Weekend Reads

For the profit and pleasure of subscribers, here's a few longer reads on political, economic and social issues for the weekend.

The world is awash with voters and politicians lashing back at globalisation and the technocratic elites that have preached about the benefits of globalisation for three decades. Sebastian Mallaby writes here in The Guardian about the collapse of the cult of the expert, starting with a scene piece on Ben Bernanke's plea to Congress to allow him to bail out US banks in 2008.

"When the history is written of the revolt against experts, September 2008 will be seen as a milestone. The US$85bn rescue of the American International Group (AIG) dramatised the power of monetary gurus in all its anti-democratic majesty. The president and Congress could decide to borrow money, or raise it from taxpayers; the Fed could simply create it," Mallaby writes.

I think at least some of the current reaction against global elites is a delayed howl of outrage about how Governments used public funds to rescue banks that got themselves into trouble by being risky and in some cases fraudulent. Yet very few were held to account. Now the reckoning is coming via the ballot box.

Mallaby, who has written a detailed biography of Alan Greenspan, spends a lot of time looking at how central bankers have managed to break their leashes from their political masters over the last 20 years or so, including some surprisingly political details about how Greenspan operated. New Zealand gets a mention as the first to create an independent central bank. I suspect Graeme Wheeler might find it an interesting read on the politics of central banking.

In a week where AT&T offered to buy Time Warner for US$100 billion and Qualcomm agreed to buy NXP for US$47 billion, this Matt Stoller piece in The Atlantic rightly asks: what happened to all the politicians fighting monopoly power and ever-larger banks? He focuses on a crop of young Democrats who took over the US Congress after Watergate.

"In 1974, young liberals did not perceive financial power as a threat, having grown up in a world where banks and big business were largely kept under control. It was the government—through Vietnam, Nixon, and executive power—that organized the political spectrum. By 1975, liberalism meant, as Carr put it, 'where you were on issues like civil rights and the war in Vietnam.' With the exception of a few new members, like Miller and Waxman, suspicion of finance as a part of liberalism had vanished," Stoller writes.

Stoller's piece is a fascinating history lesson on the changes in US politics over the last 50 years and cuts to the heart of the unease about Hillary Clinton. Her famed closeness to Wall St is a function of being a part of that post-Watergate generation.

The FT's John Authers takes a long look at the effects of an ageing population on the economy. He writes in depth about this Federal Reserve paper on the role of ageing in the 'new normal' economy of low interest rates and slow growth, which I mentioned in Weekend Reads two weeks ago.

Essentially, the argument goes that baby-boomers have been saving madly in low-risk investments as they got closer to retirement, which slowed growth and increased demand for bonds and property, but reduced investment in real growth. We've certainly seen plenty of all that.

There's another theory that as the baby boomers retire there will be labour shortages that will drive up inflation, and that their need to liquidate those assets might drive down property and bond prices (pushing up interest rates). It's hard to see much of that yet.

On a similar issue, Tony Alexander also points out that New Zealand's 'retirees' over the age of 65 are increasingly staying in the workforce. The employment rate for over 65s has risen from 5.8% in 1998 to 22% this year. That's the beauty of a universal basic income for people over the age of 1965. They keep working while also collecting a benefit.

And finally, some employers are getting savvier about employing people on the autistic spectrum. EY in Philadelphia has launched a programme to seek out, employ and train people on the spectrum, as Fortune reports here. Others, including Microsoft and SAP, are doing the same. Good on them, I say.

Have a great weekend.