INTERVIEW
Niall Ferguson Takes on the World
Ferguson sees more trouble ahead for Europe, China, and Saudi Arabia. But countries with cheap stocks and political stability could beckon investors.
Barron's, December 26, 2015
“There are deleterious consequences if the leading power in the world abdicates its leadership role.“—Niall Ferguson Photo: Jared Leeds for Barron’s
Niall Ferguson, the historian, Harvard professor, and author of more than a dozen books on the nexus of economics, finance, and geopolitics, argues that America’s abdication of its role as the world’s policeman is one cause of the global economic malaise. U.S. policies, or lack thereof, have allowed terrorism to breed and dictatorial states such as Russia and China to assume a larger role in world affairs.
The author of Civilization: The West and the Rest, Ferguson says China’s attempt to move to a true market economy probably will fail, potentially causing serious disruptions to other markets. He likens Saudi Arabia to Iran in 1979—a state ripe for destabilization. In the U.S., he sees tax reform coming, but worries that America’s love affair with regulation will continue to dampen its growth prospects. India gets a thumbs-up, but Europe’s prospects are bleak.
Ferguson recently announced that he’ll leave Harvard next year to become a senior fellow at Stanford University’s Hoover Institution. He spoke with Barron’s at our offices just after November’s terrorist attacks in Paris, and was every bit as thoughtful and provocative as when we last chatted, three years ago.
Barron’s: The U.S. economy has been growing by only 2% to 3% a year. Why isn’t it firing on all cylinders?
Ferguson: There are at least three theories. The seven-year hangover theory suggests that the U.S. will shake off the effects of the 2008 financial crisis next year. The secular-stagnation theory posits that, for a variety of reasons, the economy is in a depressed state. That is most obviously [expressed] in interest rates.
I’m attracted to a third argument, the geopolitical one, that says growth in modern American history has tended to be high at times of national strength and low at times of national weakness, because our weakness has ramifications for the world as a whole. One has to combine the three theories to understand why growth is lower than expectations. It isn’t low based on a pretty long-term average, but it is sluggish compared with the glory days of the Cold War.
What was so glorious about the Cold War?
There were two phases of growth, one associated with the Eisenhower and Reagan administrations, and one with the depressed period in between. Since 9/11, things have gone from bad to worse. We find ourselves in a deflationary version of the 1970s, marked by stagnation, not stagflation. [Russian President Vladimir] Putin is doing his best to give us reasons to man up. But we’re not really doing so.
The global economy needs a strong hegemonic power to reduce conflict, ensure freedom of the seas, and so forth. In the 19th century, it was Great Britain, and for much of the 20th, the U.S. But in 2013, President Obama said there was no global policeman. There are deleterious consequences if the leading power in the world abdicates its leadership role.
What are some of these ramifications?
Part of the reason the world isn’t as buoyant as it might be is that Europe is doing much worse than the U.S. It doesn’t help Europe to have a massive influx of real and “not so real” refugees. Some 220,000 people arrived in the European Union in October, a direct consequence of the disintegration of order in a whole bunch of countries, Syria principally, but not only.
The U.S. walking away from the Middle East has had a direct impact. We’re only beginning to see the ramifications, in Paris most recently. It isn’t going to stop there. There is growing anxiety in East Asia about the rise of China. Japan remains a large economy, but a depressed one in yet another recession. Economists tend to underestimate geopolitical factors because they aren’t in their models. Global order and stability need to be underwritten. It doesn’t just happen spontaneously.
Are you suggesting that the U.S. ought to be the world’s policeman?
Somebody’s got to do it. It better not be the Chinese or Russians. The market system requires an effective state that enforces the rule of law. That is true internationally, as well. As the world becomes less secure, it becomes a less safe place to do business.
A world in which the U.S. yields regional power to China or Russia is one in which the rule of law is driven back. We underestimate the extent to which the age of globalization depended on an American underwriting, and that is gradually unraveling.
Can the U.S. afford to keep the peace?
The U.S. has a fundamental problem: Gradually, its national security is being squeezed by social [benefits], particularly its health-care system. It will be squeezed by the burden of interest payments on Federal debt as interest rates go up. In theory, as the biggest economy in the world, the U.S. should be able to afford to build up its military power. In practice, the congressional budget sequester was a blunt instrument applied to the defense budget, cutting it indiscriminately.
The U.S. should be investing to maintain its lead, particularly in areas where it is vulnerable, such as cybersecurity. No matter how many aircraft carriers we have, it might not be that big of a technological leap for us to be matched in the new theaters of war that are emerging.
But as you note, our finances are hobbled.
Entitlements are the obvious problem. Republicans discovered that if you want to cut entitlements, it is hard to win the presidency. I’m optimistic that the U.S. can make its health-care system far more efficient and less expensive as new technology comes into place. With the application of technology, we will start seeing not only stuff about our own health, but also which doctors and hospitals do which things best.
The employer-pays insurance system is loopy and ripe for revolution, in the way that Uber is revolutionizing transportation. We will see similar types of companies revolutionizing health care. At that point, you may be surprised to find that costs start coming down. I can’t imagine in 10 years’ time that when you visit your doctor, someone will hand you a clipboard with a badly photocopied form that you’ll have to fill out for nth time. That’s ludicrous.
You have written about the toxic combination of litigation and regulation in the U.S. What are the odds of reform?
I don’t see any light at the end of the tunnel. The Federal Register has never been so large. The Dodd-Frank and Affordable Care Acts alone produced a staggering volume of regulation. Now we have the Trans-Pacific Partnership Agreement, with a document even larger than Dodd-Frank. It is really disheartening. That there hasn’t been more rapid U.S. growth is due at least in part to these head winds.
Many U.S. companies won’t bring home the cash they have overseas because it would be subject to a hefty tax. Is there any chance this might change soon?
The income-tax code has to be simplified, and corporate tax has to be reduced to some internationally competitive rate. Otherwise, corporations are going to continue to emigrate to wherever the tax burden is lower. Tax reform must be on the agenda of the next president in year one. Tax reform will happen. The political class gets it; the voters get it. It is much harder to tackle excessively complex regulation because there are too many people who benefit from it.
Let’s turn to Asia. You have said that regarding China as an emerging market is absurd. Why?
It is now the second-largest economy in the world, or the largest based on purchasing-power parity, with an influence on the global economy second only to the U.S. China is sui generis. Is China is going to go further in the direction of a market economy? Will it reduce the importance of state-owned enterprises and remove the state from the financial system? Is it going to open its capital account and allow the Chinese to invest abroad freely? Each answer has ramifications for the rest of us like no other economy.
Give us your answers.
We don’t know whether China will be more of a market economy 10 years from now. It is risky for a one-party state to continue increasing the economic freedom of its citizens. President Xi Jinping, who is more interested in power than anything else, understands this well. Consequently, plans for privatization of state-owned enterprises, liberalization of the financial system, and the opening of the capital account will remain plans, but won’t be implemented.
China has created the biggest middle class in history, but middle-class people want property rights. That implies law courts and officials who aren’t corrupt. The moment you demand these things, you are asking the one-party state to loosen its grip on power. The Chinese are terrified of anything like that.
What impact might Xi’s foreign policy have on markets around the world?
To ensure the one-party state’s legitimacy, Xi won’t shy away from a relatively saber-rattling foreign policy, because this plays well [domestically]. There is also an element that isn’t propaganda. China is building up its naval capability, modernizing its pretty antiquated army. It has a financial diplomacy that has proved effective. The Chinese have been using their considerable resources to win friends and influence people around the world, including in Central Asia and Africa. China says, “Let us build your infrastructure.” That increases its leverage over a whole bunch of countries that the U.S. has neglected.
What is the outlook for India?
The Indian economy looks to be growing faster than the Chinese economy. India is good for a couple of reasons, including demographics, which turn out to be a lot more important than most people thought. India didn’t have the one-child policy, unlike China, whose workforce is shrinking.
India has rule of law—slow, maybe, but it is there, and a representative government and free press. Unless you think the success of the West is pure luck, which I don’t, those are advantages. There are many thickets of vested interest, but I’m broadly bullish about India’s prospects. The problems India faces are fixable, like infrastructure and housing. China’s problems are much more difficult.
Will the Middle East roil markets in the years ahead?
I expect next year to be more violent than 2015. Many investors don’t realize that since the outbreak of the Arab Spring in 2011, fatalities due to armed conflicts are up by about a factor of four; terrorism is up by a factor of six.
The events in Paris are a reminder that the jihadist network doesn’t confine itself to the majority-Muslim world. It is now embedded in minority-Muslim communities all over Europe. There will be more such attacks, and at some point the terrorists will be successful in the U.S. again. [This interview was conducted before radicalized Islamists killed 14 people in San Bernardino, Calif.] The resources that go into producing radicalism aren’t about to disappear. Networks are difficult to decapitate.
The president has failed to understand this because his model is decapitation. You think, let’s take out the boss. Then you are amazed to find the network [still] grows. We won’t see this go away in the next 10 years. The threat of violent instability in the region will go up, and probably will affect Saudi Arabia. Support for the Islamic State is high among the Saudi population.
Why is that?
An Islamic state can credibly argue that the Saudi royal family is corrupt, Westernized, and hypocritical. The family itself is divided. Saudi Arabia is a weak link, the way Iran was in 1979. If you had to ask what headline would move markets tomorrow morning, a revolution in Riyadh, especially a messy one, would be a pretty good answer. You could see a big terrorist attack on Saudi facilities, and markets would move the price of oil up.
The dollar is strong, and commodity prices are weak. What does that mean for countries like Brazil and Russia?
There comes a point when an investor says, “Hey, that’s attractively priced.” Argentina has been one of the great trades of the year. You might ask, “Where is the political problem horrible, and where is it about to get solved?” It is pretty horrible in Brazil, and I don’t see a fix in the short run. Things will be solved in Argentina, more or less. South Africa? No, that looks bad politically. Turkey? [Prime Minister Recep Tayyip] Erdogan is a dodgy customer. Egypt? I don’t like the way that’s going.
The key is attractive prices and political stability. Money is going to start flowing back into emerging markets that don’t have a political problem, such as Indonesia and maybe Malaysia. In Russia, suppose the sanctions get relaxed, as seems likely next year. Russian bonds have been one of the great performers this year. Everybody was too negative about Russia. There are some interesting opportunities in the rest of the world. It is hard to see the dollar- strength story continuing indefinitely.
What is the biggest risk to global markets?
China. It was so crucial as an engine of growth through the financial crisis. If there is a policy error in China, it could cause huge instability. The government could ease restrictions on cross-border capital flows, which would result in a great wall of money coming out of China. Money would be deployed in Western assets, and it might be difficult for China to cope. Imagine the effect on all other emerging markets, if China suddenly devalues by 20% or 30%.
On the other hand, if Xi turns the clock back, this could lead to a big downside shock.
Will Europe get its act together?
Europe faces three extraordinary challenges. It wants to have a foreign policy to be able to influence the fate of Syria, but it can’t act independently of the U.S. because it has slashed its defense capability. Secondly, Europe can’t stop this huge wave of refugees. The border is enormous, vastly larger than the Mexican border with the U.S., and much of it is a sea border.
The biggest problem is the fifth column within Europe—people who aren’t loyal to their European states even though they are citizens, second- and third-generation. Potentially, there are thousands of jihadists or sympathizers.
Europe’s problems are unsolvable. Anybody who thinks this great wave of immigration solves Europe’s demographic deficit hasn’t been to the suburbs of Paris.
On that cheerful note, thank you.
quarta-feira, 6 de janeiro de 2016
Niall Ferguson "spenglerizando" nesta entrevista; readable, but...
Spenglerizar, um verbo que acabo de inventar, significa obviamente partilhar da ideia de que o Ocidente está efetivamente em decadência.
Pode até ser, mas se não tem nada de outro para colocar no lugar, fica tudo por isso mesmo.
Concordo com a maior parte do que Ferguson diz, inclusive sobre os riscos da China, para si mesma e para o mundo, menos com a abdicação dos EUA. Como diria Churchill, os EUA acabam fazendo a coisa certa depois de tentarem todas as demais.
Como ele diz, investidores querem preços atrativos e estabilidade política. O Brasil pode ter os primeiros mas não tem a segunda, e não vai ter enquanto o governo mafioso continuar no poder, e ele não vai sair enquanto o partido totalitário não for desmantelado pela polícia ou pela justiça, um dos dois.
Grato a meu amigo Sérgio Florêncio por mandar-me a entrevista.
Paulo Roberto de Almeida
terça-feira, 5 de janeiro de 2016
RBPI: sempre na vanguarda, convida submissoes
Chamada de artigos para as edições regulares da RBPI em 2016
O Instituto Brasileiro de Relações Internacionaisinforma chamada de artigos para as duas edições regulares da Revista Brasileira de Política Internacional – RBPI, a serem publicadas em 2016.
Em 2016 a RBPI passa a ser uma revista quadrimestral, e publicada exclusivamente on line, em acesso aberto, em sua página no Scielo. O primeiro número do ano, já em produção e a ser lançado em abril, será a edição especial Many worlds, many theories?, que tem como editoras convidadas as professoras Cristina Inoue (Universidade de Brasília) e Arlene Tickner (Universidad de los Andes, Colômbia). As duas edições seguintes serão publicadas em agosto e em dezembro e as submissões para elas se fazem em fluxo contínuo, diretamente na página da Revista.
Com periodicidade quadrimestral, a Revista Brasileira de Política Internacional – RBPI é uma publicação dedicada ao debate sobre relações internacionais contemporâneas, em múltiplas perspectivas. É a mais tradicional publicação científica brasileira da área de Relações Internacionais e uma das mais influentes da América Latina e do Sul Global.
Decana das revistas brasileiras de relações internacionais, a Revista Brasileira de Política Internacional – RBPI foi fundada no Rio de Janeiro em 1958, e transferida para Brasília em 1993, é editada desde sempre pelo IBRI. Desde dezembro de 2015 é publicada exclusivamente em língua inglesa.
A RBPI está indexada em dezenas de serviços internacionais de alto nível (inclusive Scopus-SJR e ISI-JCR), e é das poucas publicações brasileiras da grande área de humanidades a ter Fator de Impacto no ISI-JCR. A RBPI está classificada como um periódico A1 na escala Qualis das áreas de Ciência Política e Relações Internacionais e de Direito, e A2 na escala da área de História.
As normas de colaboração podem ser consultadas aqui e submissões se fazem aqui.
Venezuela: O Antagonista pensa que ainda existe vida inteligente no Itamaraty
Deveras surpreendente. Quem diria?!
Antagonista - Há vida inteligente no Itamaraty
Há vida inteligente no Itamaraty
Brasil <http://www.oantagonista.com/assuntos/brasil> 05.01.16 16:18
Numa atitude surpreendente para uma diplomacia submetida aos desígnios bolivarianos, o Itamaraty emitiu nota agora há pouco pressionando o governo de Nicolás Maduro a respeitar o resultado da eleição que deu maioria à oposição na Assembleia Nacional.
"O governo brasileiro confia que serão preservadas e respeitadas as atribuições e prerrogativas constitucionais da nova Assembleia Nacional venezuelana e de seus membros", diz a nota.
Para um texto diplomático, é um recado claro após a iniciativa do Partido Socialista Unido da Venezuela (PSUV) de recorrer ao Tribunal Supremo de Justiça, controlado por Maduro, para impugnar a posse de alguns deputados.
"O governo brasileiro confia que será plenamente respeitada a vontade soberana do povo venezuelano, expressada de forma livre e democrática nas urnas. Não há lugar, na América do Sul do século XXI, para soluções políticas fora da institucionalidade e do mais absoluto respeito à democracia e ao Estado de Direito."
Parece que ainda há vida inteligente no Itamaraty. Esperamos que ela floresça e se reproduza.
Congresso: medíocre, indiferente, incompetente. Calma, se trata de outro Congresso...
Alexander Hamilton, assessor especial de George Washington, escreve uma carta ao primeiro presidente para reclamar da mediocridade dos representantes do povo.
Alguma coincidência?
Paulo Roberto de Almeida
Da seleção de excertos de livros de Delanceyplace, 6/01/2016
Today's selection -- from A Second Treasury of Great Letters ed. by Wallace Brockway & Bart Keith Winer. In 1778, after Alexander Hamilton had spent one year on the personal staff of George Washington, and less than two years after the forming of the First Continental Congress, he wrote a letter to Washington lamenting the character of the American Congress. Hamilton was an advocate for a strong central government. Here read the beginnings of his federalist argument: "There is a matter, which often obtrudes itself upon my mind, and which requires the attention of every person of sense and influence among us; I mean a degeneracy of representation in the great council of America. It is a melancholy truth, Sir, the effects of which we daily see and feel, that there is not so much wisdom in a certain body as there ought to be, and as the success of our affairs absolutely demands. Many members of it are no doubt men, in every respect, fit for the trust; but this cannot be said of it as a body. Folly, caprice, a want of foresight, comprehension, and dignity, characterize the general tenor of their actions. Of this, I dare say, you are sensible, though you have not perhaps so many opportunities of knowing it as I have. "Their conduct, with respect to the army especially, is feeble, indecisive, and improvident; insomuch that we are reduced to a more terrible situation than you can conceive. False and contracted views of economy have prevented them, though repeatedly urged to it, from making that provision for officers, which was requisite to interest them in the service. This has produced such carelessness and indifference to the service, as is subversive of every officer-like quality. ...
"Each State, in order to promote its own internal government and prosperity, has selected its best members to fill the offices within itself, and conduct its own affairs. Men have been fonder of the emoluments and conveniences of being employed at home; and local attachment, falsely operating, has made them more provident for the particular interests of the States to which they belonged, than for the common interests of the confederacy. This is a most pernicious mistake, and must be corrected. However important it is to give form and efficiency to your interior constitutions and police; it is infinitely more important to have a wise general council; otherwise a failure of the measures of the Union will overturn all your labors for the advancement of your particular good, and ruin the common cause. You should not beggar the councils of the United States to enrich the administration of the several members. Realize to yourself the consequences of having a Congress despised at home and abroad. How can the common force be exerted, if the power of collecting it be put in weak, foolish, and unsteady hands? How can we hope for success in our European negotiations, if the nations of Europe have no confidence in the wisdom and vigor of the great Continental government? This is the object on which their eyes are fixed; hence it is, America will derive its importance or insignificance in their estimation. You and I had some conversation, when I had the pleasure of seeing you last, with respect to the existence of a certain faction. Since I saw you, I have discovered such convincing traits of the monster, that I cannot doubt its reality in the most extensive sense. I dare say you have seen and heard enough to settle the matter in your own mind. I believe it unmasked its batteries too soon, and begins to hide its head; but, as I imagine it will only change the storm to a sap, all the true and sensible friends to their country, and of course to a certain great man, ought to be upon the watch, to counterplot the secret machinations of his enemies. |
 A Second Treasury of the World's Great Letters Ed: Wallace Brockway & Bart Keit |
NET Combo DESABAFO: a NET continua uma companhia vagabunda
Desde o dia 28/12/2015, continuo aguardando que a NET complete o serviço de instalação de TV a cabo.
Registrei cinco protocolos, e nas três últimas vezes fui obrigado a aguardar que um Representante dessa companhia vagabunda comparecesse à minha residência para efetuar o serviço agendado, e NUNCA houve comparecimento e sequer justificativa, desculpas, reagendamento, ou qualquer outra providência.
Estes são os três últimos protocolos registrados junto a essa companhia vagabunda, inepta e relapsa, que sequer se desculpa junto a seus usuários.
Ganharam um inimigo, em lugar de um cliente.
Por isso continuo repetindo: a NET é uma companhia vagabunda, inepta e relapsa.
Paulo Roberto de Almeida
Brasília, 5 de janeiro de 2016.
Registrei cinco protocolos, e nas três últimas vezes fui obrigado a aguardar que um Representante dessa companhia vagabunda comparecesse à minha residência para efetuar o serviço agendado, e NUNCA houve comparecimento e sequer justificativa, desculpas, reagendamento, ou qualquer outra providência.
Estes são os três últimos protocolos registrados junto a essa companhia vagabunda, inepta e relapsa, que sequer se desculpa junto a seus usuários.
1) Conforme a
sua solicitação, seguem abaixo os dados do seu
atendimento,
realizado no dia 03/01/2016, às 00:00:00
Protocolo n.: 040162369491600
2) Conforme
a sua solicitação, seguem abaixo os dados do seu
atendimento,
realizado no dia 02/01/2016, às 00:00:0
Protocolo n.: 040162369015292
3) Conforme
a sua solicitação, seguem abaixo os dados do seu
atendimento,
realizado no dia 30/12/2015, às 00:00:00.
Protocolo n.: 040152367959674
Ganharam um inimigo, em lugar de um cliente.
Por isso continuo repetindo: a NET é uma companhia vagabunda, inepta e relapsa.
Paulo Roberto de Almeida
Brasília, 5 de janeiro de 2016.
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