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Before the Flood

Climate change is creating new problems and difficult choices everywhere, but coastal zones are particularly susceptible because of the double whammy of sea-level rise and increasingly intense storms.

In the U.S., the National Flood Insurance Program is supposed to keep flood insurance affordable while staying fiscally solvent. Climate change is making that mandate all but impossible. The Washington Post examines the politically fraught challenges of getting incentives right for a program that is $25 billion in debt and still underwriting properties that have filed as many as 40 claims.

Meanwhile, a century-old cranberry bog in Massachusetts is being re-wilded as an experiment in creating “natural infrastructure” that can buffer coastal regions, according to the New York Times.

For the Philippines, an archipelagic nation in the typhoon belt of the Pacific, the challenges are critical. Kenneth Hartigan-Go of the Asian Institute of Management has an overview in Global Network Perspectives.

Winner Take All?

Nine retail brands have declared bankruptcy this year and 3,000 stores have closed. Meanwhile, Amazon is moving into bricks and mortar—opening bookstores, experimenting with convenience stores that don’t need cashiers, and most recently buying Whole Foods.

The New York Times points to an economy-wide fight for scale as markets increasingly favor a few big winners. Research finds these “superstar firms” pay more, explaining much of the increasing pay inequality.

That’s great for those on the winning teams, but Stanford’s Nicholas Bloom writes in the Harvard Business Review, “Workers outside this charmed circle experience something quite different.”

Yale SOM’s Lisa Kahn found another explanation of divergence between companies: as many tasks are computerized, the more successful companies are the ones that learn to complement technology with uniquely human capabilities.

How Do We Combat Cybercrime?

The biggest cyberattack to date unfolded like a Hollywood thriller. Exploiting a vulnerability in Microsoft Windows stolen from the NSA, hackers—possibly linked to North Korea—crippled more than 200,000 computers at government agencies and businesses with the "WannaCry" ransomware.

Microsoft’s president called for a Digital Geneva Convention, saying that 74% of companies expect to be hacked each year and the economic cost of cybercrime is expected to hit $3 trillion by 2020.

Wired seconded the call, pointing to models of successful international technical accords on everything from telegraph to satellites.

Are We Living in a Near-Zero World?

Janet Yellen recently signaled that the Fed has shifted its goal from stimulating the economy to maintaining gains. Is this low-interest rate environment is the new normal?

There’s wide agreement that the natural rate of interest has been declining, though less agreement on why. Recent work from Brookings attributes it to investors’ willingness to pay a premium for safe and liquid assets like U.S. Treasuries, which keeps interest rates low.

What will the future look like? Modeling by the Fed showed its rates could hit zero as much as 40% of the time.

Ben Bernanke weighed in on the policy and political consequences. And the New York Times suggested that if monetary policy is losing some of its punch, perhaps fiscal policy—government spending and taxation—will need to be pulled out of the toolbox more often.

Fixing Healthcare?

The much-discussed Affordable Care Act and American Health Care Act are mostly about health insurance, not healthcare. It takes a lot more than insurance to create a successful healthcare system.

The NYU Langone Medical Center aims to train doctors while delivering world-class care. But in 2007 it lost $120 million and seemed to be in decline. strategy+business details how a new CEO led a turnaround that put the organization in the black and raised its rankings and quality scores. 

Harvard Business Review looked at a range of strategies to pare away the estimated $1 trillion in wasteful healthcare spending. 

And we talked with Yale professor Zack Cooper about his groundbreaking work on healthcare pricing.

"The future is here—it’s just unevenly distributed"

Quartz warns that we are heading into a Great Displacement. Automation is likely to eliminate millions of jobs in coming decades, a phenomenon already hitting those least able to adapt. Can entrepreneurs counter the trend and create widespread opportunities?

Already, jobs are moving away from the places where many of us live. Since the Great Recession, less than 40% of metro areas are adding new companies every year, according to an Economic Innovation Group report. And five metros accounted for as many new businesses as the rest of the country combined.

Yale Insights talked with Yale SOM economist Lisa Kahn to get an overview of the roiled labor markets.

Predictions for 2017

A tumultuous 2016 culminated in a political earthquake: the election of Donald Trump. Will the upheaval continue in the year to come? 
Writing for Bloomberg, Satyajit Das says that Trump’s proposals sound big, but aren’t actually going to change much for the economy as a whole.

Former treasury secretary Larry Summers and the Eurasia Group see a stock bubble and additional political shifts from elections in Europe as possible sources of chaos. 

And the FT sees economies performing above expectations—unless Trump throws a wrench into global trade.

A Shift in the Climate

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

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

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

Repeal and…

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

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

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

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

Now what?

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

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

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