The Great Debate UK

Expect no immediate fireworks from Mark Carney

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–Darren Williams is European Economist at AllianceBernstein. The opinions expressed are his own.–

On July 1, former Bank of Canada Governor Mark Carney will replace Sir Mervyn King as Governor of the Bank of England. For many observers, this will herald a new dawn in the conduct of British monetary policy. The process, however, will be more evolutionary than revolutionary.

Don’t expect any fireworks at Mr Carney’s first Monetary Policy Committee (MPC) meeting on July 3 and 4. Neither the prevailing view of the MPC nor recent strong economic data support an immediate change in policy.

But this doesn’t mean that important changes aren’t coming—and the reasons aren’t hard to find. Notwithstanding recent figures, the UK’s economic performance since the credit crunch has been dire. Many independent forecasters expect the economy to be operating below full capacity for at least the next five years.

from David Rohde:

The global middle class awakens

People stand during a silent protest at Taksim Square in Istanbul June 18, 2013.  REUTERS/Marko Djurica

Alper, a 26-year-old Turkish corporate lawyer, has benefited enormously from Prime Minister Recep Tayyip Erdogan’s rule. He is one of millions of young Turks who rode the country’s economic boom to a lifestyle his grandparents could scarcely imagine.

from Nicholas Wapshott:

David Cameron takes on the tax havens

There is nothing more likely to spark anger than an unfair tax regime. The American Revolution was founded on it. So the discovery that some of the largest and most successful companies in the world -- among them Google, Apple, Amazon and Starbucks -- have legally minimized the tax they pay, sometimes to as low as zero, in many nations in which they earn the lion’s share of their revenue is causing considerable irritation.

The result was evident at the G8 meeting in Northern Ireland, where Britain’s conservative government, chairing the conference of the world’s richest nations, put making corporation tax fairer at the top of its agenda, after the civil war in Syria. David Cameron, who like most conservatives believes in low taxes, is in a bind.

from Jack Shafer:

Snowden versus the dragons

One measure of our culture's disdain for whistle-blowers like Edward Snowden can be culled from the pages of a thesaurus. Beyond "source" and "leaker," few neutral antonyms exist to describe people who divulge alleged wrongdoing by the government or other organizations to the press, while negative synonyms abound—spy, double-agent, rat, snitch, informer, fink, double-crosser, canary, stoolie, squealer, turncoat, betrayer, traitor and so on.

We bristle at the scent of whistle-blowers for atavistic reasons: They've violated the norms that bind the group together and must be scorned and punished, and their only allies are like-minded individuals who've deserted the pack—or joined opposing packs—and portions of the press, which occupies a floating niche somewhere between the individual and the group that allows it to thrive on such principled perfidy.

Don’t cry for me RBS

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“Don’t cry for me, RBS” could certainly be the lament being sung by Stephen Hester, outgoing CEO of bailed out Royal Bank of Scotland, after the shock announcement that he will have left the bank by the end of this year. CEOs of banks come and go; however, the government stake in RBS makes this CEO particularly important.
There are two things that make Hester’s departure fascinating: firstly, the fact that the RBS board along with the Treasury have concentrated on how a new leader is needed to privatise the bank. Secondly, the fact that Hester doesn’t seem to want to go.

During an interview with BBC Radio 4 less than 24 hours after the announcement was made, Hester admitted that he wanted to take the bank through its privatisation process “for me that would have been the end of the journey.” However, that was not meant to be, and he said he “understood” that “new blood” at RBS was a good thing.

from Anatole Kaletsky:

When illogical policy seems to work

It’s cynical, manipulative and hypocritical – and it looks like it is going to work. How often do you hear a sentence like this, to describe a government initiative or economic policy?  Not often enough.

The media and a surprisingly high proportion of business leaders, financiers and economic analysts seem to believe that policies which are dishonest, intellectually inconsistent or obviously self-interested in their motivation are ipso facto doomed to fail or to damage the public interest. But this is manifestly untrue. The effectiveness of public policies and their ultimate desirability is in practice judged not by their motivations, but by their results.

from Nicholas Wapshott:

Buying into Big Brother

Whatever high crimes and misdemeanors the National Security Agency leaker Edward Snowden may or may not have perpetrated, he has at least in one regard done us all a favor. He has reminded us that we are all victims of unwarranted and inexcusable invasions of privacy by companies who collect our data as they do business with us.

Some, like Google and Facebook, pose primarily as software companies when their main revenue source, and their main business, is to mine data and sell advertisers access to customers. We knew this already, of course, though it seems many of us would prefer to forget the true nature of the technology firms that have boomed in the last decade. Seduced by their dazzling baubles, we have bought in to Big Brother without truly understanding the true price we are paying and will continue to pay for access to their brave new world.

from Jack Shafer:

Edward Snowden and the selective targeting of leaks

Edward Snowden's expansive disclosures to the Guardian and the Washington Post about various National Security Agency (NSA) surveillance programs have only two corollaries in contemporary history—the classified cache Bradley Manning allegedly released to WikiLeaks a few years ago and Daniel Ellsberg's dissemination of the voluminous Pentagon Papers to the New York Times and other newspapers in 1971.

Leakers like Snowden, Manning and Ellsberg don't merely risk being called narcissists, traitors or mental cases for having liberated state secrets for public scrutiny. They absolutely guarantee it. In the last two days, the New York Times'David Brooks, Politico's Roger Simon, the Washington Post's Richard Cohen and others have vilified Snowden for revealing the government's aggressive spying on its own citizens, calling him self-indulgent, a loser and a narcissist.

Do you want shares in RBS and Lloyds?

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By Matt Scuffham, UK Banking Correspondent.

The government should hand most of its shares in Royal Bank of Scotland and Lloyds Banking Group to the public, an influential political think tank says, in what would be the country’s biggest privatisation.

The proposal would enable 48 million taxpayers to apply for shares at no initial cost and with no risk attached, the think tank said. A ‘floor price’ would be set and taxpayers would make a profit on any rise in the shares above that level.

US-China research ties should be a wake-up call to Europe

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–Dirk Jan van den Berg is President of Delft University of Technology, and was formerly the Dutch Ambassador to China and the Permanent Representative to the United Nations in New York. The opinions expressed are his own.–

Despite much media attention on disagreements, ranging from Taiwan to alleged cyber-attacks, as Chinese President Xi Jinping and U.S. President Barack Obama prepare for their first major summit meeting in California, there is a relatively new and growing basis for warmer ties: scientific and technological collaboration. 

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