March 22, 2017

God, help my descendants live out of reach of high priests of complacency, like Basel Committee’s bank regulators

Sir, Martin Wolf writes: “China can help give Mr Trump what he wants. The US president wants greenfield industrial investments in parts of his country damaged by deindustrialisation. This can never be reversed. But Mr Xi can surely find Chinese businesses happy to invest in the US. Mr Trump likes such announcements. Mr Xi should help him.” “An odd couple doomed to co-operation” March 22.

What? Is the future wellbeing of America now beholden to China? Would Wolf really like this opinion of his to be quoted during a Trump rally?

If I were to give a recommendation of how to promote any type of greenfield investments in America, I would start with, of course, by telling America to get rid of those disastrous risk weighted capital requirements for banks that orders complacency with what we have, and de facto blocks bank lending to whatever smells as risky unknown future.

That regulatory risk aversion, which so odiously discriminates access to bank credit in favor of “the safe”, like the sovereign, the AAArisktocracy and residential housing; and so disfavoring the lending to risky SMEs and entrepreneurs… has no place in any country that wants to build future… much less in one that prides itself of being the Home of the Brave.

But there is much more to it.

On March 10, in “British business is starting to look more Italian” Martin Wolf drowned us in growth projections statistics that most probably are not based on an acceleration of any of those profound economic changes the world is going through. Sir, I wrote you a letter commenting on that.

On March 14, Wolf discussed the horrors of bilateralism and the blessings of multilateralism, trade agreements and globalization, reminding us of oldies like the Marshall Plan, “The folly of bilateralism in global trade”.

Today it is China and America, with Wolf referencing the “reform and opening up” proposed in 1978 by Mao Zedong’s successor, Deng Xiaoping.

Sir, about a month ago I had the chance to visit a wonderful small regional museum in Sweden, the Blekinge Museum. It lies very close to my recently deceased mother’s family house, in which I spent a lot of time in my youth. It was a shocking and a humbling experience. It was not a museum of very old times gone by; it was a museum of so much of my (1950), (and Wolfs) times gone by.

Images of heavy horses pulling carriages full of hay, Olivetti accounting machines, telephone exchanges with hundred of cables, old bicycles, wrinkled by rough seas rowing boats, and hundred similar items that I have lived with, but that mostly no longer exists, and are much less used, shouted out… “Per, what on earth do you know about tomorrow… what does anyone know?”

Coming out of the museum, more than ever, I felt like praying “God make us daring”; or at least God make my children, grandchildren and their descendants daring, so that they are not among the so many to be left behind… doomed (by automation and robots) to end up like the heavy horses of my time. God let them live free of that complacency Tyler Cowen writes about in “The Complacent Class”… faraway from the high priests of complacency.

And as for me, and as for Martin Wolf, as economists, as citizens, as parents and grandparents, if we only look back, and do not do our utmost to imagine what lies around the corners of tomorrow then, like old soldiers (and heavy horses) we might perhaps better fade away.

Does all what we older have lived not mean anything for the young? Of course it should signify a lot… but much more in terms of wisdom, than in terms of knowledge.