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 Wall St Journal's Brody Mullins blew the lid this week on what looks like being the biggest lobbying scandal in Washington since Jack Abramoff in the mid 2000s. He reports that a Roche lobbyist (with four Porsches) is suspected of embezzling millions by taking kickbacks from political consultants. He oversaw a Roche lobbying office that turned over US$50 million a year. He personally orchestrated an avian flu scare that forced the Bush administration into buying US$1 billion worth of Roche's Tamiflu drug. This article on its own is why it's worth subscribing to the WSJ. It is a deep look into a world where huge amounts of money floods through the policy-making world, and often corrupts those involved. It unveils a scandal and a tragedy.

The New Yorker's Sheelah Kolhatkar details Donald Trump's many conflicts of interests and how his apparent attempts to distance himself from them was only paper thin.

Anyone trying to understand what on earth Donald Trump wants to do with trade policy should read this document prepared by Trump's trade adviser Peter Navarro before the election It is mercantilism in its most basic form.

Here's a taste: " Donald Trump views America’s economic malaise as a long-term structural problem inexorably linked not just to high taxation and over-regulation but also to the
drag of trade deficits on real GDP growth. Trade policy factors identified by the Trump campaign that have created this structural problem include: (1) currency manipulation,
(2) the equally widespread use of mercantilist trade practices by key US trading partners, and (3) poorly negotiated trade deals that have insured the US has not shared equally in
the “gains from trade” promised by textbook economic theory."

This Martin Sandbu piece in the FT (again, the most useful stuff is worth subscribing to) is a good riposte to Trump's mercantilism and love of big factories. Sandbu points out robots are doing more damage to manufacturing jobs than globalisation and that the big international firms have already internationalised their supply chains. Trying to turn back the tide would just increase the costs of imports and make US exporters less competitive.

"If the factory fetishists are obsessed enough to throw themselves into a battle for a steadily shrinking type of employment, they may well find that their most obvious weapons are doubled-edged at best. Suppose the Trump administration forced through changes in the North American Free Trade Agreement so as to repatriate all parts of the car production process, the most salient of the supply chains Mr Navarro says he wants to bring back. The result will be to make US-produced cars more expensive. How is that going to help expand American car exports?," Sandbu writes.

Here's Jeffrey Sachs along the same line in this Buzzfeed interview -- the manufacturing jobs aren't coming back because of robots. There'll be lots of low-paid service jobs instead.

“Lots of jobs are being created in home care, personal care, care for the elderly. One could imagine lots of jobs being created in helping young kids, sports, entertainment. We are a luxury economy in one sense. We have a lot of leisure, a lot of elderly who can retire, and a lot of demand for personal services. Those jobs will continue, but they won’t be high-paying jobs. The issue isn’t the number of jobs, it’s the wages those jobs will command.”

Away from Trump, Micheal Lewis is back with an article in Nautilus about how doctors suffer from the same cognitive biases as the rest of us. It follows up on the topic of Lewis' latest book on the work on cognitive bias by Israeli psychologists Daniel Kahneman and Amos Tversky.

Have a great weekend.