Economists from across the political spectrum offer their ideas to jump-start wage growth

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The middle class in rich countries is living in the age of the stagnant wage. While precise measurements are difficult and disputed, there is no doubt that incomes for ordinary families in the US, Japan and across Europe barely increased faster than prices in the decade before the financial crisis – and have fallen in many countries since.

The result is sending tremors through politics as a lack of progress breeds resentment, populism and, sometimes, extremism.

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ON THIS STORY

• UK unemployment rate falls to 6.2%
• Video Drop in UK wages puzzles economists
• Wage growth feeble as economy recovers
• UK wages fall for first time since 2009
• Germany skids closer towards deflation

IN THE BIG READ

• The Battle for Britain
• Tying up the internet
• Europe strikes back
• Big Tech at Bay

Increasingly, economists also fear the stagnation in advanced economy wages is holding back the global recovery. The OECD warned this week that although real wage cuts at a time of still rising productivity had limited job losses, “it is now holding back a stronger recovery in consumer spending”.

If recent trends persist, the wonderfully accurate 1930 prediction of John Maynard Keynes that rich societies could expect far less toil and greater leisure – with hindsight through longer retirement – was strictly time-limited.

The global trends are stark. Stefano Scarpetta, director for employment, labour and social affairs at the OECD, says “almost all advanced economies have seen labour’s share of gross domestic product fall over the past 20 years”. Prof John van Reenen, director of the Centre for Economic Performance at the London School of Economics, notes that average workers have been hit hardest.

“Over time non-manual jobs have found their tasks taken over by computers and robots. Think of bank clerks and ATM machines,” he says.

In Japan, it is the young who have been hurt worst as the traditional salaried jobs in big companies dwindled.

Masahiro Yamada, a sociology professor at Chuo University in Tokyo, says this means young people live longer with their parents, generating a “falling birth rate and an acceleration in ageing [that] cuts economic growth while increasing the ratio of unmarried people in a vicious circle”.

The incomes of rich-country middle classes have done worse than almost any other group globally over the 20 years before the crisis, according to Branko Milanovic of the Graduate Centre, City University of New York and the Luxembourg Income Study, creating a “major political problem”.

To suppose that restricting free exchange makes the poor or the median better off is magical thinking

- Dierdre McCloskey of the University of Illinois

But he adds that when viewed from a global perspective, this has in some ways been a “small price to pay for the massive growth in incomes of much poorer groups in Asia”.

Experts from many different political hues, contacted by the Financial Times, agree on the diagnosis. Solutions are more difficult and contested.

On the political left, top economists such as Nobel Prize-winning professor Joseph Stiglitz of Columbia University, call for an immediate fiscal stimulus to boost demand, more generous minimum wages to improve workers’ bargaining positions and tax incentives for labour-intensive investment.

The other side of the political spectrum also focuses on restoring growth. But Dierdre McCloskey of the University of Illinois sees opportunities for market-tested betterment hindered by regulations.

“To suppose that restricting free exchange makes the poor or the median better off is magical thinking,” she says.

Many economists of all political persuasions think education and retraining is essential. Prof Milanovic says the focus on education should not be just for the elite, or for the post-school period, but spread through working lives. 

None of the economists and sociologists contacted by the FT thinks there is a silver bullet. Perhaps the most hopeful assessment came from Bart van Ark, chief economist of the Conference Board, who says some of the weakness in wages is likely to be temporary. “Because of potential labour shortages in many mature economies, wages are likely to start rising anyway,” he says, suggesting that countries focus training on areas likely to suffer skill shortages.

Wage stagnation has been well documented. There is a growing consensus that it is contributing to the weak recovery. During the past 40 years, average worker productivity in the US has roughly doubled, while real wages have stagnated.

There are no easy solutions. An increase in minimum wages would have a trickle-up effect: not only would those at the bottom benefit but so would those further up. The diminution of workers’ bargaining position – both because of weaker unions and asymmetric globalisation – has contributed significantly.

But right now, the single most important policy is to improve the macroeconomy, through a well-designed fiscal stimulus.

Not only is the effectiveness of monetary policy limited, but lowering the cost of capital also induces companies to use more capital-intensive technologies, contributing to a jobless recovery and further weakening workers’ bargaining position.

Instead, we should have an investment tax credit to encourage investment – but one designed to especially encourage more labour-intensive investments, particularly ones that require labour of only moderate skills.

As it is, companies have in effect been encouraged to replace unskilled checkout clerks with machines, contributing further to unemployment of unskilled labour and downward wage pressure.

In Japan, the economy has been stagnant for 20 years. The jobs and wages of middle-aged men are secure and protected but the outlook for new graduates and women is unstable. There is also preferential reallocation towards elderly people in social policy.

As a result, the salaries of young people and families with small children have not risen for a long time.

This has two effects. First, for young people with little chance of higher pay, one of the few choices to prevent a fall in living standards is to stay at home with their relatively affluent parents, and therefore postpone marriage. But the result is a falling birth rate and an acceleration in ageing. That cuts economic growth while increasing the ratio of unmarried people in a vicious circle.

A second effect is people escaping to virtual worlds of games, animation and costume play. Here, even the young and poor can feel as though they are a hero.

Financial resources should be generated by reviewing benefits towards the elderly while imposing heavier taxes on the wealthy elderly in particular. This should allow young people to preserve their living standards after marriage and during child-rearing. In a similar vein, the low ratio of women in the workplace should be increased, and unfair hiring practices for young people should be corrected. We need to restore hope to young people.

Slowly rising or stagnating living standards of ordinary people in the developed world are emerging as one of the key issues of globalisation. From a cosmopolitan perspective, stagnation of wages and incomes among people who are relatively well off may be a small price to pay for the massive growth in incomes of much poorer groups in Asia. Politically, though, it is a big problem.

There is no silver bullet solution. But focusing on better public education could improve the lives of ordinary people. There are at least three reasons for it.

Countries that had good mass education systems, such as the US, have been economically successful . More recent examples include South Korea, Japan and Singapore. Second, an OECD study has found that, for the first time, many children in rich countries have lower educational attainment than their parents.

Third, rich countries have a rising share of low educational performers. Western lower middle classes are losing out to the similarly placed Koreans because the latter are better educated. But they also lose out to the Thais, who have similar skill levels, because Thai workers are cheaper. Simply put, one part of the western middle class has a wage/skill ratio that makes them globally uncompetitive.

Even a casual observer would notice that Europe is in the process of creating, in its cities, an underclass reminiscent of the US in the 1960s. To avoid creating a permanent underclass there needs to be upward educational mobility. That should come about through improvement in the quality of public education and less emphasis on elitist institutions.

What we should not do is focus on inequality. It doesn’t matter, ethically speaking, if the heiress to the L’Oréal fortune has six yachts or none. True, she ought to be ashamed that she spends her wealth on baubles and not on good works. But her wealth is not what made people poor. Taking it will not much improve their condition.

What we should focus on is the absolute condition of the working class, how much food and clothing and healthcare and education the poor have. The real goods and services earned by the poor has risen since 1800 in the OECD countries by a factor of anywhere from 30 to 100 – 2,900 per cent to 9,900 per cent. And, contrary to what you might have heard, it continues to rise, if not at the heady rates of postwar recovery. Ordinary people in the already well-off countries such as Italy or UK have better heating in their flats, better medical care and better televisions than they had in 1975.

What ails the OECD are regulations piled on regulations, slowing market-tested betterment. What, then, is to be done? Let betterment proceed by stripping away the silliest of the regulations, many of them emanating from Brussels, and the rest from special interests, or plain monopoly. To suppose that restricting free exchange makes the poor or the median better off is magical thinking. Give up the minimum wage, the “protection” of jobs, the over-regulation of banking and the support for monopolies from taxis to surgeons. Yes, I know: hopeless politically. But so people said under all the ancient regimes.

To put wages back on to a sustainable growth path, the focus for policy makers should not be on how to deal with too few jobs, but with too few workers. This is a problem which will arise sooner than many may anticipate, mostly due to the significant slowdown in the growth of the working-age population in mature economies. The pace by which unemployment is declining varies hugely by country, but in Germany and Japan, for instance, the unemployment rate is already below its natural rate. In the US, that will happen next year. Other countries, such as France, Italy and Spain will follow at least three years later.

The focus should be on figuring out where labour shortages will be largest and emerging first. An index by The Conference Board on emerging labour market shortages by occupation shows they will not just affect highly skilled professionals (where immigration at least in part makes up for shortages), but also skilled labour middle-income occupations in the transport, construction, utility and mining industries (from which many older workers are retiring) and occupations at the lower end of the distribution such as health carers (for whom demand is up due to ageing).

Education needs to be broadly targeted to all skill levels where labour shortages are likely. Policy makers should also focus on easing labour market mobility and supporting productivity growth. Technology can help ease labour shortages through higher productivity, but there should also be investment in human capital, strategic workforce planning and new tools for human capital analytics. Governments can learn from what many large businesses are doing.

Everybody should have a basic income. It should be paid monthly, not as a lump- sum capital grant, to reduce weakness of will problems.

A basic income is affordable because it would substitute for many forms of transfer, including the ludicrous array of subsidies that go predominantly to upper-income groups and corporations. And it would cut administrative costs of existing social assistance schemes.

We should recognise that our individual wealth is due far more to the collective efforts of our forebears than anything we do. A basic income should be seen as a social dividend on their efforts. None of us knows whose forebears made the vital contributions to our current status.

It was evident from the 1980s that globalisation and technological innovations, coupled with labour market flexibility policies, were bound to generate a “precariat” – people experiencing declining and volatile real wages and labour insecurities. Social insurance and assistance schemes could not provide them with basic security. Many face horrendous poverty traps.

Only a basic income could provide them with basic security. Unless that happens, there is a danger that more and more will turn to the populist far right. Politically, a basic income is becoming essential. There are standard objections, notably that it would give something for nothing (as does all inheritance) and would reduce labour supply. But our theoretical and experimental research, including extensive pilot schemes in India and Africa, and work in Canada, show that people provided with basic income work more, not less, and work more productively and co-operatively.

Almost all advanced economies have seen labour’s share of gross domestic product fall over the past 20 years. But not all workers have suffered. People at the top of the wage distribution have increased their share by about 20 per cent while everyone else has lost out. We think that is largely because of rapid technological changes: some people have had the skills to harness advances in information and communication technology to their advantage, while people with more routine skills have seen their jobs replaced by software.

So what is to be done? Improve the skills of the workforce so they can beat the race against the machine. That is not just a job for schools. No education system will be able to give you the skills that will enable you to keep a good job for your whole career. You have to adapt and upgrade your skills continuously.

The best way to encourage life-long learning would be through public-private partnerships. Employers are best placed to know which skills are most required, but especially small and medium-sized companies, but they will need support or subsidies from governments to invest in on-the-job training for their workers.

Of course, it is not realistic to pretend everyone will be highly skilled in the future. And in our ageing societies, there will be demand for services such as long-term care that will not necessarily demand high skills. But we should still try to equip everyone with the best skills, and help them adapt these skills during their working life. We need to rethink our tax and benefit systems, too, to make sure that people at the top pay their fair share and those at the bottom of the wage distribution do not fall into poverty.

Fonte: FT

Martin Wolf: Russia is our most dangerous neighbour

Russia is both a tragedy and a menace. In the Financial Times this week Sergey Karaganov offered an arresting insight into the blend of self-pity and braggadocio currently at work in Moscow. It is as depressing as it is disturbing. Western policy makers seem to believe the Islamic State of Iraq and the Levant (known as Isis) is the greater danger. But Russia is the nuclear-armed rump of a former superpower and, ruled by an amoral autocrat, it frightens me even more. For Europe and, I believe, the US, there is no greater foreign policy question than how to deal with today’s Russia.

The west “proclaimed itself victor in the cold war”, according to Mr Karaganov. Maybe the origin of the tragedy can be found in this remark. The west did not just proclaim itself victor; it was the victor. A defensive alliance defeated the Soviet Union because it offered a better way of life. That is why so many wanted to escape the Soviet prison, including many once-optimistic Russians.

Yet President Vladimir Putin, the latest in a long line of Russian autocrats, has stated, instead: “The collapse of the Soviet Union was a major geopolitical disaster of the century.” It was, in fact, an opportunity, one that many in central and eastern Europe seized with both hands. The transition to a new way of life proved unavoidably difficult. The world they now inhabit is highly imperfect. But they have mostly joined the world of civilised modernity. What does this mean? It means intellectual and economic freedom. It means the right to engage freely in public life. It means governments subject to the rule of law and accountable to their people.

The west has too often failed to live up to these ideals. But they remain beacons. In the early 1990s they were beacons to many Russians. As a great admirer of Russian culture and Russian courage, I hoped, fondly perhaps, that the country would find a way through the debris of its collapsed ideology, state and empire. I knew it would be difficult. I wanted Russia to choose western values, however, not just for our sake but also for its own. The alternative of continuing the cycle of despotism was too depressing.

With the selection of Mr Putin, a former KGB colonel, as his successor, Boris Yeltsin delivered that outcome. The president may, for now, be a popular despot. But a despot he is. He is also heir to the project of Yuri Andropov, former KGB head and Soviet leader, for a modernised autocracy. As a loyal servant of the state, he believes results alone matter. Lies are just another tool of statecraft. Only the wilfully blind could fail to see that evident truth in recent months.


The west is partly responsible for this tragic outcome. It failed to offer the support Russia needed quickly enough in the early 1990s. Instead it focused, ludicrously, on who would pay the Soviet debt. It acquiesced in the larceny of Russian wealth for the benefit of a few.

But more important was the refusal of Russia’s elite to address the reasons for the collapse, then to start afresh. Only by confronting the reality of Stalin’s monstrous machinery of oppression and lies could they build something new.

The nation that has emerged was always the likely outcome. It sees itself as surrounded by enemies. Foreign relations are zero sum; success for others is a failure for Russia. In this view, a prosperous and democratic Ukraine, if achieved (a remote possibility, I agree), is a nightmare. For Moscow’s elites preventing that is, as Mr Karaganov puts it, “a struggle to stop others expanding their sphere of control into territories they believe are vital to Russia’s survival”. And who is it that, allegedly, threatens Russia’s survival? It is a west that is “weaker than many imagine”. Such a feeble west plays the part of bogeyman.

Viewed from Moscow, western policy is the politics of Versailles. In fact, the western position is based on two simple principles: first, a country is entitled to make its own choices; second, borders may not be changed by force. Russia rejects both of them. It is because its former satellites and dependencies were rightly confident that Russia would not accept these principles that they have been so keen to join Nato. The military alliance did not have to force them to join. They begged to do so. Maybe they understand how broad is Russia’s understanding of its “vital interest” and how ruthless it is in protecting them.

At times the outlook among Russia’s elites borders on parody. One reason many in Moscow believe that a political union with Europe is impossible is that Europe is abandoning Christianity and “traditional” norms – for which read acceptance of homosexuality. But I, at least, remember that the Soviet Union whose disappearance Mr Putin bewails persecuted Christianity mercilessly. One might remember, too, that Russia’s elite love this western den of iniquity.

“I bully; therefore I am.” That appears to be the motto behind some of the president’s outbursts. But they are no less serious for being absurd. The west is not a threat to Russia. On the contrary, the west knows very well it has a vital interest in good relations with the country. But it is not so easy to ignore an invasion and, yes, that is what it is, however much one might dislike the word. At the same time, an adversarial relationship with a power as important and potentially helpful as Russia is grim.

Is there a solution to this quandary? All possibilities – further sanctions, massive economic and possibly military assistance to Ukraine or doing nothing at all – carry risks. But the west has to start from an honest reckoning of the Russia it now has to live with. Today’s Russia feels it is the victim of a historic injustice and rejects core western values. It also feels strong enough to act. Today’s Russian leader also sees these potent emotions as a way to secure power. He is not the first such ruler. His Russia is a perilous neighbour. The west must shed its last post-cold war illusions.


Martin Wolf


Fonte: FT

Nicholas Lardy: China’s rise is a credit to private enterprise not state control

There is no shortage of critics who confidently attribute China’s rise to state intervention in the economy. But the ranks of policy makers and commentators decrying Beijing’s brand of state capitalism are wrong – and, worse, they risk provoking short-sighted and counterproductive responses.

The reality is that China’s rapid ascent is the result of the expanding role of the market and the rise of private businesses. Such companies now account for more than two-thirds of output, up from nothing when reform began in 1978, in an economy that has expanded 25 times in real terms. They account for almost all jobs growth in the same period and are leading contributors to export growth.

State companies’ shrinking role has been particularly rapid in manufacturing, which opened up to private businesses in the 1980s. State enterprises’ share of output in the sector is a fifth compared with four-fifths in 1978. Conventional wisdom says state industrial companies have enjoyed a resurgence since the onset of the global financial crisis. In fact, the growth in output of private businesses since 2008 has averaged 18 per cent, twice the pace of expansion of state businesses.

Underlying the poor performance of state industrial companies is low productivity. Most investment is financed with retained earnings – so private industrial companies, with a return on assets more than twice that of state companies, can expand faster. This is reinforced by the increasingly commercial conduct of mostly state-owned banks.

China’s industrial policy is perhaps exemplified best by the state-owned assets supervision and administration commission, created in 2003 to oversee the largest state-owned non-financial enterprises. Critics say it favours state companies to try to strengthen national champions. But this has failed: the return on assets of Sasac’s companies has plummeted since 2007, and is now below half their cost of capital.

The disparity is evident even in the steel industry, identified by Sasac as one in which Beijing was to maintain relatively strong control. This seemed an easy task in the mid-2000s, when state companies produced half of all steel output and their efficiency matched that of private companies. But when annual growth in output fell to an average of 9 per cent after 2006, compared with its average pace of more than 20 per cent earlier in the decade, state companies’ returns fell sharply. By 2012 they were in the red, and their share of production had fallen below a third. In contrast, the return on assets of private steel companies rose after 2006, reaching a peak of more than 10 per cent in 2011 before declining slightly. With private steel companies investing more than twice as much as their state counterparts, their rising output share will continue.

The exception to the rise of private business is in high-tech business services, as well as in upstream oil and gas. In manufacturing, private companies account for seven times more investment than state ones. But in services the share of state companies’ investment exceeds that of private companies and has declined only slightly in recent years. Yet the productivity differential favours private service providers by a margin of two to one, suggesting a substantial misallocation of capital.

The footprint of state companies is shrinking but, because they earn less than their cost of capital, they remain a drag on growth. If China enacts economic reforms announced last year, particularly eliminating all but natural monopolies such as power distribution, and making the market the decisive factor in the allocation of resources, private businesses will displace state enterprises in services. That would allow China to sustain a relatively high rate of growth and thus to continue its role as a leading driver of global growth. Those making policies and predictions based on a fundamental misunderstanding of China’s ascent are likely to lose out.



Nicholas Lardy is a fellow at the Peterson Institute for International Economics and author of ‘Markets over Mao’

Fonte: FT

Christopher Caldwell: The billionaires bending American politics to their will

The billionaire Koch family members, outspoken on a host of Republican causes, have lately begun discussing something different: themselves. Koch Industries, the Kansas-based energy giant, is running advertisements that attempt to protect its corporate image, which may have taken a hit from the efforts of Democrats – particularly Senate majority leader Harry Reid – to sully the family name. Republicans, meanwhile, have belatedly begun highlighting the Democratic party’s network of plutocratic backers, linked to a donor group called the Democracy Alliance. At times, American politics can look like a clash of oligarchs.

In a new book, Brookings Institution political scientist Darrell West argues that this is exactly what it is. In Billionaires: Reflections on the Upper Crust, he writes that they shape US politics more than we think (although he at times assumes, wrongly, that Republicans are by default the party of privilege, and Democrats the party of those arrayed against it). In his view, the Kochs’ approach has been “emulated” by such left-leaning donors as hedge fund manager Tom Steyer (a backer in this election cycle of environmentalist causes in several states) and financier George Soros.

Almost every analyst of rich people’s influence on politics focuses on campaign finance, and West is no exception. But he also gives a picture of less noted methods the rich use to shape politics. One is to befriend senators who have certain prerogatives. West points to Bill Ackman, the activist hedge fund manager who has taken a short position in nutrition company Herbalife and has been close to Democratic senator Edward Markey of Massachusetts. As The New York Times reported last spring, Mr Markey wrote letters to both the Securities and Exchange Commission and the Federal Trade Commission, urging a formal investigation of Herbalife , at which point the stock’s value dropped 14 per cent.

Perhaps the easiest place for US billionaires to work their will is not in the national government, however, but at state level. With the shift of governing responsibilities to Washington over the decades, local countervailing forces have been hollowed out. They can be overwhelmed with money. Big donors create Potemkin political movements, phoney groundswells for their favoured causes. Sometimes these causes involve economic advantage. The gambling mogul, Sheldon Adelson, has campaigned against the legalisation of internet gambling, which would harm business at his resorts. Stephen Ross, owner of the Miami Dolphins American football team, sought a referendum that would approve hundreds of millions of dollars in publicly funded repairs for his side’s stadium.

But it is social issues on which billionaires are most agreed, and on which they have had the most success in altering the political landscape: gay marriage, immigration, guns and marijuana. Rich people care more about choice (because they can do more with it) and less about order (because they can pay for it themselves). On some of these issues they are virtually unanimous. Hedge fund manager Paul Singer, for instance, is seen as a Republican donor but for several years his policy priority – gay marriage – has also been that of Democrats. By the time California’s law forbidding gay marriage came before the US Supreme Court in 2013, it was opposed by Apple, Google, Bill Gates of Microsoft, Jeff Bezos of Amazon and the White House. Mass immigration is an issue many billionaires would like to regularise and few to halt. Guns appear to be anathema among America’s richest donors, none more so than Michael Bloomberg. The late insurer Peter Lewis did much to push the legalisation of marijuana in certain US states after using it as a painkiller.

Almost all billionaire activism in these areas seeks to drive public opinion away from traditional or conservative views. It is often the Democratic party on which the eyes of the super-rich shine. West describes the organisation of Karl Rove, the former aide to George W Bush, as having “devoted $300m to unseat Obama”. Mr Rove’s way of doing this has been by purging the Republican party of less electable conservative candidates.

Two things make ours an era of big money in politics. One is inequality (for which Republicans are rightly given much of the blame); the other is centralisation (seen rightly as the fault of the Democrats).

Most suggested remedies would curtail campaign finance – which is to say political speech – and merely compound the problem. The two parties simply serve the rich in different ways: Republicans are an army of the rich and their emulators; Democrats an army of the rich and their retainers. Those looking for a “billionaire’s party” are unlikely to find it.


Christopher Caldwell is a senior editor at The Weekly Standard

Fonte: FT

Gambler places bet on patriotic game

Perfil do lider do movimento pro independencia da  Escocia.


With summer showers turning the grass to mud among the tanks, artillery and other emblems of British military power, the field below the walled cliffs of Stirling castle on Armed Forces Day looked like tricky territory for a Nationalist first minister bent on tearing Scotland out of the UK.

But Alex Salmond is not the sort of politician to be put off by a bit of wet weather or the presence of thousands of UK ex-servicemen mostly hostile to the idea of Scottish independence. No matter that the decision to host the event in Stirling was a ploy by pro-union politicians to deflect attention from nearby events marking the Scottish victory at the 1314 Battle of Bannockburn; Mr Salmond could still seize the chance to charm visitors. Long after the UK prime minister David Cameron had left for home, he was still cheerfully posing for selfies – incongruously sporting on his lapel a Union Flag badge expressing support for British military personnel.


The blend of self confidence, dedication to the cause and pragmatic pursuit of tactical advantage on display that rainy afternoon has brought Mr Salmond a long way. The boy from the council house in Scotland’s central belt has led his nation to the brink of a vote that could end its three centuries of political union with England.

It has been an extraordinary journey, one that spans the Scottish National party’s rise from fringe group to government – and that now has the potential to transform the map of the UK and send shockwaves across Europe and beyond.

Yet on the threshold of this climactic vote, the fiercely private Mr Salmond still appears an enigmatic figure. Scottish voters hold sharply contrasting views of the man who has led their devolved government in Edinburgh as first minister for the past seven years. Though his popularity ratings are far higher than any of his UK rivals, a large section of the electorate sees him as arrogant and untrustworthy. Campaigners for a Yes vote on September 18 say that often one of the biggest obstacles to winning over new potential supporters to independence is their antipathy to Mr Salmond himself.

Now with Scotland a week away from its biggest constitutional decision in three centuries, it is not only Scottish voters seeking to take the measure of the man who, if a Yes vote prevails next Thursday, will direct his nation’s first steps into an independent future.

It is no insult to call Mr Salmond a “black bitch”. Citizens of Linlithgow, the Scottish town where Alexander Elliot Anderson Salmond was born on New Year’s eve in 1954, are traditionally proud to identify themselves with the mythical beast that features on its coat of arms. This is a royal burgh steeped in history – a ruined palace from the days when Scotland was an independent kingdom lies just off the high street. And it was here that Mr Salmond as a young boy sat on his grandfather’s knee to hear tales of local families joining the bloody 14th century resistance to English rule that had its climax at Bannockburn, where an army under Scots King Robert the Bruce destroyed a much larger invading force to secure his kingdom.

Mr Salmond says his grandfather’s stories “kindled a flame” of patriotism, but harking back to such stirring tales alone do not a Scottish Nationalist make. Many proud Scots also celebrate Bannockburn, while still seeing the 1707 union between the parliaments of Scotland and England as a good deal that paved the way for peace and prosperity as Great Britain.

Mr Salmond’s grandfather, a retired plumber, was himself a Liberal. His father was a strong socialist, his mother a Conservative. It was only after the future first minister became an undergraduate at St Andrews that he joined the SNP. He studied medieval history and economics, and says it was the confidence in the economic case that turned him into a supporter of independence.

He quickly showed the kind of determination to take on the British establishment that has marked his career. As a Scot from a working-class background he stood apart from the English and public school-educated Scots who made up much of St Andrews’ student body. But he was contemptuous of contemporaries who tried to polish their style to fit in with the social elite – instead he launched a surprise bid to become student president and only narrowly lost to a Conservative candidate.


After graduation in 1978, he worked first for the Scottish civil service before a successful early career as an energy economist at Royal Bank of Scotland. The experience left him with an assured way with statistics that has helped give him an edge over many opponents ever since. But his passion was politics. He established himself as one of the SNP’s rising stars, pushing for the party to make itself more electable in western and central Scotland by adopting more socialist policies. Briefly ejected from the party in 1982 for his role in a socialist and republican faction, he was a few years later selected to contest the Banff and Buchan constituency in northeast Aberdeenshire for the 1987 UK general election.

Stuart Pratt, an SNP veteran and still Mr Salmond’s election agent, was one of the local party organisers who reviewed the fresh-faced young politician as a candidate – and says his selection as candidate was controversial among some local members. Some thought his leftwing credentials were too much of a handicap in a rural Conservative-held constituency where the best chance of victory lay in rallying the anti-Tory vote rather than talking about independence or socialism. But Mr Pratt says Mr Salmond’s qualities outweighed the doubts.

“It was his confidence and his ability to speak to all sorts,” Mr Pratt recalls in an interview at his home among low hills dotted with livestock and barley farms, adding that Mr Salmond also had and retains an excellent memory for names and faces. Other natural skills include a sense of comic timing and an unforced bonhomie.

The selection gamble paid off. Mr Salmond defeated the Conservative incumbent by more than 2,000 votes. His ambition and his potential were clear, says Mr Pratt. “On the night of Alex’s first election, [one person there] turned to me and said: ‘You know you’ve just elected Scotland’s first prime minister, don’t you?’,” he says.


For Mr Salmond, getting to parliament was just the start – but making an impact in Westminster was not easy, not least since he was one of only three SNP members in parliament. But the novice MP found a way to establish himself as a presence with a move combining his tactical sense, self-belief and penchant for tweaking the establishment. This was a planned disruption of the Budget speech, a highlight of the UK calendar. In Scotland at the time there was widespread opposition to the imposition of the “poll tax” a flat local charge considered to favour the wealthy, and when then Tory chancellor Nigel Lawson unveiled his tax-cutting plan, Mr Salmond stood up to denounce it as an “obscenity” and then refused to sit down – a breach of protocol that earned him a suspension – and the SNP widespread publicity.

It is the kind of cheeky tactic that remains a trademark. The first minister still likes to defy convention, even “photo-bombing” UK Prime Minister David Cameron with a Saltire after Scottish tennis player Andy Murray’s victory at Wimbledon last year.

Yet the 1988 budget disruption also fitted into Mr Salmond’s long-term strategy, to raise the SNP’s profile and align it more closely with Scottish majority opinion. Elected party leader from 1990, he pursued a more pragmatic approach to independence aimed at minimising nervousness among voters about the risk of leaving the UK, an approach aided by his abandonment of previous opposition to EU membership in favour of calls for “independence within Europe”.

If this month’s referendum has proved anything, it is Mr Salmond’s long standing belief – maintained against fierce opposition from SNP “fundamentalists” – that Scotland was unlikely to achieve independence in one fell swoop and that the party’s best option was an incremental approach of supporting devolution from London.

A Labour government’s creation of the Edinburgh parliament in 1999 transformed Scottish politics and gave the Nationalists a stage on which they could play a bigger role than was ever possible in Westminster.

Ironically, Mr Salmond at first struggled to take advantage. In 2000 he stunned SNP supporters by stepping down as leader. The next year he left the Scottish parliament.

But Labour’s grip on Scotland was slipping. With a refreshed Mr Salmond back in command, the SNP in 2007 became the largest party in the Scottish government – and formed a minority administration of impressive competence and discipline.

The victory put Mr Salmond in a political sweet spot – still able to act as opposition when it came to battling London over policies or resources, but also enjoying the power and prestige that comes with control of the Scottish government.

Like many successful politicians, he has also been lucky in his enemies. Out of office, Labour in Scotland has crumbled. In 2011, the party scored a stunning election victory that has paved this way for this month’s referendum. The pledge to hold an independence referendum had not been a manifesto priority, but Westminster agreed the SNP now had a democratic mandate for a vote.

It says a great deal about Mr Salmond’s political style that even many people who have been watching him for decades struggle to say what – beyond independence for Scotland – he stands for. Under him the SNP has cast itself as left-of-centre, but Mr Salmond has also cheerfully cultivated such right-leaning international figures as Rupert Murdoch and – until a falling out over wind power – Donald Trump.

“I find him the most pragmatic politician that I have ever met,” says Peter de Vink, a financier and libertarian local councillor who is a strong admirer. “He talks left of centre, but he hasn’t acted left of centre.”

James Mitchell, a politics expert at Edinburgh university and author of The Scottish Question who has known Mr Salmond since he was at RBS, says the first minister should be understood as an “old fashioned social democrat” who supports redistribution but respects the power of markets.

“Like all social democrats he can be accused of not having very clear ideological positions,” Prof Mitchell says. “When you’re in government you can’t be an ideologue and he’s always had ambitions to govern.”

The growing possibility that Mr Salmond might indeed be Scotland’s first prime minister means increased scrutiny of his personal character. His reputation for arrogance is such that even he jokes about it. Some who have dealt with him say he can be a bully, happy to browbeat critics into silence. Even admirers acknowledge he can be a hard and sometimes bad-tempered taskmaster to his staff.

But it is Mr Salmond’s adept use of spin – effortlessly gliding over gaps in his arguments, selectively quoting opponents and stretching statistics to breaking point to make his case – that really enrages his rivals.

Even Mr Salmond can take spin too far, however. In 2012 he appeared to claim that the Scottish government had legal advice supporting its position on EU membership. When it later emerged there was no such advice, many felt betrayed. The Scottish Sun, which backed the SNP in 2011, ran a front-page headline reading: “EU Liar”. Asked in a recent YouGov poll whether they trusted Mr Salmond, 58 per cent of voters said no. Yet even fewer trusted Mr Cameron and Mr Salmond still enjoys approval rates impressive for a seven-year incumbent.

Still, trust could yet be a big issue if Scotland votes for independence next week. Many Yes supporters stress that the referendum is not about the first minister or dependent on his arguments. But the picture he paints of a smooth transition and rosy fiscal future has been at the centre of the campaign, as has his insistence that Scotland will be able to continue to use the Bank of England and the pound.

This has been a gamble much bigger than the bets Mr Salmond loves to place on horses. Any serious set backs in post-vote negotiations could shake confidence in him and sour the early days of independence.

Mr Salmond no doubt thinks it a gamble worth taking. The onetime history student loves quotes from the past, and one of his favourites is from James Graham, Marquis of Montrose, who in the 17th century wrote a poetic defence of living dangerously that runs: “He either fears his fate too much/Or his deserts are small/That puts it not unto the touch/To win or lose it all”.

It is no surprise that Mr Salmond appears convinced independence is well worth the risks and costs. Next week he will find out if the people of Scotland agree.

Politician craves quiet life away from the cameras

Mr Salmond’s insistence on maintaining his privacy has long encouraged curiosity among journalists and associates used to leaders more willing to share their personal lives to the public. His marriage at 26 was unusual in that his wife Moira, a senior official in the Scottish civil service where he worked briefly in the late 1970s, is 17 years his senior – although to many the couple say the age gap was hardly apparent.

“Alex has always been older than his age. I always think he was probably born middle-aged and has always been middle-aged, but Moira’s always been the opposite, much younger at heart,” says one person who has known the couple for many years and who describes Mrs Salmond as very private, intelligent, witty and a “huge support” for her husband.

Such is the divide between Mr Salmond’s political life and his weekend retreats home to the elegantly restored Mill of Strichen in his northeastern constituency that some longstanding observers wonder aloud whether he even has any real friends.

But Dennis MacLeod, a Scottish gold industry entrepreneur and SNP supporter now based in Canada, says the childless Mr Salmond is actually a “very ordinary, affable and down to earth person”. He portrays the politician as a warm friend who frequently stayed at his home when he lived in Scotland and who would always bring toys and end up playing with them in the garden with his children.

Mr MacLeod says during a visit to northern Ullapool in the late 1990s, Mr Salmond once instructed one of his daughters to go ahead of him down a street telling voters the SNP leader would be arriving shortly, then followed behind in a hastily-purchased gorilla mask to general amusement. “That’s very typical of the man,” Mr MacLeod says.




Mure Dickie


Fonte: FT

Japan is creating jobs but workers do not prosper

Something odd is going on with Japan’s labour market. Unemployment is at 3.7 per cent. Recently, it has been as low as 3.5 per cent, considered by some economists to be pretty much full employment. (The uptick is only because the previously discouraged are flooding back to work.)

The trend is being helped by demographics, which sees more baby-boomers retiring than millennials starting out. For every 100 people looking, there are 110 jobs on offer, the best ratio in 20 years. In some industries, including truck driving and healthcare, employers cannot find workers for love nor money. Building site foremen are in desperately short supply as construction companies work overtime to rebuild the tsunami-devastated coast and prepare for Tokyo’s 2020 Olympic Games. One restaurant chain specialising in beef-and-rice dishes was forced to close a 10th of its roughly 2,000 restaurants this summer because it could not find enough staff.

You would have thought that wage inflation would be going crazy as a result. Unfortunately for Japan, you would be wrong. The government has badgered companies, which are making record profits, to share the love. Some have responded with modest wage increases, but not enough to keep pace with prices, which are rising thanks to monetary stimulus and a 3 percentage-point increase in sales tax.

It is just possible that labour-market tightness is finally filtering through. In July cash earnings for regular employees rose a hefty 2.6 per cent, the fastest increase for 17 years. But much of this has come in cash bonuses, not in the base pay that gives workers lasting confidence.

Japanese wages do not seem to be responding to normal market pressures. Why not? The conundrum has its roots in the altered structure of the labour market. Contrary to common perception, Japan has an exceptionally flexible workforce. Outside the ranks of the protected “job-for-lifers” – a much rarer breed these days – nearly 40 per cent of workers are about as flexible as you get. They work in poorly paid jobs for hourly rates. Benefits are all but non-existent. For most of these workers, sometimes referred to as the “precariat”, unemployment is a mere “sayonara” away.

Of course, Japan is hardly alone in seeing the bifurcation of its jobs market. Non- or semi-skilled work commands a lower price in a world where technology and cheap foreign labour are ready substitutes. In Japan, though, this is proving a particularly thorny problem. For its reflationary experiment to work, wages must begin to rise in line with inflation. But the casualisation of the labour force is short-circuiting that process. Moreover, people in the precariat are less likely to marry and have children. If Japan is to solve its demographic problem, it will have to tackle the labour issue.

What can be done? At least three things. The first is to narrow the gap between over-protected permanent workers and under-protected non-permanent ones. Akira Kawamoto of Keio University argues that coddling one section of the workforce does not serve Japan’s interests well. Absolute job security stifles risk-taking, he says, something that Japan desperately needs. Simply making life less cushy for permanent workers is not likely to do any good on its own.

If adding to Japan’s aggregate demand is the goal, the big push should be on improving the wages and conditions of temporary workers. Crucially, it should be made far easier for them to migrate to permanent jobs and for workers of all descriptions to move more freely between companies. An open, fluid labour market would help cross-fertilise ideas and allocate resources to productive parts of the economy.

Second, immigration policy needs to be bolder. True, allowing in lots of foreign workers might put downward pressure on wages, at least initially. Yet there are some jobs that Japanese are simply not prepared to do. If foreigners were brought in, for example, to provide affordable care for children and the elderly, this could free Japanese women to have more fulfilling careers.

That brings us to the third point. Women are flooding into the workforce in unprecedented numbers. Nearly 65 per cent of women aged between 15 and 65 are working, the highest percentage since records began in 1968.

There is a catch. The majority of these jobs are badly paid, part-time or both. Too many companies still view men as the primary wage earner: younger women are there to look pretty and older women to do the drudgery. If Japan is to progress, such attitudes need to change.

Legislation can help. One simple measure would be on tax. At present the head of a household, usually male, can claim a dependent tax exemption for his wife so long as she earns less than about $10,000 a year. Neutral tax treatment of second earners would remove this disincentive, encouraging married women to pursue full-time careers. And if the men did not like it, they could always stay at home and look after the kids.




David Pilling


Fonte: FT

Gideon Rachman: Why investors are ignoring war, terror and turmoil

At the beginning of the year, I gave a talk about “geopolitical risk” to a big conference of investors. I trotted briskly around the course: Russia, the Middle East, the South China Sea, the eurozone. Afterwards, I was having coffee with one of the other speakers, a celebrated private-equity investor, and asked him how much he thought about geopolitical risk.

“Hardly at all,” he replied. “We look at the companies, the cash flows, the investments themselves.”

Since the man I was speaking to is a billionaire, who ended the conversation by offering me a lift to Madrid in his private jet, it would be foolish to dismiss his views. Most of the time, it does make sense for investors to treat the political news as background noise, which is only marginally more relevant than the sports pages.

Events that are tragedies at a human level turn out to be irrelevant for investors. The unfolding war in Syria, which has claimed close to 200,000 lives, has taken place against a background of booming stock markets.

The disconnect between the markets and politics has been particularly stark recently. Last week, even as the newspapers were filled with stories about war in Ukraine and the Middle East – as well as the possible break-up of the UK – the FTSE 100 hit a new 14-year high. The previous week, the US S&P 500 broke 2,000 for the first time.

The standard response to all this from a political commentator would be to tut-tut about the short-sightedness of investors. But there is another possibility. Maybe the markets are right. Of course, from time to time, a political shock will cause stocks to fall – for a while. But recent experience suggests that the recovery is often surprisingly rapid.

In the first week of trading after the terror attacks of September 11, the Dow Jones fell 14 per cent. But the Dow and the Nasdaq recovered their pre-9/11 levels within months of the attacks.

It has been a long time since international politics really transformed the outlook for investors for years – rather than for weeks or months. The last times I can think of were the oil shocks of the 1970s that followed the Arab-Israeli war of 1973 and the Iranian revolution of 1979.

Since then, the world has been characterised less by geopolitical risk than by the much less often cited idea of geopolitical opportunity. It was the political changes brought about by the end of Maoism that led to the economic transformation of China. Markets opened up for investors in Europe after the fall of the Berlin Wall. The ending of dictatorships in Latin America in the 1980s was also followed by the widespread adoption of more market-friendly policies.


So it would be completely wrong to say that global politics has not mattered for investors in recent decades. It is just that political change, on a global level, has done more to create opportunities than to destroy them.

Within that, of course, there are all sorts of political events that can adversely affect the investment climate in particular countries. It is useful to know if a coup or a war is brewing. But the big global shifts in investor sentiment, in recent decades, have been driven by economics, not politics: most notably the bursting of the dotcom bubble in 2000, the financial crisis of 2008 and quantitative easing in the US.

The explanation for current market highs is probably that investors are still much more preoccupied by monetary policy than by wars. But can that attitude survive the current bout of geopolitical turmoil? In the 1970s, war and revolution drove energy prices to levels that shocked western economies into recession. Now, two of the major energy-producing regions of the world – Russia and the Middle East – are in turmoil. And yet the oil price is actually falling.

There are a few reasons why this could be happening. First, the “shale revolution” in the US has made world energy markets less vulnerable to events in the Middle East. Second, the fighting in the Arab world has not yet affected the oil production of Saudi Arabia or the Gulf states.



Finally, Russia has not yet made serious threats of energy sanctions against the west. If war reached the Gulf, or Russia turned off its energy tap, markets surely would panic.

There is also a bigger and more general political threat that investors may soon have to grapple with. For the past 40 years, political change has broadly pointed in one direction – towards more and more countries joining the global market system, increasing opportunities for trade.

Recently, however, there have been reminders that politics can close markets as well as open them. Japanese firms saw their sales plummet in China, after the rise in Sino-Japanese tensions and have reduced their direct investments in China by 50 per cent this year. Now Russia and the west are engaged in rounds of tit-for-tat sanctions. Unsurprisingly, the Russian stock market is the worst performing big market this year.

However, even investors without a direct stake in Russia, should be paying attention. The Ukraine conflict could still worsen and spread, with unpredictable effects across Europe.

It is also possible that what is happening in Russia is an extreme version of a wider phenomenon – the return of nationalist politics. In different ways that theme can be seen in countries as diverse as China, India, Egypt – and even France and Scotland. Nationalism and international investment tend not to be comfortable bedfellows. Sooner or later, the revival of nationalism could even affect plutocrats in their private jets.




Gideon Rachman




Fonte: FT

Philip Stephens:The world is marching back from globalisation

There is a mood abroad that says history will record that sanctions against Russia marked the start of an epochal retreat from globalisation. I heard a high-ranking German official broach the thought the other day at the German Marshall Fund’s Stockholm China Forum. It was an interesting point, but it missed a bigger one. The sanctions are more symptom than cause. The rollback began long before Vladimir Putin, Russia’s president, began his war against Ukraine.

The case for calling a halt to business as usual with Moscow is self-evident to anyone who considers that international security demands nations do not invade their neighbours. The valid criticism of the west is that it has been too slow to react. At every step, the Russian president has ruthlessly exploited US hesitation and European divisions.

He will do so until Nato restores deterrence to the core of European security. Mr Putin’s irredentism demands tough diplomacy stiffened by hard power. He will stop when he understands that aggression will invite unacceptable retaliation. To make deterrence credible, the alliance must put boots on the ground on its eastern flank. The Baltics have replaced Berlin as the litmus test of western resolve.

Some, particularly though not exclusively in the rising world, have seen sanctions through a different prism. By punishing Russia economically, the US and Europe are undermining the open international system. Economics, this cast of mind says, must be held apart from the vicissitudes of political quarrels. Why should new powers sign up to a level international playing field if the US and Europe scatter it with rocks in pursuit of narrow interests?

These critics are right to say an integrated global economy needs a co-operative political architecture. Sanctions against Russia, though, fit a bigger picture of the unravelling of globalisation since the financial crash of 2008. They testify to a profound reversal in US attitudes. Washington’s steady retreat from global engagement reaches beyond Barack Obama’s ordinance that the US stop doing “stupid stuff”.

The architect of the present era of globalisation is no longer willing to be its guarantor. The US does not see a vital national interest in upholding an order that redistributes power to rivals. Much as they might cavil at this, China, India and the rest are unwilling to step up as guardians of multilateralism. Without a champion, globalisation cannot but fall into disrepair.

Not so long ago, finance and the internet were at once the most powerful channels, and visible symbols, of the interconnected world. Footloose capital and digital communications had no respect for national borders. Financial innovation (and downright chicanery) recycled the huge surpluses of the rising world to penurious homebuyers in Middle America and dodgy speculators on the Costa del Sol. The masters of the banking universe spun their roulette wheels in the name of something called the Washington consensus.

Then came the crash. Finance has been renationalised. Banks have retreated in the face of new regulatory controls. European financial integration has gone into reverse. Global capital flows are still only about half their pre-crisis peak.

As for the digitalised world, the idea that everyone, everywhere should have access to the same information has fallen foul of authoritarian politics and concerns about privacy. China, Russia, Turkey and others have thrown roadblocks across the digital highway to stifle dissent. Europeans want to protect themselves from US intelligence agencies and the monopoly capitalism of the digital giants. The web is heading for Balkanisation.

The open trading system is fragmenting. The collapse of the Doha round spoke to the demise of global free-trade agreements. The advanced economies are looking instead to regional coalitions and deals – the Trans-Pacific Partnership and the Transatlantic Trade and Investment Pact. The emerging economies are building south-south relationships. Frustrated by a failure to rebalance the International Monetary Fund, the Brics nations are setting up their own financial institutions.

Domestic politics, north and south, reinforces these trends. If western leaders have grown wary of globalisation, many of their electorates have turned positively hostile. Globalisation was sold in the US and Europe as an exercise in enlightened self-interest – everyone would be a winner in a world that pulled down national frontiers. It scarcely seems like that to the squeezed middle classes, as the top 1 per cent scoop up the gains of economic integration.

Much as the south has prospered within the old rules – China’s admission to the World Trade Organisation has been the biggest geopolitical event so far of the present century – yet the new powers show scant enthusiasm for multilateralism. The old order is widely seen as an instrument of US hegemony. India scuppered the latest attempt to reinvigorate the WTO.

Globalisation needs an enforcer – a hegemon, a concert of powers or global governance arrangements sufficient to make sure the rules are fairly applied. Without a political architecture that locates national interests in mutual endeavours, the economic framework is destined to fracture and fragment.

Narrow nationalisms elbow aside global commitments. Sanctions are part of this story, but Russia’s contempt for the international order is a bigger one. Sad to say, we learnt in 1914 that economic interdependence is a feeble bulwark against great power rivalry.


Philip Stephens


Fonte: FT

ECB acts to boost eurozone with rate cut and asset purchases

The European Central Bank has cut interest rates to a record low and launched a programme of private-sector asset purchases as it ratcheted up attempts to counter the threat of economic stagnation across the eurozone.

The governing council on Thursday cut its benchmark main refinancing rate from 0.15 per cent to 0.05 per cent and said it would charge lenders 0.2 per cent, up from 0.1 per cent, for their deposits parked at the central bank.

During a press conference, ECB President Mario Draghi revealed a further escalation of the bank’s bid to stimulate the eurozone’s ailing economy with a programme to purchase a “broad portfolio of transparent asset backed securities” starting from October this year.

He also launched a programme of purchases of covered bonds, securities backed by cash flows from mortgages or public sector loans. These schemes would have a “sizeable impact on our balance sheet,” Mr Draghi said.

The euro fell below $1.30 to a low of $1.2995 on the back of the ECB’s announcements. The single currency is now down almost 5 per cent against the dollar since the beginning of July.

European government bond yields also tumbled at the news with the yield on Italian 10-year bonds falling by 11 basis points to 2.36 per cent. Spanish 10-year bonds dropped 11 bps to 2.16 per cent. Equities bounced as France’s share market barometer, the CAC 40, rose 0.4 per cent and the UK’s FTSE 100 climbed 0.3 per cent.



While the ECB president resisted calls to unveil a programme of government bond purchases, he made clear that quantitative easing remained firmly on the ECB’s table.

“Should it become necessary to further address risks of too prolonged a period of low inflation, the Governing Council is unanimous in its commitment to using additional unconventional instruments within its mandate,” Mr Draghi said.

“With another rate cut, an ABS purchasing programme and a new covered bond purchasing programme, the ECB has now reached a point at which fully-fledged QE, ie outright purchases of government bonds, is the only option left,” said Carsten Brzeski an economist at ING.



Expectations of more monetary action had been high since Mr Draghi acknowledged in late August that markets had started to doubt the ECB’s ability to return inflation back to its target.

At 0.3 per cent, eurozone inflation is at a five-year low. The region’s economy failed to grow at all in the second quarter and, unlike the US and the UK, remains below its pre-crisis peak.

The ECB president said at the Kansas City Federal Reserve’s Jackson Hole symposium that key measures of inflation expectations had started to drift below 2 per cent. He added that the governing council would “acknowledge these developments and within its mandate will use all the available instruments needed to ensure price stability over the medium term”.

On Thursday, the ECB revised its forecast with regard to eurozone inflation and gross domestic product. The central bank foresees annual HICP inflation at 0.6 per cent in 2014, 1.1 per cent in 2015 and 1.4 per cent in 2016. In comparison with the June forecasts, the projection for inflation for 2014 has been revised downwards, while the projections for 2015 and 2016 have remained unchanged.

The ECB now expects the eurozone economy to grow by 0.9 per cent in 2014, 1.6 per cent in 2015 and 1.9 per cent in 2016. The projections for 2014 and 2015 have been revised downwards and the projection for 2016 has been revised upwards.


Fonte: FT

Aqui se faz, aqui se paga: Dilma e os unicampistas....

Os números da economia brasileira não deixam dúvidas quanto ao fracasso retumbante de mais uma experiência heterodoxa liderada pelos desenvolvimentistas da linha da Unicamp.  O primeiro, para quem tem memoria, curta foi o plano cruzado. Neste caso o fracasso foi compartilhado com a PUC-Rio que, ao contrário dos unicampistas, aprenderam com o erro e continuaram influenciando fortemente a formatação da agenda da política economica brasileira.

Os unicampistas  na matriz e nas várias filais espalhadas Brasil afora, continuaram com o seu bla, bla, de sempre, ignorando a produção mais recentes em economia, assim como o uso de instrumentos mais refinados, como é caso da econometria, na avaliação de medidas de política econômica. É o tipo de discurso que pela simplicidade tem forte apelo junto aos jovens preocupados com a terrivel situacão social do país.  Agrada. tambem, aqueles que sem a devida formação em economia, podem passar por economistas.

A Presidente que tem uma boa formação em economia - graduada pela federal gaucha - comprou a vista a retorica vazia desta linha desenvolvimentista e por teimosia manteve na Fazenda  um dos seus representantes menos preparado.  Agora paga a conta pelo erro e pela teimosia. Não seria um problema, se isto não colocasse em risco a politica social que apresenta bons resultados na melhoria da vida dos brasileiros. Política esta  que não requer a reinvenção da política econômica em linhas heterodoxas para gerar bons frutos.

Para  tentar reverter o favoritismo do Janio de saias é fundamental reconhecer os erros  da atual gestão e não somente os seus vários acertos. Modestia, neste momento delicado da corrida eleitoral, é uma grande virtude. A arrogância, por sua vez, é o beijo de morte. É fundamental sinalizar que haverá mudanças na equipe a começar pela Fazenda.  O tempo é curto, mas como se diz: eleição não  se ganha na vespera e  tão pouco se perde.

A direita e a centro direita andam assanhadas com a possibilidade de tirar o PT do poder e mais uma vez flerta com a instabilidade política e econômica. O fracasso do Aecio, não é apenas dele, mas do Partido que no momento melhor representa o pensamento de centro direita e que possui mais competitividade eleitoral. Jogar a toalha é um equivoco e um desserviço a democracia brasileira.

Eurozone: Draghi’s new deal

About halfway through the speech, Mario Draghi stumbled. The European Central Bank president had reached a passage in his prepared remarks about the worrisome trend in inflation afflicting much of the continent. With inflation at a five-year low, it is a topic Mr Draghi talks about often, and a subject that his audience – the world’s top central bankers at last month’s Jackson Hole conference – knows well.

But Mr Draghi’s usual fluent, Italian-accented English faltered a touch as he delivered several paragraphs with a very different texture – rambling and highly technical. Then he uttered a line that would send a potent message to global financial markets and political leaders across Europe. The ECB’s governing council, he said, “will use all the available instruments needed to ensure price stability in the near-term”.

Mr Draghi was off his text. The remarks surprised many of Mr Draghi’s colleagues on the council, but their impact was delayed: European markets were closed, the addition was not in the speech on the ECB’s website, and the Jackson Hole audience focused on his comments about austerity. The next Monday, however, eurozone governments’ bond yields fell and equity markets around the world rallied in anticipation of more monetary easing when the ECB board meets tomorrow.

Few central bankers are more aware of the power of their words than the ECB’s urbane president. Another of Mr Draghi’s ad-libs, made two years ago, that the ECB would do “whatever it takes” to save the euro is seen as a masterstroke that halted the downward economic spiral that had gripped the continent.

The confidence inspired by that speech lasted until a few months ago, when worries about the eurozone began to resurface. Mr Draghi’s Jackson Hole remark was his most direct acknowledgment yet that investors had begun to lose faith in the ECB’s ability to hit its inflation target – the cornerstone of its policy framework. And he suggested that the eurozone’s monetary guardians were willing to do more to prevent it from falling into Japanese-style stagnation.

Yet his pledge came with a caveat. Conditions had become so bad that, while the ECB could act, it could not do it all alone. Mr Draghi signalled the ECB was reluctant to reach for its most powerful tool – mass government bond buying, or quantitative easing – without the co-operation of European governments.

At the height of the crisis central bankers saved the day, cutting interest rates and providing plentiful supplies of cheap money to stave off a financial meltdown. But the lacklustre performance of the global economy since then has highlighted the limits of monetary policy. While central bank cash has helped asset prices soar, productivity and growth remain anaemic in advanced economies.

“QE’s critical,” says Krishna Guha, vice-chairman at ISI Strategy. “But it’s not transformative.”

For the first time, the ECB president proposed what amounts to a fiscal and monetary compact with the currency area’s lawmakers. The only way to defeat the region’s low inflation and double-digit unemployment was, he said, “a policy mix that combines monetary, fiscal and structural measures at the union level and at the national level”.



Guntram Wolff, director of Bruegel, a Brussels think-tank, says it was a message Europe needed to hear: the eurozone economy is in a mess so grave that mass bond-buying alone cannot revive it.

“He is saying that the eurozone needs easier macroeconomic policies and structural reforms, and that the two need to go hand in hand,” Mr Wolff says. “You need both; without reform all of the fiscal and monetary ammunition will just evaporate.”

Six years after the collapse of Lehman Brothers, the currency area’s economy remains smaller than it was at its pre-crisis peak. Its recovery has ground to a halt. Inflation, at less than a fifth of the ECB’s target of just below 2 per cent, threatens to wreak havoc by exacerbating high debt burdens in some countries.

For that to change, Mr Draghi signalled that governments in the eurozone’s three largest economies – Germany, France and Italy, none of which grew at all between the first and second quarters of this year – needed to act alongside the eurozone’s monetary guardian.

The message: Paris and Rome must reform their economies, removing barriers to the creation of businesses and jobs. Countries with the flexibility to spend more while staying within EU deficit rules should do so, creating what Mr Draghi described as “a more growth-friendly overall fiscal stance for the euro area”.

Though the ECB president did not name names, that suggestion was widely interpreted as a call for Germany, the eurozone’s dominant economic power, to raid its fiscal coffers.

“The part of Mr Draghi’s speech on the fiscal stance was an innovation,” says Lucrezia Reichlin, a professor at London Business School and a former head of research at the ECB. “The idea of co-ordination between
monetary and fiscal policy from a euro area perspective is a hint to Germany.”

France, already used to the ECB’s grumbles that it should do more to restructure the economy, received Mr Draghi’s calls warmly.



President François Hollande’s embattled government seized on the speech. “It is the position held by the president for the past two years,” insisted prime minister Manuel Valls in a speech on Sunday aimed at rallying the rebellious ruling Socialist party behind Mr Hollande.

The French president, who met Mr Draghi in Paris on Monday, is acutely aware that France’s credibility is very low, weakening its pleas to Brussels and Berlin for more budgetary leeway and a demand boost from the EU and Germany. During his two years in office, pledges to reduce the budget deficit below the EU’s designated limit of 3 per cent have come and gone with each budget projection. After securing a two-year delay from Brussels to 2015, it is already clear, with growth stalled, that France will not meet that deadline either.

Only now is the government gearing up to rein in its vast public spending bill, via €50bn savings over the next three years, and to take steps to loosen rigidities in the economy. (France said yesterday it will miss targets to trim public spending.)

In Italy, now suffering from its third recession since the crisis began, Matteo Renzi, the country’s 39-year-old prime minister, took office in February vowing to bring new flexibility to the EU’s rules. But while Mr Draghi’s shift in tone on fiscal policy brings him closer to Mr Renzi’s position, the ECB president is thought to favour less flexibility than the Italian prime minister.

Mr Renzi has taken a swipe at Mr Draghi’s criticisms and calls for more centralised control of reform efforts, with the prime minister pugnacious in his defence of Italy’s sovereignty. “I agree . . . when he says that Italy needs to make reforms, but how we are going to do them I will decide,” he told the Financial Times last month.

Mr Renzi has responded to Italy’s economic malaise with what he has called his “1,000-day” reform programme, which includes pledges of structural reforms to be undertaken over three years.

If the ECB president is to pull off his strategy to mend the eurozone economy, it is crucial that he wins the support of German chancellor Angela Merkel. “In Germany what matters is that he has Merkel’s support. If Draghi is keeping her onside, then he’ll be fine,” says Lorcan Roche Kelly, of Agenda Research.

The government of the eurozone’s largest economy, accounting for almost 30 per cent of all of the region’s output, has room to spend. A fall in output in the second quarter has raised concerns that Germany – the bloc’s economic engine – is beginning to run out of steam, bolstering the case for more investment spending by Berlin.

But Ms Merkel’s willingness to raid the fiscal coffers is unclear. Though she left the door open to channelling the budget surplus into investment programmes, she has indicated this could happen only if the economy were strong enough.

Her relationship with Mr Draghi, the strength of which played a vital role in shaping the ECB’s response to the financial crisis, still appears strong. Reports in Der Spiegel, a German weekly news magazine, over the weekend that the German chancellor had taken Mr Draghi to task over his remarks were quickly rebuffed.



Ms Merkel’s office confirmed that a call had taken place between the German chancellor and Mr Draghi, who initiated it. However, her office insisted that claims the chancellor questioned Mr Draghi about his speech “had nothing to do with the truth and the facts”.

The ECB is the only leading central bank to have avoided embarking on quantitative easing. One factor has been German opprobrium over a policy some view as a bailout for the region’s weaker economies. The governing council’s hawks have also used what they view as France and Italy’s fiscal profligacy and resistance to reform as crucial to their argument.

Some analysts view the apparent trade-off between quantitative easing and more reform from France and Italy – and more spending from Germany – as a ploy to buy more time.

“Draghi’s remarks shouldn’t be taken at face value. His call for fiscal easing deflects pressure on the ECB to launch QE, safe in the knowledge that Germany would block any such move,” says Philippe Legrain, an economist and former adviser to then European Commission president José Manuel Barroso. “By arguing that the effectiveness of QE depends on a more stimulative fiscal policy and bolder structural reforms, he was in effect raising new hurdles to it.”

Others question Paris and Rome’s willingness to take steps that could risk alienating the electorate.

“The problem is that the only bit that can move is Mario Draghi,” says Mr Roche Kelly. “The biggest risk he is taking is that he ends up as the boy who cried wolf.”

The ECB will almost certainly act on Thursday. But more incremental policies to ease credit conditions, such as an announcement of a plan to buy asset-backed securities, are a far more likely outcome. Investors desperate for large-scale bond purchases could, for now, find their hopes dashed.

“An outright announcement on QE is not going to come just yet,” Mr Wolff says. “The ECB would like to see some form of political contract.”

Asset-backed securities: A tarnished product primed for a comeback

One policy option available to Mario Draghi that he is almost sure to use is a European Central Bank programme to buy “asset backed securities”, writes Ralph Atkins.

These are financial instruments that package up bundles of loans, tranches of which are then sold to investors. Their reputation was blackened in 2007 when securitised “subprime” US mortgages helped trigger the global financial crisis.

But Mr Draghi sees them as a way of restoring credit flows to distressed eurozone economies. His idea is that securitisation should also be used to pool loans made to job-creating small and medium-sized companies.

If the market were revived, ABS could whet investors’ appetites for better performing assets during an era of ultra-low interest rates.

“ABS channel investors’ ‘hunt for yield’ into loans to the real economy – that is the missing link in the chain,” says Alberto Gallo, strategist at Royal Bank of Scotland.

Rather than repeating the complexity of pre-crisis ABS, Mr Draghi says he wants simpler, more transparent products that “are not going to be a sausage full of derivatives”.

The ECB announced last week that the advisory arm of BlackRock, the US asset manager, would help design a purchasing programme.

A revived ABS market would allow Europe’s weakened banks to shift loans off their balance sheets. But ECB purchases would not be a quick fix for the eurozone’s woes. After the US subprime mortgage crisis, ABS fell out of favour among regulators and the market slumped. There are still not many ABS for the ECB to buy.

Most of the €1.4tn European securitisation market consists of residential mortgage-backed securities, which the ECB may not want to buy through fear of encouraging housing bubbles. Only about €108bn of European ABS are backed by small business loans.

That means an ECB purchasing programme would have to be small scale initially. Moreover, its aim would be to remove obstacles to lending – rather than provide an inflationary stimulus to the economy. It would not be the “big bazooka” many economists believe is needed to prevent the eurozone falling into a dangerous deflationary downswing.




Fonte: FT

Ideia de renúncia, para apoiar Marina, ronda Aécio Neves

Analise bem interessante sobre o provável Governo Marina. A lógica política indicaria uma aliança da Marina com o centro direita e a direita liderados pelo PSDB. A incognita é o papel do PT. Em todo caso, mantenho a minha avaliação que Marina, a pessoa, não tem habilidade para liderar uma grande coalizão e que seu governo será um desastre. 

Não resta dúvida, depois do debate de hoje, que Aecio é carta fora do baralho. So lhe resta tentar salvar o seu curral politico em Minas. O que não será nada fácil. 

Marina so perde se cometer algum erro ou for encontrado algo comprometedor no seu passado.  Se nada disto ocorrer ela pode, inclusive, levar no primeiro turno. 

A ideia da renúncia seguida do apoio a Marina Silva ronda o candidato Aécio Neves, segundo reportagem exclusiva publicada no Valor Pro, serviço de notícias em tempo real do Valor. Seria a maneira de despachar o PT já no primeiro turno das eleições, sem correr o risco de uma eventual virada no segundo turno, algo que até hoje não ocorreu nas eleições, desde 1989, quando foi restabelecida a eleição direta para presidente da República.

Aécio tem prazos. Assim como o PT, o candidato do PSDB apostou na polarização e se deu mal. Contra a maioria das apostas no PSDB, Aécio ainda acredita numa resposta positiva do eleitorado, em meados de setembro, quando aposta que sua propaganda eleitoral começará a apresentar resultados. De qualquer forma, o programa de Aécio, cada vez mais, fala para Minas Gerais.

Mal na disputa presidencial, Aécio também enfrenta problemas em Minas, onde seu candidato ao governo do Estado, Pimenta da Veiga, está comendo poeira no rastro de Fernando Pimentel, o único petista a liderar a corrida para o governo do Estado, nos quatro maiores colégios eleitorais. O próprio Aécio não tem o desempenho esperado em Minas. Em algum momento da campanha, o candidato terá de se concentrar na campanha mineira, de modo a assegurar sua base de apoio mineira para as próximas eleições.

Também não é certo, a esta altura, que se Aécio desistir e apoiar Marina a fatura será liquidada no primeiro turno. Hoje a presidente está consolidada no segundo turno, graças sobretudo ao forte apelo que seu nome mantém nas regiões Norte e Nordeste. O problema de Dilma é que ela não amplia nem para o primeiro nem para o segundo turno, conforme demonstram as últimas pesquisas.

É improvável que Aécio aceite algum tipo de acordo com Marina já no primeiro turno, mas o simples f ato de a proposta circular nas áreas afins ao candidato, eleitores fiéis que agora pensam no voto útil em Marina, dá uma ideia do tamanho do apoio que se delineia em torno da candidata do PSB. Na hora em que o PT perder a eleição, a disponibilidade dos o utros partidos para se aproximar será grande.

No segundo turno, a tendência do PSDB é apoiar Marina Silva e ajudá-la a governar, se ela for eleita, como apontam as pesquisas. Ao contrário do que aconteceu em 1992, quando era oposição e se recusou a compor com o governo Itamar Franco, o PT tem muitos interesses em jogo e deve pensar com mais receptividade a ideia de dar apoio congressual a Marina. O problema é que Marina se tornou a primeira opção ao PT. O mercado financeiro é parceiro de Marina porque não quer o PT no governo.

Nos cálculos dos políticos mais experientes, Marina não precisará compor com o PT. Ela pode fazer maioria tranquila com partidos médios e apoios nos maiores, mas, sobretudo, vai jogar luz sobre o Congresso. Marina terá uma agenda dura, para trazer as pessoas da rua, os manifestantes de junho. É evidente que haverá gente no Congresso tentando esconder com mão de gato, mas será muito mais difícil com uma relação transparente.

Dilma, no momento, tem maioria instável no Congresso. Pode-se afirmar que Marina deve ter uma minoria estável. Ela também vai contar com o apoio da mais tradicional sigla brasileira, o PG, o Partido do Governo, aquele que está com qualquer que seja o presidente no Palácio do Planalto. Mas a candidata do PSB também quer inverter a lógica adotada pela presidente para a nomeação dos ministros.

Assim, não será o PSDB, por exemplo, que vai dizer “eu quero fulano”. Marina vai escolher, até porque poderá dizer que não tem interesse na reeleição. É uma negociação que não está sobre a mesa. E quando fala que não quer disputar um segundo mandato, Marina Silva desarma os partidos e seus eventuais candidatos em relação a ela. Pode montar um ministério de melhor qualidade. Eduardo Campos, o candidato cuja morte virou de ponta cabeça a sucessão presidencial, era mais gestor e menos equipe. Marina, que o sucedeu, é menos gestora mas tem mais equipe

O PSDB deve declarar apoio a Marina Silva no segundo turno da eleição, se as pesquisas atuais forem confirmadas em 5 de outubro. A dúvida no entorno da candidata do PSB é sobre o apoio do PT. Afinal, Lula é candidato declarado em 2018. O fato de Marina não querer disputar um novo mandato ajuda um entendimento, se houver convencimento de que ela não cederá a pressões para permanecer, caso faça um bom governo.

A situação do PT hoje é muito diferente daquela vivida quando o partido teve de decidir se apoiava ou não Itamar Franco, após o impeachment de Fernando Collor. Não se trata simplesmente de uma questão de manter cargos, isso também existe, mas de projetos e políticas em andamento que são muito caras ao partido. Diz um integrante da coordenação da campanha de Dilma: “Na época do governo Itamar nós éramos oposição. Agora, com um monte de gente no governo, nós vamos ficar”.Fonte: Valor