National / International News

Doubling a country's economy with the click of a mouse

Imagine a country being able to double the size of its economy, almost at the touch of a button, or the click of a mouse. The tiny Baltic state of Estonia aims to do just that. Next month, Estonia will become the first country in the world to offer foreigners so-called “ e-residency,” which could hugely expand its customer base without increasing the size of its physical population of 1.3 million people.  

Estonia is trying to cash in on what it calls its digital infrastructure. It’s one of the most e-connected places on the planet with almost every home, office, factory and classroom hooked up to the internet, and most government business conducted online; Estonia even uses e-voting in its general elections. 

Now, foreigners will be invited to sign up, pay $64, and become an e-resident of Estonia.

“E-residency is basically a government-guaranteed digital identity,” explains Siret Schutting, Estonia’s e-ambassador. “We are allowing foreigners to acquire what every Estonian already has: a digital signature. This means they can securely sign documents online. It’s legally the same as a handwritten signature.”

You “sign” by using a unique code along with your own smartcard and reader. E-residency won’t give you right to live in Estonia or even to visit the country, but Taavi Kotka of the Ministry for Economic Affairs in the capital Tallinn says it will let you do business there. 

“You can open up a bank account, start a company, run a company, all that stuff," he says. "We’re aiming to sign up 10 million e-residents. That would give a big boost to the Estonian economy. More customers for our banks, for telecom companies ... for everybody.”

Kotka claims e-residency will be totally secure. To qualify, you must supply biometric data — like finger prints — and be vetted. However, Ian Bond, a former British ambassador to neighboring Latvia, is not entirely reassured.

“I would have some concerns about who exactly would be getting e-residency. With Russia on its doorstep, there is a risk of money laundering. There is a risk of exploitation by organized crime. $64 won’t pay for much in-depth vetting,” he says.

Estonia knows all about cyber problems from its mighty neighbor; the country suffered a massive attack from Russian hackers in 2007, apparently because it planned to relocate a Soviet-era war memorial. Estonian government, bank, police and other emergency websites crashed under a bombardment of service denial messages. But the Baltic state weathered the storm and it is now host to NATO’s cyber security headquarters. Estonia reckons that although it is small, it can defend itself — and its residents — in cyberspace.   

What might happen after Iran sanctions are lifted

Monday is the deadline for Iran nuclear talks. Negotiators are considering a deal that would limit Tehran’s nuclear enrichment ability, in return for lifting international oil and banking sanctions.

These sanctions helped bring Iran to the talks in the first place—Its markets were cut off, oil exports fell, recession came.

Karim Sadjadpour at the Carnegie Endowment for International Peace has tallied the cost of Iran’s nuclear program, in terms of sanctions, lost revenue and lost investment. His number: $100 billion dollars.

Separately, a former Iranian foreign minister put the cost at $450 billion.

“When you look at these enormous costs and you weigh it against what Iran’s nuclear program can really provide in terms of energy, it’s an economic catastrophe,” Sadjadpour says. “This is a nuclear program which can at best provide only two percent of Iran’s energy needs, and in the process of building this nuclear program, they’ve cannibalized their main source of revenue, which is oil and gas.”

And yet, Sadjadpour notes, Iran’s supreme leader does not make decisions based on economics. It’s politics.

Click below to hear more of Sadjadpour's interview:

 

If there is a deal, Iran will want to sell more oil and return to previous levels. This despite today’s global glut, and despite the fact that Iran and other OPEC members are considering overall production cuts. That would put upward pressure on oil prices, currently down some 30 percent from June.

So, which OPEC member would bear the pain of lost business? Likely not Iran, says analyst Amrita Sen of Energy Aspects in London.

“They have already lost out on so many billions of dollars of revenues,” she says. “That’s really where it becomes a challenge for OPEC.”

The group meets on Thanksgiving day.

 

 

 

 

Marriage and the class divide

The rise of single-parent households isn’t just a social and cultural phenomena—it has import economic implications. That’s the gist of a new study put out by the conservative-leaning American Enterprise Institute, who argues that stronger marriages could help bridge the ever-growing class divide. But trying to pin down the root causes of the gulf between the haves and have-nots is a bit like hitting a moving target.

In 1980, approximately 78 percent of families with children were headed by married parents. In 2012, married parents account for only 66 percent of families with children.

Bradford Wilcox is the Director of the National Marriage Project and a co-author of the AEI study, which is titled "For Richer, For Poorer." He says this retreat from marriage accounts for 32 percent of the growth in family-income inequality between 1979 and 2012, and falls particularly hard on the poor and working class.

“So, not only are they earning less, comparatively speaking," says Wilcox, "but they’re also less likely to pool their incomes and to build common assets as married families."

On average, Wilcox says the data show married men earn about $16,000 more than their single peers. Likewise, children from married families are much more likely to get a college degree. But others say this marriage effect is a bit overblown.

“The big changes in distribution of income since 2000 have been near the top,” says Christopher Jencks, a professor of Social Policy at Harvard’s Kennedy School of Government. He says the massive growth in incomes by the "one percent" is a more plausible explanation for inequality.

“It’s a little hard to think that, 'well, that’s all driven by single parent families.' That’s a big factor at the bottom [of the income scale], but the bottom hasn’t changed much," explains Jencks.

He points to wage stagnation and fewer manufacturing jobs as other explanations for growing economic inequality.

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