Two excellent columns over the weekend, both by conservative-leaning columnists, that deserve your attention.
The first is by David Brooks in The New York Times, citing Tucker Carlson’s “now famous rant on Fox News…that American elites are using ruthless market forces to enrich themselves and immiserate everyone else.” (You can watch Carlson’s fascinating New Year monologue here. But fair warning: it’s 15 minutes long, an eternity in TV news time.)
The other is by Gerald Baker in The Wall Street Journal, focusing on Alexandria Ocasio-Cortez, who he says may be “one of the most important political figures of our age” — despite her “inexperience, knowledge gaps and alarmingly ahistorical belief in impossible ideologies.”(For another version of this theme, read Edward Luce in yesterday’s FT.)
What the columns underscore is the still-building forces on both sides of the political aisle challenging the existing economic order. There’s a sense that, as Baker puts it, “old nostrums of free-market, growth-maximizing economic efficiencies” no longer appeal to a broad swath of Americans. “Capitalism itself is in a strange place. On the one hand, it’s impossible to dispute that the market-oriented liberalization of the world economy over the last 50 years has produced perhaps the most explosive growth in prosperity in human history. But in the West we are profoundly ill at ease, not just with the widening inequalities it produces but with capitalism’s limitations in answering deeper human needs.”
Brooks rejects Carlson’s simplistic diagnosis (it’s the greedy bankers’ fault) and provides a more subtle — and more accurate — alternative. American corporations over the last half-century made a shift from serving multiple stakeholders — customers, employees, the towns in which they are located — to giving primacy to the shareholder. In the process, “we switched to a purely economic lens” and “turned off the moral lens… A deadly combination of right-wing free-market fundamentalism and left-wing moral relativism led to a withering away of moral norms and shared codes of decent conduct.”
The good news is that a growing number of business leaders recognize, and agree, with what Brooks and Baker are saying. Capitalism is at a turning point, and those running the show face an urgent need to demonstrate they can do a better job serving society.
The bad news is that the political system may be fraying faster than far-sighted business leaders can repair it.
More news below.
Chinese exports suffered a 4.4% year-on-year fall in December, which was worse than expected. Imports fell by 7.6%, pointing to softening domestic demand. Both provided the worst results for China since 2016, and they arguably suggest a weakening hand in Beijing’s trade tussle with Washington. Speaking of which, China’s trade surplus with the U.S. hit a record $323.3 billion last year. Bloomberg
Visa and Mastercard
China supposedly opened its payments markets to outside players in 2017, but although Visa and Mastercard submitted applications to participate over a year ago, the People’s Bank of China has ignored them. Perhaps more evidence of informal barriers that block foreign competition. Financial Times
Geisha Williams has resigned as CEO of PG&E, the Californian power utility that could face bankruptcy after sparking many wildfires. The lucky new interim CEO is general counsel John Simon, who will get to deal with liability suits and regulatory calls for a breakup. Wall Street Journal
Ford CEO Jim Hackett has reassured the automaker’s U.S. workers that their jobs are secure, despite the company cutting back its European workforce. “I’m confirming that there’s no blue collar cuts in the offing,” Hackett said. “So the promise to the folks in the factory floor is that we keep the economy strong, because that’s the issue that can threaten their employment… but the design of the business isn’t threatening that at all.” Fox Business
Around the Water Cooler
UBS insists that there’s still money to be made in the stock market before a recession hits. “You have to stay invested, whatever your risk tolerance can bear,” claimed Mark Haefele, UBS Global Wealth Management’s global chief investment officer. CNBC
The European Commission wants to get rid of member states’ vetoes over its taxation initiatives, which currently require unanimity to move ahead. Guess what stands in the way: the veto. To get its new plan in motion, the Commission needs to trigger a clause in the EU treaty that itself requires unanimity among the 28 (maybe soon to be 27) EU countries. Politico
The U.K.’s pound is steady at the moment, but everyone’s bracing for a turbulent week. Tomorrow the British parliament will most likely reject Theresa May’s negotiated Brexit settlement, and let’s see what happens next. The most likely scenario is that she asks the EU for an extension of the “Article 50” period that leads up to Brexit—and she’ll probably get it—but she may take her time in making that request. FXStreet
China will try to grow a flower on the moon within a 100-day experimental period. The Chang’e 4 spacecraft that it managed to land on the dark side of the moon is carrying a cylinder that contains silkworm eggs and potato and cress seeds. Apart from growing those plants, the aim is to get the silkworms through a full life cycle. South China Morning Post