Tag: International Politics
Photo & Video: Mikhail Kasyanov, former Russian Prime Minister
Photo: In Conversation with former Russian Prime Minister Mikhail Kasyanov
Video: Mikhail Kasyanov & Chrystia Freeland
Video: Audience Q&A
Analysis: Who is Matteo Renzi?
At just 39 years of age, Matteo Renzi became Italy’s youngest-ever prime minister in late February. Yet only months before, the then-mayor of Florence had been embroiled in a primary race for the leadership of the Italian Democratic Party. He secured victory with a convincing majority in early December 2013; Renzi won 68 percent of the popular vote, while rivals Gianni Cuperlo and Giuseppe Civati scored just 18 percent and 14 percent, respectively.
Following his December victory, Renzi quickly became frustrated with the government’s prolonged stalemate, due in part to his own party; neither the government coalition nor the prime minister, Enrico Letta, were capable of pushing through much-needed reforms. In mid-February, having lost patience, he called a meeting of the Parliamentary Party, during which he briefly thanked Letta for his leadership but also called for—really, effectively demanded—his resignation.
The dramatic events that led to this meteoric rise are nothing new for Renzi. Over the course of his relatively short political career, the former lawyer and regional counselor earned the nickname “il Rottomatore”—meaning “the bulldozer” or “the demolition man”—thanks to his reputation for taking on the establishment and pushing through political reforms. The Financial Times has dubbed him “a young man in a hurry,” but a number of commentators have questioned whether his lack of experience at the national level could undermine his ability to modernize Italian politics and kick-start economic growth.
Others, however, suggest his very willingness to shake things up is what Italy needs and that this willingness to push for reforms will be precisely the source of his success.
Download Matt Browne’s analysis here.
Matt Browne is a Senior Fellow with the Center for American Progress, a member of the Canada 2020 Advisory Board, and has been advising Matteo Renzi for the past 3 years.
The New Clintonomics
Two weeks ago, two policy think tanks based in the U.S. and the UK — the Center for American Progress, founded by Bill Clinton’s former Chief of Staff John Podesta, and Policy Network, founded by former Labor Cabinet Minister Peter Mandelson and a group of former advisors to the government of Tony Blair — hosted a meeting of Europeans and North Americans in London. Canada 2020 was invited to attend this summit as the only non-European, non-American participant.
The meeting was framed as a trans-Atlantic dialogue on some of the major issues facing progressives today, in particular how to tackle the fiscal crises in Europe and the United States in the context of weak economic growth, and in a manner that doesn’t betray core progressive principles and values. The conference was also designed to bring together a new generation of progressive thinkers and politicians from Europe and North America, to regenerate the trans-Atlantic Third Way dialogue of the late 1990s that Tony Blair and Bill Clinton led.
Fittingly, then, the keynote speaker was President Clinton. In a forty-minute address, Mr. Clinton provided a road map for how America should deal with the fiscal and economic issues it faces. His prescription could be seen as amounting to a macro economic policy doctrine for the U.S. — a new Clintonomics if you will.
The foundation for the new Clintonomics rests on the notion that governments need to pursue what some might regard as two contradictory courses of action at once, what the President called “walk and chew gum’ economics. For Mr. Clinton, it is imperative that Washington invest significantly now, when US government borrowing rates are historically low, in the many things America needs to make it a more productive and competitive economy, notably infrastructure and education, but also in new industrial policy initiatives aimed at developing innovative sectors of the future. This investment will also provide needed short-run stimulus to an economy that is still operating well below potential over three years after the recession.
This bold investment agenda must, however, be anchored by a serious, credible, fiscal consolidation effort that will be planned, and expected, to kick in once economic growth takes firm hold. This, in Mr. Clinton’s view, is necessary in part to anchor expectations to help prevent the inevitable interest rate increases from rising too far and too fast and crowding out needed private sector investment.
While this was a serious policy talk from the President, he remains ever the pragmatic, centrist politician, not for a minute under-estimating the difficulty selling his economic remedy to the American public. Mr. Clinton observed that most Americans are fiscal conservatives, even if they are Democrats. Regardless of the economic merits of deficit spending in some situations, many Americans see piling on debt as immoral. As a result, those that argue for austerity now — the American right and the business community — will, in Mr. Clinton’s view, have an easier political sell to the American electorate than those that push for some variation of his agenda.
Nevertheless, the President made a compelling case that the complexity and variety of America’s core problems today — a grave fiscal situation, growing productivity and competitiveness issues, serious income inequality, and weak, post-recession growth — call for an equally complex range of actions, which might even appear contradictory to many people.
In the domain of American political economy, it seems walking and chewing gum is a lot harder than it sounds.
Australia’s Asian Century – Canada’s too?
I am British by birth and Canadian by choice. While I have a healthy respect for the Commonwealth, I have never aspired to go beyond my two nationalities – until this week. Now I want to be an Australian.
This admiration for Oz is precipitated by a new White Paper presented by the Australian government last week, Australia in the Asian Century.
The nearly 300-page paper is ambitious, strategic, well-written and comprehensive. One Australian commentator called it ‘lofty and inspirational’. That is what is at the root of my Australia-envy. It has been a long time since I have been inspired by a white paper. But then it is also a long time since I have seen a white paper in Canada. The Parliament of Canada website shows that the two most recent white papers were produced in 2010: one on cyber security and the other on the Arctic. There were two produced in 2009, none in 2008 and one in 2007.
One inspiring thing about Australia in the Asian Century is that it connects the challenges Australia faces in penetrating Asian markets with domestic objectives, including building up the five pillars of productivity: skills and education, innovation, infrastructure, tax reform and regulatory reform. It also underscores the need for Australia to learn from, not just sell into, Asia, now a ‘world centre of innovation and technological development’ (p.43).
The daunting thing is that Canada has to compete with Australia in developing relationships in Asia. We are clearly starting behind the pack. The Australian White Paper opens with the statement that:
“Our nation … has the strength that comes from a long history of engagement with countries in Asia. Australia’s relationships in our region are strong and robust, including with Asian nations like China, Japan, India, Indonesia and the Republic of Korea (South Korea).” (p.1)
Contrast this with the opening paragraphs written by Dominic Barton, Global Managing Director of McKinsey in Canada 2020’s 2011 anthology The Canada We Want in 2020.
“Asia….feels geographically and culturally distant, despite the fact that Canada is a Pacific nation. Links are sparse and Canadian businesses lag their rivals from other OECD countries in terms of Asian penetration”(p.35)
It is true that the Harper Government has “pivoted” towards Asia over the past two years. In addressing the recent Canadian Council of Chief Executives conference on Canada in the Pacific Century, Foreign Minister Baird noted that “We have made 77 cabinet-level or Prime Ministerial visits to the Asia-Pacific in the past three years alone”: tomorrow the PM will add to that total when he leads Ministers Fast, Ritz and Oliver to India.
Minister Baird went on to emphasize the steps the government has taken in the trade area (while acknowledging that there has yet to be a trade agreement signed with an Asian nation), its goals in regional security and governance and the important increase in Canada’s diplomatic presence in Asia. Lastly, Minister Baird noted the importance of promoting Canadian values in the region, citing Canadian support to Burma.
But this Australian manifesto underlines how far we have to go and how widely we need to participate in the effort. Skepticism and fear of Asia, and China in particular, is rife in Canadian society, government and business, as evidenced by the debate over the CNOOC/Nexen deal and the China-Canada FIPA. The government position on both these issues has done nothing to reassure Canadians that their interests will be served by deepening relationships with the globe’s most – perhaps only – economically vibrant region.
What the Australian White Paper does so well is to project a rallying cry to the whole of Australian society. What is required is concrete measures such as the proposal that one-third of board members of Australia’s top 200 publicly listed companies and Commonwealth bodies (including companies, authorities, agencies and commissions) will have deep experience in and knowledge of Asia, as will one-third of the senior leadership of the Australian public service.
Concrete measures yield concrete rewards. If Australia meets it objectives in Asia, it is projected that per capita real annual income will rise by A$3,000 per annum by 2025 (up from the ‘business as usual’ projection for 2025 of A$70,000 to A$73,000: the 2012 figure is A$62,000). This will put Australian in the top 10 globally for per capita income (it is already ahead of Canada, according to World Bank figures).
Rana Sarkar from the Canada-India Business Council provided much-needed inspiration when he wrote in his contribution to The Canada We Want in 2020 of our need to double down on existing policy, but also to be opportunistic, creative, bold and strategic in our approach to Asia.
This Australian White Paper puts flesh and clear targets on the strategies that Sarkar referenced. It talks of the need for government to lead a broad coalition of “business, unions, community groups and educational and cultural institutions” to improve people-to-people links to unlock large economic and social gains (p. 3) and while it pinpoints key growth opportunities for Australia (including mining, tourism, agriculture, education, environmentally sustainable development), it also highlights the contribution of culture and the arts.
“The arts, culture and creativity can broaden and strengthen Australia’s relationships in Asia, both formally and informally. Australia’s cultural strengths—as home to the world’s oldest living culture, and as a country that welcomes diversity—underpin values of respect, understanding and inclusion that help to connect people, business, institutions and governments.“ (p.8)
Australian commentators have criticized the document on two main grounds: the first is that it is not all new. A number of the targets and programs it apparently ‘announces’ are already in existence (cited here are the 12,000 Australia educational Awards (over 5 years) for study in Asia or for Asians to study in Australia). The second is that there are not enough specifics or resource commitments behind the lofty policies.
From a Canadian perspective we have to hope that that is the case. Australia starts ahead of us in Asia. It has a similarly stable economy to ours. But it also has greater ambition, it seems, and a stronger track record in solving the type of problems that Asian countries face (for example, it already has experience with carbon pricing and can point to successes in water and soil management, while Canada has no binding national laws on drinking water quality, river basin management or agricultural waste: all pressing problems in Asia).
If we are to ‘leapfrog’ others in our quest to get ahead in Asia we clearly have to jump very high: it would help if our competitors could crouch, but that does not appear to be happening.
Falling off the ‘fiscal cliff’ will hurt Canada too
It has been said that when the U.S. sneezes Canada catches a cold. Today, America’s economy has a low grade fever that could develop into pneumonia in the next few months. This takes the economic form of relatively slow post-recession growth by US historical standards—an annualized rate of 2.0% according to the US Department of Commerce’s most recent estimate. The looming pneumonia is another American recession, a very real possibility.
The path the illness takes is dependent in the immediate term on whether Washington avoids the so-called “fiscal cliff”. If the politicians fail to avoid driving off this cliff, the American economy will suffer a major blow and will in all likelihood fall back into recession. This would be very bad news for Canada’s economy.
At the end of this year, the tax cuts put in place by President Obama’s predecessor, George W. Bush, which has been considered important stimuli during and after the recession, will expire. This will take purchasing power out of the hands of the debt laden American consumer. At the same time a “sequester,” part of the 2011 Budget Control Act, indiscriminately cuts $1.2 trillion over nine years from spending in Washington. According to the Congressional Budget Office, the combined effects of these two measures equal about 3.6% of GDP in 2013. Other analysts say it could be more like 5% of GDP, either of which is enough to end the fragile US recovery and tip the economy back into recession.
To avoid falling off the fiscal cliff the newly elected Congress and the Administration would have to agree before the end of the year on a budget that reduced Washington’s deficit by an amount at least equivalent to the sequester. In theory this is very easy. As TD CEO Ed Clark recently said, “If you put five economists in a room and say you each have half an hour to come up with a solution for the United States (fiscal problem), all five could say, ‘I don’t need half an hour.’” In practice, however, it seems an almost impossible task in the ideologically divided Washington of today, which reflects the deep divides within American society itself on the role and size of government—what The Economist calls “The 50-50 nation”.
What does all this mean for Canada? We are a trading nation. One third of our GDP, and one in five jobs in Canada, is export dependent. While Canadian exports to the US have declined in recent years – from a peak of over 80% of Canada’s total exports a decade ago—the US is still far and away our biggest market, accounting for nearly 74% of Canada’s exports in 2011. By contrast, Mexico, our other NAFTA partner, accounted for a paltry 1.2% of Canada’s exports last year, the UK 4.2% and China 3.8%.
Hence, if the US tips back into recession as a result of falling off the fiscal cliff, the negative economic effects in Canada will be real and significant, slowing what is already relatively slow growth in this country.
We also know that when the US economy struggles, protectionism south of the border rises. This came home to Canadians in spades during the 2008-09 recession with the Buy American provisions of the American Recovery and Investment Act of 2009, which excluded Canadian firms from supplying projects funded under Washington’s stimulus measures. Further protectionist measures emanating from Washington and negatively affecting Canada’s exports could rear their ugly heads if there is a second US recession in five years, in a country with a persistently high, and historically anomalous unemployment rate—nearly a percentage higher than that of Canada.
Put simply then, averting the fiscal cliff in Washington really matters in this country, as Canada’s Ambassador to Washington Gary Doer made clear Wednesday in a speech in Vancouver. So let’s hope our friends to the south can get beyond their 50-50 divide in the next sixty days and come to agreement on a new fiscal plan that will avoid plunging their economy into another recession and doing significant economic damage to their neighbour.
Venus and Mars Align – Income Inequality Agendas in France and America
When the President of the most anti-government country on earth and the President of the country that invented dirigisme are converging upon a political narrative, if not a shared policy agenda, something is going on that Canadians better pay close attention to.
Francois Hollande, the newly elected socialist president of France, is defining the early days of his presidency on the issue of income inequality. Barack Obama, who faces a jaded American electorate in a few months, has decided to make income inequality the central issue of his re-election campaign. This amounts to the political equivalent of the alignment of Venus and Mars.
Canada lies, both culturally and politically, in the mid- point of these two planets. And yet oddly enough politicians in this country are saying almost nothing about income inequality.
Hollande has exhibited the most extreme rhetoric and pointed policies on the subject, echoing the language of the Occupy Movement. He has called “the world of finance” his main enemy. The government Hollande leads plans to introduce a variety of tax increases to level things out on what he has termed “the grasping and arrogant rich”. These include wealth, financial transactions and inheritance tax rises. An extra 3% dividend tax on business has been mooted. Planned increases in value added tax by Nicolas Sarkozy, Hollande’s predecessor—which would have hit hardest on low and average earners—are being cancelled, even though the French government desperately needs the revenue (not having balanced its budget in thirty eight years and with a debt GDP ratio of 86%). A new 75% top rate tax on incomes over 1 million euros is expected. Salaries at majority state owned companies, of which there are dozens, will be capped at 20 times the lowest paid worker’s wage, meaning some chief executives could take as much as a 70% pay cut.
All in the name of reducing income inequality. And all quite popular in the land of liberty, equality, fraternity.
But how can an income inequality agenda be popular in America, the land of the free and the home of the brave, a country that likes to present itself as the world’s beacon of unbridled free market capitalism. President Obama certainly thinks it can be. He sees income inequality as the “defining issue of our time”. While Obama’s points are subtler and less overtly “soak the rich” than Hollande’s, the message is pretty clear.
In his State of the Union Address in January the subject of income inequality featured prominently. The president said– “No challenge is more urgent. No debate is more important… We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by. Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules.” Building on this theme in April, the president said–“What drags down our entire economy is when (sic) there is an ultra-wide chasm between the ultra-wealthy and everyone else.”
So for Obama, income inequality is bad for the economy, which fits well with America’s basic narrative. And for Hollande and the French socialists, income inequality is an affront to the core French values of egalite and fraternite. Different strokes for different folks.
President Obama has been shorter on solutions to the defining issue of our time than has Hollande, but he has put a couple things on the table. Notable among these are extending tax breaks for America’s struggling “middle class”, by which he means everyone but the top 2% of earners, who drive the income inequality gap so wide in America. And he has expanded tax credits for low income people and put more money into education.
While income inequality has emerged over the past few months as a dominant issue in France and America, the silence among Canada’s politicians on this subject is truly deafening. This is especially puzzling given that measures of income inequality are much worse in Canada than in France. And income inequality in this country is rising faster than it is south of the border.
This week the Premiers gather for their annual confab to discuss the major issues they think confront Canada. Energy, a perennial favourite, is at the top of their agenda. The Premiers would be well advised to spend a little more of their energies on the defining issue of our time.