The Great Debate UK

from Lawrence Summers:

On inequality

Inequality has emerged as a major economic issue in the United States and beyond.

Sharp increases in the share of income going to the top 1 percent of earners, a rising share of income going to profits, stagnant real wages, and a rising gap between productivity growth and growth in median family income are all valid causes for concern. A generation ago, it could have been plausibly asserted that the economy’s overall growth rate was the dominant determinant of growth in middle-class incomes and progress in reducing poverty. This is no longer plausible. The United States may well be on the way to becoming a Downton Abbey economy.

So concern about inequality and its concomitants is warranted. Issues associated with an increasingly unequal distribution of economic rewards will likely be with us long after the cyclical conditions have normalized and budget deficits finally addressed.

Those who condemn President Barack Obama’s concern about inequality as “tearing down the wealthy” and un-American populism have, to put it politely, limited historical perspective. Consider a sampling of past presidential rhetoric.

from The Great Debate:

In the Netherlands, bankers turn to God — by law

 

Lloyd Blankfein, the chief executive officer of Goldman Sachs, once famously said he believed banks were doing “God’s work.” Now, the Netherlands is going one step further: starting later this year, all 90,000 Dutch bankers will have to swear an oath that they’ll do their “utmost to maintain and promote confidence in the financial-services industry. So help me God.”

It’s part of a major attempt by regulators and banks to clean up after the financial crash of 2008, and put behind them scandals that continue to blacken the financial service industry’s reputation. Just last October, the big Dutch cooperative bank Rabobank paid a $1 billion fine to settle charges in the Libor rate-fixing scandal.

The Sochi Olympics: Russia’s Double-Curse?

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Vadislav Zubok–Professor Vladislav Zubok is Head of the Russia in Global Affairs Programme at LSE IDEAS. The opinions expressed are his own.–

As athletes and sport fans travel to the Black-sea resort of Sochi, an old observer may have a sense of déjà vu. Thirty-three years ago, Western countries boycotted the 1980 Olympic games after Soviet troops occupied Afghanistan.

from The Great Debate:

Putin’s Occupation Olympics

The upcoming Olympic Games in Sochi has naturally led to a critical look at the host country’s human rights record, with particular focus on issues such as the treatment of gays and journalists.

Yet in a less-noticed offense, Russian President Vladimir Putin is using the Olympics to advance his violations of international law -- namely, as a tool for expanding Russia’s control over the occupied Georgian territory of Abkhazia. Despite the conquest of a neighboring nation -- an action almost unheard of since World War Two and banned by the U.N. Charter -- the international community has scarcely protested.

from The Great Debate:

Moscow fiddles, while Kiev burns

Timing is everything in politics, and this adage could not be truer for the whirlwind now enveloping Russia and Ukraine. Both countries are in the headlines -- Russia for the coming $50 billion Winter Olympics extravaganza, and Ukraine for an economic and political collapse that has left the country on the cusp of revolution.

The confluence of these two events has created a unique set of circumstances unlikely to change until the Olympic flame is extinguished on February 23. For the prestige of hosting the Olympics -- and the huge international spotlight that accompanies the spectacle -- limits Moscow’s ability to act decisively toward Ukraine as it might have otherwise.

from The Great Debate:

In France, where unions rule, a challenge from Hollande

In France, taking a person hostage or sequestering them against their will is a crime punishable by up to 20 years in jail. It also happens to be a very effective weapon in French labor disputes. Since 2009, there have been 15 incidents of “boss-napping” and only one resulted in sanctions: 11 postal workers who were fined $2,000 apiece for locking up their managers during a dispute over a change in how the mail is delivered.

Most of the time, it’s the unions who win. That’s certainly the case in the most recent incident, involving a bitter struggle over job losses at a Goodyear tire plant in Amiens. Earlier this month, union officials occupied the factory and sequestered the production manager and head of human resources for 30 hours. After the government intervened, the battle finally ended last week when the company agreed to triple the severance it had offered. Union leader Mickaël Wamen didn’t hide his triumph. “It was a grand and beautiful struggle,” he wrote in a blog post on Jan. 24, announcing details of the settlement.

Was Nigel Farage right about mothers in the City?

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And the award for foot in mouth this week goes to… UKIP, again. This time it was leader Nigel Farage, who said that women who take time off to have children are worth less to their employer. He said this to an audience of (presumably) men in the City and rounded it off by saying there is no sexism in financial services and that childless women are more than a match for their male counterparts.

While I am not normally in the position of defending Nigel Farage, or any other politician for that matter, I think his comments deserve our attention and women should use them to trigger an important debate about mothers and the work place.

from The Great Debate:

To boost entrepreneurship, France tries to change its attitude toward failure

When entrepreneur-turned-venture capitalist Mark Bivens first moved to Paris in 2001, he regularly introduced himself as someone who had started three software companies in the U.S., two of which had flopped. That’s a badge of honor in Silicon Valley, where failure is viewed as a rite of passage. Not in France. One day, a French colleague took Bivens aside and gave him some friendly advice: if you want to reassure people, stop talking about the companies that didn’t work out. “I soon realized that failure carries a stigma,” Bivens says.

The French word “échec” is indeed loaded with negative connotations. It starts at school, where pupils who get bad marks can be quickly branded “in a situation of failure” early in their education, and often drop out before graduating. In the business world, failure has long been fatal: bankruptcy in France is a lengthy and complicated process, and can scar entrepreneurs for life. And in addition to the logistical hurdles of starting a new business after bankruptcy, second-chance entrepreneurs must contend with the social stigma associated with failure, which makes raising funds or even opening a new bank account difficult.

Turkey – avoiding the glare of the IMF

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The Turkish government has been in the news for all of the wrong reasons in recent weeks. Corruption scandals, accusations of a potential coup and fears that the government is trying to erode the independence of the judiciary have led to widespread protests. Prime Minister Erdogan’s reputation at home has undoubtedly been eroded in recent months; however the bad news could be spreading further afield.

Financial markets are a good gauge of international sentiment towards a country and right now they are dumping Turkish assets by the bucket load. The Turkish lira plunged to another record low against the US dollar this week and the Istanbul index has bucked the global trend and has fallen nearly 20% in the past 12 months.

from The Great Debate:

France says ‘Non’ to the digital age

France has kicked off 2014 with an array of skirmishes against Amazon, Google and other U.S. Internet companies, in what is shaping up as a classic battle between comfortable Gallic tradition and disruptive modernity.

On Thursday, Jan. 9, the French Senate unanimously approved a bill that would ban Amazon from offering free shipping on books in France. Strongly endorsed by the Ministry of Culture, the legislation is supposed to safeguard the existence of the country's 3,500 bookstores, about 800 of which are independent.

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