The anger of Martin Wolf

I’ve been reading the Financial Times for nearly 25 years. No English-language newspaper does a better job of covering the stories that matter globally. It’s always been intelligent and reasoned, often taking positions that casual observers might find odd for the “world business newspaper”. For example, it endorses Labour and Democrat politicians more, to my memory, than Conservative and Republican.

One of the great strengths of the FT over the last decade and more has been the economic commentary of Martin Wolf. I’ve quoted him often on Davos Newbies, which might seem a bit of a copout for a blogger. But until the financial and economic turmoil of the last year or so, Wolf was just about the only mainstream writer consistently probing issues on the global economy. I know Wolf a little bit, and I remember discussing this strange state with him when I still lived in London. He thought Paul Krugman could obviously intrude on his patch, but in those days Krugman was (to my mind correctly) obsessed with exposing the bankruptcy of the Bush administration. There was no one else, until the rise of what Felix Salmon calls the econoblogosphere.

One of Wolf’s traits has always been, to my mind, impressive reasoning, bolstered by wonderful command of pertinent statistics. He’s often impassioned, but until recently I would never have termed him angry. It’s a worrying sign of the desperate straits of the global economy that Wolf is screaming from the rooftop afforded him by the FT.

Many people have quoted his column yesterday (the first line forces you to read on, certainly):

Has Barack Obama’s presidency already failed? In normal times, this would be a ludicrous question. But these are not normal times. They are times of great danger. Today, the new US administration can disown responsibility for its inheritance; tomorrow, it will own it. Today, it can offer solutions; tomorrow it will have become the problem. Today, it is in control of events; tomorrow, events will take control of it. Doing too little is now far riskier than doing too much. If he fails to act decisively, the president risks being overwhelmed, like his predecessor. The costs to the US and the world of another failed presidency do not bear contemplating.

What is needed? The answer is: focus and ferocity. If Mr Obama does not fix this crisis, all he hopes from his presidency will be lost. If he does, he can reshape the agenda. Hoping for the best is foolish. He should expect the worst and act accordingly.

But if you want to see how the usually unflappable Wolf is boiling, I can highly recommend the boxing match between him and various writers for the FT’s Lex column. Wolf is arguing for government-imposed controls on bonuses at banks that take government aid. A number of Lex writers foolishly rush into battle against Wolf, only to slink from the field of battle. Here’s a taste of Wolf’s argument:

I think that, once we get away from the red herrings, there are just three real issues at stake here.

The first is whether it is desperately important to pay bankers more than any other workers in a society (these are not entrepreneurs, after all), because their talents are so rare and so socially valuable. The answer to this is: you must be joking.

The second is whether governments have a legitimate interest as risk-bearers of last resort in the incentives provided by the structure of remuneration at least, if not its level. The answer to this is: of course they have – and how!

The third question is whether it makes sense to separate out a regulated utility banking industry from free-wheeling capital market-oriented institutions. On this last point, I have an open mind, though I am inclined to believe the answer is: yes. The fact that US legislators reached this conclusion in the 1930s seems to me quite important. But if that is not the answer, then we must accept tighter regulation of the financial system.

For connoisseurs of intra-newspaper tiffs, a small but delicious moment came in an exchange between Wolf and Lex’s Jo Johnson.

Wolf: As Talleyrand said of the Bourbons, “They have learned nothing and forgotten nothing.” That seems to be Jo’s position. It is not mine. I am with Keynes who said, “When the facts change I change my mind – what do you do sir?”

Johnson: And what did people call Talleyrand? “A shit in silk stockings”, I believe, or “de la merde dans un bas de soie” in the original.

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