Author: philmullan

Could this be the death of the dollar?

philmullan Changing world order, Debt, Geopolitics, Trade

The single most important prop sustaining the US economy today is the global power of the dollar. America’s current relative prosperity (which until recently was dubbed ‘US exceptionalism’) rests far more on the role of its currency than on its tech companies, abundant resources or famed entrepreneurial spirit. Because the dollar is accepted as world money, when the American state and its corporations spend or borrow abroad, foreigners have been willing buyers. This has enabled a seemingly endless flow of cheap money to support the economy at home.

Today, however, this special benefit is looking increasingly vulnerable. And the greatest threat to the dollar’s status doesn’t come from Russia or China or even Europe, but from the US government’s own actions.

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Scrap the fiscal rules, abolish the OBR

philmullan Democracy, Economic growth, Economic policy, Politics, State intervention , ,

The parlous state of the British economy and its public finances shows us what happens when you defer to the ‘experts’. Rachel Reeves is a middle manager posing as chancellor. She exemplifies the managerial politician. She doesn’t make political decisions about what the country and its people need, so much as follow rules and procedures authored by experts – by those who supposedly know best.

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The death of the West?

philmullan Changing world order, Geopolitics, Politics, Rivalries, Trade

‘There are decades where nothing happens; and there are weeks where decades happen’, Vladimir Lenin is supposed to have said. But the globalised world order collapsing within the space of weeks would be momentous even by the Bolshevik leader’s standards. This is certainly what many international politics watchers think is happening.

Bronwen Maddox, director of the Chatham House think-tank, has said that the concept of the West as an alliance of liberal democracies is ‘probably’ over. Michael Clarke, a former director general of the Royal United Services Institute, has been more forthright. ‘The West is dead’, he said. Meanwhile Marc Chandler, chief strategist at Bannockburn Global Forex, has said that Trump’s policies will ‘end globalisation’.

The problem with these obituaries to the West, these valedictions to the world order and to globalisation, is that they assume that a decisive transition has taken place in recent weeks. But this is not what is happening. Rather these declarations express the dawning, and deepening, recognition by the west’s elites of the existing instability of global politics and economics, even though this has been so for some time.

In truth, the geopolitical and economic shifts and fractures that Trump has brought to the fore over the past few weeks have been taking place for years.

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Trump is hardly the West’s only trade warrior

philmullan Creative destruction, Economic growth, Geopolitics, State intervention, Trade

Enough of the hyperbole about Trump’s tariffs. His tariffs are wrong, but so is the rest of the west’s obsession with Trump-driven trade wars. For a start the hysteria over Trump’s tariffs ignores, and distracts, from just how protectionist most mature economies have become. Protectionism in its many forms impedes the domestic business investments needed for productivity growth. And the parallel fear-mongering about a ‘trade war’ is clouding the bigger geopolitical, as well as the economic issues, at stake today.

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The myth of America’s economic exceptionalism

philmullan Economic growth, Economic policy, Productivity, State intervention, The longest depression

What sort of economy is the returning president Donald Trump inheriting? In otherwise polarised and uncertain times, a consensus stands out: the belief in US economic exceptionalism. America’s recent growth out-performance and its ever-climbing equity markets seem to make the country the exception to economic stagnation across the west. But America’s underlying productive decay is not that different to the other mature industrialised nations. The staying power of the narrative of ‘US exceptionalism’ points not to the US’s exceptional vigour but rather to some peculiar forces for resilience in the face of its long-running productive decline. These US-specific factors reveal America’s superior capacity to offset its moribund tendencies.

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