If I were to plan a trip with friends to Portugal or Spain this summer, the first website I would check for accommodation options is Airbnb. If you are more than 3 or 4 people, renting out a flat to share could save you a lot of money. For those who are not familiar, Airbnb is a company which describes itself as a peer-to-peer online marketplace and homestay network that allows people to list or rent short-term lodging in residential properties. The cost of the accommodation can vary, but the owner of the property is always the one to determine the price. The platform makes money through a percent of service fees from every booking from both the guests and the hosts. From my personal experience, Airbnb services are reliable and of a high quality. Moreover, Airbnb helps create some amazing experiences: sleep with sharks, book a photo shoot in a city you are visiting, cook breakfast or dinner with a famous chef, or perhaps most importantly, help them experience an up-and-coming neighbourhood like a local. Yet, despite the advantages of the home-sharing site, not everyone is enthused about many of its variables. Local governments argue that short-term house renting creates a number of negative side effects like noise, trash or lack of parking, as well as generate more serious problems such as an impact on affordable housing and neighbourhood «reputation». However, tacking such an issue is quite challenging. Identifying illegal rentals is difficult and time-consuming, and with no ease to verify rental activity and ensure that apartment owners actually act according to the rules. The first Airbnb «scandal» took place in Berlin. The local government passed laws in May 2016 stipulating that landlords are forbidden from renting out apartments for short-term stay purposes, with a large penalty up to $113,000 should they choose to do so. The crisis then spread to New York, where in October 2016 New York Governor Andrew Cuomo signed a ban on short-term rentals. Rental of an entire apartment for a stay of fewer than 30 days is illegal with fines up to $7500. One of the most recent destinations where «Airbnb disease» immersed is Palma de Mallorca, capital of Mediterranean tourist destination – the Balearic Islands. In April this year, local authorities voted to ban all short-term rentals of private homes like those on Airbnb, which locals say have triggered sharp rises in rental prices. Under new regulations, it is no longer allowed to rent flat in a block of flats, although, some of the detached houses will still be available, as long as they are registered with the local municipality.  So protests against Airbnb have rapidly spread across Europe and capital across the globe in the past two years. To make the topic slightly more relevant, the issue of Airbnb bans in Amsterdam was recently addressed by the Dutch Labour Party (PvdA). The Labour Party argues that only a relatively small part of Amsterdammers actually benefit from Airbnb, while most of them are paying for the cost of these rentals. The principal problem, however, lies in taxes. The Dutch government is not particularly delighted that due to Airbnb being a foreign company it doesn’t contribute to Dutch tax revenues through profit taxes. Let’s be frank. Expats and locals have been experiencing the increasingly difficult challenge to find accommodation in Amsterdam the last few years, especially in the more central and trendy areas of the Dutch capital. We’ve all been there – chances of finding an accommodation within Amsterdam for a reasonable price equal almost to zero. Airbnb problem in Amsterdam is real and it can be a threat to the city. It drives up real estate prices that are already flaming in Amsterdam. Neighbourhood business that creates ties between residents is replaced by businesses that only focus on tourists. Is «Airbnb effect» indeed that big? According to Peter Boelhouwer, professor of housing systems at the University of Technology in Delft: “When so many flats are rented out to visitors, it has an effect on the availability of real estate. There is a great shortage in the housing market in Amsterdam and this doesn’t do it any good – but one shouldn’t exaggerate it.” Boelhouwer says that rapid growth of the number of Airbnb rentals is by no means a primary factor in the city’s gentrification, which “has been going on for a long time in the central areas of Amsterdam”. City gentrification is a term used to describe «urban renewal» marked by inflated home prices and the displacement of the original, usually lower income, residents. Gentrification is a controversial topic. It was once thought to have a positive effect on areas where economic growth had stagnated or decreased. However, these days it is seen by some as part of a larger discrimination issue. Although gentrification of urban areas generally brings increased economic growth to the area, it displaces the original lower income residents, many of whom have lived there for generations. Families with children have to leave the city due to the inability to pay such a high housing price. Thus, Airbnb contributes to the creation of not only economic but rather social economic issues. In fact, Amsterdam government has already taken some steps to address the impact of Airbnb on its housing market. Back in 2014, they signed an agreement which enforced Airbnb to hand over tourist tax to the city, block those addresses where the council has intervened because of complaints, and inform users of its rules that the apartment should be rented out for a period no longer than 60 days a year. However, the problem is still there and Airbnb refuses to act together with the local authorities. Consequently, as from this year, the tourist tax on Amsterdam raised from 4 percent to flat 7 percent, and moreover, the number of days permitted for Airbnb-type rentals for tourists will be halved to 30 per year. Will the problem be solved? Maybe instead of radically banning we should think of effective policies that actually work. Maybe, we should be asking how our communities can reap the many benefits of home sharing while at the same time ensuring that everyone acts in a responsible way. Maybe, we could think of an alternative service, where house owners, local authorities and neighbours are involved in effective management of a platform that is beneficial to the city. A platform that really complies with the principles of a fair and collaborative economy.

In 2001, the Turkish economy collapsed in an extensive crisis also known as “Black Wednesday”, the most impactful economic crisis in the modern Turkish history. The overnight interest rates rose up to as high as 7,500%, stock prices plummeted by approximately 15% and many were left without a job. Political instability, extensive domestic capital outflow, and high interest rates along with the devastating 1999 Marmara earthquake were the biggest issues leading to the crisis. Today, strikingly similar circumstances that are believed to have contributed up to 2001 are recurring in Turkey, creating an atmosphere of uncertainty and worry as the Turkish lira keeps hitting new lows against the USD and the Euro. The Turkish lira recently hit a historical low of 4.9200 to the USD, reflecting a devaluation of approximately 30% against the dollar in 2018 so far. In addition to that, the current deficit is highly concerning. The Moody’s report have presented that Turkey has the biggest current account deficit among all emerging economies, equivalent to 4.5% of the country’s GDP in 2017. Turkey’s geopolitical position is not helping the trends in the economy either, the ongoing Syrian war and the refugee crisis, the recent US sanctions to its neighbor Iran, and continuous conflicts of interests with its allies are all factors that bring greater perceived risks to the table.The “governorship of region in a state of emergency” (OHAL), which enables further power to the president, has been extended for the 7th time in April, following the failed coup d’état of 2015. However, over the devaluation of the lira, Erdoğan has consistently necessitated a looser monetary policy, claiming that it is what the Turkish economy requires for growth and new jobs created through investment. His regular “comments” on monetary policy have led many to believe that the independency of the CB was impaired. Constant pressure by the government officials backing Erdoğan’s claims seem to eliminate the interest rates as a tool to combat high inflation and high exchange rate volatility for the so-far-unresponsive CB. The initial date set out for the 2019 presidential and parliamentary elections were moved up to June 2018. Erdoğan recently promised lower interest rates as a part of his election campaign, suggesting that higher interest rates are the root of Turkey’s inflation problem. Due to higher country and currency risks, the Turkish market is received by investors as more risky and volatile than before. This is believed to be the main reason that the Turkish lira devalued significantly over the recent years. The depreciation of the currency was disadvantageous mainly because of deepening the already significant current account deficit, as well as readjusting the prices of exports as significantly more expensive. Combination of these circumstances has contributed to the existing inflationary problems. Additionally, the fact that the Central Bank of the Republic of Turkey (CBRT) missed consecutive inflation targets, has worsened the case by undermining the reliability and capability of the CBRT. Expected inflation and therefore the real inflation rates have spiraled out of control of the authorities, which have only increased the pressure on the lira. High inflation is exactly what Erdoğan believes to be the main cause of the underperformance of the economy, and he has publicly announced that he would be reducing interest rates after the presidential elections in Turkey in hopes of scaling down the inflation back to the targeted levels. The Portfolio Balance Model, pioneered by Branson and Kouri in the late 70s, suggests that a contractionary sterilized foreign exchange operation could reduce interest rates just as it appreciates the home currency. Erdoğan’s promises seem to coincide with the ones of the model. The graph below shows an interpretation of a contractionary foreign exchange operation (FXO) carried out simultaneously along with an expansionary open market operation (OMO). The combination of these two policies results in a sterilized foreign exchange operation (SFXO). President Erdoğan might be able to reduce interest rates by applying a similar SFXO. Graphical representation of an SFXO on the Portfolio Balance Model. In order to follow a contractionary FXO, authorities must sell foreign assets in exchange of domestic money, this in turn will increase the amount of agents’ holdings of foreign assets to finally shift the F-curve (foreign bonds) to the left from F1 to F2. Furthermore, the increase in the money base will be offset by a massive sale of domestic bonds, which will also result in a reduction of the supply of domestic bonds to finally yield a left shift of the B curve (domestic bonds). This shift is represented in the graph as a movement from B1 to B2. As can be seen, money supply remains constant in order to keep inflation stable. President Erdoğan expects to win the next elections and to have a direct effect in the interest rates. However, it is my personal opinion that an SFXO will not work in the case of Turkey due to the absence of credibility of the CBRT. More than once has the CBRT promised lower inflation in order to have a direct effect on expected inflation, and more than once has the CBRT failed to meet such standards. Although Erdoğan winning the elections might bring “political stability” in the short-term and a probable reduction in country risk, the inflation rate will not be severely affected at least in the short term. Furthermore, the constant promises of president Erdoğan regarding the Turkish economy create further speculation about the degree of independence of the CBRT, hence raising eyebrows about the future of the economy. If Erdoğan is indeed elected, Turkey will most likely be in risk of a potential massive capital outflow as many investors seek for opportunities in countries with a more credible central bank and a more credible president.

Oil and natural gas are bad. Their use causes climate change, on which most of us agree is one of our biggest current problems. Their use also pollutes our air and water supplies, causing all kinds of health issues. The way oil and gas are acquired destroys ecosystems, think of the devastating effects of fracking, how oil spills fill up whole seas with crude oil and how the people in the Niger delta now have to live with heavily polluted water due to mismanagement by Shell. However, some would argue, for a lot of countries this is the only way to get their population out of poverty. Many developing countries don’t have a well-diversified economy, they can’t just stop exporting fossil fuels and other natural resources because that would benefit the environment. Although this sounds correct, empirics show that in many cases, natural resources don’t help the population get more wealthy. This may sound very counter-intuitive. Why would countries with an abundance of natural wealth under their soils not profit from these, and even grow slower on average that resource-poor countries. It’s an issue that has occupied economists since Adam Smith. A large body of research was conducted on the topic, and the reasons for this phenomenon are, as is common in economics, wide ranging. In this article I’ll focus on the possible causes, and I will mainly focus on the natural resource that fuels the world economy: oil. A very economic reason is that of the ‘Dutch Disease’, which is when countries export a lot of natural resources, their currency appreciates to the point their other exports become noncompetitive. Add to what economist Dani Rodrik calls premature deindustrialization, which is the fact that recently a lot of developing countries are actually deindustrializating instead of building up industries. This upholds the mono-culture of resources. Not only does this make the economy more sensitive to changes in the business cycle, resource exports tend to have low added value, thus low employment opportunities. Although quite convincing, the Dutch Disease is only a part of the problem. Economists must always remember that while they use quantitative research methods, they still study social phenomenon. This means that politics has to be taken into account. And if you take a look at the average resource-export dependent county, it quickly becomes clear why. SOURCE: World bank (WITS and democracy index, both data from 2013) As you can see, the top-15 countries with the highest fuel-to-export ratio all score, apart from Brunei and Qatar, very low on the average democracy index (an average of scores on democratic indicators like democratic rights, political stability and upkeep of the rule of law.) This doesn’t mean having oil reserves makes a country a (semi-) dictatorship. There are plenty of countries that are resource-poor and have undemocratic or ill-functioning governments such as Somalia, Afghanistan or the Central African Republic. On the other hand, Norway’s export consists for 55,2% out of fossil fuels, but it is the second-strongest democracy in the world. As always with statistics, it’s important not to conflate correlation with correlation. However, the table above still shows some remarkable results. Economists and political scientists have come up with a couple of theories to explain this tendency of resource-rich countries to have bad governance. The two economists Daron Acemoglu and James A. Robinson have come up with a broad theory which tries to explain economic failure, and it can be summarized by one word: institutions. In their book Why Nations Fail, they describe that differences in economic and political institutions can have a major effect on growth in the long run. They looked at countries that were very similar in terms of natural resources. However, in some countries innovation and entrepreneurship was encouraged whereas in the other country the government was mainly extractive. In the long run, they claim, this is the reason that for example, The United States and Canada are wealthier than Latin America. But how does this theory explain the resource curse? Well, institutions are shaped by the incentives of those in power. When the Iraqi government can extract a very large portion of its income from selling crude oil, it’s less incentivized to set up institutions that promote the growth of it’s citizens. This is because the Iraqi government isn’t dependent on taxes for its income. A country like Japan, which only gets 2,14% of its exports out of fuels, has no option other than to invest in the productivity of its people. Following from Acemoglu and Robinson’s theory is why Japan is now a highly developed industrialized country while Iraq still lags far behind in terms of development. Thus, the incentives for development given by the stock of natural resources plays an important role. The lack of strong institutions explains another cause for the bad governance: corruption. Oil rich countries often have a small group of really rich people, oligarchs, that have a massive effect on how policy is shaped. These people have worked their way up the ladder in the fuel-industry and through their influence have gotten themselves very rich. Take for instance the close ties the Brazilian state-owned company Petrobras and Brazilian politicians have to each other. Petrobras paid out 449 million dollars in bribes, which makes it easy to understand why the lawmakers receiving these bribes are less inclined to direct the oil company’s funds to its people. While it could increase overall economic growth, those in power would simply not profit as much. For those of us who have a grim image of mankind and expect that money and power would make anyone corrupt, this paints a depressive picture, since no law-maker will do something to improve the situation. Politics can also play an important role if the well-being of the people is taken in consideration, albeit for electoral reasons. When countries take populist measures to provide short-term well-being to its people, this often doesn’t help them in the long run. Take Venezuela. Here a lot of anti-poverty programs were funded with its oil income. These programs were very successful and the amount of people living in poverty were halved, however due to the cyclical character of the spending (meaning they spend more when the world economy is doing well and thus government income is high) they now have serious problems paying off their debts. This is because oil prices went down in 2008 and 2014, resulting in staggering budget deficits. Due to limited access to capital markets and import restrictions, inflation is estimated to reach 13000 percent this year with many terrible effects for the Venezuelan people. The oil proceeds weren’t used to invest in a broader export sector to make the country’s economy less sensitive to declines in demand of oil. The luxury of having oil often makes governments lazy when it comes to looking ahead. Luckily, if your country happens to find oil under its soil, you’re not doomed. Norway founded a national investment fund in 1990 in which they deposit capital they get from selling oil. The fund is property of the Norwegian people and it’s proceeds are used to foster their well-being in the long run. With its investments the fund focuses on issues like climate change and human rights. Norway is an example of how a country can use its natural resources to the benefit of economic well-being. For this, it’s imperative that the government acts for the benefit for its people in both the short and long run. A country needs strong and transparent democratic and economic institutions. However, history proves that these are hard to build up. Especially for many countries that have a colonial past, corruption seems to be baked into their institutions. So if you are from one of these countries, educate yourself and be very critical of how your government conducts its business, because your country’s natural wealth might go to waste.

Last week, Rethinking Economics NL published an outstanding analysis of the state of economics education in the Netherlands today. It starts out by explaining how economics has gone from a science whose focus, domain and methods are defined or at least informed by its subject matter to a science whose subject matter is wholly defined by its method of analysis. To see the difference, it may well be worth quoting the UvA webpage on the nature of economics: ‘Economists are specialised in analyzing trade-offs. At the heart of this field is the notion of scarcity of means (commodities, time) in relation to unlimited needs. This forces subjects to make choices as to how to use their means. ‘ So there you have it: economics is useful only in situations where trade-offs engendered by ‘a scarcity of means in relation to unlimited needs’ are the most essential determinant of an agent’s economic behavior as it shapes human institutions (such as markets). This definition excludes many phenomena that lay people would consider of economic interest, crises prominent among them. After all, when you are in a crisis, unemployment soars and capital lies idle. So both capital and  labor time are abundant rather than scarce at such times. Of course one can rephrase this in terms of scarcity of aggregate demand and scarcity of jobs. Such a linguistic trick however, merely begs the question as to how such things could become scarce in the face of an abundant supply of labor, capital and money (created by quantitative easing) and abundant desire to consume. Something other than scarcity is clearly gumming up the works. Economists that define their field along the lines quoted above, however, will never find out. Moreover, if they try to, they are engaging in extra-scientific speculation. After all, theories that distance themselves from the idea of trade-offs engendered by scarcity fall outside the realm of economics as the UvA (and the mainstream generally) defines it.  No wonder then that ‘the collective imagination of many bright people’ failed to predict the financial crisis or properly understand it. Economists’ definition of their subject matter forbids them to engage with the causes of crises and if they do engage with them, their tools make it impossible for them to make any leeway in their understanding (see also here). So, if you signed up for a study in economics hoping it would help you understand the pickle we have found ourselves in since 2008, you are very likely to be disappointed. Interestingly enough, Rethinking Economics presents evidence that suggests economists are implicitly aware of the limited scope of their methods. Van Dalen et al (2015) have asked economists to rank both the qualities of the ideal academic economist and the ideal professional economist. The profiles that emerge could hardly be more different. Only 7% of economists for instance say that for the professional economist does not need profound knowledge of the (Dutch) economy. A whopping (and shocking) 34% of economists however, feels such knowledge is irrelevant for academics. So it appears there is a wide rift between the skills required for professionals advising e.g. economic policies and those developing economic theory. Such a rift implies that economic theory is not developed to illuminate economic phenomena. For if it were, the academic economist would need to be knowledgeable about the economy.  ‘Nothing is as practical as a good theory’ the maxim goes. Economists, then, either deny this or they secretly believe their theories aren’t any good, but are afraid to admit it (hell, you are out of a job if you do – oops, there goes mine). This explains why some economists voice the sentiment that ‘economics is very useful as a form of employment for economists’ (Galbraith). Phrased like this, economics is a mostly harmless waste of time and talent for nerds that otherwise would probably be more usefully employed. The harmless part only holds, however, if economists refrain from applying their tools to problems they are unsuitable for. Alternatively, they could add extensive disclaimers to their advice. (Something like: ‘Warning! This advice is based on mainstream economic theory. It is therefore only valid in situations of scarcity. Furthermore, many of the models used, assume that everyone is exactly the same. The chances that this analysis has any bearing on economic reality in times of crisis are therefore small to non-existent. Use at your own risk.’) Economists would also be harmless if policy makers refused to take over their advice on the grounds that it stems from ‘a caricature that’s so silly [they do not] want to get close to it’ (Meyer 2010). In practice however,  economists do offer advice on unemployment, crises and what not and such advice is often accepted without question. A lot of this advice is not rooted in the inherent scarcity properties of the problem at hand. Instead, it unwittingly creates scarcity in effective demand while trying to remedy the scarcity of jobs. For instance, the response to the crisis is driving down wages, social security and government spending (austerity). Although the lower wages may increase labor demand, they hurt effective demand and thus profit and investment opportunities at the same time. Adding government austerity to the mix only exacerbates the situation. So lowering wages and engaging in austerity measures amounts to adding insult to injury for those least responsible for, but suffering most from, the financial crisis. The net macro-economic effect is quite ambiguous, though. Such measures, then, effectively amount to swapping one type of scarcity for another. Yet, if we take the whole economy into account, scarcity cannot actually be the root cause of the problem, let alone solve it. For this, we need a different kind of economics (for instance, a Keynesian one). Economics is only a tool and tools have to be used with skill, precision and judgement. Physicians that dogmatically use the same tool no matter what the patient’s ailment is, will most likely kill the patient. Similarly, economists who define the scope of their field with reference to their tools, should not apply their expertise to economic phenomena that lie outside that scope. Economists that do, are positively dangerous.

Waymo, Ford, BMW, Volkswagen Group. These, among some others, are currently the companies that are more likely to be the first to have their driving cars circulating on the road. In fact, self-driving vehicle have become a focal point for many companies in the automobile industry. Why so? Self-driving cars can be defined as motor vehicles that are capable of driving and navigating in an autonomous way without any input of a human being. Until now, the system that will allow this has not been yet developed as fully autonomous. However, advanced driver-assistance systems (ADAS) have been playing a crucial role in preparing regulators, consumers, and corporations for the medium-term reality of cars taking over control from drivers. There has been a great improvement in the last years, but there is a long way to go for fully autonomous vehicles to be available in the market. The potential of self-driving cars The main potential of self-driving cars could be summarised as efficient usage of resources, safety and traffic congestion. Sharing self-driving cars is one of the most efficient ways to decrease the amount of space required for parking, as well as the resources used to build the vehicles. Today, an average car in the US is being unused 22 hours a day. This waste of materials used to produce the almost 270 million cars in the country could be greatly decreased with the introduction of self-driving cars. How? Companies are looking towards the creation of an automated vehicle that will be used as a transport service. The same case as Uber has expanded our concept of a sharing economy, where we do not own the car but we share the service, self-driving vehicles could be used in the same way. This could result in a decrease of an unnecessary manufacturing of cars. Sharing vehicles is the most promising approach for a sustainable environment. Concerning the safety issues, self-driving cars offer a great potential. Many of today’s car accidents are due to human error (e.g. driving under the effects of drugs, or lack of attention because of tiredness and usage of smartphones). Since self-driving vehicles could be connected and communicate among themselves, research estimates that around 80% of vehicle crashes could be avoided. This centralized routing system could also reduce delays for all drivers by minimising common bottlenecks causing slow traffic and thus increase the capacity of freeways. Challenges Autonomous vehicles could entirely change our perception of transportation. This, however, does not come with possible challenges and problems. First of all, we must consider the technological aspect of these new automobiles. Development of the required software is an issue that companies have been working on for several years, and still requires a lot of improvement. Self-driving cars must be able to act and drive like a human, and therefore mimic (and to some extent, improve) the process of human decision making. The problem? While humans are continuously learning from their mistakes and past decisions, automated vehicles may be constrained to their slower capacity to assimilate the consequences of their decisions. It must be also considered that research in this field has been based on representations of a real world situation, so to which extent can we rely on decisions that are taken from an unreal situation? Concerning the possible social challenges and the acceptance of society, safety is the imperative when it comes to self-driving. In theory, this new technology should be able to overcome the errors in human decision-making, therefore decreasing the accident rates and improving safety on the road; but how should these cars be tested? When it comes to the vehicles we use today, a number of different standards assure the safety in the roads by implementing a set of mandatory rules. However, in the case of automated vehicles, the standards are still under development and based on unreal experiences. Therefore, until the learning-from-experience mechanism in self-driving cars is not improved, complete safety won’t be assured. In refutation of this argument, over-reliance must be discussed. The concept is nothing new; in the 90’s, when airbags have been developed some drivers and passengers felt confident enough to stop wearing their seatbelts, thinking they were not necessary anymore. This illusion of over-protection resulted in increased deaths and injuries. Finally, let’s relate to the economic aspect. A mass usage of this type of vehicles would have a great impact on several job markets: taxi drivers, truckers, chauffeurs, etc. These industries would have to be reallocated, ending with an important part of the tertiary economic sector. Furthermore, an industry that would bear the consequences would also be the one consisting of insurance companies. Since the rate of accidents is expected to decrease drastically with the implementation of automated vehicles, these companies would have to adapt to the new situation. Sharing the vehicles would also result in an important impact on the economy and the business’ strategies. Companies would need to find new ways to achieve competitive advantage in the market. The automotive industry has a highly competitive market, but since the driving would not be experienced by the person inside the car anymore, firms should focus more deeply in the interior of the vehicle and its design. Considering that in the US alone more than 6.3 billion hours are being wasted on average per year in traffic jams, more than 37000 people die every year in car crashes, automobiles are being unused most of the time, self-driving cars could signify an important revolution. Nevertheless, the previously mentioned challenges show that there is still much work ahead until we can sit comfortably in our cars and let the machines transport us safely and effectively to our destinations.

It is a well-known fact that Japan has one of the worlds oldest populations, with a median age of 47 that’s well above the world median of 30. Japan’s population is both shrinking and aging at the same time. For decades economists have warned us about the threat of aging populations, and in the case of Japan, the consequences that this social phenomenon has had on the country are vast and can be seen on many aspects such as economic growth and interest rate. However, they might have just encountered a new repercussion, their senior citizens are purposely committing petty crimes in order to get themselves into jail. Why is this happening? For starters, there has been a shift in some family dynamics within Japanese societies. In the past, the elderly used to reside with their families. However, over the past 30 years, the number of senior citizens who live by themselves has been six-folded. As a result, some of them are now turning to jail, seeking for the sense of community and stability that they are lacking outside. In fact, elderly crime rates have nearly quadrupled over the last decade, and almost half of the seniors caught shoplifting reported living alone and having hardly any contact with their families. Some inmates have even stated that jail gives a new sense of purpose to their lives because they are able to work in prison factories, something that they would not be able to do on the outside. Besides the emotional troubles that have led to this scene. There’s also a monetary element to the issue. Age increases economic vulnerability, this is not a strange situation given that in most parts of the world the elderly are usually the poorest part of the social spectrum, often living below the poverty line. In Japan, many elders are finding it increasingly hard to rely solely on welfare for their daily needs, and prison becomes an attractive option by guaranteeing them three meals per day, a roof above their heads and even medical facilities. What are the effects? Currently, 22% of women in prison are over 65 years old. And given that older people require more medical checkups and particular attention, this inherently increases the cost of maintaining prisons, which is already about $20 thousand per inmate, having already increased by 80% since 2005. Prisons are progressively resembling retirement homes, and although specialized employees have been hired to take care of the needs of the aged, according to Satomi Kezuka, an officer at Tochigi Women’s Prison, her job has come to resemble that of a “nursing-home attendant”, which in turn has spiked their labor turnover rates, causing a shortage of staff. As a matter of fact, approximately more than 30% of correctional officers quit their jobs within the first three years, What do they plan to do about it? Japan’s ministry of justice has stated that it will be up to each prison to adapt to the new necessities of their inmates. Right now some of them are trying to find a balance between keeping them healthy without making their conditions too comfortable. For example, in some prisons, elderly inmates are now allowed to sleep and work in their cells, instead of having to go to a prison factory every day but talking is still forbidden during working hours. Moreover, a law has already been passed that requires inmates to go through a rehabilitation process and get support from the welfare system once they leave prison in order to prevent recidivists. Although Japan is currently leading the charts, it is important to mention that population aging is widespread across the world. Countries in Europe and America are also struggling with the effects of increasing longevity and declining fertility. As dependency ratios increases these counries will definitely face challenges regarding their pension and financial systems. Therefore, it is important to start adapting our institutions and taking preventable measures to fit new demographic models and avoid situations such as this one.

I have always been very interested in development economics. Institutions such as the World Bank and the International Monetary Fund have bedazzled me, and to that extent I took up subjects such as Development Studies and Development Economics. As my degree comes to an end, and now that I have started looking for internships and jobs, I have realized one thing: there are no jobs in development economics, and moreover, there is no such thing as development economics. To illustrate what I am saying, let me compare a country to a human body. A body has different parts; accordingly, a country has different sectors. Doctors who specialize in specific organs can find jobs. Imagine a doctor who specializes in “human body betterment”, he would turn out to be a jack-of-all-trades, yet, a master of none. Similarly, as an economist, if we as economists do not specialize in a particular sector when it comes to development-related work, then we end up like that useless doctor as well. Moreover, foreign aid as part of a country’s Gross National Income is going down in much of the advanced countries. At the same time, the total amount in aid has been rising because of economic growth in donor countries. The following graph, which was taken from the OECD (Organisation for Economic Co-operation and Development) website summarizes this clearly: At the same time, the very theory of development economics is not without its flaws. In a competitive, cut-throat world, latest information is key to success. In the world of finance and trading, information is churned out and consumed at the very instant. In development economics, it takes a few months, even years before the impact of a program can be fully assessed, which in turn results in inefficient allocation of resources and implementation. There is a learning curve with each particular experiment and project, and there are hardly any golden rules that could be applied to all the projects; i.e. there is a serious lack of external validity in the theory. Most importantly, governments and organizations have dwindling faith in this subject of late. There have been scathing reviews on the neo-liberal policies undertaken by the World Bank and the IMF, which are considered to be the premiere institutions to foster economic growth and promote a global development agenda (I am not even bringing up the blow to the IMF due to the whole Dominique Strauss-Kahn case). Numerous studies have shown that the aforementioned policies have actually worsened conditions in the recipient countries, and its citizens have lost faith in the states’ ability to manage aid funds and run a nation. Plus, the politics of these organizations also need to be taken into account. The World Bank has been accused of predominantly submitting to US interests, and the US has veto power over policies. Although it made sense when these institutions were created (US stock amounted to 74% in the bank, in 1950), the times have changed now. However, the politics still echoes the Cold-War Era power dynamics. The following graph taken from Politico illustrates the share of the US in the Bank: However, this is not to say that development economics is outdated or bad, or anything of the sort. For me, the nobility of the subject and the work is alluring. Coming from a developing country myself, I have seen the struggles of the laborer who works 12 hours a day at 1.5 euros per day, to feed his family. I am not trying to be a gospel or a messiah, it is about being empathetic, and helping the world become a better place. There are many other ways to apply your knowledge, maybe in the field of finance or business. It is important to realize that your means to an end will change over the years, but the end will be what your goals are, and what motivates you as a person.

On the 18th of April 2018, the president of the Republic of Turkey, Recep Tayyip Erdoğan, together with an opposition party’s leader, Devlet Bahçeli, announced that a decision has been made to have an early election for both the parliamentary elections, and the presidential elections of Turkey, who will hold higher power than his/her predecessors and will not work together with a prime minister. The decision to switch from a parliamentary system to a presidential system came in 2017, when a referendum took place and the majority of votes turned out to be in favor of a change. The transition period was supposed to last for 2 years, with the election date being decided as the 3rd of November, 2019. The selected date would give opposition leaders such as the rooted Cumhuriyet Halk Partisi (Republican People’s Party) and the up-and coming İYİ Parti, who were expected to run a strong campaign, enough time to prepare their agendas and decide on a candidate and run their election campaigns. According to the explanations that were made by AKP(Justice and Development Party), the ruling party and president Erdoğan, the main motivation for the change of date was the current state of the Turkish economy, mainly the worsening exchange rate, decrease in foreign direct investment and the current deficit. While these problems have occurred during the ruling of Erdoğan and his party, they were quick to dismiss any wrong doing, and suggested that these were due to the long transition period from the parliamentary system to the presidential system, and the political uncertainty that was caused by it. The announcement for the change of date was met with heavy criticism from the opposing parties, their leaders and also many Turkish people, as they claimed that the said reasons behind the decision were baseless. While political uncertainty can certainly contribute to the mentioned problems by Erdoğan and Bahçeli, it is important to remember that the Justice and Development Party have been in charge since 2001. Therefore, looking deeper into the reasons behind this decision to move the elections up, the whole situation paints itself as more of a power move. After coming to power in 2001, the Justice and Development Party AKP, has won  12 elections in total, running against several different parties (and candidates) as their opposition. The broken-down state of the Turkish opposition parties has been apparent, as the aggressive and assertive campaigning that AKP engaged in for years have eclipsed the social justice focused passive agendas that their rivals pursued. AKP’s heavy focus on helping the “little people”, following a religiously charged agenda with a vulgar and volatile way of handling foreign relations raised them and their then-leader Erdoğan to cult hero status in Turkey. However, with the establishment of İYİ Parti, lead by Turkish politician Meral Akşener, many experts believe that the ruling party could face stronger opposition in 2019, initial intended date of the elections to take place. The party was formed by prominent former members of Turkey’s main established parties, and its agenda mainly focuses on the restoration of the parliamentary and judiciary systems together with complementary institutions that forms the government. After its formation, members of İYİ Parti have engaged in assertive campaigning, by spreading their so called anti-Erdoğan agenda across the nation, attracting voters from different parts of the country and aimed to place themselves in primary position to establish the party into a powerhouse opposition. However, it is important to remember that the party was established on the 25th of October 2017 and needed time to achieve their set goals before the elections in 2019, therefore a change in the date for the election was likely to damage their chances of running a successful election campaign, cutting their preparation time from 24 months to just 8. Together with the İYİ Parti situation, members of the main opposition party CHP were also displeased with the passive demeanor of their leader Kemal Kılıçdaroğlu. Having lost 12 elections as the main opposition to AKP, there were speculations regarding CHP advocating for a different party candidate, rather than advocating for Kılıçdaroğlu.  Muharrem İnce, a fierce politician who is an MP of CHP for his hometown, Yalova, was regarded as a prominent candidate by the main opposition party members. However, similar to the situation of İYİ Parti, the main opposition needed time and planning to run their long expected successful election campaign, and the decision for an early election now stands in their way. The above-mentioned issues for the opposition left many experts and citizens displeased. President Erdoğan and AKP are currently being accused of using their influence and political power to assist themselves to reinforce Erdoğan into becoming the first ever “president” of Turkey. Together with this, Erdoğan and AKP’s influence on the problems that are being faced by the Turkish economy have been heavily discussed, and Erdoğan’s vulgar behavior towards the European Union, decision to attack Syria to intervene with domestic terror threats, and aggressive attitude regarding holding more power and influence were pointed out as the main arguments behind them. Regardless, the upcoming elections in Turkey will heavily influence the growth trajectory of the country, and will have an enormous impact on the political identity of the country as a whole.

A few weeks ago I attended the Digital Economy Days, a technological conference organized by the University of Amsterdam in partnership with Samsung, that encourages students to get ready for the digital economy environment in which they will be working. Being rather tech adverse and having a limited understanding of anything beyond Microsoft Office, one could say that I wasn’t exactly in my comfort zone. However, from my position I sill licked up on the leitmotif of the day: “Data analysis is the deal”. So, as this was mentioned by the CEO’s of Samsung, TomTom, and VodafoneZiggo, I decided that this is the time I exit my sphere of ignorance and fear and finally understand what Big Data is. More importantly, my final goal was to understand why Big Data is such a game changer for economics. As such, I put together a small introduction to how recent data analysis technologies will impact behavioral sciences and the skills future employers seek when hiring economics graduates. Big Data Big Deal From a technological perspective, Big Data is data that has a large volume, velocity and that cannot be processed using traditional techniques. For people less familiar with this terms, it just means a very large amount of information that we can now understand and analyze because of recent technological developments. The importance of this data comes from its potential and what one chooses to do with it. For us, that might mainly mean more available information for economic modeling and better future predictions on both macro and micro scale Where exactly does the data come from? In short, the data come from you. Or more specifically, anytime you are online and search the web, use Facebook, make a purchase or just communicate with your friends. However, this data mostly comes unstructured. Here is where the recently developed algorithms come in handy. They are the ones that select and process the data given your particular preferences. A very common example of a programme that uses such an algorithm is predictive on your iPhone keyboard. However, this enormous data collection does not come without harm. Over the past weeks, we have particularly seen problems with data collection come to light. The recent Facebook Cambridge Analytica scandal is probably the most famous one. Security of the gathered data, despite its importance, is not the main theme of the article. But, it’s applicability in economics is. So… Why is this important to economics? First of all, big data offers us immense opportunity for development of economic policy.  As such, governments can use it to analyze the impact of former regulation and create a more effective and efficient administration. Also, authorities could get a better understanding of how the underlying framework influences the goals of the government. A tangible example can be found in the project done by the University of Edinburgh and the Uganda Bureau of Statistics. The aim of the research is quite straightforward. In Uganda, the roof of the house represents the financial status of the family and can, therefore, be used as a measure of assessing poverty levels. So, what the researchers are planning on doing is using satellite and aerial images to monitor the changes in rooftops. What this means is that Uganda will be rapidly gathering poverty information and could implement more effective developmental policies in the future.  Another very important aspect of big data is that the research conducted from it results in a system that is more centered on the well-being of the citizen. This is mostly the case as the information is gathered from the user directly. Data will eventually give a better understanding of what the specific needs of a population are. Finance might also be greatly influenced by this new technology. Finding the driving factors for fluctuations in price shares and behavior changes are only a few of the applications. Therefore, Big data will influence the majority of the fields in economics, from research to investment and consultancy. What should you do? At first glance, it might seem that anything that has to do with data can be quite repetitive and not as fun as being an investment banker on Wall Street. Well. It appears that the data analysis skill is exactly the type of qualification that will most likely make you stand out. Despite data scientist not being the first career path for any economics student, some of the skills possessed by those who practice this profession will most likely come in handy in the developing labor market. Analyzing and understanding the data yourself offers you more independence from both an academic and practical point of view. Firstly, as we previously saw it might be particularly important in the research field. As the data offers opportunities for improved economic theory, you might even become one of the researchers to finally explain business cycles.  Also, understanding the “oil” of the digital era is a very forward thinking skill. Many predict data to be the driving force of our future and a stepping stone in creating a more sustainable life. So, maybe the first thing you could do is look into understanding what some of the developed analysis programmes do. Many data manipulation courses are also available online if you feel you are ready to take the next step. All in all, Big Data might be, or already is changing the game rules for economics. With more effective and focused policies and a better understanding of the behavioral world, new ideas will most likely come as well. So ,frankly, Big Data is just the selection of significant parts out of a multitude of information. The selective information has been always the basis of learning and innovation. Data analysis promises to deliver exactly that, with accelerated and more practical development. Of course, problems are and will always be. Privacy, security, the feeling that somebody is watching over you are indeed justifiable. But, if used for good purposes the trade-off might even fall in favor of the benefits derived from your preferences. #bigdata #business #career #digitaleconomy

Summary: During the course of history, we have seen how human capital could make a substantial difference to the economy. For example, the rise of East Asian countries between the 1960s and 1990s is largely made possible by the role of policies that focus on developing the human capability. Still, many countries, especially developing ones, continue not to appreciate this issue in the right manner. This article will present the importance of human capital to the economic development of the country and how international organizations are helping countries to achieve growth through building human capital. World Bank suggested that the developing countries were severely lacking behind developed countries in terms of human capital investment. 70% percent of the economic growth of developed countries is attributed to the investment in human, while only less than a half (40%) of the economic growth of the developing country is through human capital investment channels. The consensus among economists (and policy-makers as well) is that investing in people strengthens economies, but the implementation of the relevant policy has been extremely overlooked in some countries, especially developing ones. Human capital cannot be underestimated, as we try to understand why we should not remain inactive on the problem. Human capital Human capital can be shortly defined as the skills and attributes of an individual, or a collective group of individuals, that, through performing its function as the labor in the economy, is possible to create economic value. The concept was first termed by Nobel Laureate Gary Becker and it has been frequently mentioned since. Following the objectives of poverty reduction of the past three decades, this might turn out to be one of the most important economic issues moving forward. Usually, when we discuss human capital, the most relevant aspect is education, as it is the primary means to translate skills and attributes to productivity and output. However, there are also other indirect factors of human capital that are highly relevant to economic growth, for instance, health, social policies and population. In this issue, we will look at the two main components of the many that form the structure of human capital: education and health. Firstly, the goal of education has been long considered as the strong foundation of building a sustainable human capital basis. Research has shown that educational attainment, measured by years of schooling (and enrolment rates in other designs), is strongly correlated with economic growth across countries around the world. However, while the number of schooling years is measurable, it is difficult to imagine that a school year in the Netherlands can be considered as equal to a school year in a sub-Saharan country in terms of quality and the knowledge gained. In order to address this problem, the World Bank introduces the learning-adjusted school year in order to make education in each country more comparable. The readjustment of the variable makes the correlation between educational attainment and economic growth even stronger, suggesting that human capital is as important as ever in our contemporary times. In their findings, between the top quartile and bottom quartile country in terms of wealth, there is a difference of 1.25 percent of GDP that is attributed to the role of human capital in the last 25 years. To put it in perspective, the global economic growth in the last 25 years has been around 2 to 3 percent; so the difference of growth that is attributed to the role of human capital is indeed very significant. In fact, in an era where technology and innovation are the motivators of growth, investment in human capital is the right direction for many (developing) countries if they want to remain competitive with countries around the world. The second aspect that I want to focus on is the importance of improving individual health to human capital. Ensuring good health throughout the entirety of a person’s childhood is essential to the attainment of education at the early age in which knowledge can be easily absorbed. In this case, public organizations have long addressed the eradication of stunting and infectious diseases in many underdeveloped and developing countries where people lack primitive access to healthcare. In terms of household investment, families could buy protectionary measures to minimize the chance of their children getting caught by a disease. As a result, healthier children would be more engaged in learning activities and have fewer absent days, which effectively raises the level of individual human capital. If more families are engaged into preventive measures, all children can be the beneficiaries since the transmission of diseases is lowered across all households, so all children would go to school more often in a way such that it increases the social human capital. Also, by making sure that an individual is healthy, that can be translated to more productive capacity in the latter stage of their career. For developed countries, where malnutrition or diseases are less of a problem, then the necessity to create equal opportunities for people is more prioritized. With regards to disabled people, they usually could not earn the same privilege as their other counterparts, since they usually are seen as inferior, even in some cases, they struggle to even live on their own. In some countries, public educational programs on helping the disabled to live independently and training in specialized skills have had some tremendous achievements. Employment across disabled people increases dramatically when they are trained to prepare to participate in the workforce. Measurement of human capital In order to quantify human capital, one of the newest entries to the World Bank database that is going to assist is the Human Capital Index, which is still due to be published later in the year. Because of its first publication, there is going to be much controversy surrounding the myriads of aspects of the data: the construction of the model, the measurement and the results themselves. Since countries are being put in comparison to one another, not many government officials would not be too e happy seeing the results. However, the key takeaway of this research (or at least the goal of its first publication) is that whether administration of a certain country looks their results (in comparison to others) is they should make some positive and urgent changes to their policy so as to develop or strengthen its domestic human capital capacity Investment in human capital. Human Capital indicator might need some refinement in the future, but as long as the data are quantifiable, reliable and accurate enough, it would be able to attract more investment. The investment would not only come from the public sector (which only have limited income through taxes), but it can attract private sector which has more resources as well. Usually, the private sector decides to stay away from human capital investment because investment in human capital is considered a long-term investment that would not able to yield immediate returns. While there are many private enterprises and foundations that possess forward-looking perspective and have been actively engaged for a number of years, there are yet still many firms that have the capability to support and finance such projects. Providing in-house training programs in terms of specialized skills can be one of the many projects that could yield possible returns only within a couple of years. While this issue of the investment into human capital cannot be resolved within the length of a magazine article hope our audience can understand the overview of the issue. As the World Bank begins its project on building human capital and projects a clearer build path, they hope developing countries would start to follow suit.

There are different theories that try to explain the reasons of the contrast of economic development in the colonized countries. It is widely believed that it is fair to assume an equivalent rate of economic growth in countries that were colonized and later emancipated within the same periods of time, especially if those countries also share geographical and cultural similarities. Such is the case of the Americas hemisphere. Any economist nowadays finds evident the fact that North America has evolved at a more rapid pace than Latin America. Its economic development and its political and military forces are among the most powerful in the globe, matching and even surpassing those of the European colonizing powers. But when did this contrast in development become evident? How did Latin America fall behind? What were the main reasons of the diverging paths of these economies? Most economists consider the structure of institutions as a main factor for economic progress. It is well known that corruption or bureaucracy (among other institutional issues) can easily tear a country apart even when this is at the peak of economic maturity (e.g. modern Venezuela). According to Stanley L. Engerman and Kenneth L. Sokoloff, the structure in which institutions were created in a country is a crucial point to take into account in order to understand the later development of the country as a whole. It is necessary to study the initial factor endowments of these economies and the institutions built around them, in order to find a more accurate pattern that indicate the real reasons for this slow economic growth. There is a misconception that credits the success of North American countries to the superiority of British heritage or the better match of Protestant faith with market institutions; however, systematic investigation concerning these fallacies is very limited. Research rather mentions the late arrival of the British as the main reason for the superiority of their colonies in the long-term. Once the British had arrived, they had to settle in the least fertile areas, as every piece of land that could potentially grow important crops or exploit relevant mines was already occupied by other European kingdoms. The latter prevented the British colonies from being largely benefitted from cheap labor derived by slave trade, but it created a more homogeneous society that gave rise to competitive institutions without limitations of power for elite members. Engerman and Sokoloff classified the New World colonies into three categories, according to their initial endowments. Those suitable for the plantation of lucrative crops, those convenient for the extraction of mineral resources (e.g. Gold, Silver) and those applicable for small-scale agriculture (Engerman and Sokoloff, 2013). The first two types were largely benefited by the international slaves markets or by the oppression of local native populations. The low labor supply costs and the high marginal productivity of labor were essential to the successful progress and exploitation of crops and mines in the New World. However, this heterogeneity in populations gave rise to institutional structures that greatly advantaged certain elite classes, while disadvantaging the vast rest of the population (Engerman and Sokoloff, 2002). Unfortunately, this structure of unequal opportunities was embedded into the culture and remains up to date. Latin America is considered one of the most unequal places on Earth. It is famous for its corruptive institutions that are far more likely to benefit the class elites before looking for the well being of society. The last of the three categories refers mainly to the Northern hemisphere, where most of the British colonies were settled. These areas were not endowed either with labor supply (substantial native populations) or with soil and climates able to produce crops characterized by major economies of scale. Most of the immigrants coming to these areas devoted their lives to farming activities and small-scale agriculture since climate conditions did not allow for much more. The easy access to cheap land and the absence of economies of scale, made it possible for everyone to become independent farmers. Finally, the lack or limited amount of a contrasting population allowed a more equal society where even ordinary men could set up independent businesses. Overall, Engerman and Sokoloff research concludes that the contrast in economic development between Latin American and its hemispheric neighbors, date back to colonial times, being the structure of institutions the primary factor to influence their long-term growth. In turn, these institutions were settled and structured according to geographical patterns and initial endowments such as the three divisions made by the two researchers. They also deny the long-known idea that gives credit to the British for their superior inheritance to their colonies. Similar to these findings, lies research done by Acemoglu, Johnson and Robinson in 2002. They explain Latin America’s fate with a theory named “reversal of fortune”. The main idea is similar to that of Engerman and Sokoloff but they rather refer to the purpose by which various institutions were raised in the New World. In territories that had a vast native population and abundant natural resources, such as Mexico or Peru, Europeans established “extractive institutions” that were mainly controlled by a special elite despite its long-term negative effects on growth. These extractive institutions were built with the main aim of obtaining as much wealth as possible, only to bring it to the motherland (Europe). They had little to no interest in reinvesting those resources in the New World. In contrast to these settlements, the poor and less densely populated areas (namely North America) were mainly colonized by a vast number of Europeans. This homogeneity of population encouraged the creation of institutions with the main aim of reinvesting the returns in that same land. In the medium to long-term, this constant reinvestment became evident as these colonies progressed much more rapidly than their southern counterparts (de la Escosura, 2007). It is necessary to mention that a vast majority of Europeans coming to British colonies were in seek of a better life, and had no future plans to return to Europe. Therefore, the creation of efficient and productive organizations was crucial for their offspring’s’ future. Much more research is necessary in order to obtain a more accurate idea of the essential factors that affected economic growth in the American hemisphere; however, it is well noted that the European colonization and the international slave market played a crucial role in its development. Also, the structure by which several institutions were created has embedded certain features and cultural attitudes into Latin American culture. These features have evidently deteriorated the growth of the economies and it is fundamental that societies work on these issues if they ever want to achieve a more rapid economic, social and political growth.

Imagine people from various backgrounds – students, teachers, journalists, artists, soldiers – laughing, dancing and hugging one another.  Envision a sea of flags with red, blue and orange colours fills the main square. Picture ordinary people who stood up for the transparent and accountable government. Imagine a united nation that managed to fight against almost impossible odds. This was the scene on Monday, 23rd April, at Republic Square in the centre of Yerevan, the capital of Armenia. «Congratulations to every single Armenian! We WON,», said my Armenian friend on Facebook. It was indeed a victory. A victory of the people. A victory of a nation. For those of you who wonder where Armenia is, it a country in the South Caucasus, which was the Soviet Republic until independence in 1991. More than 50% of the population lives in poverty. Unemployment and emigration remain problematic, and Armenia is under a trade blockade from Turkey and Azerbaijan over the dispute in Nagorno-Karabakh—goods are transported only through Georgia and Iran. Yet, it is a monoethnic and monolithic country– factors that probably played a vital role in the success of the revolution. But I will get back to this argument later. How had Armenian Revolution unfolded? It was in 2008 that Serzh Sargsyan came to power as president amidst violent suppression of anti-government protests in which at least 10 people were killed.  When the legal term of his powers came to an end, he initiated a referendum on the establishment of a parliamentary republic, in which the prime minister would become a political leader. The referendum took place in 2015, but the constitutional change officially came in power only from this year. At the same time, Sargsyan publicly promised not to be elected as the premiere and broke the promise. Fast forward 10 years, thousands of people in the streets of Armenia. It all began with the walk from the second largest city in Armenia, Gyumri, to Yerevan, the capital city. The moto and the purpose of this march were: “Make the step, reject Serz.”  Tens of thousands, mainly students and high-school children, poured on to the streets protesting. The young generation is probably another important factor that has led to success. Armenian population is very young – the average age as of 2014 is 33 years. Students are not the ones who grew up with the Soviet mentality and Soviet propaganda, they are freer in their thoughts, thus they are demanding their rights more freely. The march lasted 13 days, which turned into a peaceful protest in the main square of Yerevan, announced by Nikol Pashinyan – the opposition leader.  Protestants blocked the streets, however, there were no political slogans, no political demands (apart from Sargsyan resignation), there were only flags and flowers. Sometimes silence is louder than any words, isn’t it? There were probably three turning points that led to the success of the opposition. Firstly, negotiation with the prime minister in front of the press, which happened for the first time in Armenia. Conference between Sargsyan and Pashinyan lasted less than 5 minutes and failed after the prime minister walked away, threatening people with the second 1st March (referring to protests back in 2008). Secondly, after unsuccessful negotiation, three main opposition leaders were arrested for 24 hours. This caused a number of the protestants in the streets to almost double, and on the top of that, veterans of Nagorno-Kharabah conflict symbolically joined the protestants. People realized that they could themselves shape the future of their country. The society overcame all those socio-psychological fears that were caused by poverty, corruption and lack of faith in tomorrow. Remember, in the beginning, I mentioned that monoethnicity played a big role? Often, the main tool in the hands of the government of a country in which revolution takes place is to make one group of people act against another. In Armenia, instead, there was only one single group against the government. The sense of justice led to the third critical point of the “velvet revolution.” Following the arrests, people performed a total blockade of the main highways to Yerevan, adding to the protests in the city of Yerevan with the strike of workers and students. Not only the whole life in the capital city was paralysed, but people couldn’t even get to or from the airport. Another friend of mine, who also studies at UvA and was visiting his family at a time, had to walk 17km to make it to his flight back to Amsterdam. The situation was so critical that even the “newly” elected prime minister Serg Sargsyan could not make any influence. In his resignation appeal, Sargsyan said: “There are a number of solutions in the current situation, but I will not resort any of them.” He recognized that he has two choices – either to start a fire or leave. And he made the only right decision – to resign.  “Nikol Pashinyan was right. I was mistaken,” was Sargsyan’s last words. What’s next? The people’s revolution is still underway. On May 1, the Armenian parliament voted against making Pashinyan, who was the sole candidate, prime minister. However, the government in power promised to support the opposition leader in the upcoming elections that will be held on the 8th May. Seems like protesters are now taking a break to “save their strength”. Only time will show what happens, but Armenia gives a lesson to all the post-Soviet republics, that the government could not be irrevocable. What happened in Armenia is very unique. Armenian Revolution not only represents a major political change for the country, but also a psychological change for the Armenian people.  They provide us with an example of a politician who actually serves his people and who takes responsibility incumbent upon him, as well as portrays a responsible opposition. People in the streets of Yerevan acted incredibly peaceful and restrained. The opposition had a very distinct strategy which was supported by its main goal – protest without any victims. The ordinary people turned out to be wiser. Maybe other nations should learn a political lesson from Armenia?