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IMF calls on rich nations to boost public investment | Financial Times

IMF calls on rich nations to boost public investmentFund downplays debt concerns and calls for infrastructure spending for Covid-19 recoveryMany countries have already begun to increase spending in response to the economic damage caused by the pandemic

The IMF has issued a rallying call to rich countries around the world to increase public investment and spark a strong economic recovery from the coronavirus pandemic.

Advanced economies should worry less about their public debt, but instead take advantage of historically low borrowing costs to increase spending on infrastructure maintenance immediately, the IMF said in a report published on Monday.

Source: IMF calls on rich nations to boost public investment | Financial Times

 

Northern Comment: Interesting to see what appears to be a major policy shift from the IMF. A recognition the economic challenge of CovEcon-19 brings into question a whole series of current economic shibboleths. Is Rishi Sunak paying attention to this?

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Fear and Rage – The Trump Presidency

Bob Woodward is an exceptional journalist who began his career with the crescendo that was Watergate. Together with his colleague Carl Bernstein and meticulous reporting he contributed to the fall of President Nixon.

His coverage of US politics and presidents is marked by meticulous attention to detail and rigorous fact checking. To date he has written two books on the Presidency of Donald Trump. The first, “Fear” dealt with the first two years of the Trump White House. It involved both, on the record, and deep background interviews, with serving and former members of the administration.

It provides a detailed insight into the day to day decision making of President Trump. What makes it stand out from the myriad of other books about the President is that it does not start from an assumption that President Trump is self evidently neither suitable for nor capable of the job.

He reports the conversations between Trump and members of his administration as close to how they happened as possible. How the president appointed senior members of his cabinet and what he saw as their strengths. How he discussed key policy issue such as trade with China, North Korea, NATO, The Middle East and also more directly concerning issues such as the Mueller Inquiry.

Occasionally, in comment, Woodward will sympathetically point out that some of the issues Trump is criticised for are intractable issues which previous incumbents have failed to resolve and made similar policy mistakes about. In a very partisan environment, the fact that he does not leap on every policy error as proof positive that Donald Trump is a narcissistic imbecile is actually refreshing.

Mr Woodward has been criticised for producing books full of facts but little analysis. It is certainly the case that both “Fear” and his latest book “Rage” are fact full. Comment is confined to occasional small paragraphs which mainly involve a fact check.

Having said this assessing the Trump Presidency requires little more than listening. What comes out of the mouth of the President is so self condemning that to point out it is untrue and or stupid would seem to be an unnecessary statement of the bleedin’ obvious.

Reading, “Fear” is like reading a succession of comments which range from the completely inappropriate, to the laugh out loud stupid ( see page 273 when he wants to launch an investigation into China without mentioning that it is into China!) to the treasonously criminal.

Fear ends with the resignation of Trump’s personal lawyer, a man called John Dowd. Mr Dowd had been appointed specifically to defend Trump in the Mueller Inquiry.

Mueller wanted the President to testify to his Inquiry under oath. Dowd told Trump he could not do this. In Dowd’s view it was a perjury trap. Trump disagreed, he wanted to testify to clear it all up. Unable to act for a client who would not take his advice, Dowd resigned.

As Bernstein puts it in the last sentence of the book, “…Trump had one overriding problem that Dowd knew but could not bring himself to say to the President: “Your a fucking liar”.”

“Rage” is not just based on interviews with his staff and colleagues, but its principal source is the President himself and comprises some 18 taped interviews. Given the conclusion of the previous book one might wonder about the benefit of this.

However, the final comment on his veracity, or lack thereof, might have included the word stupid. Trump lies when there are multiple sources including his own recorded testimony that contradicts what he says. He lies when he does not even have to. The reality of life in the States screams against his words for most Americans.

The very way in which these interviews are organised provides insight. Some have a degree of formality in the Whitehouse with other staff present who might be able to shield some of the more off-beat answers. Others, come out of a phone call from the president at any random time. There appears to have been no advance notification of the questions so that the President could bone up on them.

On one occasion Mr Woodward phoned the president, when he got through to him the President said he could not talk because he had half the National Intelligence Committee waiting for him for a meeting downstairs. He then proceeded to talk for 15 minutes.

Lack of discipline, lack of focus, lack of concentration, lack of strategy all shine out of the words coming out of the presidents own mouth.

The president provided Bernstein with the correspondence between himself and Kim Jong Un. A more toe curling example of brazen flattery from Kim is difficult to imagine. But it seemed to work. He got his meetings, destabilised the relationship between Soul and Washington and kept his weapons. Having said this war was avoided, but it is difficult to see how, after all the bally hoo, things differ now from how they were when President Obama walked out of the White House.

One thing that strikes you as you read Rage is how sympathetic you become to individuals who, you might expect to have little in common with, politically, socially or morally. Dan Coats a devout Christian and former Republican Senator from Indiana. James “Mad Dog” Mattis, a Marine General who had overseen the wars in Iraq and Afghanistan. Rex Tillerson ex CEO of ExxonMobil one of the largest fossil fuel companies in the world.

The recruitment of these individuals to the offices of Director of National Intelligence, Secretary of Defence and Secretary of State respectively is described as is their subsequent careers. A pattern emerges of patriots trying to make policy and sense out of Tweets, TV interview statements and incoherent meetings lacking any sense of purpose. They all loyally attempt to make steam of consciousness seem like coherent policy.

After, diligently and loyally working for the President, each one of them found their position increasingly untenable. The President cancelling joint military exercises with South Korea without any reference or forewarning to his Secretary of Defence. His dismissal of National Intelligence reports about Russia’s interference in the 2016 election on the strength of a robust denial by… Vladimir Putin.

Eventually all were sacked, even those that resigned. As Mattis put it, he quit when “…I was basically directed to do something that I thought went beyond stupid to felony stupid, strategically jeopardising our place in the world and everything else,…”

The book also changes ones perception of others in Trump World from that which has been built in the partisan media. Rod Rosenstein, the Deputy Attorney General who took over the supervision of the Mueller Inquiry when Jeff Sessions recused himself, came across as a beleaguered defender of Mueller. He was that but it seems independently he kept Mueller on a very short leash of his own design,

Republican Senator Lyndsey Graham has been a robust defender of Trump in public and has drawn the ire of the liberal media for that. Unquestioning public defence has made Graham look either stupid or blinded by partisan prejudice. Behind the scenes however he seems to have been someone consistently willing to challenge the president and give him sound advice.

Lynsey confided that he had never been, “…more worried than I am right now” when Trump had Lafeyette Square violently cleared of peaceful protestors so he could wave a bible in front of St John’s Church. Graham proposed to Trump he appoint a commission to look into policing and race before he started getting tough on protestors. He was ignored.

Whether from the outset or from experience Graham clearly saw the weaknesses of his man and the risks these represented. In relation to Covid-19 the president’s failure to properly engage was a matter of real concern. At one point, perhaps prophetically, he says of Trump, “His biggest political threat is is for people to go without a pay check for weeks and get disgruntled, and he overreacts and tries to open up the economy too soon. That will be the end of him, because you will have another round of the virus.” Prophetic words.

Like a toddler Trump only paints in primary colours. There are loyal friends who are very smart or there are treacherous enemies who are dumb and stupid. There is no shade or tone. Bernstein overcomes this and provides a much more nuanced picture of those around the president and indeed he genuinely seems to try to let the president present a more nuanced picture of himself.

He lets the president speak for himself. He does not try to catch him out, indeed he often points out how Trumps actions and words might be perceived negatively by those outside of his bubble. Even with such an even handed approach Trump clearly emerges as a what-you-see-is-what-you-get person. There is no hidden, deep strategic direction for the nation. His administration’s strategy has all the clarity of a set of random fridge magnets that have dropped on the floor.

Metropolitan, elite disdain for Trump is easy. That he is nasty, self centred, stupid but laced with flashes of evil genius is apparent from his public persona. It is a testament to the depths of despair with the pre-existing political elites that a substantial number of people were willing to try him and indeed for some to stick with him despite all the evidence.

However, it is too easy to dismiss Trump as a buffoon. He is not a harmless clown. There are real areas of concern, the born again christian supporter and Director of National Intelligence Dan Coats never overcame a concern about the relationship between Trump and Putin, for him it was never all witch hunt.

The isolation of the States from its natural allies, the cavalier approach to diplomacy with an unpredictable leader with nuclear weapons, a science ignoring approach to the worst pandemic in 100 years costing 210k lives and counting. These are direct outcomes of Trumps unprocessed impressions and random style of leadership and direction.

Since the start of his presidency there have been those who have tried to suggest behind all the u-turns and sharp shifts in key there is an underlying logic. That his style is to secure his ultimate goals by keeping his opponents, his friends and his staff guessing. It sounds stupid. There is a reason. It is stupid.

Trump’s view of the presidency is of a sinecure for personal aggrandisement. Notoriety is seen as a positive achievement and the venal pursuit of personal gain the lodestar of all his actions.

Despite his best endeavours this is what emerges from Woodward’s book , and while his analysis and commentary is spare it is ultimately damning. He concludes the book as follows: “When his performance as president is taken in its entirety, I can only reach one conclusion: Trump is the wrong man for the job.”

Rage. Bob Woodward. Simon and Shuster 2020.

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Alexei Navalny poisoned with nerve agent novichok, says Germany | Financial Times

Alexei Navalny poisoned with nerve agent novichok, says GermanyRussia urged to provide explanation as a ‘matter of urgency’Russian opposition activist Alexei Navalny is being treated in a Berlin hospital after collapsing in Siberia last month

The German government has said Alexei Navalny, the Russian opposition activist who is being treated in a Berlin hospital after collapsing in Siberia last month, was poisoned by the chemical nerve agent novichok.In a statement, the government said it “strongly condemned” the poisoning and demanded the Kremlin provide an explanation “as a matter of urgency”.

Source: Alexei Navalny poisoned with nerve agent novichok, says Germany | Financial Times

Northern Comment – President Putin continues to flout international norms and is the most urgent and proactive challenge to Western democracies. Further, sanctions should be implemented as a matter of urgency. At the moment they would have to be European as it is almost certain if President Putin says he didn’t do it President Trump will believe him.

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Sharing the pain of CovEcon-19

Covid-19 has had a devastating impact on families across the country and made exceptional demands on the health service. At the same time it has brought the vast bulk of the UK’s economy to a hard stop. Responding to both the health service costs, the social and economic lockdown the Treasury has spent billions of pounds.

The automatic stabilisers of transfer payments during times of recession have been magnified by both the depth and breadth of the economic impact. This has added enormous sums to the Government’s annual deficit which will in turn increase total government indebtedness to levels last seen after World War Two.

This level of indebtedness is certain to increase before it comes down. Cuts to government expenditure and increases in taxation in the midst of an historically unprecedented economic downturn will only deepen the depression and make recovery even slower.

At some point however a reckoning will come and taxes will have to be increased to address the costs of the combined health and economic consequences of CovEcon-19. When that day comes there needs to be some principles as to how the pain is distributed.

The first principle is taxation should be fair. In other words those with the broadest shoulders should carry most weight. This means the rates of taxes applied should be progressive with the rich and super rich paying very significantly more than those who are not within those categories.

There are a number of reasons for this. Firstly there is a moral argument that the riches of the rich and the super rich are so far distant from personal effort. The argument they are the just rewards to innovation or hard work have always been thin but now are non-existent in the vast majority of cases.

Second, the claim that the enormous rewards are what makes the economy grow thus providing the tide to lift all boats is discredited by the fact even when the economy grows most boats are stuck in the mud. Their crew’s, far from being lifted up are being drowned.

What is more in the 1950’s and 1960’s when the distribution of incomes was much less extreme than now the economy was more productive with better growth levels. As the captains of industry have increased their pay growth has gone down. It is time this was reversed.

There is another, economic, argument which is critical in societies based on consumer capitalism. Basically, the need for consumers. The rich and super rich tend to save very significant proportions of their incomes, buying financial assets.

The vast majority of the population save much less, indeed, many save nothing. All of their income is spent. They are the consumers of consumer capitalism. In aggregate, over the past thirty years the share of income going to workers as opposed to owners of capital has gone down. Thus reducing aggregate demand in the economy. A bad thing.

Redressing the balance therefore would not just be morally, but also, economically good.

The second principle is that everyone should pay their taxes. This seems obvious and for the vast majority of the working population is an inescapable given. For those with large incomes however taxes become more optional.

Governments talk about addressing this at the same time as they reduce the number of tax inspectors, and allow the Crown Dependancies like the Isle of Man and British Overseas Territories, like the Cayman islands to provide opaque financial locations for those with large fortunes to hide their wealth.

As the recent Report of the Intelligence and Security Committee has indicated, London, always an innovative financial centre, became the ‘laundromat’ for the illicit finance of Russian oligarchs. This enabled them to park the wealth extracted from their country into a stratospheric property market having detrimental knock-on effects for the rest of the housing market in the City.

The Russian elite are not the only ones using the City to hide their wealth. Plenty of locals take advantage of the creative skills of the big four accountancy firms to avoid and evade taxes, a distinction which needs to be redrawn to provide clarity and more tax.

The two principles do not appear revolutionary. But they are. To make them effective will certainly require new legislation and investment in resources to implement that legislation. However, much more than this will be a political determination to drive through the radical transformation to the economy they require.

Failure to do so will undermine the support for taxation which is critical in a democracy. Eventually, consent to tax will be withdrawn and we will no longer be able to purchase civilisation.