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Jim O'Neill

Jim O'Neill



Articles by Jim O'Neill

It’s Time to Target Nominal GDP

May 5, 2020

After years of persistently low inflation, tepid growth, and rising inequality, central banks can no longer justify a monetary-policy regime that targets price stability. To strengthen the post-pandemic recovery, they must shift gears, by adopting a policy objective that actually has some bearing on the real economy.

LONDON – Ever since Western central banks started targeting inflation in the early 1990s, some economic analysts – not least Samuel Brittan of the Financial Times – have been pointing out that it would be better to target nominal GDP. As the numerical value of all output or expenditure in an economy, nominal GDP combines a country’s real economic output with its associated prices or costs.

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How to Use the SDR

April 28, 2020

With governments in need of new options to shore up national economies during the COVID-19 lockdown, an older but potentially more powerful mechanism is already available. If deployed in the right way, the IMF’s international reserve asset could mobilize substantial capital at effectively no cost.

LONDON – Owing to the COVID-19 pandemic, the International Monetary Fund estimates that, between now and the end of 2021, global GDP will suffer a cumulative loss of more than $9 trillion – a figure greater than the size of the Japanese and German economies combined. While the ultimate solution to the crisis will depend on the development and widespread deployment of diagnostics, treatments, and eventually a vaccine, there

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Blaming China Is a Dangerous Distraction

April 14, 2020

Nobody denies that Chinese officials’ initial effort to cover up the coronavirus outbreak in Wuhan at the turn of the year was an appallingly misguided decision. But anyone who is still focusing on China’s failings instead of working toward a solution is essentially making the same mistake.

LONDON – As the COVID-19 crisis roars on, so have debates about China’s role in it. Based on what is known, it is clear that some Chinese officials made a major error in late December and early January, when they tried to prevent disclosures of the coronavirus outbreak in Wuhan, even silencing health-care workers who tried to sound the alarm. China’s leaders will have to live with these mistakes, even if they succeed in resolving

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The G20’s Pandemic Moment

March 24, 2020

Just as a meager investment to address antimicrobial resistance could yield a 2,000% return in the future, so, too, would an immediate modest outlay to finance development of COVID-19 therapeutics. As world leaders gather to formulate a response to the crisis, they must not lose sight of this simple cost-benefit calculus.

LONDON – This week, G20 leaders will convene virtually to discuss the COVID-19 crisis. One hopes that the emergency summit marks the beginning of a thoughtful collective response to this grave challenge. If so, the meeting may turn out to be even more consequential than the London summit hosted by British Prime Minister Gordon Brown in April 2009, which created the framework for a coordinated

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A Stress Test for Public Health Systems

March 9, 2020

Now that the coronavirus has gone global, markets are swooning and the weaknesses of national health systems are being revealed. Like the slower-moving crisis of antimicrobial resistance, the pandemic should alert governments to the need for significantly greater investment in public-health preparedness.

LONDON – On January 25, Chatham House and Georgetown University hosted US Secretary of the Treasury Steven Mnuchin for a discussion about US economic policymaking and the world. Mnuchin had come straight from the World Economic Forum’s annual meeting in Davos, but the dominant theme of that gathering (“stakeholder capitalism”) had already been eclipsed by broader developments. The coronavirus (COVID-19) outbreak had become a

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All Eyes on South Korea

February 20, 2020

Now that the South Korean blockbuster Parasite has taken home the Oscar for Best Picture, many around the world are eagerly searching for more examples of South Korean coolness. They should look to the South Korean economy, which offers valuable lessons for achieving sustainable, inclusive growth.

LONDON – South Korea is all the rage these days. Earlier this month, Parasite, from the South Korean filmmaker Bong Joon-ho, won Best Picture at the Academy Awards. Having read the reviews and seen the film a few days earlier, I was not surprised. Still, for the uninitiated, it is worth noting that this was the first time that a foreign-language film took home the top Oscar. Now, many around the world are eagerly searching for more

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Has the World Economy Reached Peak Growth?

January 16, 2020

Whether or not the 2010s were a "lost decade," one thing is clear: many countries fell short of their potential, possibly squandering their last best shot of registering strong GDP growth. In the decade ahead, demographic realities will catch up to China and the West, and the world will need a productivity miracle to offset the effects.

LONDON – At the start of a new decade, many commentators are understandably focused on the health of the global economy. GDP growth this decade most likely will be lower than during the teens, barring a notable improvement in productivity in the West and China, or a sustained acceleration in India and the largest African economies.
Financial Markets’ Iran Delusion

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Where Is the AMR Rebellion?

December 10, 2019

With extreme weather events becoming more frequent and young climate activists keeping the pressure on governments, policymakers and business leaders have finally begun to focus on the threat of climate change. The growing threat to human wellbeing posed by antimicrobial resistance merits a similar level of attention.

LONDON – The threat of antimicrobial resistance (AMR) is being overshadowed by the menace of climate change. Though the AMR problem is arguably equal in importance, it has not commanded nearly the same level of public awareness.
Is Growth Passé?

Kanok Sulaiman/Getty Images

Democratic

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A Living Wage for Capitalism

November 14, 2019

Higher nominal wages for low-paid workers can boost real earnings, increase consumer spending, and help make housing more affordable. And insofar as raising the minimum would increase companies’ wage bill, it would create a stronger incentive to replace labor with capital, which could lay the foundation for renewed productivity growth.

LONDON – At 3.6%, unemployment in the United States remains near its lowest level since the late 1960s. There are even signs that people who had previously dropped out of the labor force are being attracted back into it as employers scour a tight labor market for the marginal employee. Consistent with this news, US Federal Reserve Chair Jay Powell has pointed out that wage gains are

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Is Finance Ready to Go Green?

October 7, 2019

The financial industry plays an indispensable role in the modern economy by allocating society’s savings to borrowers engaged in productive pursuits. It could also play a crucial role in facilitating the investments needed to combat climate change, but only after it is restructured for that purpose.

LONDON – Since the 2008 financial crisis, the question of how to guide activity in the sector has featured prominently in public discourse, particularly in debates about building a sustainable future. In its most basic form, finance is a means of arbitrage between savers and borrowers: its purpose is to direct society’s savings toward productive ends. For those who provide financing, the goal is to support projects that

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The Issue Behind Our Issues

October 2, 2019

Many commentators nowadays rely on a narrative in which weak productivity growth, populism, and a rising China are threatening the very survival of Western liberal democracy. Yet most of the commonly identified causes of Western discontent are in fact symptoms of a deeper intellectual breakdown.

LONDON – As the chair of the Royal Institute of International Affairs (Chatham House), I recently hosted an offsite event with some of the organization’s strongest supporters, research staff, and other leaders. I left with a clearer view of three of the biggest issues of our time: slowing productivity growth, anti-establishment politics, and the rise of China.
The Impeachment Trap

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The Return of Fiscal Policy

September 18, 2019

With interest rates at record lows and global growth set to continue decelerating, there has rarely been a better time for governments to invest in infrastructure and other sources of long-term productivity growth. The only question is whether policymakers in Germany and elsewhere will seize the opportunity now staring them in the face.

LONDON – As we enter the last quarter of 2019 (and of the decade), cyclical indicators point to a slowing world economy amid wide-ranging structural challenges. There are plenty of issues to keep one up at night, be it climate change, antimicrobial resistance (AMR), societal aging, strained pension and health systems, massive debt levels, and an ongoing trade war.

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Trump’s One-Way Economy

August 13, 2019

If these were normal times, recent global developments would be showing up as sharply rising risk premia. But with monetary policymakers trying to sustain the current growth cycle in the face of disruptions from an incompetent US administration, these are anything but normal times.

LONDON – Nowadays, when people ask me how I am, I answer, jokingly, that I’m doing great, so long as I ignore Donald Trump’s presidency in the United States, Brexit, the crisis of the United Kingdom’s major political parties, and the performance of Manchester United.
The Case for a Guaranteed Job

PS OnPoint

Getty Images

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Does the G20 Still Matter?

July 10, 2019

The first few gatherings of the G20, at the height of the global financial crisis, yielded concrete results, and seemed to promise an auspicious future for global governance. But in the years since, the group has increasingly replaced action with empty talk, piling ever more goals on top of the unmet objectives of summits past.

LONDON – When the G20 leaders held their first summit in late 2008, many welcomed what looked like a diverse, highly representative new forum for crafting common solutions to global problems. The group acquitted itself well in responding to the global financial crisis, and, for a while, its emergence as a forum for international policy coordination seemed like one of the only

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Economic Lessons From Everest

June 18, 2019

Recent images of long lines at the Mount Everest base camp, and at choke points on the way to the summit, offer a perfect real-world example of mismanaged supply and demand. As in a number of other economic-policy areas, a combination of price adjustments and regulation offers the only way off the mountain.

LONDON – Like many others, I was shocked by recent images showing the size of the queue that formed in May to scale Mount Everest, the world’s highest peak, from the Nepalese side. The idea that delays caused by overcrowding may be partly to blame for some of the 11 reported deaths on the mountain during this year’s climbing season is horrific to consider.
Why Universal

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Putting Growth in its Place

May 10, 2019

Despite the political turmoil engulfing the United Kingdom, there is growing evidence to suggest that the "northern powerhouse" model of regional development outside of London is working. If the government fulfills its recent commitment to support a new Northern Powerhouse Rail project, current progress could gain even more momentum.

LONDON – After leaving Goldman Sachs in May 2013, I had the privilege of chairing an independent City Growth Commission to study the geographical imbalances of the British economy. Our task was to determine why London and the southeast had become so dominant, and how the economic performance of other major urban centers might be improved.
The

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The Future of Economic Growth

April 11, 2019

Given the failures to foresee the 2008 financial crisis and subsequent weak recovery, it is easy to think that economists have little to offer in the way of predictions. But when it comes to national-level GDP growth, past projections have largely been borne out; even when wrong, they can be used to diagnose structural problems.

MANCHESTER – Last month, I wrote about the growing divide between economic theory and real-world economic conditions, and reminded readers that economics is still a social science, despite whatever loftier ambitions its practitioners may have. Nonetheless, when it comes to the specific question of what drives economic growth in the long term, one can still offer rigorous predictions by

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Can Economics Shake Its Shibboleths?

March 14, 2019

Since the 2008 financial crisis, economic orthodoxies have been collapsing left and right. Under conditions of low unemployment, elusive inflation, weak productivity growth, and high profitability, economists in advanced economies may need to go back to the drawing board.

LONDON – Though economics aspires to the rigor of the natural sciences, at the end of the day it is still a social science. At no point in the past 40 years has this been more evident than it is now.

Jose Luis Pelaez Inc/Getty Images

Wojtek Radwanski/AFP/Getty Images

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For decades, conventional macroeconomic analysis has rested on the edifice of the

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Is Japan’s Sun Rising?

February 6, 2019

At a time of rising populism and authoritarianism around the world, Japan stands out as a relative island of social and economic stability. And though it owes its current situation to unique economic and geopolitical circumstances, it might still have something to teach other developed countries.

TOKYO – When I participated in the Chatham House/Daiwa Research Institute conference on the post-Brexit Japan-UK relationship in Tokyo last month, it was my first visit back to Japan since my departure from Goldman Sachs almost six years ago. Prior to this trip, I had been visiting the country regularly since 1988, so it was helpful to see things from a slightly more detached perspective.

Fred Dufour – Pool/Getty Images

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Whither the Chinese Consumer?

January 10, 2019

Between 2010 and 2017, consumer spending in China increased by almost $3 trillion dollars, and global brands came to rely on the Chinese market for a growing share of sales. But now that Apple has revised downward its expected revenues, citing slowing Chinese growth, the outlook for such firms – and for the world economy – has dimmed.

WASHINGTON, DC – For most of the past decade, the growing spending power of China’s expanding middle class has fueled the global economy. After the 2008 financial crisis, I argued that the United States and China would need to swap places – with the US saving more and consuming less, and China doing the opposite. Until the past year, that is largely what had been happening. Not so anymore.

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Trump’s Economic War of Choice

December 13, 2018

It is only natural for a dominant power that finds itself in second place to experience self-doubt or a loss of confidence. But as China’s nominal GDP surpasses that of the US, Americans will just have to get over it, as the rest of the world did when America became the single largest economy.

OTTAWA – The brewing conflict between the United States and China is typical of zero-sum contests among countries, firms, and individuals. The US is acting under the implicit assumption that if China’s GDP were to surpass that of the US in nominal dollar terms, US economic prospects would be reduced by an amount equal to the margin of China’s gain.

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An Earnest Proposal for Tackling AMR

November 2, 2018

Despite global recognition of the threat posed by antimicrobial resistance (AMR), not nearly enough has been done to bring new antibiotics into development. With some drug makers now leaving the antibiotics market altogether, there is an urgent need for a realignment of incentives in this vital area of public health.

LONDON – Under Article 50 of the Treaty of Lisbon, the United Kingdom will leave the European Union on March 29, 2019. Presuming that it does (but even if it does not), the UK government should continue to lead the charge against antimicrobial resistance (AMR), as it has in the past. Specifically, it is time for the UK to join with pharmaceutical companies in piloting a new model of finance for investment in research and

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Will Italy Sink Europe?

October 17, 2018

Italy’s coalition government has been generating headlines with its pursuit of populist economic policies that threaten to leave eurozone fiscal rules in tatters. But before EU authorities respond, they should bear in mind that if Italy does not achieve stronger GDP growth, political conditions there could deteriorate further.

LONDON – Despite political turmoil and emerging risks at the global level, the eurozone has had two years of strong economic growth, at least by its own historically disappointing standards – and even with the United Kingdom lurching toward withdrawal from the European Union. But with the emergence of a populist government in Italy this year, it is no longer safe to assume that the eurozone’s worst days are behind it.

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The Global Economy Ten Years After

September 10, 2018

In the decade since the collapse of Lehman Brothers and the start of the global financial crisis, the world economy has registered stronger growth than many realize, owing in large part to China. But in the years ahead, global economic imbalances and troubling trends in the business world will continue to pose economic as well as political risks.

LONDON – Much will be said about the tenth anniversary of the 2008 financial crisis, so I will focus on the global economy, which has not been nearly as weak as many seem to think.

Melanie Stetson Freeman/The Christian Science Monitor via Getty Images

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According to the International Monetary Fund, the rate of real

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The Turkish Emerging Market Timebomb

August 14, 2018

As the Turkish lira continues to depreciate against the dollar, fears of a classic emerging-market crisis have come to the fore. Turkish President Recep Tayyip Erdoğan’s populist economic policies have finally caught up to him, and sooner or later, he will have to make nice with his country’s traditional Western allies.

LONDON – Turkey’s falling currency and deteriorating financial conditions lend credence, at least for some people, to the notion that “a crisis is a terrible thing to waste.” I suspect that many Western policymakers, in particular, are not entirely unhappy about Turkey’s plight.

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The Evolution of Global Governance

July 17, 2018

The Western-led international order is in disarray, with this year’s chaotic G7 summit being an obvious case in point. But for Jim O’Neill, chair-elect of Chatham House, the public disagreement among allies was a sideshow; the real crisis is in the failure of global governance institutions to reflect economic reality.

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The Global Economy’s Uncertain Future

July 9, 2018

At this time last year, the global economy was experiencing strong, widespread growth, with even the long-stagnant European Union staging a robust recovery. But with key indicators of trade and investment now weakening, a new crisis – not least a global trade war – could quickly bring the global upturn to a halt.

LONDON – At the start of 2018, most of the world economy was experiencing a synchronized cyclical recovery that seemed to herald a longer period of sustainable growth and an end to the decade-long hangover from the 2008 slump. Despite the shock of Brexit, storm clouds over the Middle East and Korean Peninsula, and US President Donald Trump’s unpredictable behavior, rising investment and wages, alongside falling

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Why the G7 Is a Zero

June 12, 2018

Since its creation in the 1970s, the Group of Seven has become increasingly irrelevant in a world of new emerging powers. An institution that excludes the BRICs while still including economic basket cases like Italy cannot possibly claim the legitimacy required to exercise global economic leadership.

LONDON – Though US President Donald Trump’s appearance at the Group of Seven (G7) summit in Quebec last week was not particularly well received, I find myself sympathizing with his skepticism toward the group. I have long doubted that the annual meeting of leaders from Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States serves any useful purpose.

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How Universities Can Soften the Brexit Blow

May 16, 2018

Despite weakening growth, the United Kingdom continues to punch above its weight economically, and remains a world leader in higher education. But to sustain this success after Brexit, British universities must contribute more to the fundamental drivers of productivity growth and wealth creation.
LONDON – The United Kingdom ranks around 22nd among countries in terms of population. Its economy is somewhere between the fifth- and seventh-largest in the world in terms of nominal GDP (in US dollars), which is comparable to the economies of India and France. In terms of wealth – that is, GDP adjusted for population – it ranks anywhere from 22nd to 30th.

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Where Are We in the Fight Against AMR?

May 9, 2018

In recent years, global awareness about the threat posed by drug-resistant microbes has increased, particularly within global-governance bodies such as the G20 and the United Nations. But awareness alone will not rescue us from "superbugs," which could claim more than ten million lives per year by 2050.
LONDON – To mark the second anniversary of the British government’s Review on Antimicrobial Resistance (AMR), which I had the honor of chairing, two members of the Review team – Anthony McDonnell and Will Hall – and I have published a new book: Superbugs: An Arms Race Against Bacteria. In it, we discuss the Review’s ten recommended interventions – what I call the Ten Commandments – while considering the progress made so far, and the work that still needs to be done.

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