaluing expertise "Learning every detail to perfection uses up a lot of bandwidth, leaving you little time to develop the relationships you need to move ahead." #Habit 4: building rather than leveraging relationships "Whilst women are often stellar relationship builders, they tend to be less skilled at leveraging relationships. Or maybe not exactly less skilled, but rather noticeably reluctant to do so.”

how women rise jaahnvi shastri and aanya gardi This year, at the annual Emirates Literature Festival, we had the opportunity to hear a talk by Sally Helgesen, a co-author of the book, ‘How Women Rise’. For the last thirty years, she has strived to help women leaders recognise and act on their strengths and weaknesses. ‘How Women Rise’, by Sally Helgesen and Marshall Goldsmith sold out in merely a week after publication!

The book encompasses the idea that women face certain and different roadblocks from men as they look to succeed in the workplace. The book revolves around twelve habits that hinder progression - each approached taking into consideration the social forces and obligations many women tend to face. In fact, there were more than a few times we we caught with a guilty, ‘I do that’ look on our faces! Perhaps, the biggest takeaway from the session was the following: "There are four kinds of power in organisations: the power of expertise, the power of connections, the power of personal authority or charisma and the power of position."

As the first-ever all female DKS leadership team, we felt that this talk suited us perfectly!

Insight into the twelve habits #Habit 1: reluctance to claim your achievements "Women (young women in particular) are worst a bringing visibility to their success, they often work harder than their male peers but then go out of their way to avoid taking credit for what they’ve done” #Habit 2: expecting others to notice and reward A common belief held amongst women is that "great work should speak for itself” or “if I do an outstanding job, people should notice”. However, these beliefs can serve as a convenient excuse for refusing to claim your achievements and showcasing your strengths.

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#Habit 5: failing to enlist allies from day one "Women who assume new positions resolve to keep their heads down until they’ve mastered the details and are confident they can perform to a certain standard. They want to feel fully prepared before they start reaching out and forming relationship. #Habit 6: putting your job before your career "The desire to be loyal can lead you to neglect your future, sacrifice your ambitions, and sell your talent and potential short.

Others may benefit, but you do not." #Habit 7: the perfection trap "Women are especially vulnerable to the perfection trap, the belief that they will succeed if they do their job perfectly and never mess anything up. Even high achieving women tend to take failure deeply to heart and get tangled up in self blame instead of moving forward.” #Habit 8: the disease to please "You can't avoid stirring up some resentment. It comes with the territory, no matter how nice you try to be." #Habit 9: minimizing "Physically minimizing behaviours and figures of speech are particularly challenging for women i.e. taking the seat in the corner, scooting up to the side, speaking quietly. Politeness can sometimes come across as passiveness” #Habit 10: too much “Women on average use 20,000 words a day whereas men use 7,000.” Women try to offer all the information and facts in order to not seem inadequate or unknowledgeable on the subject and thus. #Habit 11: ruminating Make a To-Don't list. "If instead you just keep adding tasks to your to-do lists, you'll start to feel overwhelmed as you rise and take on more responsibility." If this happens, you may end up strip-mining your inner resources, making it impossible to operate in a way that is sustainable, energizing and enjoyable. And one day you'll wake up and say, 'What's the point?'" #Habit 12: letting you radar distract you "Women have a much broader spectrum of brain activity whilst processing information as fMRI results confirm”. It is not possible to try and fulfill every single task that a female brain processes it is important to prioritise the most potent issues.

Overall, this is a tremendously powerful and enlightening book we encourage all women, (and men!) to read. It is a thorough guide to help women make definitive and positive choices into their lives, that will ensure they are successful in their professional, as well as personal lives!

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For example, one of the largest examples of creative destruction is the video consumption industry. What started with black and white TVs in the 1950s became on-demand CDs, to BluRays and now the age of Netflix. The industry has gone through economic changes several times, but always with more innovation, efficiency and growth.

creative destruction- a necessity of capitalism?

Joseph Schumpeter was a significant economist of the 19th century, notable for the creation of the term creative destruction. For Schumpeter, the story of capitalism is of constant change; slowing or expanding, but never stagnating. The system relies on innovation and technology – new industries, new products, and new trends.

Once the system goes ‘new’, there is no going back, entailing the destruction of the old.

Why does the free-market support the ideas of creative destruction?

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suryansh loya

Firstly, it encourages innovation.

(Ironic, I know). The threat of losing profits to another competitor is a large incentive for firms to innovate and keep costs low. For example, in the age of digital news, established newspapers needed to re-invent themselves with online models to keep themselves profitable. Moreover, it increases the allocative efficiency and productivity of the market. If a firm becomes unprofitable and closes due to other companies innovating and creatively destroying it, resources can be moved to more productive and efficient methods of production, thus reducing wastage in the economy. Without this happening over the centuries, we might be stuck in villages with family farming. Lastly, there is long-term job creation. Even though people focus on machines stealing jobs, for example, there are real rising wages as less visible new jobs have been created, such as people to service the machines.

However, there are problems. Creative destruction could lead to large long-term damage that was unintended and nearly-impossible to know at the time. Obviously, one of the major impacts is unemployment. Structural and Regional unemployment could occur with old skills required for the shutting companies method of production not needed anymore, resulting in skill mismatches. Moreover, the new jobs of the innovative industry might be created in a different area to the previous one (now with high unemployment), resulting in low growth and significant regional unemployment. In addition to this, the redistribution of resources from the previous company to the new company could take a long time and could result in large inefficiencies in the short run. Finally, the closing uninnovative company might provide external benefits that were not taken into account and might actually result in a net welfare loss when the creative destruction takes place. For example, when cars took over the railway in the 1960s, over time this has resulted in traffic, pollution, and congestion. One could argue that the consumption of railways now might be more socially benefiting than cars.

Creative destruction is a force to be reckoned with in the coming decades, with several innovations taking place every year. Governments are looking to see where this goes next due to its large impacts on the economy. But with more downturns than upturns recently, maybe a little bit of destructive creation might be happening…

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the economic sustainability of global healthcare hannah dawson

Healthcare stakeholders are struggling to manage clinical, operational and financial challenges where they envision a future of new business and care delivery models, aided by digital technologies to solve the escalating global healthcare expenditure.

Increasing at an alarming rate, countries worldwide spend anything between 5-20% of their GDP on national healthcare expenses and it is projected that spending will increase to $10.059 trillion by 2022. Cost pressures in the healthcare sector are not confined to the public health care sector where private healthcare insurance companies are also seeking answers to these rampant costs.

The adage that “what goes up, must come down� isn’t likely to apply economically with the aging and growing populations alongside the greater prevalence of chronic diseases, and the exponential advances in innovative and costly digital technologies.

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The solution lies in the healthcare ecosystem collaborating around a whole-life approach regarding the funding and delivering of sustainable healthcare. Investing in technology for virtual and telehealth could expand services and herein allow hospitals to bend the cost curve. Investing in disgitisation will ensure that there is better use of data which supports the future of personalised medicine and clinical innovations, all contributing to increasing life expectancy, lowering mortality and disease rates, and increasing the GDP per capita within a country.

Governments will need to drive preventative and an organised health care system to keep people well and not just a curative approach. Technology-enabled care should be readily available alongside personalised medicine and people literacy in understanding the costs and impact of their options for care.