Mario Draghi writes:  There is a common misconception that the euro area is a monetary union without a political union. But this reflects a deep misunderstanding of what monetary union means. Monetary union is possible only because of the substantial integration already achieved among European Union countries – and sharing a single currency deepens that integration.

If European monetary union has proved more resilient than many thought, it is only because those who doubted it misjudged this political dimension. They underestimated the ties among its members, how much they had collectively invested, and their willingness to come together to solve common problems when it mattered most.

Yet it is also clear that our monetary union is still incomplete. This was the diagnosis offered two years ago by the so-called “Four Presidents” (the European council president in close collaboration with the presidents of the European Commission, the European Central Bank, and the Eurogroup). And, though important progress has been made in some areas, unfinished business remains in others.

But what does it mean to “complete” a monetary union? Most important, it means having conditions in place that make countries more stable and prosperous than they would be if they were not members. They have to be better off inside than they would be outside.

In other political unions, cohesion is maintained through a strong common identity, but often also through permanent fiscal transfers between richer and poorer regions that even out incomes ex post. In the euro area, such one-way transfers between countries are not foreseen (transfers do exist as part of the EU’s cohesion policy, but are limited in size and are primarily designed to support the “catching-up” process in lower income countries or regions). This means that we need a different approach to ensure that each country is permanently better off inside the euro area.

This implies two main things. First, we have to create the conditions for all countries to thrive independently. All members need to be able to exploit comparative advantages within the Single Market, attract capital, and generate jobs. And they need to have enough flexibility to respond quickly to short-term shocks. This comes down to structural reforms that spur competition, reduce unnecessary red tape, and make labor markets more adaptable.

Until now, whether or not to carry out such reforms has largely been a national prerogative. But in a union such as ours they are a clear common interest. Euro area countries depend on one another for growth. And, more fundamentally, if a lack of structural reforms leads to permanent divergence within the monetary union, this raises the specter of exit – from which all members ultimately suffer.

In the euro area, stability and prosperity anywhere depend on countries thriving everywhere. So there is a strong case for sharing more sovereignty in this area – for building a genuine economic union. This means more than beefing up existing procedures. It means governing together: shifting from coordination to common decision-making, and from rules to institutions.

The second implication of the absence of fiscal transfers is that countries need to invest more in other mechanisms to share the cost of shocks. Even with more flexible economies, internal adjustment will always be slower than it would be if countries had their own exchange rate. Risk-sharing is thus essential to prevent recessions from leaving permanent scars and reinforcing economic divergence.

A key part of the solution is to improve private risk-sharing by deepening financial integration. Indeed, the less public risk-sharing we want, the more private risk-sharing we need. A banking union for the euro area should be catalytic in encouraging deeper integration of the banking sector. But risk-sharing is also about deepening capital markets, especially for equity, which is why we also need to advance quickly with a capital markets union.

Still, we have to acknowledge the vital role of fiscal policies in a monetary union. A single monetary policy focused on price stability in the euro area cannot react to shocks that affect only one country or region. So, to avoid prolonged local slumps, it is critical that national fiscal policies can perform their stabilization role.

To allow national fiscal stabilizers to work, governments must be able to borrow at an affordable cost in times of economic stress. A strong fiscal framework is indispensable to achieve this, and protects countries from contagion. But the crisis experience suggests that, in times of extreme market tensions, even a sound initial fiscal position may not offer absolute protection from spillovers.

This is a further reason why we need economic union: markets would be less likely to react negatively to temporarily higher deficits if they were more confident in future growth prospects. By committing governments to structural reforms, economic union provides the credibility that countries can indeed grow out of debt.

Ultimately, economic convergence among countries cannot be only an entry criterion for monetary union, or a condition that is met some of the time. It has to be a condition that is fulfilled all of the time. And for this reason, to complete monetary union we will ultimately have to deepen our political union further: to lay down its rights and obligations in a renewed institutional order.

Nouriel Roubini writes:  Technology innovators and CEOs seem positively giddy nowadays about what the future will bring. New manufacturing technologies have generated feverish excitement about what some see as a Third Industrial Revolution. In the years ahead, technological improvements in robotics and automation will boost productivity and efficiency, implying significant economic gains for companies. But, unless the proper policies to nurture job growth are put in place, it remains uncertain whether demand for labor will continue to grow as technology marches forward.

Recent technological advances have three biases: They tend to be capital-intensive (thus favoring those who already have financial resources); skill-intensive (thus favoring those who already have a high level of technical proficiency); and labor-saving (thus reducing the total number of unskilled and semi-skilled jobs in the economy). The risk is that robotics and automation will displace workers in blue-collar manufacturing jobs before the dust of the Third Industrial Revolution settles.

The rapid development of smart software over the last few decades has been perhaps the most important force shaping the coming manufacturing revolution. Software innovation, together with 3D printing technologies, will open the door to those workers who are educated enough to participate; for everyone else, however, it may feel as though the revolution is happening elsewhere.

For the developed countries, this may seem like old news. After all, for the last 30 years, the manufacturing base in Asia’s emerging economies has been displacing that of the old industrial powers of Western Europe and North America. But there is no guarantee that gains in service-sector employment will continue to offset the resulting job losses in industry.

Technology is making even many service jobs tradable.  Eventually echnology will replace manufacturing and service jobs in emerging markets as well.

Today, for example, a patient in New York may have his MRI sent digitally to, say, Bangalore, where a highly skilled radiologist reads it for one-quarter of what a New York-based radiologist would cost. But how long will it be before a computer software can read those images faster, better, and cheaper than the radiologist in Bangalore can?

Job-reducing technological innovations will affect education, health care, government, and even transportation.  Education and governments are shedding labor.  Even transportation is being revolutionized by technology. In a matter of years, driverless cars – courtesy of Google and others – may render millions of jobs obsolete.

And, of course technological innovation that is capital-intensive and labor-saving is one of the factors – together with the related winner-take-all effects – driving the rise in income and wealth inequality. Rising inequality then becomes a drag on demand and growth (as well as a source of social and political instability), because it distributes income from those who spend more (lower- and middle-income households) to those who save more (high-net-worth individuals and corporate firms).

Obviously, this is not the first time the world has faced such problems, and the past can help to serve as a model for resolving them. Late nineteenth- and early twentieth-century leaders sought to minimize the worst features of industrialization.

As we begin to seek enlightened solutions to the challenges that the Third Industrial Revolution presents, one overall theme looms large: The gains from technology must be channeled to a broader base of the population than has benefited so far. That requires a major educational component. In order to create broad-based prosperity, workers need the skills to participate in the brave new world implied by a digital economy.

Should you opt for diversity, picking an equal number of men and women to comprise your team, or should you instead create a single-gender office?

Well, it all depends on whether you’re aiming for a happy staff—or a productive one.

A new study, Gender Diversity in the Workplace conducted by researchers at the Massachusetts Institute of Technology and George Washington University, found that people are happier working with employees of the same gender—yet, surprisingly, gender-diverse teams tend to be more productive.

The researchers looked at anonymous employee surveys administered at a Boston-based professional services company between 1995 and 2002 that measured cooperation, trust and work enjoyment; they also analyzed the teams’ revenue over that same time period.

Benjamin Fox writes:  Four EU countries in the world’s top ten economies.

– Four European countries are in the world’s 10 largest economies, according to research by the Centre for Economic and Business Research.

The annual World Economic League Table 2015 published on Friday (26 December) by the London-based think tank puts the US as the world’s main economic powerhouse, followed by China and Japan.

Germany, the UK and France take the fourth, fifth and sixth spots, respectively, with Italy, in the eighth place, the only other EU country in the top 10.

The UK has edged ahead of France into fifth place in this year’s rankings, although the Cebr comments that the $1 billion (€850 million) gap in output between the two countries is “well within the margin of error” and would likely be extinguished if France’s markets in drugs and prostitution, which “may prove to be ‘larger than their British counterparts”, were included.

In June, the UK economy received a statistical boost of £65 billion (€80 billion) following the introduction of new EU accounting rules allowing the so-called ‘grey economy’, which includes proceeds from drug trafficking and prostitution, to be recorded.

Meanwhile, Russia is the main loser in the new list, dropping from eighth place to tenth in the rankings, with Cebr chief executive Douglas McWilliams suggesting that Moscow’s role in the ongoing Ukraine conflict was a factor in the country’s economic decline.

“The fun of the world economic league table is that it brings things back to hard figures,” said McWilliams.

He added that “countries like Russia and Argentina, who have invaded neighbouring countries and whose leaders spout aggressively nationalistic rhetoric, are brought down to earth by their falls in the league table as their economies collapse”.

The Russian economy is poised to endure a 4.5 percent recession in 2015 as a result of falling oil prices and the effects of western sanctions.

Last week the country’s central bank was forced to spent around €3 billion of its foreign currency reserves to prevent a run on the rouble currency.

But the next 15 years are likely to be about the continuing rise of some of the ‘Bric’ countries – Brazil, Russia, India, and China.

China is projected to overtake the US by 2025 as the world’s largest economy, the Cebr forecasts, while the “unstoppable” rise of India will see it become the world’s third-largest economy by 2024.

In Europe, meanwhile, Cebr predicts that Germany’s ageing and declining population, coupled with the weakness of the euro, will allow the UK to overtake it by 2030.