Tag Archives: The Economist

Jan 16 2015
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Culture, Economy, Media

For a prominent prognosticator, no easy answers in the year ahead

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Reading The Economist’s redoubtable annual turn as Nostradamus, we will be forgiven if we emerge shocked, appalled and fundamentally confused.

After all, this is what the western world’s leading print pundit of fair-market capitalism does best: perplex.

“The World in 2015” imparts much the same wisdom as the various “Worlds” the magazine has published since big-picture, 30,000-foot views became both the sage and financially responsible way to board-up the bottom lines of publications heading into the otherwise preoccupied end-of-year times, just around the Christian holidays.

In the early 1980s, at the Globe and Mail’s Report on Business, these annual numbers were considered essential reading for cub reporters – just as important, for example, as the Canadian Securities Institute’s textbooks for aspiring investment, dealers, brokers and floor traders.

And as metro and national beat scribblers might have tucked into Charles Dickens, while the snow fell gently on the gritty curbs of downtown Toronto, we trenchers at the ROB studiously perused the writings of Walter Bagehot, The Economist’s preeminent editor (between 1860 and 1877) for clarity about the how the world’s financial systems worked then, and perhaps now, to sadly little avail.

Complexity is, of course, the essential nature of modernity. And accepting intricacy – nay, embracing it – in the affairs of men and women of good conscience is, arguably, what The Economist does best (hence, the name of the publication). In this regard, the 2015 outlook edition does not disappoint.

In his piece, the magazine’s editor-in-chief, John Micklethwait, writes, “Of all the predictions to be made in 2015, none seems safer than the idea that across the great democracies people will feel deeply let down by those who lead them. In Britain, Spain and Canada, elections will give voters a chance to unleash some of those frustrations.”

Are you listening Messrs. Harper, Mulcair and Trudeau? How about you, Barack Obama, one-time savior of the disavowed?

“The levels of unpopularity and disengagement in the West have now risen to staggering levels,” Micklethwait continues. “Since 2004 a clear majority of Americans have told Gallup that they are dissatisfied with the way they are governed, with the numbers of those fed-up several times climbing above 80 per cent (higher than during Watergate. Britain’s Conservative Party, one of the West’s most successful political machines had three million members in the 1950s; it will fight the (general) election in May with fewer than 200,000.”

So, then, we may reasonably assume, democracy is on the run.

But, wait, here’s what The Economist’s foreign editor, Edward Carr, writes in the same issue:

“Look on the bright side. . .Armed with more realistic expectations, optimists can point to three reasons for hoping for something better in 2015. The first is that democracies take time to respond to new threats and dangers, but when they do they tend to be committed to their new policies. . .The second reason to temper pessimism is adaptation. . .In 2015, China and Japan will begin to put aside their differences. Not because either is willing to give ground on their in their long-running territorial dispute over some rocky outcrops in the East China Sea, but because both need the economic boost from sustained trade and investment between them. . .The third reason concerns America. . .(Some have said) that (Barack Obama) is weak and distracted, and others (have said) that the United States is falling into decline. The charges distort Mr. Obama’s thinking and vastly overstate America’s loss of power.”

In fact, it’s hard to argue with a five-year recovery that has returned five million jobs to the biggest economy on the planet, reduced unemployment to below 5.6 per cent, and goosed annual GDP growth (in that country) to between three and 3.5 per cent over the next 15 months.

Perplexing, indeed.

Are we going to hell in a hand basket; or are we at the cusp of a new age of fair-market capitalism, powered by democracy movements that fully appreciate the role that healthy public institutions play in realizing their peaceful, common goals?

Let us dust off our crystal balls, for all the good they will do us.

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Jan 14 2015
Leave a comment
Business, Media

For a prominent prognosticator, no easy answers in the year ahead

DSC_0058

Reading The Economist’s redoubtable annual turn as Nostradamus, we will be forgiven if we emerge shocked, appalled and fundamentally confused.

After all, this is what the western world’s leading print pundit of fair-market capitalism does best: perplex.

“The World in 2015” imparts much the same wisdom as the various “Worlds” the magazine has published since big-picture, 30,000-foot views became both the sage and financially responsible way to board-up the bottom lines of publications heading into the otherwise preoccupied end-of-year times, just around the Christian holidays.

In the early 1980s, at the Globe and Mail’s Report on Business, these annual numbers were considered essential reading for cub reporters – just as important, for example, as the Canadian Securities Institute’s textbooks for aspiring investment, dealers, brokers and floor traders.

And as metro and national beat scribblers might have tucked into Charles Dickens, while the snow fell gently on the gritty curbs of downtown Toronto, we trenchers at the ROB studiously perused the writings of Walter Bagehot, The Economist’s preeminent editor (between 1860 and 1877) for clarity about the how the world’s financial systems worked then, and perhaps now, to sadly little avail.

Complexity is, of course, the essential nature of modernity. And accepting intricacy – nay, embracing it – in the affairs of men and women of good conscience is, arguably, what The Economist does best (hence, the name of the publication). In this regard, the 2015 outlook edition does not disappoint.

In his piece, the magazine’s editor-in-chief, John Micklethwait, writes, “Of all the predictions to be made in 2015, none seems safer than the idea that across the great democracies people will feel deeply let down by those who lead them. In Britain, Spain and Canada, elections will give voters a chance to unleash some of those frustrations.”

Are you listening Messrs. Harper, Mulcair and Trudeau? How about you, Barack Obama, one-time savior of the disavowed?

“The levels of unpopularity and disengagement in the West have now risen to staggering levels,” Micklethwait continues. “Since 2004 a clear majority of Americans have told Gallup that they are dissatisfied with the way they are governed, with the numbers of those fed-up several times climbing above 80 per cent (higher than during Watergate. Britain’s Conservative Party, one of the West’s most successful political machines had three million members in the 1950s; it will fight the (general) election in May with fewer than 200,000.”

So, then, we may reasonably assume, democracy is on the run.

But, wait, here’s what The Economist’s foreign editor, Edward Carr, writes in the same issue:

“Look on the bright side. . .Armed with more realistic expectations, optimists can point to three reasons for hoping for something better in 2015. The first is that democracies take time to respond to new threats and dangers, but when they do they tend to be committed to their new policies. . .The second reason to temper pessimism is adaptation. . .In 2015, China and Japan will begin to put aside their differences. Not because either is willing to give ground on their in their long-running territorial dispute over some rocky outcrops in the East China Sea, but because both need the economic boost from sustained trade and investment between them. . .The third reason concerns America. . .(Some have said) that (Barack Obama) is weak and distracted, and others (have said) that the United States is falling into decline. The charges distort Mr. Obama’s thinking and vastly overstate America’s loss of power.”

In fact, it’s hard to argue with a five-year recovery that has returned five million jobs to the biggest economy on the planet, reduced unemployment to below 5.6 per cent, and goosed annual GDP growth (in that country) to between three and 3.5 per cent over the next 15 months.

Perplexing, indeed.

Are we going to hell in a hand basket; or are we at the cusp of a new age of fair-market capitalism, powered by democracy movements that fully appreciate the role that healthy public institutions play in realizing their peaceful, common goals?

Let us dust off our crystal balls, for all the good they will do us.

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Oct 15 2014
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Business, Economy, Politics

How to tempt a global downturn

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One of the great, not entirely discreditable, boasts of the current federal government has been its masterful handling of both the national economy and the public books during and after the Great Recession of 2008-09.

And, indeed, the world looked on in envy, as a piece in The Economist this past May reminded readers: “In the government’s retelling of the crisis, it alone stood between Canadians and doom.

“(The country) weathered the financial crisis well. No bank needed to be rescued: the World Economic Forum anointed Canada’s banking system the soundest in the world. Mark Carney was exported to the Bank of England in large part because of his work at the Bank of Canada. Stephen Harper, the prime minister, took to describing Jim Flaherty, who died on April 10th just weeks after leaving the cabinet, as “the best finance minister on the planet’.”

Of course, as The Economist writer, and many others, point out, Canada’s performance during the downturn owed as much to the sturdiness of its financial traditions and institutions than to the foresight of the sitting government.

But whichever successful combination of policy and regulatory fiat did the trick, the timing of Canada’s financial fortitude was inarguably auspicious.

Is it so today, 62 months into the recovery?

The question is more than merely academic. Lately, the dreaded ‘r’-word has been making rounds, if not yet headlines, in the world’s increasingly turbulent capital markets, leaving many economists to ponder when the dominoes will again begin to fall, and which nations are most vulnerable when they do.

According to London-based economist Philip Pilkington, writing in Aljazeera America last month, “The current consensus among American policymakers and commentators, including Federal Reserve Chairwoman Janet Yellen, is that the U.S. economic recovery is well underway. But not everyone agrees with this assessment. One firm in particular, the Jerome Levy Forecasting Centre a New York–based economic consultancy, warned that the world economy might plunge into another recession in 2015 that will take down the U.S. economy with it.”

What makes this all the more troubling is that these guys are no Chicken Littles. When they say the sky is falling, they’re always right. Mr. Pilkington notes: “Levy economists. . .use The Profits Perspective forecasting model developed by Jerome Levy in 1908. . .(and) have accurately predicted every major financial event in the past few decades, including the financial crisis, which many mainstream economists said was unforeseeable.”

All of which leads Mr. Pilkington to conclude that U.S. policymakers continue to underestimate the impact emerging economies, whose growth rates have substantially slowed in the past couple of years, have on developed ones.

“They have once again become hypnotized by their overly simplistic, abstract models, which exposed their failure in 2008,” he writes. “This generates a rather bizarre argument about what constitutes slow wage growth. Meanwhile a storm that could tip the world back into recession seems to be gathering in the emerging market economies. It is perhaps time to listen to and engage with the economists who saw the last crisis coming. If these self-reinforcing tendencies within the profession continue, it seems unlikely that we could effectively face down future economic problems.”

Has any of this showed up on the radar in the war rooms of Ottawa’s economic planners?

Certainly, Parliamentary Budget Officer Denis Frechette and his researchers wonder what justifies collecting billions-of-dollars more in Employment Insurance premiums than are required to pay for the system over the next two years – a circumstance that, they insist, will likely suppress job creation.

“PBO estimates that the Small Business Job Credit will create 200 new full‐time equivalent jobs in 2015 and 600 new jobs in 2016,” their report to Parliament stated last week. “PBO estimates the premium rate freeze will reduce full‐time equivalent employment by 2,000 jobs in 2015 and a further 8,000 jobs in 2016.”

Just in time, perhaps, for the next great, jobs-devouring recession.

Brilliant, boys and girls!

That’s how the onetime envy of the world becomes its laughingstock.

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