Economics

Trump et l'exemple de l'Angleterre

Dec 13, 2016 Jim O'Neill

LONDRES – Il y a quelques jours, le président américain nouvellement élu, Donald Trump, a choisi Twitter – son moyen de communication préféré - pour déclarer qu'il n'a pas besoin de la permission de la Chine pour contacter Taïwan, car la Chine ne demande à personne la permission de dévaluer sa devise. A ce moment-là, mon espoir que la secousse provoquée par son arrivée soit bénéfique aux USA sur le plan économique s'est effrité.

A mon avis les pays développés ont besoin d'un choc pour parvenir à une véritable reprise après la crise de 2008 et leur recours excessif au relâchement monétaire pour y échapper. Etant donné la tendance de Trump à renverser le cours des choses, il paraissait être l'homme de la situation. Mais pour aider les USA, il faudrait qu'il se concentre sur les fondamentaux économiques plutôt que sur les habituelles fariboles populistes, souvent inappropriées.

A en juger par ses accusations contre la Chine, il se contente de faire des vagues et d'irriter ses partisans, sans proposer un quelconque programme constructif. Tout observateur averti de la Chine – dont ses propres conseillers avec lesquels j'ai travaillé dans le passé – savent qu'elle n'avait pas dévalué sa monnaie depuis relativement longtemps.

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0 Comments on this paragraph, 25 Comments on this article

Bob Bronson Dec 20, 2016

O'Neill said nothing of substantive action value.

Very British, I say ole chap.
- Wee John Lee Dec 21, 2016
  
  This article is of no substantial action values.
  The author uses Trump's election victory as starting lines to get the necessary attention, and then move into scenario that are totally unrelated.
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Patrick Newman Dec 19, 2016

Sorry, Jim but George Osborne's let's re-organise local government in his lunch hour (aka northern powerhouse) just wont work - it's more devo-illusion. What is being devolved is austerity when it's investment and public services that is the key. Combining politically diverse powerful unitaries under a mayor whose limited powers at best will be subject to the conflicts of interest of the constituent authorities where the real political power lies. You are also confusing announcement with achievement. There is not one infrastructure project benefiting the North has begun (i.e. shovel in earth). Many have been cancelled (e.g. Hull - Selby electrification). Talk to these people before painting a rose tinted picture of the revival.
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Mauricio Duran-Loriga Dec 19, 2016

If History is any guide, economic revivals in the same region and within the same sector, simply never happen. Betting against this proven certainty will bring much economic pain and social frustration.

I very much doubt Trump has the slightest intention of making the auto industry back to its good old days in the Rust Belt. The campaign is past, so guys move on from luring voters to managing the country in earnest.

The British northern powerhouse concept can not be extrapolated to the US. Basically because British manufacturing is ultra concentrated in a not so big area.

The US manufacturing is the "dog" of the economy. Pouring billions in infrastructure into a dying sector is the perfect definition of malinvestment.

Wouldnt it be much better to create the necessary conditions in the US (regulation, taxes, trade deals) as to allow the private sector to efficiently allocate capital to new manufacturing sectors in the most suitable regions, and at a later stage then throw in the public kitchen sink of infrastructure investment to leverage the whole thing?

Globally considered, British transportation infrastructure is apt for utter improvement. Never in the last 100 years has infrastructure gotten Britain out of a recession. Much on the contrary, it has always been a drag on the economy.

History books show that Britain has overtime worked firmly on a pro-growth legal environment seeking to attract maximum capital investment, and where taxes allowed for sustainable and generous yield on those capital inflows.

Over the last 100 years, the icing on the cake was put on every occasion by the Bank of England, allowing the pound to temporary depreciate quickly and deeply at recessions and/or uncertain economic times.

Spain is a sad example of how investing gargantuan sums in the best infrastructure possible money can buy, without having a pre-existent economic engine to be leveraged by the newly built infrastructure, only leads to a leap in public deficits and debt, which leads to higher taxation, capital flight, higher interest rates, higher unemployment, and recession. An unmitigated disaster.

If a new avalanche of infrastructure investment arises, beware of sneaky Keynesian hole diggers.
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Barry Rosenfeld Dec 19, 2016

Is this the old "growth pole" model that is being proposed? The growth of city regions owes much to Myrdal's notion of circular and cumulative causation. Only rapidly rising input costs tend to attenuate this process. The notion of creating a new centre of growth in an area that had faced secular decline because its industrial base is uncompetitive in the world economy might be a great boon to investment banks but might also be a great waste of limited public and private resources. The reasons, if any , for UK policy in this regard has much to do with politics and little to do with economics.
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Robert O'Regan Dec 18, 2016

I get the feeling that this one-percenter may think that the 'rentier' class of people are the ones who rent cheap apartments. Now let me get on to my plans for Bangkok.
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S Nanda Dec 18, 2016

"And, indeed, the distances between Manchester, Leeds, Liverpool, and Sheffield are smaller than the distances covered by the Central, District, and Piccadilly lines in the London Underground." I'm sorry but what?
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Subhash Garg Dec 15, 2016

IN fact, the US is already there. The Eastern seaboard and coastal California are integrated regions consisting of hundreds of small. medium and large cities. Most of the industrial East coast is that way. What about the plains?
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Peter Schaeffer Dec 14, 2016

I read this and thought "if this is best the establishment can come up with, Brexit makes more and more sense". Thanks for the incisive argument in favor of Brexit and against the status quo.
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Curtis Carpenter Dec 13, 2016

I can see how the "rustbelt powerhouse" concept could yield some benefits, and the idea is intriguing. But the devil is most assuredly in the details and involve more than just improving transportation infrastructure. Isn't the scheme analogous, in many respects, to putting all of your poor and disabled people in one place (the term "concentration camp" comes to mind) and expecting them to solve their own problems thereby?
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Jose araujo Dec 13, 2016

Just compare the performance of the UK vs the US to get a glimpse on who should be asking for advice...
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Jose araujo Dec 13, 2016

I find it amazing that a former chairman of a major asset management institution never stopped himself to ask how could and an economy that relies too much on an easy monetary policy fail to produce inflation…

The level of ignorance and lack of understanding of the ones leading our institutions is just amazing
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Petey Bee Dec 13, 2016

Nicely done, O'Neill seems to be with it on the modern rhetoric. (despite the headline, article is mostly about his proposals for the UK).

Can't go wrong with public transportation either, a concept badly needed in the US. With Uber, and new car inventories forming a monumental cliff it's probably not going to happen, but one can dream.
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dan baur Dec 13, 2016

There was a time when living in the NE US made sense, but not anymore. Why should anyone live in the rust belt when they can move to nicer places? The uk is nasty everywhere so moving doesn't help except perhaps moving to Spain. See how the US is different? Comparisons across countries should be used sparingly if at all.
- Steve Hurst Dec 13, 2016
  
  @dan
  
  There are some beautiful places in the UK but they are normally a long way from industry. Geologically the UK is far more complicated than the US. But yes comparing the UK to the US doesnt work, just on the scale issue
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Alisdair Hamilton-Wilkes Dec 13, 2016

I am no fan of this odious tosser Trump. However, I was pleased to see the Clintons vanquished and hope for the same ‘jolt’ to our world.

“Trump is simply stirring the pot and riling up his supporters – not advancing any kind of constructive agenda.”
– actually I read it a bit differently; I took the real message to be ‘You cannot takeover the South China Sea' with impunity.

With regards to the rest of the article and the NPH, I totally agree. So many of our economic problems discussed in UK politics are a misdiagnosis with the true root causes being too much centralisation and an unbalanced economy.
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Steve Hurst Dec 13, 2016

I am sorry but this is devoid of any real argument other than noting that there are major problems with skills and education and transport links in areas that have lost traditional industrial bases. Apart from anything else linear transportation links work differently to radial networks so to compare the two regions - Northern v London - is weak
- Alisdair Hamilton-Wilkes Dec 19, 2016
  
  @ Steve,
  There is a slight drop in education funding overall but an increase in the North. Currently London is comparatively over funded. Several supporting entities are being defunded too (Local Education Authorities and they won't be missed). I am generally not that impressed by arguments about the spending inputs either, in the public sector the relationship between spending and outcome is often poor and precisely because there is no coordinated objective.
  
  This is exactly what the Norther Powerhouse is about and hope the government sticks with it. Short termism and constant policy flux are major causes of the UK's malaise in this area.
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- Steve Hurst Dec 17, 2016
  
  @Alisdair
  
  Education has just had a 1.5% shave when it should be expanded. Its not going to happen. Talk is cheap. There is plenty of manufacturing in the EU still; its just been relocated out from the UK using EU grants (net positive funded by the UK)
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- Alisdair Hamilton-Wilkes Dec 16, 2016
  
  @Steve
  It's time more than money. The reason the Blair government poured money into the North (in the hope it would shore up their voters) but utterly ignored manufacturing was because modern manufacturing doesn't create lots of employment. Hence their reliance on crapy service jobs.
  
  However, manufacturing provides vastly more value added work and those networks don't need to be started from scratch. There is actually a lot there already -it just isn't enough and it is not well integrated (in terms of supplier clusters and risk sharing component suppliers) and there isn't enough R&D happening to ensure deeper long term growth.
  
  So we agree that transport networks are only a starting point.
  
  I have recruited in Manchester before (I live in the South) and I was impressed by the amount of talent available. Sadly it isn't being maximised; yet.
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- Steve Hurst Dec 13, 2016
  
  @Alisdair
  
  I am all for the rejuvenation of the North I just do not think it will happen with this outline. The problem is not a few metros it is tackling a wholesale skills shortage and boosting education and building new industrial networks from scratch. You are not going to replace trad mass manufacturing and need a totally different type of worker. In a digital age it is questionable if physical movement of people on metros is the answer. Economic activity normally develops within ring roads not along islands on a linear layout. In short you are talking about a lot of money
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- Alisdair Hamilton-Wilkes Dec 13, 2016
  
  @ Steve Hurst
  Not really he is advocating more of metro system to tie those small cities into a unitary agglomeration. I agree that the linear East West link is only a start of what is needed but rejuvenating the North is crucial for long-term success.
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