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Treason. If I was an American this is what I would be saying that my President was guilty of. There will always be ups and downs, but as far as everybody was concerned the American economy was functioning as it should, subject to policy variations, inflections on interest rate adjustments, exposure to foreign currency movement and generally subservient to, and subject to, the bond market (US Treasuries ) – which as the debt and budget management provider of first/last resort, all seemed to be a perfectly reasonable proposition…

And then President Trump comes along and based on mercantilist perspectives on trade – and his own unknowable psychology – he decides to play a version of Russian roulette with the world economy. Again, based on zero sum methodology, that simply has no place whatsoever in international trade – or diplomacy. In fact not only does it not have a place, it is precisely the worst way imaginable to approach your allies, whether it be from an economic or a political standpoint. Janet Yellen today described Trump’s measures as the worst act of self-harm on a perfectly functioning economy.

Technical economics sometimes finds it hard to discount for ephemeral variables such as pride – yet this is precisely what is on show in China’s refusal to dance to Trump’s music. As far as I’m concerned – why should they? (Other than the pretty obvious reasons of trying to avoid the continuation and magnification of self inflicted wounds, through the application of somewhat similarly extortionate tariffs on imports from the US… But what’s a chap supposed to do, right?)

One thing that screams out is – where are all these constitutional protections that academic lawyers in jurisprudence have always so celebrated in the US Constitution? How can a guy, that in so many other instances one imagines could easily be sectioned, be allowed to wreck havoc in the international economy, embarrass his nation, and present as entirely transactional, relationships cultivated over a century of goodwill between allies?

I’d say hand me the popcorn, as this is some show – except that tariffs on corn, maple syrup and the wood pulp for the box it comes in, have now pushed the price of the popcorn up to more than the movie…

#chaos #economics #geopolitics #trump #treason

Europe can simply not live under the threat of continued Russian intimidation. I’m with Zelenskyy. Europe needs its own Army.

As an Economist who also works in the geopolitical realm, yet who happens to be a former soldier – for me it is truly more straightforward than I think politicians and diplomats are leading us to believe. Offense, or the threat thereof, is almost always the best form of Defense. Mutually Assured Destruction, whatever the minor variations it has undergone during and post Cold War, essentially remains the backbone of nuclear realpolitik. European NATO member armies, Russia knows, have been dangerously underesourced.

Building up of European Defense budgets to 3.5% of GDP should be considered critical to National Security. In the case of Britain where we are currently moving towards 2.5%, an additional 1% would represent circa £30 Billion pounds. This is absolutely not an insignificant sum, yet in comparison to living under the subjugation of ongoing threat posed by Russia, it really is a price we can’t afford to not pay. From my very first involvement with the British Army, as a junior Officer Cadet, to, after leaving and rejoining – when I left 10 years ago, manpower had reduced from 130,000 to roughly 77,000 (now circa 73k). Given perhaps roughly only 1/3 of these are deployable Infantry, our current numbers are tactically of limited use. Let alone the degradation in ammunition supplies that we have permitted (given to Ukraine and not replaced).

Like Churchill in the late 30s, I would say we should re-arm and “up-arm” now, and I personally would go so far as to say we should attack Russia first. I for one don’t like living with the threat of a boot on my throat.

I do feel for the people of Los Angeles. I do.

But I also hope that this brings into the minds of those who are at the very pinnacle of our society, the loss and devastation of those more vulnerable around the world. The losses that they have experienced for generations.

Gaza.

The displaced of Ukraine.

Sudan, the world’s worst catastrophe caused through War.

And countless others, both conflicts and areas subject to natural disaster. These people have memories. They had schools that they once went to, now destroyed.

Gaza, of all of these, is the most pernicious and industrial scale of destruction, and from whom Western eyes of solidarity seemed to have found it the most easy to turn away from…

Tariffs: “An eye for an eye makes the whole world blind”

Where do we start with the very bad idea that tariffs are good for anybody? “Tariff is a beautiful word”. When I first heard that Trump had said this I genuinely didn’t understand it. I thought perhaps it was a misspeak or something – so obvious is the fact that tariffs are only a force for damaging both the imposer of the tariff, as well as the recipient.

David Ricardo is one of the founding fathers of Economics and his instrumental principle of Comparative Advantage has led to the creation of international trade, in which countries that excel at producing certain things trade them with countries that excel at producing different things. Ergo, the net gain is greater than the sum of its parts. Even this statement shouldn’t really need to be explained: the fact that we trade, is itself a benefit. By imposing stringent tariffs on any product – and particularly a technologically advanced product, from which by exposure to the presence of that product in our marketplace, it is likely to prompt competitive innovation in the production of a rival product, or novel and innovative ways of including this product in day-to-day living, in ways that had previously not been considered. Either way, invariably it is a win-win. The fact that BYD appears to have become better at making electric cars than Tesla, may not be great news for Tesla but it’s certainly is for the consumer, and thus the transition to electric vehicles.

Tariffs are a very powerful mechanism for the retardation of economic growth. They are also a fairly effective mechanism for prompting homegrown inflation, requiring either domestic interest rate rises, or at best delayed interest rate reductions – all of which will further retard investment in potentially additional productive capacity: thereby reducing economic growth. A downward spiral of retrenchment, both economically and technologically.

And that is before we get into the geopolitics of isolationism. Again, it’s Diplomacy 101: talking with, and trading with economic partners, particularly post Second World War, has shown that we are much less likely to invade each other and treat each other as a latent threat.

Trump’s ascendancy, like Brexit, doesn’t have an economic rationale. It’s a sociological and political manifestation of fear: fear of the unknown, fear of “the other”; fear of being swamped, fear of losing identity, sovereignty and self-determination… Time after time history has shown us that isolationism and retrenchment exacerbates these fears rather than alleviating them. Tariff is not a beautiful word.

#economics #tariff #trump #competition

For Economic Policy to work, two things have to be right: the Economics, and the Policy. In an earlier post I said, “it’s not rocket science.”

Apparently I miss spoke.

For all the managerial competence that Rishi Sunak exuded when he competed against Liz Truss for the Premiership of our country, in Government he has proven himself always to be following events, rather than creating them…

There are a couple of key caveats that even the most ardent libertarians allow for as an activity of the State in the provision of Government – the first of which is defense of the Nation. By announcing a new plan for national conscription of all 18-year-olds, Sunak displays a bizarre magnetism towards both bad economics and bad policy. The economics is quite simple: this is additional government spending, for actually a disbenefit, rather than a benefit. It is throwing money out of the window, just because you like the patterns it makes in the wind… Prior of course, to he himself being thrown out of the window by the British public.

The stated policy for several decades of the UK Government in relation to defence was that we, as a country, should be able to mount two significant continental land-based wars at the same time. From our history as a colonial power it was implicitly understood that one of these wars may well be in the far East. The logistical support to a war on the other side of the world cannot easily be underestimated. The other hypothetical war was anticipated to be within the European land mass, and therefore supportable and sustainable. Currently we would struggle to deploy 5,000 soldiers in an operational capacity. This is fewer than the numbers currently defending the Kiev region alone.

National Conscription hobbles our already significantly hobbled military. Instead of autonomously being able to pursue two independent land wars simultaneously, there has been a subtle yet powerful shift towards being entirely dependent on NATO’s Article 5 regarding collective security. This, as an independent nuclear state, was never previously the UK’s position. It is a complete philosophical surrendering of our active leadership role, and an acceptance of the denudation of our military prowess. Moreover, it admits to a diminution of our status as a global power in world diplomacy.

Accruing additional debt, and diverting strained military resources, to facilitate 18-year-olds, “escaping their bubble”, is not what we elect a government to do on our behalf. Policy switches such as these appear to have come from a cosseted and privileged mindset that hasn’t had the wherewithal to test them, either with the military or the public. In doing so, I believe that Sunak has gifted Kier Starmer an additional two to three percentage point lead on his forthcoming defeat at the General Election.

#economics #politics #conscription #policy #rishisunak #military

How to avoid The Great Resignation…

There is a huge amount to be said for a shifting in the balance of power from the employer to the employee. Covid genuinely brought home to so many people that whatever we had previously believed – there simply is more to life than work. That wonderful phrase, hard to top: nobody ever said they wanted this on their gravestone, “I wish I’d spent more time at the office”…

I’ve always tried quite hard to maintain several strings to my bow, and I do not consider them strings unless I am actually competent at them. Fitness helps enormously with depression – yet standing in front of a mirror doing repetitious biceps curls, is itself depressing. So, I very much believe the skill is in combining fitness with an activity that has a progressive and deep culture all of its own. This is fitness with a purpose; fitness with an outcome… Lots of professionals do physical sports, whether they be team sports or individual pursuits. I’ve done martial arts for several years, and believe me it’s said with pride not arrogance, that I can jump up spin round and kick higher than my own head height, at 54!! But… much more than this, and I believe with a far greater read across to my broader fields of Economics, business and politics, is Mountaineering. Trying to discern undulations in gradient change on a landscape, in a whiteout, requires the same type of instinct that an Economist would apply in understanding the integration of a new technology into a previous flat industry…

So how do we value the non monetary facets of our life? You don’t need to be an industrial psychologist to realise that it is likely to bring with it financial gains. A happier employee/ independent…is likely to be a more productive worker. A more productive worker is a more profitable worker. Combining these two is also likely to give you a more insightful worker. Stepping away from the coal face affords you mental clarity, and a bit of distance to gain a new perspective… This is not rocket science – even if you’re a rocket scientist! 😊

#economics #cpd #greatresignation #employeeengagement