NY Times Book Review: Looking Back@Crash of 2008


August 11, 2018

CRASHED

By Dr. Fareed Zakaria

How a Decade of Financial Crises Changed the World
By Adam Tooze
706 pp. Viking. $35.

Steve Bannon can date the start of the Trump “revolution.” When I interviewed him for CNN in May, in Rome, he explained that the origins of Trump’s victory could be found 10 years ago, in the financial crisis of 2008.

“The implosion of those world capital markets has never really been sorted out,” he told me. “The fuse that was lit then that eventually brought the Trump revolution is the same thing that’s happened here in Italy.” (Italy had just held elections in which populist forces had won 50 percent of the vote.)

Adam Tooze would likely agree. An economic historian at Columbia University, he has written a detailed account of the financial shocks and their aftereffects, which, his subtitle asserts, “changed the world.”

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If journalism is the first rough draft of history, Tooze’s book is the second draft. A distinguished scholar with a deep grasp of financial markets, Tooze knows that it is a challenge to gain perspective on events when they have not yet played out. He points out that a 10-year-old history of the crash of 1929 would have been written in 1939, when most of its consequences were ongoing and unresolved. But still he has persisted and produced an intelligent explanation of the mechanisms that produced the crisis and the response to it. We continue to live with the consequences of both today.

CreditTyler Comrie; Photograph courtesy of GSO/Getty Images

As is often the case with financial crashes, markets and experts alike turned out to have been focused on the wrong things, blind to the true problem that was metastasizing. By 2007, many were warning about a dangerous fragility in the system. But they worried about America’s gargantuan government deficits and debt — which had exploded as a result of the Bush administration’s tax cuts and increased spending after 9/11. It was an understandable focus. The previous decade had been littered with collapses when a country borrowed too much and its creditors finally lost faith in it — from Mexico in 1994 to Thailand, Malaysia and South Korea in 1997 to Russia in 1998. In particular, many fretted about the identity of America’s chief foreign creditor — the government of China.

Yet it was not a Chinese sell-off of American debt that triggered the crash, but rather, as Tooze writes, a problem “fully native to Western capitalism — a meltdown on Wall Street driven by toxic securitized subprime mortgages.”Tooze calls it a problem in “Western capitalism” intentionally. It was not just an American problem. When it began, many saw it as such and dumped the blame on Washington.

In September 2008, as Wall Street burned, the German Finance Minister Peer Steinbruck explained that the collapse was centered in the United States because of America’s “simplistic” and “dangerous” laissez-faire approach. Italy’s finance minister assured the world that its banking system was stable because “it did not speak English.”

 

In fact this was nonsense. One of the great strengths of Tooze’s book is to demonstrate the deeply intertwined nature of the European and American financial systems. In 2006, European banks generated a third of America’s riskiest privately issued mortgage-backed securities. By 2007, two-thirds of commercial paper issued was sponsored by a European financial entity.

The enormous expansion of the global financial system had largely been a trans-Atlantic project, with European banks jumping in as eagerly and greedily to find new sources of profit as American banks. European regulators were as blind to the mounting problems as their American counterparts, which led to problems on a similar scale. “Between 2001 and 2006,” Tooze writes, “Greece, Finland, Sweden, Belgium, Denmark, the U.K., France, Ireland and Spain all experienced real estate booms more severe than those that energized the United States.”

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Credit Sonny Figueroa/The New York Times

 

But while the crisis may have been caused in both America and Europe, it was solved largely by Washington. Partly, this reflected the post-Cold War financial system, in which the dollar had become the hyper-dominant global currency and, as a result, the Federal Reserve had truly become the world’s central bank. But Tooze also convincingly shows that the European Central Bank mismanaged things from the start.

The Fed acted aggressively and also in highly ingenious ways, becoming a guarantor of last resort to the battered balance sheets of American but also European banks. About half the liquidity support the Fed provided during the crisis went to European banks, Tooze observes.

Before the rescue and even in its early stages, the global economy was falling into a bottomless abyss. In the first months after the panic on Wall Street, world trade and industrial production fell at least as fast as they did during the first months of the Great Depression. Global capital flows declined by a staggering 90 percent. The Federal Reserve, with some assistance from other central banks, arrested this decline. The Obama fiscal stimulus also helped to break the fall.

 

Tooze points out that almost all serious analyses of the stimulus conclude that it played a significant positive role. In fact, most experts believe it ended much too soon. He also points out that large parts of the so-called Obama stimulus were the result of automatic government spending, like unemployment insurance, that would have happened no matter who was president. And finally, he notes that China, with its own gigantic stimulus, created an oasis of growth in an otherwise stagnant global economy.

The rescue worked better than almost anyone imagined. It is worth recalling that none of the dangers confidently prophesied by legions of critics took place. There was no run on the dollar or American treasuries, no hyperinflation, no double-dip recession, no China crash.

American banks stabilized and in fact prospered, households began saving again, growth returned slowly but surely. The governing elite did not anticipate the crisis — as few elites have over hundreds of years of capitalism. But once it happened, many of them — particularly in America — acted quickly and intelligently, and as a result another Great Depression was averted. The system worked, as Daniel Drezner notes in his own book of that title.

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A trader on the floor of the New York Stock Exchange in February 2009. CreditJames Estrin/The New York Times

 

But therein lies the unique feature of the crash of 2008. Unlike that of 1929, it was not followed by a Great Depression. It was not so much the crisis as the rescue and its economic, political and social consequences that mattered most. On the left, the entire episode discredited the market-friendly policies of Tony Blair, Bill Clinton and Gerhard Schroeder, disheartening the center-left and emboldening those who want more government intervention in the economy in all kinds of ways. On the right, it became a rallying cry against bailouts and the Fed, buoying an imaginary free-market alternative to government intervention.

Unlike in the 1930s, when the libertarian strategy was tried and only deepened the Depression, in the last 10 years it has been possible for the right to argue against the bailouts, secure in the knowledge that their proposed policies will never actually be implemented.

Bannon is right. The crash brought together many forces that were around anyway — stagnant wages, widening inequality, anger about immigration and, above all, a deep distrust of elites and government — and supercharged them. The result has been a wave of nationalism, protectionism and populism in the West today. A confirmation of this can be found in the one major Western country that did not have a financial crisis and has little populism in its wake — Canada.

The facts remain: No government handled the crisis better than that of the United States, which acted in a surprisingly bipartisan fashion in late 2008 and almost seamlessly coordinated policy between the outgoing Bush and incoming Obama administrations. And yet, the backlash to the bailouts has produced the most consequential result in the United States.

Tooze notes in his concluding chapter that experts are considering the new vulnerabilities of a global economy with many new participants, especially the behemoth in Beijing. But instead of a challenge from an emerging China that began its rise outside the economic and political system, we are confronting a quite different problem — an erratic, unpredictable United States led by a president who seems inclined to redo or even scrap the basic architecture of the system that America has painstakingly built since 1945.

How will the world handle this unexpected development? What will be its outcome? This is the current crisis that we will live through and that historians will soon analyze.

Dr. Fareed Zakaria is a CNN anchor, a Washington Post columnist and the author of “The Post American World.”

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A version of this article appears in print on , on Page 1 of the Sunday Book Review with the headline: The Aftershocks.

The British History of Brexit


August 1, 2018

The British History of Brexit

by
My main worry is the loss of the chance for Britain to help shape the political future of Europe. The organization Britain will be leaving is far from marching confidently ahead to political union. It is riven with conflict. German Chancellor Angela Merkel is almost as powerless as May; neo-fascists are in, sharing, or close to power in several European countries. Almost the entire weight of the European project rests on the shoulders of French President Emmanuel Macron. It would have been good to have Britain by his side, rather than drifting out to the Atlantic.”–

It is now all but certain that Britain will leave the EU in March 2019 without a workable divorce settlement. The only question is whether this outcome will be the economic catastrophe that most observers fear.

 

LONDON – Since June 23, 2016, when 52% of British voters backed withdrawing from the European Union, the “Brexit” debate has been tearing British politics apart. Although the Brexit referendum was non-binding, then-Prime Minister David Cameron’s government, expecting a vote in favor of “Remain,” had promised to honor the result. Britain, late to join the EU, will be the first member state to leave it, with the exit date set for March 2019.

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Remainers alternate between blaming Cameron for his recklessness in holding the referendum and his incompetence in managing it, and castigating the Brexiteers for swamping the voters with lies. At a deeper level, the Brexit vote can be seen as part of a transatlantic peasants’ revolt, making itself felt in France, Hungary, Italy, Poland, Austria, and of course the United States. Both explanations have merit, but both ignore the specifically British roots of Brexit.

Britain had stood alone against a Hitler-dominated continental Europe in 1940, the moment of recent history recalled with most pride. Years later, Margaret Thatcher voiced a common British sentiment in her usual emphatic manner. “You see,” she once said to me, “we visit, and they’re there.” Despite former Prime Minister Tony Blair’s stated intention, Britain was never “at the heart” of Europe: it was. In their 42 years in the EU, the British have always been an awkward, Euroskeptical partner. Approval of membership has only briefly been above 50%, and by 2010 was dipping below 30%. A referendum back then most likely would have resulted in an even bigger majority for leaving.

The United Kingdom did not sign the 1957 Treaty of Rome, which joined the EU’s six original members – Germany, France, Italy, the Netherlands, Belgium, and Luxembourg – in the European Economic Community. True to its traditional policy of divide and rule, it organized the seven-member European Free Trade Association as a counterweight in 1960.

But the UK stagnated, while the EEC prospered, and Britain applied for entry in 1963. Britain’s motive was mainly economic – to escape the EEC’s external tariff against British goods, by joining a more dynamic free-trade area. But the motive of preventing the formation of a political bloc was never absent, and ran counter to the European founding fathers’ dream of a political union. In the end, French President Charles de Gaulle vetoed the UK’s membership bid, viewing Britain as an American Trojan Horse.

Remainers conveniently forget that when Britain voted in 1975 to remain a member of the EEC – after joining in 1973 – the referendum was based on the lie that membership had no political implications. In fact, the EU’s founders, especially Jean Monnet, saw ever-deeper economic union as a way to forge ever-deeper political union. In 1986, Thatcher signed the Single European Act (which set the objective of establishing a single market), apparently believing that it was only an extension of free trade in goods to services, capital, and labor.

But Britain’s semi-detached status was confirmed by the Maastricht Treaty of 1992, under which Thatcher’s successor, John Major, obtained (together with Denmark) an exemption from the requirement to join the euro. More obviously than anything preceding it, the single currency was a touchstone of willingness to proceed toward political union. After all, as the events of 2008-9 showed, a common currency without a common government cannot be made to work.

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In the wake of the Brexit decision, Cameron’s hapless successor, Theresa May, has been caught between the demands of Brexiteers like her erstwhile Foreign Secretary, Boris Johnson, for “control of our borders” and the fears of the Remainers concerning the economic and political consequences of leaving. She hopes for an exit from the EU whereby Britain would retain the benefits, but avoid the costs, of membership.

This hope is embodied in the government’s just-published White Paper, “The Future Relationship between the United Kingdom and the European Union.” In it, the government seeks an “Association” that would leave Britain within the EU’s external tariff area for all trade in goods made in Britain and the EU, but free to conclude its own free-trade agreements with everyone else.

The single market in services would be replaced by a special agreement allowing EU clients unrestricted access to London’s financial services, while avoiding a common regulatory system. A new “framework for mobility” would aim to continue to “attract the brightest and the best, from the EU and elsewhere,” while curtailing (in unspecified ways) EU citizens’ freedom to work in Britain.

Nothing is more certain than that the White Paper’s jejune attempt to have it both ways will fail to survive serious scrutiny on either side of the Channel. And that means that Britain will leave the EU in March 2019 without a workable divorce settlement. The only question is whether this outcome will be the disaster most observers fear.

I am unpersuaded by the Remain argument that leaving the EU would be economically catastrophic for Britain. The loss of settled EU arrangements would be balanced by the chance for Britain to rediscover its own way, not least in fiscal and industrial policy. Experience suggests that the British are most resilient, most inventive, and happiest when they feel in control of their own future. They are not ready to give up their independence.

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My main worry is the loss of the chance for Britain to help shape the political future of Europe. The organization Britain will be leaving is far from marching confidently ahead to political union. It is riven with conflict. German Chancellor Angela Merkel is almost as powerless as May; neo-fascists are in, sharing, or close to power in several European countries. Almost the entire weight of the European project rests on the shoulders of French President Emmanuel Macron. It would have been good to have Britain by his side, rather than drifting out to the Atlantic.

*Robert Skidelsky, Professor Emeritus of Political Economy at Warwick University and a fellow of the British Academy in history and economics, is a member of the British House of Lords. The author of a three-volume biography of John Maynard Keynes, he began his political career in the Labour party, became the Conservative Party’s spokesman for Treasury affairs in the House of Lords, and was eventually forced out of the Conservative Party for his opposition to NATO’s intervention in Kosovo in 1999.

Trump–The Demolition Man and an Upscale Archie Bunker


June 12, 2018

Trump–The Demolition Man and an Upscale Archie Bunker

by John Cassidy@www.newyorker.com

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Donald Trump hasn’t changed. The many biases and misconceptions that he has about the United States and its place in the world go back as far as 1990, when an interviewer from Playboy asked him about the first thing he would do if he were elected President. “Many things,” Trump replied. “A toughness of attitude would prevail. I’d throw a tax on every Mercedes-Benz rolling into this country and on all Japanese products, and we’d have wonderful allies again.” A President Trump, he went on, “wouldn’t trust our allies; he’d have a huge military arsenal, perfect it, understand it. Part of the problem is that we’re defending some of the wealthiest countries in the world for nothing . . . . We’re being laughed at around the world.”

This clearly wasn’t a man who had studied much history, beyond perhaps the volume of Hitler’s speeches that his former wife Ivana once claimed that he kept by his bed. He seemed blissfully unaware of how, after the Second World War, the U.S. used its military and economic power to create an open international economic system in which American multinational companies such as Ford, General Motors, and I.B.M. were guaranteed a growing and prosperous market. And he seemed similarly clueless about the role that multilateral institutions like NATO, the G-7, and the International Monetary Fund played in extending and perpetuating American power.

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If Trump’s worldview has any consistency, it is as the ideology of a certain type of parochial, embittered, outer-borough New Yorker, an upscale Archie Bunker. The first great misfortune that befell the U.S. and its allies came in November of 2016, when this small-minded parvenu was elected President. The second came earlier this year, when Trump belatedly realized that he didn’t have to surround himself with wiser and more knowledgeable people who could restrain his impulses. He replaced H. R. McMaster, the national-security adviser, and Gary Cohn, the head of the National Economic Council, with John Bolton and Larry Kudlow, two wizened conservative talking heads who both know their role, which is to parrot whatever nonsense Trump comes up with on any given day.

On Saturday, Trump once again made a stunning display of his ignorance. Before departing early from the G-7 summit in La Malbaie, Quebec, to fly to Singapore, he issued a preposterous threat to cut off all U.S.-Canadian trade if the Canadians responded to his imposition of tariffs on Canadian steel and aluminum goods entering the United States by levying similar duties on some American goods entering Canada. At a press conference that Justin Trudeau, the Canadian Prime Minister, held to close the summit, he was inevitably asked whether his government would go ahead with the retaliatory tariffs despite Trump’s barking. “I have made it very clear to the President that it is not something we relish doing, but it is something that we absolutely will do,” Trudeau said. “Because Canadians, we’re polite, we’re reasonable, but we also will not be pushed around.”

In diplomatese, Trudeau’s statement was polite but firm. (He also said that he stood ready to resolve the trade dispute in consultation with Trump.) But when Trump watched, or got wind of, the press conference on Air Force One as he flew to Singapore, he flipped out and fired up his Twitter account, describing Trudeau as, “Very dishonest & weak,” and adding, “Our Tariffs are in response to his of 270% on dairy!” He also said that he had ordered the U.S. representatives on the ground to not endorse the G-7 communique that they had previously agreed on.

Far from trying to talk Trump around, or clear up the mess that the President had created, Bolton and Kudlow made matters worse. On Saturday afternoon, Bolton tweeted out the most talked-about image from the G-7 meeting, in which a seated Trump is being confronted by Angela Merkel, the Chancellor of Germany, and Emmanuel Macron, the President of France. “Just another #G7 where other countries expect America will always be their bank. The President made it clear today. No more,” he wrote.

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On Sunday, Kudlow said on CNN’s “State of the Union” that Trudeau “kind of stabbed us in the back,” and added, “It was a betrayal.” Another Trump aide, Peter Navarro, who is a self-styled trade hawk, told Fox News, “There’s a special place in hell for any foreign leader that engages in bad-faith diplomacy with President Donald J. Trump and then tries to stab him in the back on the way out the door.”

The invocation of Weimaresque rhetoric to describe a trade dispute with America’s closest neighbor was something to behold. But in geopolitical terms, it wasn’t even the most provocative thing that Team Trump did over the weekend. Before, during, and after the G-7 summit, the U.S. President called for Vladimir Putin’s Russia to be allowed to rejoin the group, and sought to downplay the reason that the country got kicked out in the first place—Putin’s decision, in 2014, to invade Crimea and destabilize eastern Ukraine.

“Something happened a while ago where Russia is no longer in,” Trump said, at a press conference on Saturday. “I think it would be an asset to have Russia back in.” He didn’t dwell on Putin’s aggression further, other than to say that questions about it should be addressed to Barack Obama, who “allowed Russia to take Crimea. I may have a much different attitude.”

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Really? At this stage, Trump’s bromance with Putin is so obvious that it has turned into something of a joke. Guy Verhofstadt, the former Prime Minister of Belgium who is now a powerbroker in the European Parliament, tweeted out the viral G-7 photo, and suggested a caption for what Merkel was saying to Trump: “Just tell us what Vladimir has on you. Maybe we can help.” Putin, for his part, said he would welcome a summit meeting with Trump in the Oval Office.

It is possible, of course, that Putin doesn’t have anything on Trump, and that Trump has simply had a lifelong affection for ruthless, authoritarian figures that overwhelms any actual knowledge he may have picked up in the past seventeen months about the benefits of Atlanticism, a liberal trading order, or anything else. Back in that 1990 Playboy interview, in addition to expressing his protectionist beliefs about the economy, he criticized Mikhail Gorbachev for allowing the Soviet Union to break up and praised the leaders of China for putting down the Tiananmen Square demonstrations “with strength.”

This side of Trump—the wannabe strongman—has always been there. But the truly alarming thing is how few restraining influences it now faces. Defense Secretary James Mattis, who has maintained a steadfast support for NATO and the Atlantic alliance more generally, appears to be about the only one left. The Vice-President, the Secretary of State, and the Secretary of the Treasury are all Trump toadies. John Kelly, the White House chief of staff, seems to be a busted flush. The Republican leadership on Capitol Hill is AWOL. And Fox News, which is Trump’s main source of information, is a Trump echo chamber.

And so we go to Sentosa Island, in Singapore, where the North Korean boy autocrat awaits. After Trump’s behavior in the past few days, the world will be watching nervously.

  • John Cassidy has been a staff writer at The New Yorker since 1995. He also writes a column about politics, economics, and more for newyorker.com.

  • Here’s a who’s who of the people pictured (pic above), and where they stand on the trade row that defined the summit.

    1. Donald Trump, US President

    Mr Trump shocked America’s allies – namely the EU, Mexico and Canada – when he recently announced a 25% tariff on imports of steel and 10% on aluminium from these countries. They are all threatening retaliatory measures and the rift overshadowed the summit, leaving the American president isolated at times. Mr Trump departed before the other leaders, and complained that America was “like the piggy bank that everybody is robbing”.

    He then tore into Canadian Prime Minister Justin Trudeau in a pair of tweets, calling him “very dishonest and weak” and attacking his “false statements” after Mr Trudeau reasserted his strong opposition to the US tariffs in a news conference.

    2. John Bolton, US National Security Adviser

    It’s been just three months since he was appointed President Trump’s top security adviser but John Bolton has already made an impact. One of the President’s arguments for the tariffs is on “national security grounds” – a view Mr Bolton has stridently backed.

    3. Kazuyuki Yamazaki, Japanese Senior Deputy Minister for Foreign Affairs

    Promoted to the post in July 2017, he recently led a Japanese delegation to Pakistan and took part in joint talks between Japan, China and South Korea in Seoul about a proposed free trade agreement.

  • 4. Shinzo Abe, Japan’s Prime Minister

    He has come under increased pressure to join retaliatory measures against America’s tariffs. This puts him in a difficult position – he has tried hard to cultivate a warm relationship with President Trump and the two are said to have met at least 10 times since he was elected to the White House.

    5. Yasutoshi Nishimura, Japanese Deputy Chief Cabinet Secretary

    The MP from Japan’s governing party once worked in the ministry of international trade and industry.

    6. Angela Merkel, German Chancellor

    She has been at the forefront of talks to try to resolve differences at the summit, as is clear in this photo. Mrs Merkel apparently floated an idea to set up a mechanism to resolve trade disputes between the US and its allies on Friday. Asked during the summit about her relationship with President Trump, Mrs Merkel said the two leaders did not always agree but could talk to each other: “I can say that I maintain a very open and direct relationship with the American president.”

    7. Emmanuel Macron, French President

    He engaged in a Twitter spat with President Trump over the tariffs hours before the summit – leading some to question whether the blossoming “bromance” between the two was over. Despite this, they were seen to be on good terms, and President Macron’s team said his talks with Trump were “frank and robust”. However, following Mr Trump’s online outburst against Mr Trudeau, the French president issued a statement that “international co-operation cannot be dictated by fits of anger and throwaway remarks”.

    8. Theresa May, UK Prime Minister

    In a telephone call last week, she told President Trump she found the US tariffs “unjustified and deeply disappointing”. But she also struck a more conciliatory tone at the summit, urging fellow leaders to step back from the brink of a possible trade war.

    9. Larry Kudlow, Director of the US National Economic Council

    Mr Trump’s top economic adviser has defended the new tariffs and said his boss should not be blamed for trade tensions. After the summit, Mr Kudlow told CNN that the president and his team had gone to the summit “in good faith” but that Mr Trudeau had “stabbed us in the back” in his news conference.

 

 

 

Post-Davos Depression


February 4, 2018

Post-Davos Depression

by Dr. Joseph E. Stiglitz@www.project-syndicate. org

The CEOs of Davos were euphoric this year about the return to growth, strong profits, and soaring executive compensation. Economists reminded them that this growth is not sustainable, and has never been inclusive; but in a world where greed is always good, such arguments have little impact

..,the lessons of history are clear. Trickle-down economics doesn’t work. And one of the key reasons why our environment is in such a precarious condition is that corporations have not, on their own, lived up to their social responsibilities. Without effective regulations and a real price to pay for polluting, there is no reason whatsoever to believe that they will behave differently than they have..–Joseph E. Stigltz

DAVOS – I’ve been attending the World Economic Forum’s annual conference in Davos, Switzerland – where the so-called global elite convenes to discuss the world’s problems – since 1995. Never have I come away more dispirited than I have this year.

Image result for The Economic Elites at Davos 2018Demonstrators in Zurich this week. While many are poised to recoil at President Trump’s arrival in Davos this week, much of the moneyed elite there are willing to overlook what they portray as the president’s rhetorical foibles in favor of the additional wealth he has delivered to their coffers. Credit Ennio Leanza/European Pressphoto Agency.

 

The world is plagued by almost intractable problems. Inequality is surging, especially in the advanced economies. The digital revolution, despite its potential, also carries serious risks for privacy, security, jobs, and democracy – challenges that are compounded by the rising monopoly power of a few American and Chinese data giants, including Facebook and Google. Climate change amounts to an existential threat to the entire global economy as we know it.

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Perhaps more disheartening than such problems, however, are the responses. To be sure, here at Davos, CEOs from around the world begin most of their speeches by affirming the importance of values. Their activities, they proclaim, are aimed not just at maximizing profits for shareholders, but also at creating a better future for their workers, the communities in which they work, and the world more generally. They may even pay lip service to the risks posed by climate change and inequality.

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But, by the end of their speeches this year, any remaining illusion about the values motivating Davos CEOs was shattered. The risk that these CEOs seemed most concerned about is the populist backlash against the kind of globalization that they have shaped – and from which they have benefited immensely.

Not surprisingly, these economic elites barely grasp the extent to which this system has failed large swaths of the population in Europe and the United States, leaving most households’ real incomes stagnant and causing labor’s share of income to decline substantially. In the US, life expectancy has declined for the second year in a row; among those with only a high school education, the decline has been underway for much longer.

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Justin Trudeau of Canada and Narendra Modi of India–The Globaists at Davos 2018 who together with Germany’s Angela Merkel, Emmanuel Macton of France and China’s Xi Jinping will make America First’s Donald Trump irrelevant.

Not one of the US CEOs whose speech I heard (or heard about) mentioned the bigotry, misogyny, or racism of US President Donald Trump, who was present at the event. Not one mentioned the relentless stream of ignorant statements, outright lies, and impetuous actions that have eroded the standing of the US president – and thus of the US – in the world. None mentioned the abandonment of systems for ascertaining truth, and of truth itself.

Indeed, none of America’s corporate titans mentioned the administration’s reductions in funding for science, so important for strengthening the US economy’s comparative advantage and supporting gains in Americans’ standard of living. None mentioned the Trump administration’s rejection of international institutions, either, or the attacks on the domestic media and judiciary – which amounts to an assault on the system of checks and balances that underpins US democracy.

No, the CEOs at Davos were licking their lips at the tax legislation that Trump and congressional Republicans recently pushed through, which will deliver hundreds of billions of dollars to large corporations and the wealthy people who own and run them – people like Trump himself. They are unperturbed by the fact that the same legislation will, when it is fully implemented, lead to an increase in taxes for the majority of the middle class – a group whose fortunes have been in decline for the last 30 years or so.

Even in their narrowly materialistic world, where growth matters above all else, the Trump tax legislation should not be celebrated. After all, it lowers taxes on real-estate speculation – an activity that has produced sustainable prosperity nowhere, but has contributed to rising inequality everywhere.

The legislation also imposes a tax on universities like Harvard and Princeton – sources of numerous important ideas and innovations – and will lead to lower local-level public expenditure in parts of the country that have thrived, precisely because they have made public investments in education and infrastructure. The Trump administration is clearly willing to ignore the obvious fact that, in the twenty-first century, success actually demands more investment in education

For the CEOs of Davos, it seems that tax cuts for the rich and their corporations, along with deregulation, is the answer to every country’s problems. Trickle-down economics, they claim, will ensure that, ultimately, the entire population benefits economically. And the CEOs’ good hearts are apparently all that is needed to ensure that the environment is protected, even without relevant regulations.

Yet the lessons of history are clear. Trickle-down economics doesn’t work. And one of the key reasons why our environment is in such a precarious condition is that corporations have not, on their own, lived up to their social responsibilities. Without effective regulations and a real price to pay for polluting, there is no reason whatsoever to believe that they will behave differently than they have.

The Davos CEOs were euphoric about the return to growth, about their soaring profits and compensation. Economists reminded them that this growth is not sustainable, and has never been inclusive. But such arguments have little impact in a world where materialism is king.

So forget the platitudes about values that CEOs recite in the opening paragraphs of their speeches. They may lack the candor of Michael Douglas’s character in the 1987 movie Wall Street, but the message hasn’t changed: “Greed is good.” What depresses me is that, though the message is obviously false, so many in power believe it to be true.