Weekend reads for August 19-20

Especially for subscribers over the weekend, here's a few longer reads on economic, social and political issues of the week. Please feel free to email me (just hit reply) with suggestions for next week. We have a savvy set of subscribers who are always telling me new and useful things that I like to share. My mobile number is also at the bottom of the subscriber emails so you can also just text me or phone me with a tip that is safe from the prying eyes of the OIA.

Usually I don't link to videos, but this is an essential 22 minutes of coverage of the Charlottesville clashes from Vice. Many thanks to one our readers for pointing this out to me. It helps explain why so many Americans from all sides of politics were so upset with Donald Trump for failing to condemn the white nationalists' actions in Charlottesville.

It also helps explain the near complete isolation of Trump from both his own party in Congress, corporate America and the US military, who essentially declared him persona non grata this week.

Trouble is also brewing for Trump's muse, Steve Bannon, who egged the President on with his self-destructive comments on the the Charlottesville clashes. This American Prospect article where Bannon dished the dirt on the rest of the White House and the alt-right could prove a Scaramucci moment for him.

But it's his comments on America and China that are the most alarming for us.

“We’re at economic war with China,” he said. “It’s in all their literature. They’re not shy about saying what they’re doing. One of us is going to be a hegemon in 25 or 30 years and it’s gonna be them if we go down this path. On Korea, they’re just tapping us along. It’s just a sideshow.”

Sheesh.

Scaramucci was right in his description of Bannon, which is too graphic for your spam filters.

Water quality is set to be one of the big three or four issues in this election campaign, alongside housing, migration and mental health. Until now, the debate has largely been between New Zealanders. The rest of the world has largely believed the 100 percent pure campaign and have yet to get down and dirty with the issues of nitrates, phosphates, campylobacter and the quirks of Overseer. Until now. The Wall Street Journal published a deeply reported piece this week on the environmental challenges posed by New Zealand's dairy boom.

Here's the lead: "This South Pacific country markets itself to international tourists as “100% pure,” but a rapid expansion of its dairy industry is endangering its clean, green image. The shift threatens to pit the nation’s No. 2 export, tourism, against dairy, its No. 1."

Here's the killer quote for all the fly-fishing billionaires who read the Wall St Journal this week:

“Fifteen years ago, when I started to guide in the region, there was not a river where I would hesitate to have a drink of the water,” said Serge Bonnafoux, a fly-fishing guide. “Nowadays there are only rivers in remote areas, where I know there are no cows above me, where I will drink.”

Ouch.

The future of work and the transition from manufacturing to services in a globalised age is one of those tectonic shifts underneath many of the big issues of our time. One of the themes is the growing proportion of jobs in low paid services jobs in hospitality and aged care. The Atlantic has published a useful piece on how "Restaurants are the new factories."

"Four of the five best years for restaurant growth on record have happened since 2011. Restaurant jobs have grown faster than the overall economy every month for the past seven years," Derek Thompson writes. "The trend is speeding up, but it’s not clear that we should cheer it—or whether it’s sustainable. Jobs are jobs, but these ones don’t pay very well. The typical private-sector job pays about $22 an hour. The typical restaurant job pays about $12.50. That’s one reason why the Fight for 15 movement to raise the minimum wage has targeted the restaurant industry."

This ties in with the other big story: low inflation. The latest minutes from the US Federal Reserve showed again this week that the inflation everyone expects in a growing economy at its apparent limits is just not coming. We could easily see a new Reserve Bank Governor make some different judgements about both macro-prudential and monetary policy that allow interest rates to fall to get New Zealand's own inflation rate up from the bottom of its target range. A key moment will be the Fed's September meeting where it is expected to begin selling its stockpile of bonds back into the market. Here's a Bloomberg preview of what that moment might do to global markets.

Have a great weekend.

cheers

Bernard