Stuff that caught my attention (STCMA) – 23 May 2017 edition

MINT Edit on Conventional politicians and why they are useful

Philippine President says China President threatened war if Philippines explored South China Sea for oil

President Trump’s speech at the Arab-Islamic-American summit

Tulsi Gabbard not pleased with Trump speech in Saudi Arabia.  A sample here.

Spanish government debt again above 100% of GDP

Key achievement of ‘Department of Economic Affairs’: Improvement in India’s macroeconomic stability – say it again, please?

Ministry of Finance of the Government of India has discontinued the mid-year economic appraisal and the monthly economic reports too have not been updated since August 2016. Pity.

Anil Padmanabhan on the political significance of the GST Council meeting in Srinagar

Scott Greet in ‘Daily Caller’: The Predictable catastrophe of firing James Comey [Link]. I checked out his tweets last night. Seems worth following.

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Finally!

Halfway through an interview in the Oval Office, President Donald Trump is asked if he regrets any of his abrasive tweets about allies, political opponents and the state of the world. Mr Trump pauses, momentarily: “I don’t regret anything, because there is nothing you can do about it. You know if you issue hundreds of tweets, and every once in a while you have a clinker, that’s not so bad.”

The Trump presidency is like no other in the 230-year history of the American Republic. Yet as Mr Trump approaches his first 100 days in office, there are tentative signs that there is more method behind the madness than critics suspect.

Read the full FT interview here.

That was from an email blurb received from the FT. Funny, last week, I precisely raised that possibility in a Q&A session with Professor Easwar Prasad of Cornell University that there could be a method behind the madness, than critics suggest, in many areas of policymaking by the new American administration, including with respect to China.

He was dismissive. Oh, well.

As I had noted in another blog post, it should not be that difficult for intellectuals to accept that there are possibilities beyond their imagination or comprehension. But, somehow, it seems very difficult. Almost impossible.

Priceless Price

FT according to Tim Price

This is taken from the blog post of Tim Price of ‘The Price of Everything’ blog. If I were the editors of FT, I would be embarrassed. But, I am not sure they would be. In India, it is often said these days that heroines in Indian films have made the ‘item dance’ girls redundant with their willingness to do similar dance numbers themselves.

Similarly, mainstream media outlets have rendered tabloid journals and newspapers obsolete and redundant. They are doing tabloid journalism themselves.

In a way, this behaviour of the mainstream media outlets vindicates two of my recent columns in MINT.

(1) One was on Nov. 8 when I actually endorsed Donald Trump. One of the reasons I gave was that he would be subject to intense scrutiny as no other President has ever been. That is coming true. He is under the nanoscope!

(2) By the same token, I wrote that Ms. Clinton would not be subjected to a similar treatment. That is borne out by the fact that none of the impacts on American communities, middle classes and small businesses of the monetary and regulatory policies pursued respectively by the Federal Reserve and the Obama administration have been studied, analysed and reported up on in such excruciating detail as is being done now, for President Trump’s policies.

(3) That vindicates the second op.ed I wrote in which I said that past Presidents created Donald Trump.

 

Philip Stephens imagines Orwell

FT’s Philip Stephens has a piece on what George Orwell would make of Donald Trump. Really? Have they all become so unimaginative that they cannot think of any other topic than President Trump?

This is what he wrote in the article:

An “America first” foreign policy is part of the same construct. Mr Bannon, the ideologue who informs Mr Trump’s impulses, anticipates a civilisational clash with Islam and a war with China. The flirtation with Mr Putin is about confessional and cultural solidarity against an imagined barbarian threat.

This is the comment I posted underneath the article:

Imagined barbarian threat? Probably, Mr. Stephens does not read real news stories of ISI attacks on Sufi worshippers in Pakistan and, in general, four attacks in five days, etc. Plus, a steady stream of research from Europe and the U.S., have documented the impact of imports from China on communities and not just on jobs.

Some references for him:

(1) http://voxeu.org/article/globalisation-and-economic-nationalism (ht: Niranjan Rajadhyaksha)

(2) http://voxeu.org/article/globalisation-and-brexit

(3) Dippel, C, R Gold and S Heblich (2015), “Globalization and Its (Dis-)Content: Trade Shocks and Voting Behavior,” NBER Working Paper 21812

(4) ‘The surprisingly swift decline in U.S. manufacturing employment’ (Peter Schott and Justin Pierce)

Is there any law that forbids ‘liberals’ from being intelligent and being able to face, accept and address reality? Don’t they know that denial does not solve problems and hardens positions, making problems difficult to solve and conflicts inevitable? May be, I am being too harsh on them. May be, that is what they are craving for – conflict.

Trump,Taiwan and China

It is not quite clear as to who initiated the phone call – Taiwan or Trump. But, it has set off apocalyptic reactions in media. Unsurprisingly, there is frenzy. No time for reflection and thoughtfulness. Trump has committed a huge blunder, apparently. Offending Beijing, it seems, is worse than offending God. The United States had to ‘reassure‘ Beijing.

Even reasonably intelligent people think that Trump had made a mistake out of inexperience and that he would ‘learn’. What if it was calculated and deliberate? Some may retort that there are better ways for him to deal with China. Really? Something as harmless as taking a congratulatory phone call was not done?

This may lead to unexpected consequences. But, ‘I told you so’ response, in this situation, would be hindsight wisdom. Most policy decisions are entrepreneurial shots. One takes chances. They may backfire or hit the target. But, those decisions have to be taken. What better way to signal the end of ‘business as usual’ than doing something like this?

In the United States, the ‘fear’ of the consequences of offending China is real, even if wholly inexplicable. The relationship is two-way street and, if anything, it can be argued that the United States has more chips than China has. This blogger has said so. See here and here.

See these observations by Francis Fukuyama:

China has a lot of sources of leverage over us, beginning with how much of their currency they’ve been willing to buy, and they’ve been buying airplanes from Boeing and turbines from GE, and there’re all sorts of ways that economic relationship could go south very quickly. [Link]

A similar but not-so-disappointing piece by Yanis Varoufakis appeared in ‘Project Syndicate’ recently:

The US was also saved by the Dragon: the Chinese government cranked up domestic investment to unprecedented levels to pick up the slack created by the contraction in spending in the US and Europe…. China’s leaders knew what they were doing. They were creating a bubble of unsustainable investment to give Europe and the US a chance to get their act together. Alas, both failed to do so….

… if he plays hardball with China, pushing the Chinese to revalue the renminbi and employing threats of tariffs and the like, he may well end up pricking the bubble of China’s private debt – unleashing a deluge of nasty consequences that would overwhelm any domestic stimulus he introduces.

Prof. Varoufakis is usually savvy and sensible. It is hard to treat his observation that China was giving the US and Europe a chance to get their act together as anything more than a hypothesis. Equally, China was desperate and panicky for it feared the collapse of its own export-led growth model and hence, tried to replace it with a massive and desperate stimulus. It was nothing to do with substituting for US and Europe. If anything, US had already undertaken massive monetary and fiscal stimulus.

If Prof. Varoufakis is arguing here that China is too big to fail for the U.S. just as the U.S. was in 2008 for China, that would be acceptable and worthy of consideration, even if there is no final acceptance of the proposition. But, quite what he is recommending to President-elect Trump here is difficult to figure out.

In a paper published in 2009, Dan Drezner argues that China has not had much success in bending America to its will, despite ‘bailing out’ the United States. But, President Obama, while campaigning in 2008, had conceded that it was hard to be tough with one’s bankers! The mindset, it appears, had been set. So, even if China may not have succeeded in influencing American policies, it has succeeded in another way:

While China’s compellence measures against the United States fell short,
Beijing used its capital surplus to deter pressure from others. Financial statecraft
allowed Beijing to reduce its risk and increase its ºexibility in its foreign
exchange portfolio. As the ªnancial crisis deepened, China allowed the renminbi
to depreciate, ignoring U.S. pressure to alter course. Prime Minister Wen
asserted, “No country can pressure us to appreciate or depreciate” the renminbi.
Continuing its quasi-mercantilist policies, the government offered tax
rebates for exporters as a way to boost economic growth and rebuffed efforts
by Coca-Cola to acquire a Chinese juice maker.

China’s financial muscle also tempered U.S. foreign policy. Secretary of State
Hillary Clinton acknowledged in her February 2009 trip to Beijing that pressuring
China on human rights would take a backseat to economic issues for
the foreseeable future. In his June 2009 trip to China, Treasury Secretary
Geithner backed away from earlier U.S. calls for China to allow the renminbi
to appreciate. Geithner explained this shift in policy by noting the absence
of U.S. leverage given China’s financial leverage. Although China could not
compel the United States, it could deter Washington from trying to apply its
own foreign policy pressure.

China also used creditor power to get its way within international institutions.
Beijing effectively vetoed any discussion within the IMF to investigate
whether China’s currency was fundamentally misaligned. China vetoed
loans to Asian Development Bank loans to India because of a territorial dispute with
New Delhi.

Clearly, the Presidential candidate Obama in 2008 had set the tone and the media had obligingly fallen in line with the official policy stance since then. That is perhaps one reason why the much touted ‘pivot to Asia’ was more sound and fury signifying nothing than anything substantive. Perhaps, that was deliberate.

So, Trump’s telephonic conversation was a good signal of a policy shift. What comes out of it is a different story altogether. But, calling it impetuous or irresponsible or inexperienced reveals more about the servile mindsets (including intellectual arrogance) of the commentators than anything else.

On the issue of Trump conversation with Taiwan President, two mild or medium antidotes here and here. This is a great comment in the FT article (second link):

The irony that some liberal western analysts fiercely denounced a call to a democratic US ally, led by a feminist, progressive president, has not been lost on the Taiwanese.

Surprising that these articles appeared in places that they did despite the official and predictable FT View here. But, by the ‘objective’ standards of the newspaper, it was a passable edit.

A bigger and more forceful antidote is here. Even more surprising is that it appeared in Washington Post. John Pomfret’s article has many good parts to it.  It is hard to pick out the paragraphs. It is worth reading in full. The historical background to the evolution of US position on the so-called principle of ‘One China’ is rather interesting.

James Taranto’s piece in Wall Street Journal is another sensible, assertive and forthright pushback. He calls out the lies of journalists who call Trump a liar.

Immunity from sanity

The following came in an email from FT:

Blame the electoral college Hillary Clinton may have lost the presidency, but she  won the popular vote in a repetition of the 2000 election, when fellow democrat Al Gore lost to George W Bush. Many say the electoral college system, which was created by America’s founding fathers to ensure fair representation for small states, is no longer relevant and skews election results. (NYT)

Blame Facebook. By its inability to differentiate between ‘fake’ and real news, Facebook and other social media may have helped boost support for Donald Trump. (NY Mag)

We thought humans are made wiser by experience. Looks like we have made ourselves immune even to the lessons that life teaches us. We have made progress! 

Gone berserk

Political correctness gone berserk. That is my reaction to the news that the Chairman of Saatchi and Saatchi has been asked to go on leave for remarks reported as below in FT:

The media industry has been rocked by its third sexism furore in months after Kevin Roberts, the chairman of Saatchi & Saatchi and “head coach” at parent group Publicis, was asked to take a leave of absence for saying women employees did not have “vertical ambition”.

Mr Roberts said the gender debate in advertising was over. “I don’t think [the lack of women in leadership roles] is a problem,” he told Business Insider. “I’m just not worried about it because they are very happy, they’re very successful, and doing great work.”

He added: “I can’t talk about sexual discrimination because we’ve never had that problem, thank goodness.”

Publicis said Mr Roberts had been asked to take a leave of absence due to the “gravity” of his remarks, adding it would “not tolerate anyone speaking for our organisation who does not value the importance of inclusion”.[Link]

The industry thrives for the most part on sexist portrayal of women. Hence, the reaction to his largely ‘matter-of-fact’ remarks is nothing but exaggerated political correctness that is typical of the times we live in.

Even though many women do not want to be hired for the sake of them being women, such over-reactions would end up precisely achieving only that. Political correctness need not be the enemy of merit but in reality, its champions make it one.

Mischievously but unsurprisingly, the FT has strung this news together with other cases of more explicit sexual harassment of women. Those are completely different where no defence of the conduct could be mounted. To club these remarks with them tantamounts to casting aspersions on CEO of Saatchi and Saatchi. That is improper.