Adam Tooze's Blog, page 38

Global Power in the North-Atlantic Financial System

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Yakov Feygin
Daniela Gabor
Dominik Leusder
Carla Norrlof
Elham Saeidinezhad
Waltraud Schelke
Herman Mark Schwartz

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Make America Normal Again? With Aaron Bastani at Novara Media

Joe Biden is President-elect of the United States. But what might his Presidency mean for working class Americans, US foreign policy and perceived national decline? Does his victory represent a return to political ‘normality’ after 4 years of the Trump White House? And what might Trump’s legacy be within the Republican Party?

An interview with Aaron Bastani at Novara Media

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Trump has not been repudiated – a Biden presidency would face obstruction at every level

With progress blocked, the US election could entrench the poisonous status quo

Whatever else emerges from the US’s 2020 election, one thing is clear: it has not delivered a comprehensive repudiation of Donald Trump. The shock of 2016 has not been undone. There is nothing in the result to expiate the humiliation of the last four years, the disgraceful vulgarity and illegality. Even if Joe Biden is ultimately sworn in as president, the fact that Trump was not booed off the greatest stage in world politics in disgrace will be hard for Biden’s supporters to come to terms with. This is an inconvenient truth not for the US alone, it has implications for the rest of the world too.

Rather than a rejection of Trump, the election results reshuffle the finely balanced and deeply polarised configuration that has prevailed in American politics since the days of Bill Clinton in the 1990s. As in 2016, Trump lost the overall vote, but he continues to command overwhelming majorities in small-town and rural white America. Despite his vituperative hostility towards immigrants, Trump made remarkable gains among the rather diverse group crudely lumped together under the label Latino. Confusingly, he did well not only with anti-socialist communities of Cubans and Venezuelans in Miami, but with Mexican-Americans in Texas too. And he continues to garner a majority of votes from white women and white men of all backgrounds.

Read the full article at The Guardian.

Welcome to the Worst Election Outcome for the Global Economy

As of early morning, Nov. 4, the presidential betting market is back where it was 24 hours ago. As was true before the polls closed and the counting began, as of 7 a.m. on Nov.4 , Joe Biden is being given a 60 percent chance of victory.

But there is winning and there is winning. What the decision-makers and the markets that drive the world economy were hoping for was an outcome that promised a new and coherent response to America’s coronavirus crisis. They wanted a road map for America’s answers to long-term questions such as infrastructure and climate change. To deliver this, what is needed is a large-scale fiscal program to revive the parts of the U.S. economy that the Federal Reserve cannot reach. This does not mean that big money in America uniformly backed the Biden/Harris ticket, or that the business elite had discovered an enthusiasm for a progressive agenda on education finance, childcare, or health. But compared to Donald Trump, the prospect of a Democratic clean sweep did at least offer a coherent answer to America’s predicament. The polls themselves were a factor. It is hard to bet against the kind of margin they assigned to a Biden victory.

Then, around 9.30 p.m. Eastern Time on the night of Nov. 3, it became clear that the blue wave was a fantasy. Biden may eke out a victory. But even if he does, he will not be carried into the White House on a political high tide. The United States remains profoundly divided. By prematurely claiming victory, Trump has already cast doubt on the legitimacy of the outcome.

Read the full article at Foreign Policy.

The Markets Want Much More Than Just a Biden Win

As we await the outcome of the U.S. election, the world economy drifts listlessly, paralyzed by the shock of COVID-19 and geopolitical and political uncertainty. As Gita Gopinath, the chief economist of the International Monetary Fund, has warned, we are in a liquidity trap—a situation of chronic low interest rates and depressed demand. Former U.S. Treasury Secretary Larry Summers has spoken of a black hole of monetary policy.

The way out is to raise aggregate demand. Since the private sector is in shock, government taxation and spending are key. That is what gives the U.S. election its capital economic importance. No other government, not even the Chinese, can match America’s fiscal clout.

The nightmare scenario is that America’s election makes things worse. A disputed election followed by a constitutional crisis would compound the craving for security, which would further increase the demand for liquidity, driving the dollar higher. This is the perverse logic of the world’s reliance on the U.S. currency as the de facto global currency. A crisis increases the demand for dollars, even if the crisis originates in the United States.

Read the full article at Foreign Policy.

The political economy of Trump

The United States can protect itself against turbulence, but doing so against a great recession is a lot more difficult, and that is the danger if the Democrats get to the White House but fail to win the Senate

Four years on from 2016. On the eve of a historic American election, it is worth asking: What did the Trump phenomenon consist of and what does it tell us about America today?

It starts, of course, with Trump himself: Narcissist in chief. Reality-TV president. Bad-boy throwback to the seamier side of the baby boom. But the president would be nothing were it not for his base: white, male, small-town Americans. In rural areas, even the women like him. Then there are Trump’s shock troops, the self-appointed citizen’s militia that rallied in 2016 to Trump’s call to “build a wall,” the heavily armed men who marched in Charlottesville in 2017. Add to them the white evangelicals, stalwarts of conservative America. In the Reagan era they were the avant-garde of a new wave. Now they are on the defensive, clinging to Trump as their unlikely defender. Trump also inspired the culture war ideologues of the right, figures such as Steve Bannon. And since 2016 he has attracted a bevy of 80 right-wing billionaires, 9% of the super-rich in America. Not the tech giants of Silicon Valley, but hedge fund types, construction, casinos and oil money. In Washington DC, Trump relies on the Republican party, most prominently Mr Mephistopheles himself, Mitch McConnell. Trump is no party loyalist. He did not come up through the party ranks. Between 2001 and 2009 Trump was a registered Democrat. McConnell’s priority is first and foremost to defend his grip on power. That depends on pleasing his donors and on securing the right-wing base which, in America’s rigged electoral districts, is the only possible threat to most sitting Senators. It is the base not the GOP leadership that loves Trump. Finally, last but not least in the Trump coalition, you have the lobbyists and interest groups of American business.

Read the full article at El País

Whatever happens, it will take more than promises to Make America Normal Again

The forces Trump represents and the fragility of the country’s electoral machinery are problems decades in the making.

As we approach 3 November, it seems that the whole world is holding its breath. No other political event attracts as much attention as an American presidential election. Even in the midst of an epidemic, the American political process retains its carnivalesque appeal. There is skulduggery and outrageous rhetoric. Donald Trump performs politics as reality TV. For those that way inclined, the flood of polling and electoral expertise are an irresistible draw.

But we don’t just follow for the show. We follow because our era is marked by the US’s status as the pre-eminent superpower. Historically speaking, this is a relatively recent state of affairs. For more than a century after independence, in 1776, the US was so marginal that the major powers did not even have full diplomatic representation in Washington DC. It was only in 1893 that the UK led the way in upgrading its legation to full-embassy status. In the July crisis of 1914 – the great diplomatic drama that triggered the first world war – tiny Serbia figured more prominently than the United States.

Read the full article at The Guardian

2020: A Global Crisis Like No Other – Centre Marc Bloch

Centre Marc Bloch

In April 2020, for the first time, the Bretton Woods Institutions – the IMF and World Bank – held their spring meetings virtually. They met under the slogan “A Global Crisis Like No Other”. The slogan captured the drama of the moment. It also made a strong historical claim. What do the economic analysts of the IMF and the World Bank mean when they assert that 2020 is an unprecedented economic event? What historical frameworks might be useful in helping to locate the economic shock of 2020.

Is capital finally losing faith in Trump?

What has kept Donald Trump in the presidential race is his electoral base. It consists of white men, rural and small-town voters and small-business owners. The big bucks for the campaign come from a coterie of wealthy loyalists. This bloc will stick with Trump whatever he says or does.

But the attitude of other groups that one might expect to be Trump’s natural supporters, such as big business, financial markets, a lobby like the chamber of commerce – “capital”, in other words – is far less clear cut. If anything, as Joe Biden’s lead has stabilised, so too has their optimism. With an eye to an impending shift of power, the Chamber of Commerce has endorsed a cluster of Democrats in tight House races, provoking outrage from the president. These unexpected alignments point to the scrambling of assumptions that is characteristic of the Trump era.

The GOP is normally the party of business. The president himself is a businessman. His administration has been stacked with plutocrats, CEOs and lobbyists. It has delivered tax cuts and deregulation. The tax-collecting IRS is a shell of its former self; the Environmental Protection Agency has been gutted, and financial regulations slashed. Trump has packed the courts with judges who will deliver judgments against labour rights, environmentalism protection and business regulation. If, as seemed possible at the beginning of this year, the US economy had stayed on course and the Dems had selected the leftwing Elizabeth Warren or Bernie Sanders as their candidate to run against Trump, the battle lines would have been clearly drawn.

Read the full article at The Guardian

Die wirklichen Folgen der Corona-Pandemie stehen den USA noch bevor

Der New Yorker Wirtschaftshistoriker Adam Tooze wird ab jetzt im Wechsel mit Marcel Fratzscher (DIW, Berlin) mit Wirtschaftsredakteur Eric Graydon über die ökonomischen Auswirkungen der Coronakrise sprechen. In ihrem ersten Gespräch geht es darum, warum die wirtschaftlichen Folgen in den USA verheerend sind.

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