Joseph Stiglitz: the Right’s China Policy was Designed to Raise Profits by Weakening Wages (Labor)

Joseph Eugene Stiglitz (/ˈstɪɡlɪts/; born February 9, 1943) is an American economist, public policy analyst, and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979).[2][3] He is a former senior vice president and chief economist of the World Bank and is a former member and chairman of the (US president’s) Council of Economic Advisers.[4][5]
some ways I one has to recognize that
42:32
China may have been lucky they began the
42:37
development strategy just at the moment
42:39
when the West was very open to importing
42:43
manufacturing goods it was a moment
42:49
where because there were a large profit
42:54
opportunities in the West that sustained
42:58
the opening with wrong without regard to
43:01
the effects and workers over the over
43:04
the effects and the overall economy so
43:09
in a way China’s success is testimony to
43:13
the failures of democratic politics in
43:16
the United States in Western Europe
43:19
because the rules the game were designed
43:26
worked to advantage American
43:29
corporations Western European
43:31
corporations with no attention paid to
43:37
the consequences to the workers as the
43:41
United States d industrialized now some
43:43
countries in Europe did pay attention
43:45
and they did have active labor market
43:49
policies that shifted workers from the
43:53
old sectors that were dying into the new
43:55
sectors and Scandinavia has been very
43:58
good in these active labor market
44:00
policies which I think are really
44:02
important in the United States we didn’t
44:06
do that even though economic theory said
44:11
opening up of trade between an
44:14
banks country like the United States and
44:16
China West events would result in lower
44:21
real incomes for unskilled workers
44:24
there’s a missing Stover theorem and it
44:28
was unambiguously clear even though we
44:31
were getting cheaper goods real incomes
44:34
of unskilled workers would go down and
44:36
it’s only if you had a mystical belief
44:39
in trickle-down economics would you
44:41
think otherwise but our politicians did
44:44
have a mystical belief in trickle-down
44:46
economics and they asserted this over
44:51
and over again and so even when you know
44:54
in the Democratic Party we tried to get
44:57
Trade Adjustment Assistance we try to
44:59
have some active labor market policies
45:01
when we couldn’t because of concerns
45:04
about austerity and not enough budget
45:07
concerns they wouldn’t work we went
45:11
ahead anyway there is a growing sense
45:15
the United States though that actually
45:16
the agenda on the right was to increase
45:23
unemployment and suffering you say why
45:26
would they anybody you know why do
45:29
people want suffering well it was part
45:32
of a concerted agenda if you look at to
45:35
weaken the bargaining power of workers
45:38
and drive down the wages which increases
45:41
profits so if you look at this from a
45:45
conservative point of view the reforms
45:47
and our labor laws and reforms in the
45:51
way antitrust policy was enforced that
45:55
reform is a not the right word but
45:58
changes in those laws changes in
46:02
corporate governance and implicit
46:04
understandings the legal frameworks and
46:08
in the investment agreements in the
46:10
trade agreements the investment
46:12
agreements they gave more secure
46:14
property rights if American firms
46:16
invested abroad than if they vested at
46:18
home which meant that they were
46:21
encouraged to invest abroad which also
46:24
meant that if the firm if workers came
46:27
to affirming
46:28
we want higher wages and the firms know
46:31
if you we give you if you continue to
46:35
demand higher wages we’re going to leave
46:37
that was more credible so I think it was
46:43
a deliberate strategy to drive down the
46:45
wages of workers and it worked in terms
46:50
of the economics that I described before
46:52
it did drive down the wages but it has
46:55
now led to these this political backlash
46:58
with which we are dealing so there is a
47:04
relationship between China’s success and
47:07
some of the problems that we’re facing
47:09
it wasn’t inevitable we could have
47:11
managed it better we should have managed
47:14
it better but we didn’t but just as a
47:16
footnote the point I’m making is that
47:20
that was a particularly
47:23
Africa won’t be able to follow the
47:25
manufacturing export-led growth model
47:28
that led to the success of East Asian
47:32
countries including China in fact now
47:36
globally manufacturing employment is in
47:40
decline in any country that believes
47:44
that manufacturing should be at the
47:46
center of their economic policy is
47:48
misguided it can be part of it it can’t
47:52
be at the center well let me just
47:57
conclude by SEP some let me just
48:02
conclude by a set of remarks about that
48:07
in a way that pertain to all countries
48:10
but we’re we’re china realized this in a
48:16
way more forcefully than many others
48:18
have and that is that reform is a
48:20
never-ending process that societies are
48:28
always changing technology’s changing
48:30
and therefore the policies that are
48:36
going to make a society successful have
48:38
to change in a corresponding way
48:41
for China China’s entering a new stage
48:43
of development it’s facing critical
48:46
problems of inequality health
48:47
environment livable cities markets won’t
48:51
solve those problems in fact many of
48:53
those problems have been created by the
48:56
fact that they had markets that were too
49:00
unfettered to under-regulated
49:02
they’re going to have to regulate them
49:04
better there are further questions posed
49:09
by changing globalization the
49:12
recognition of the risks of excessive
49:14
financialization the West
49:18
I believe hasn’t succeeded in adequately
49:20
taming financial markets as you know
49:23
this is this week is the 10th
49:25
anniversary Lehman Brothers and and a
49:27
lot of people are talking about have we
49:29
done enough I think it’s absolutely
49:32
clear no and what’s particularly
49:39
disturbing is the Trump administration
49:41
is trying to undo the inadequate things
49:44
that we’ve already done again I was at a
49:48
dinner right before the inauguration of
49:51
Trump where one of his chief economic
49:54
advisors was there
49:56
I don’t normally associate with his
49:57
people might make it clearer but it was
50:02
an embassy dinner so I and I didn’t know
50:06
he was going to be there anyway
50:10
and he was talking about how he was
50:16
going to deregulate the financial sector
50:19
within weeks after taking office and the
50:26
first thing that struck me is he clearly
50:28
had no idea of our democratic processes
50:31
yeah he really thought you know Trump is
50:34
the dictator he gets to write rewrite
50:36
all the rules no no none of these
50:38
processes that we put in place as
50:40
democratic checks against authoritarian
50:43
leaders no knowledge of that was just so
50:46
clear but the second point I was going
50:50
to ask what somebody who asked it before
50:51
I did quizzically
50:55
didn’t we have a crisis in 2008 and the
51:02
implicit answer was that was ancient
51:04
history and we have to move on but it’s
51:09
not ancient history and I think the
51:12
risks are very much with us one of the
51:17
concerns that I increasingly seeing in
51:20
China is that as China grows the
51:26
influence of vested interest will grow
51:28
and you can feel it already
51:32
another just a little anecdote every
51:36
year when I go to China I often talked
51:42
to the finance minister and I’ve been
51:43
pushing them to move away from their
51:46
debt finance growth model to more tax
51:50
financed in particular I’m telling them
51:53
they need a carbon tax and it would
51:56
raise a lot of revenue it would help
51:59
clean up their air pollution exceed me
52:02
an obvious idea and the finance minister
52:05
every year says great idea and he says
52:10
we have some political problems which he
52:14
means the auto industry the coal
52:16
industry this you know steel industry
52:18
and so forth we’re gonna work on it next
52:22
year we go through the same conversation
52:27
as China has grown and it has taken on
52:31
many of the features of a modern vested
52:37
interest economy we’re getting change is
52:41
becoming more difficult and that of
52:43
course is is very worrisome but the
52:49
principles that guided China in the
52:53
first 40 years are likely to continue to
52:55
be relevant and that by that I mean the
52:57
pragmatism crossing the river by feeling
53:00
this still stone they’re going to be new
53:02
problems not fully foreseen would that
53:04
appear it will have to address these
53:08
problems
53:09
using insights from theory and past
53:11
experience and the second critical point
53:14
is openness there is much to be learned
53:18
from experiences of others and from the
53:20
ink sykes of non-ideological economic
53:23
analysis and again we’re in a particular
53:29
moment where I hate to keep coming back
53:34
to the United States but we’re a little
53:35
bit obsessed with with our problems one
53:41
can’t help but reflect on the closed
53:45
mindedness of our current administration
53:48
of not looking around you know if you
53:52
think you’re number one and you think
53:54
that you’re the there’s nothing to learn
53:57
from anybody else that is part of the
54:02
beginning of the end so we hope that
54:05
this is just a temporary interlude but
54:09
as we reflect on what makes I know
54:14
successful in the ways it is I think
54:18
there are a lot of lessons for all of us
54:19
to think about how we can make our own
54:21
economy successful for all of us thank
54:24
you
54:30

The Best Documentary Ever – Nicholas Shaxson on Tax Havens, the Banking system & UK Uncut

Nicholas Shaxson, journalist, writer, consultant, and author of Treasure Islands: Tax Havens and the Men Who Stole the World, gives an insight into his book, .

With more than 20 millionaires in the UK cabinet, reporter Antony Barnett examines the financial affairs of some ministers and others who have helped the .

Transcript

00:00
why do you think tax havens are such an
00:03
important issue right now and why do you
00:07
think it’s a subject that hasn’t really
00:09
come to light until recently tax havens
00:13
have been completely under the radar
00:15
under the radar screen for such a long
00:17
time partly because there has been this
00:20
perception that I think is deliberately
00:22
encouraged that this is these are just
00:24
places for a few kind of mafiosi and you
00:27
know celebrity tax dodgers and and you
00:29
know if you go spits and and just people
00:33
who you know misfits but the fact is
00:37
that these are now the heart of the
00:40
global economy depending on how you
00:42
measure it the figures are absolutely
00:44
staggering I mean half of world trade in
00:48
a way passes through through tax havens
00:51
huge huge amounts of money are involved
00:55
every multinational corporation pretty
00:57
much these days will have offshore
00:58
subsidiaries that they will use for
01:00
various reasons tax cutting down on
01:03
their tax bills is usually top of the
01:05
reasons banks are recently the Mail on
01:09
Sunday they did a great little
01:10
investigation about how many offshore
01:12
cysts offshore subsidiaries you know the
01:14
UK banks have and the top three Lloyd’s
01:17
Barclays an RBS had 550 offshore
01:21
subsidiaries between them and in every
01:23
survey in fact where they look at you
01:25
know what are the top companies that
01:27
have sub city that have top ranking
01:29
companies in terms a number of
01:30
subsidiaries in tax havens it’s always
01:32
the banks the banks are right in there
01:34
so this is the heart of the financial
01:36
system and when you consider the City of
01:39
London is you know as it is an offshore
01:41
system center in its own right then you
01:42
realize that this is this is absolutely
01:45
central so why hasn’t it I am still a
01:48
little bit mystified as to why it hasn’t
01:50
been so hasn’t it why it has been so far
01:53
under the radar screen I think you know
01:55
there are many different reasons I’m
01:56
still not satisfied with any of them I
01:58
mean it’s the complexity is obviously
02:00
part of it people can only ever see a
02:02
little bit of it at a time and but I
02:05
think now we are at a phase where this
02:07
is starting I know I think my book is
02:09
part of that but there are others who
02:10
are also putting this thing in a hole
02:13
takes a global context and we in Britain
02:15
must understand that this is something
02:16
that is a is a global problem and we are
02:19
right at the center of it if you work
02:22
out what a tax haven is tax haven offers
02:25
people and entities elsewhere
02:27
opportunities to escape – escape taxes
02:29
in their own jurisdictions to escape
02:31
financial regulations or whatever if you
02:34
start doing the analysis you will
02:35
quickly find that the jurisdictions that
02:37
are most effective in offering these
02:39
forms of escape our places like the UK
02:42
the the only objective ranking of in
02:46
terms of secrecy secrecy in a very
02:48
important part of it there and in
02:50
objective ranking was created by the Tax
02:52
Justice Network called the financial
02:54
secrecy index where they took a measure
02:58
they look to how opaque jurisdictions
03:01
were they looked at although they use 12
03:03
indicators to work out how a paper just
03:05
jurisdiction work was and then they
03:07
waited it according to the size of the
03:10
cross-border financial services activity
03:12
and the ranking was very clear the
03:14
United States was was top and you have
03:16
at the top of this ranking you have big
03:19
oacd countries United States Luxembourg
03:21
a great dark horse of the offshore
03:23
system that most people don’t really
03:24
know about the Netherlands Switzerland
03:27
of course the Cayman Islands is very big
03:29
United Kingdom right up there
03:32
Ireland these are the big offshore
03:34
jurisdictions if you’re talking about
03:36
offshore finance this is where it this
03:38
is where it happens and this is the
03:40
result of a process particularly since
03:41
the 1970s of the offshore system
03:43
steadily pushing its way onshore the
03:46
United States didn’t used to be a tax
03:48
haven in this way and it has steadily
03:50
become more so become gained more and
03:52
more and more offshore characteristics
03:58
[Applause]
04:10
[Applause]
04:19
there’s a very specific issue about the
04:22
UK and the UK has this network of havens
04:26
around the world such as the Crown
04:28
Dependencies Jersey Guernsey the Isle of
04:30
Man the overseas territories which are
04:33
kind of the you know the remnants of the
04:35
British Empire such as the cayman
04:37
islands such as bermuda such as
04:39
gibraltar such as the turks and caicos
04:41
islands these are all tax havens and
04:44
they are partly controlled by Britain
04:46
they are half in half out of Britain
04:49
these if you look at their flags you’ll
04:51
see a little British flag in the corner
04:52
you’ll see you know the governor is
04:54
appointed by the Queen so they’re all
04:56
these Britain is supporting these places
04:58
very much but they do have their own
04:59
independent politics so it’s a kind of
05:01
ambiguous relationship but what happens
05:04
with these jurisdictions is that they
05:05
are in my book I describe it as being
05:07
like a spider’s web so and I think that
05:11
is probably the best analogy so this is
05:12
a network of havens around the world and
05:14
you’ll have in the Caribbean for example
05:16
they’ll be focusing on business in the
05:18
Americas North and South America the
05:20
Crown Dependencies
05:21
Jersey Guernsey the Isle of Man will be
05:23
looking mostly at Europe you know out in
05:26
the Pacific they’ll be looking at Asia
05:28
and and Australasia and what these
05:32
things do they attract money into into
05:36
the havens or the business into the
05:38
havens into the into individual havens
05:40
and that business gets fed up to the
05:42
City of London so there is this sort of
05:44
capture of money from all around the
05:46
world and the business of handling this
05:47
money is constantly constantly fed up to
05:50
the City of London
05:51
I mean Jersey alone was the biggest
05:53
single source of bank deposits being up
05:56
streamed up to the city during the
05:57
during that during the crisis and that’s
05:59
just Jersey that’s just one tax haven so
06:01
we’re talking about hundreds and
06:03
hundreds of billions trillions of
06:04
dollars running through the city of
06:06
London as a result of it having this
06:09
network of havens this kind of spider’s
06:11
web bringing in business and that is the
06:13
offshore system that brings all this
06:16
money to the system is one of the most
06:18
fundamental if not the most important
06:20
under
06:21
for the financial power of the City of
06:22
London so if we’re worried about the
06:23
city and its power in the stranglehold
06:25
it has on our governments and our
06:27
societies this is this is this is where
06:31
it where so much of it comes from this
06:32
is where probably the biggest part of it
06:34
comes from this at this offshore system
06:36
that brings in business that’s one sided
06:40
but also the city in its own right the
06:41
City of London Corporation which is the
06:43
local government authority for the city
06:46
of London is in itself a slightly alien
06:50
political entity in Britain it is not
06:53
just another municipal authority it has
06:55
all of its own rules that are very
06:58
different from what apply in the rest of
07:00
written I mean voting rights in the city
07:02
it’s not just humans who vote there are
07:04
corporations corporate management
07:07
effectively can vote in the local
07:09
elections in the city of London it’s a
07:12
bizarre thing that most people in
07:13
Britain don’t know about but I’ve you
07:14
know I write about it in some detail in
07:16
my book you know when the Queen comes to
07:19
the city she stops at the city gates and
07:21
it’s it’s a kind of ceremony but she has
07:22
to meet the Lord Mayor and touch his
07:24
sword and there’s all this kind of
07:26
colourful you know ermine robes and
07:28
stuff Arizona but it’s a real marker
07:31
that there is a political discontinuity
07:33
at the boundaries of the city and it is
07:35
a very different political entity that
07:37
has them it submits to many of the rules
07:39
of this country but it’s also carved
07:42
itself out from them so it is kind of an
07:43
offshore island in a very very real
07:45
sense
07:54
there have been reformers over centuries
07:58
trying to trying to particularly merge
08:02
the City of London with the rest of
08:04
London and it’s bizarre that London
08:05
London is A Tale of Two Cities I mean
08:08
there is London has a mayor currently
08:09
Boris Johnson and it has a Lord Mayor
08:12
who’s sitting in the guild hall this
08:15
really is a Tale of Two Cities and there
08:17
have been reformers in the past who have
08:19
tried to say what we need is one
08:22
government for London we need to expand
08:25
the city to cover instead of 9,000
08:28
residents to cover whatever the
08:31
population is 8 million or so
08:33
Londoners and you have one single London
08:35
government the Labour Party for much of
08:38
the last century had a had a or for a
08:41
large part of it had a pledge in its
08:42
manifesto to abolish the City of London
08:44
Corporation and merged into the rest of
08:47
London and Tony Blair when he in 1996 as
08:51
part of his bid bid for power he he
08:54
decreed that he either that pledge would
08:56
be abolished and he made a deal with the
08:58
city and he made a promise to reform it
09:00
instead and that reform ended up being
09:02
an expansion of the corporate vote it’s
09:04
a totally bizarre story and I mean how
09:06
many people in Britain really know about
09:08
this I think it’s something that we need
09:10
to understand much much better and I
09:13
went to see them the other day because
09:15
I’m quite horrible about them right and
09:17
in a way um but I really felt like you
09:21
know naughty schoolboy going in front of
09:23
headmaster okay yes I did actually yes
09:29
yes
09:31
[Music]
09:34
settle down everybody settle down now
09:37
one thing we forgot when we came in what
09:39
did we forget past we did not take their
09:42
registar Jenkins Jenkins Jenkins very
09:52
good now anybody who isn’t here right
09:57
now the next class is may be unsurprised
10:02
to find out double banking this morning
10:07
is the eh-2-zed of modern banking
10:11
otherwise known as a last Atomics so
10:16
there will be a test at the end so keep
10:19
quiet pay attention and do feel free to
10:21
take notes so a what is a for
10:26
accountants yes a for accountants what
10:30
is the definition of an accountant
10:33
that is one definition account is not
10:38
the one I thought written unfriended me
10:39
so detention an accountant is someone
10:44
who is when asked add two plus two but
10:48
over the answer and what would you like
10:51
that to add up to they considering pay
10:54
professional in Ferris budget the only
10:56
answer that you’ll find is for B what is
11:00
B for it’s bloody obvious they’re very
11:06
clever institutions who somehow make it
11:09
seem that they are doing you a favor
11:11
when you lend them your hard earned cash
11:14
and who are allowed by government to
11:16
create money virtually out of nothing
11:18
which they then make you pay a lot for
11:21
right you hear that argument all the
11:24
time if it’s not there’s nothing
11:26
companies can do and in a narrow sense
11:28
that’s true
11:29
companies will they are in a competitive
11:32
marketplace and if they feel they need
11:33
to compete by dodging taxes more
11:35
aggressively than the next one then then
11:38
they will do that but you must have
11:41
forget the golden rule who has the gold
11:43
makes the rules in other words the rules
11:47
the tax laws of this country are very
11:50
substantially crafted by big
11:51
corporations that want those tax laws
11:53
right now as we speak there’s the at
11:56
some tax green paper has been floated
12:01
which has got some horrible concessions
12:03
huge concessions to multinational
12:05
corporations and this is the result of a
12:09
lot of consultations and committees
12:11
where you know the tax directors of many
12:14
of the biggest multinationals are
12:15
sitting on this saying basically this is
12:17
the tax system we want and and and so
12:19
corporations are punching holes in our
12:21
legislation all the time it’s a constant
12:23
process of creating loopholes lobbying
12:26
to lobbying in Parliament and elsewhere
12:28
to to make sure that they get what they
12:30
want so companies are not bystanders in
12:33
this they’re active players in this and
12:34
we have to hold their feet to the fire
12:36
so you can cut is quite right to do that
12:38
the other thing that UK Uncut has done
12:40
is to generate all sorts of new debate
12:43
this is a demo
12:44
pratik process we’re talking about here
12:46
has not been properly debated before and
12:48
they have by by taking on very high
12:51
profile targets quite legitimately they
12:55
have highlighted something that is
12:56
profoundly wrong in our society this is
12:58
a huge fault line in global capitalism
13:00
this is a distortion of markets and they
13:03
have identified it and they are focusing
13:07
on companies is absolutely the right the
13:08
right thing to do of course governments
13:10
need to be pressured as well no question
13:12
about it well there’s there’s there’s
13:25
the so-called yeah but there’s that
13:26
there’s that difference they always they
13:28
always make their say yes we pay lots of
13:29
taxes and but the question is do you do
13:32
you pay the taxes you should the urban
13:34
myth thing is always wheeled out and and
13:37
there is what some of us call the philip
13:39
green defense which is no tax was
13:43
avoided because no tax was due but what
13:47
he doesn’t say is that no tax was due
13:49
because i put a lot of work into making
13:51
sure that no tax was due so it’s a whole
13:53
slippery game that’s going on here and
13:55
this urban myth thing is quite wrong
13:57
that this is they will say that because
14:00
what you have when multinational
14:03
corporations use aggressive offshore
14:05
strategies to cut their tax bills you
14:08
have at the far extreme of it tax
14:11
evasion which is illegal activity and on
14:13
the other end tax avoidance which is by
14:16
definition legal but also by definition
14:18
avoidance it is guessing around the
14:20
spirit of legislation but in between
14:22
these two poles you have this huge grey
14:24
area and the level of aggression that
14:27
companies use in in in terms of avoiding
14:29
taxes and puts them somewhere on this on
14:32
this spectrum so when they say it’s an
14:37
urban myth they can make they can
14:39
construct an argument that technically
14:41
we have not broken any laws here look at
14:43
what we’ve done so it’s an urban myth
14:45
that we’ve avoided any money but in real
14:47
fact if you look at what they should pay
14:49
according to what democratic society
14:50
wants then you get a very very different
14:53
picture indeed so it’s not an urban myth
14:57
and the Vodafone story for example the
15:00
research was done by one of a former top
15:04
HM Revenue customs corporate tax
15:07
official who really you know he’s one of
15:09
the best in the business there’s no
15:10
question that that this is this is money
15:12
this is serious money that we’re talking
15:13
about and when they say it’s an urban
15:15
myth it’s just these are just word games
15:16
they’re they’re using to work to try and
15:19
justify what they’re doing this is money
15:27
given by the rich and the government to
15:30
their friends and the people of causes
15:32
that they like and considered a good
15:34
thing which is not to be confused with
15:37
money that goes to people and causes
15:38
they don’t like which they call subsidy
15:42
you can cut wasn’t a new phase and for
15:47
me it’s a something that kind of
15:48
exploded onto the streets which is
15:50
absolutely fantastic and so I see this
15:54
is we’re just at a fairly early stage of
15:56
a process and UK Uncut is looking at one
15:59
particular aspect of this system which
16:00
is corporate tax avoidance which is a
16:02
very important part of it but what what
16:06
is really out there is something much
16:07
bigger than that much more
16:08
all-encompassing and Britain has a
16:10
particular role in this in this global
16:12
offshore system I mean there’s no
16:15
dispute really that Britain is
16:17
responsible for about half of the tax
16:20
havens in the world and Britain is a tax
16:22
haven in its own right but you know what
16:24
companies want is when they come to a
16:27
country what they want ultimately is a
16:30
healthy and educated workforce they want
16:32
good infrastructure they want a well
16:34
governed country and that means taxes
16:37
and they don’t want you know taxes for
16:40
most corporations especially if they’re
16:42
not in the financial sector rank fairly
16:45
low there’ll be sort of four or four or
16:48
five on the list of priorities when
16:49
they’re looking at where to invest I
16:50
mean you’re not going to go you know set
16:52
up a car factory in Nigeria because it
16:55
offers you know you 0% tax on profits
16:59
and that’s not what that’s not what
17:00
drives investment decisions at the
17:02
decisions at the end of the day and so
17:04
yeah so but still politicians are
17:07
terrified
17:07
you know the this threat is made and and
17:10
they don’t know what to do and then they
17:11
say okay we’ll give you what you want
17:13
and it happens all the time and
17:14
politicians I think should call their
17:15
bluff a lot more on these sorts of
17:18
things where do you think June fits into
17:27
this picture and the disks that are
17:30
being handed over recently banking
17:33
details I think I mean I think Julian
17:37
Assange and WikiLeaks is a fascinating
17:39
story I think in this particular case
17:40
the recent handing over of two CDs by
17:43
Rudolph Alma the Swiss banker I think
17:45
it’s actually elmer story which is
17:46
perhaps the more interesting part of
17:48
this of this debate um he is a Swiss
17:51
banker who worked in the Cayman Islands
17:53
and got a very senior position with with
17:56
a big Swiss bank and he learnt a lot and
18:01
eventually decided to blow the whistle
18:03
and for whatever reasons and he is now
18:06
in prison in Switzerland for breaking
18:09
Swiss bank secrecy in the Cayman Islands
18:12
so it’s a very bizarre situation we’re
18:14
in
18:15
III don’t know what’s in what’s on the
18:19
disk I think WikiLeaks as we speak is
18:20
still analyzing them and I almost
18:23
certainly you know it is bona fide a
18:24
star from and I’ve spent time with Elmer
18:26
and he’s a fascinating guy who very
18:29
highly qualified but I think the the
18:33
aspect of it there’s a battle of ideas
18:36
going on here where jurisdictions like
18:40
Switzerland are saying it’s a crime to
18:43
steal data whereas people like Elmer and
18:47
myself would say it’s a crime to invade
18:50
billions of dollars of taxes and if if
18:55
the price is that data is is removed
18:59
through certain means then that’s a
19:01
price worth paying it’s like police
19:02
having informants you know they do that
19:05
do it all the time they they overlook
19:08
certain things in order to get you know
19:10
a bigger catch and it’s that’s what’s
19:12
going on here so that I think that’s the
19:14
story in this case and I think is this
19:16
making the world more transparent
19:18
yes there is some there is some more
19:21
transparency coming out as a result of
19:22
this it’s a good thing the release of
19:23
the release of data and general
19:25
publication of publication of data but
19:29
now countries like Switzerland with the
19:32
collusion of places like the UK are
19:34
working very hard to find ways to stop
19:37
this happening than to you know that
19:39
they’ve been very nasty indeed to Elmer
19:42
and I don’t know what’s going to happen
19:43
to him now that he’s in prison but also
19:45
they’re making it harder for you know
19:49
they’re putting in place new treaties
19:51
where they refuse to exchange any
19:52
information with anybody if there’s any
19:53
data that’s been what they call stolen
19:56
data so I think that’s it’s but I don’t
19:59
think this is good this is a game
20:00
changer that the release of information
20:02
unless we get a whole rash of new
20:04
whistleblowers but I think it’s it’s
20:05
important it’s important signal to
20:07
people that there’s something awful
20:08
going on here and I think it’s very good
20:10
from that point of view to expose what’s
20:12
really going on but these will only be
20:14
very sort of anecdotal pictures in a
20:16
much much bigger picture of crime and
20:19
abuse what places like Switzerland are
20:22
trying to do is to try and make any you
20:23
know trying to you know be very
20:26
unpleasant make it very unpleasant for
20:28
whistleblowers so I think there’s a fear
20:29
out there as well is it the start of a
20:31
trend of a strain I I trained I know
20:33
that there is I know that growing
20:35
numbers of people who work in this
20:36
sector are growing uncomfortable with it
20:38
last night I gave a talk at Chatham
20:40
House about financial secrecy and I had
20:42
somebody came up to me afterwards who
20:44
works for a private bank and was
20:46
essentially apologising for what she was
20:49
doing and saying yes you’re right this
20:51
stuff is happening and I’m doing it and
20:53
I feel really bad about it and and so I
20:55
think there is a real sense of
20:57
discomfort
20:57
whereas before a few years ago there was
20:59
not really much questioning of this
21:01
whole system it was sort of accepted
21:02
that secrecy is good and we you know the
21:05
crime is to reveal information to law
21:07
enforcement it’s a bit of a kind of
21:08
mafia code
21:15
I think now that there are a lot more
21:19
people talking about how rotten this
21:21
system is I think a lot more people are
21:23
feeling uncomfortable in in these jobs
21:25
and so I’m hopeful that there will be a
21:27
lot more revelations and people coming
21:31
forwards to explain what’s what the
21:34
system really looks like these are
21:38
salubrious retirement plans for Nobel
21:41
prize-winning mathematicians the huge
21:43
amount of money by producing absolutely
21:46
nothing of use for society and have been
21:50
known to explode unexpectedly confused
21:55
with Paige there’s no magic bullets to
22:04
all of this people often ask me this and
22:07
that the first answer I always give is
22:09
that we are still at a phase where we
22:11
don’t even have the education about the
22:13
system to know what to do about it there
22:15
needs to be widespread public
22:17
understanding and also a change there
22:21
has been a tolerance of this for such a
22:23
long time because people haven’t really
22:24
seen it people have just accepted what’s
22:27
going on and because the system is so
22:29
complicated if you’re talking about tax
22:31
when if a journalist wants to know our
22:32
pattern to write about a tax subject
22:35
there will ring up someone from KPMG or
22:38
one of the big accountancy firms these
22:40
firm their business is to design
22:42
strategies to help their clients avoid
22:44
tax and so they have got this they have
22:46
developed this worldview that tax is bad
22:48
and offshore is good and there has been
22:51
this soap so this journalist will ring
22:53
these people up and then this this
22:55
worldview gets kind of propagated into
22:57
the whole whole public consciousness and
22:59
that hasn’t really until very recently
23:02
being properly challenged and I think
23:03
that’s another it’s a very sort of vague
23:07
slightly wishy-washy thing to talk about
23:09
but but it is absolutely essential we
23:11
need to completely start to really
23:14
challenge this culture that offshore is
23:16
good and tax is bad and financial
23:19
regulation is bad and that is now
23:20
starting to happen not just as a result
23:23
of people like UK Uncut
23:24
but also wider issues such as the
23:26
financial crisis which I’ve made people
23:27
question all the assumptions that
23:30
they’ve been making before is really
23:33
difficult in a word yes and I think part
23:38
of the reason for that is that you know
23:41
we the last three years has proved has
23:44
shown to us that what we you know so
23:46
much of what we felt thought we
23:48
understood about economics is actually
23:50
rubbish but yeah I mean I think the
23:54
latest crisis you know that all these
23:56
sort of dizzying numbers coming out of
23:57
trillions and banks being supported with
24:00
these huge numbers of huge amount of
24:02
taxpayer money it’s it’s absolutely
24:06
baffling to everybody and I you know I
24:08
you know having spent a lot of time
24:10
researching the offshore system which is
24:12
a huge part of the global economy I you
24:15
know I have seen it you know it’s one of
24:17
those things where the more you know the
24:18
less you know the more you research them
24:20
all kind of you realize you don’t know
24:22
what’s going on so it is it is terribly
24:25
confusing though if you’re talking about
24:27
the offshore system it’s the essential
24:29
principles are very simple and this
24:31
these are these are places that provide
24:34
escape for mostly wealthy elite from the
24:38
rules and laws and taxes and regulations
24:41
that they don’t like leaving everyone
24:43
else to to pay their taxes for them or
24:46
all suffer the consequences of poor
24:49
financial regulation so there are very
24:50
simple principles about that but the
24:54
actual details of what’s going on is
24:56
incredibly incredibly complicated and
24:58
baffling and I think they like I think
25:01
the people who run this system or who
25:04
are big players in this system like it
25:06
that way
25:15
you
25:32
called the financial secrecy index
25:36
where they took a measure they look to
25:39
how opaque jurisdictions were they
25:41
looked at although they use 12
25:43
indicators to work out how a paper just
25:45
jurisdiction work was and then they
25:46
waited it according to the size of the
25:49
cross-border financial services activity
25:51
and the ranking was very clear the
25:53
United States was was top and you have
25:55
at the top of this ranking you have big
25:58
oacd countries the United States
26:00
Luxembourg a great dark horse of the
26:02
offshore system that most people don’t
26:04
really know about the Netherlands
26:05
Switzerland of course the Cayman Islands
26:08
is very big United Kingdom right up
26:10
there
26:11
Ireland these are the big offshore
26:14
jurisdictions if you’re talking about
26:15
offshore finance and this is where it
26:17
this is where it happens and this is the
26:19
result of a process particularly since
26:21
the 1970s of the offshore system
26:22
steadily pushing its way onshore the
26:25
United States didn’t used to be a tax
26:27
haven in this way
26:28
and it has steadily become more so
26:30
become many different reasons I’m still
26:32
not satisfied with any of them I mean
26:34
it’s the complexity is obviously part of
26:36
it people can only ever see a little bit
26:38
of it at a time and but I think now we
26:41
are at a phase where this is started I
26:43
know I think my book is part of that but
26:45
there are others who are also putting
26:47
this thing in a whole context of global
26:49
context and and we and Britain must
26:51
understand that this is something that
26:52
is a is a global problem and we are
26:55
right at the center of it if you work
26:57
out what a tax haven is tax haven offers
27:00
people and entities elsewhere
27:02
opportunities to escape – escape taxes
27:05
in their own jurisdictions to escape
27:07
financial regulations or whatever if you
27:09
start doing the analysis you will
27:11
quickly find that the jurisdictions that
27:13
are most effective in offering these
27:15
forms of escape our places like the UK
27:17
the the only objective ranking of in
27:21
terms of secrecy secrecy – in a very
27:24
important part of it there and in
27:25
objective ranking was created by the Tax
27:28
Justice Network why do you think tax
27:31
havens are such an important issue right
27:34
now and why do you think it’s a subject
27:38
that hasn’t really come to light until
27:40
recently tax havens have been completely
27:43
under the radar under the radar screen
27:46
for such a long time
27:48
partly because there has been this
27:50
perception that I think is deliberately
27:51
encouraged that this is these are just
27:53
places for a few kind of mafiosi and you
27:56
know celebrity tax dodgers and and you
27:59
know a few curves bibs and and just
28:02
people who you know misfits but the fact
28:06
is that these are now the heart of the
28:09
global economy depending on how you
28:11
measure it the figures are absolutely
28:14
staggering I mean half of world trade in
28:17
a way passes through through tax havens
28:21
huge huge amounts of money are involved
28:24
every multinational corporation pretty
28:26
much these days
28:27
gain more more and more offshore
28:29
characteristics
28:33
[Applause]
28:46
[Applause]
28:54
there’s a very specific issue about the
28:58
UK and the UK has this network of havens
29:02
around the world such as the Crown
29:03
Dependencies Jersey Guernsey the Isle of
29:06
Man the overseas territories which are
29:08
kind of the you know the remnants of the
29:10
British Empire such as the cayman
29:13
islands such as bermuda such as
29:14
Gibraltar
29:15
such as the Turks and Caicos Islands
29:17
these are all tax havens and they are
29:20
partly controlled by Britain they are
29:22
half in half out of Britain these will
29:25
have offshore subsidiaries that they
29:27
will use for various reasons tax cutting
29:30
down on their tax bills is usually top
29:33
of the reasons banks are recently The
29:36
Mail on Sunday they did a great little
29:38
investigation about how many offshore
29:39
cysts offshore subsidiaries you know the
29:42
UK banks have in the top three Lloyd’s
29:45
Barclays an RBS had 550 offshore
29:48
subsidiaries between them and in every
29:51
survey in fact where they look at you
29:53
know what are the top companies that
29:54
have sub city that have top ranking
29:56
companies in terms a number of
29:57
subsidiaries in tax havens it’s always
30:00
the banks the banks are right in there
30:02
so this is the heart of the financial
30:03
system and when you consider the City of
30:06
London is you know as an offshore system
30:08
senator in its own right then you
30:10
realize that this is this is absolutely
30:12
central so why hasn’t it I am still a
30:15
little bit mystified as to why it hasn’t
30:17
been so hasn’t it why it has been so far
30:20
under the radar screen I think you know
30:22
there are men

The Coronavirus and the Conservative Mind

The pandemic has put psychological theories of politics to a very interesting test.

Over the past two decades, as conservatives and liberals have drifted ever farther from each other, an influential body of literature has attempted to psychologize the partisan divide — to identify conservative and liberal personality types, right-wing or left-wing minds or brains, and to vindicate the claim of the noted political scientists Gilbert and Sullivan, That every boy and every gal / That’s born into the world alive. / Is either a little Liberal / Or else a little Conservative.

In its crudest form this literature just amounts to liberal self-congratulation, with survey questions and regression analyses deployed to “prove” with “science” that liberals are broad-minded freethinkers and conservatives are cramped authoritarians. But there have been more sophisticated and sympathetic efforts, too, like the influential work of New York University’s Jonathan Haidt on the “moral foundations” of politics: Haidt argues that conservatives actually have more diverse moral intuitions than liberals, encompassing categories like purity and loyalty as well as care and fairness, and that the right-wing mind therefore sometimes understands the left-wing mind better than vice versa.

Both the crude and sophisticated efforts tended to agree, though, that the supposed conservative mind is more attuned to external threat and internal contamination, more inclined to support authority and hierarchy, and fear subversion and dissent. And so the political responses to the pandemic have put these psychological theories to a very interesting test.

In the coronavirus, America confronts a contaminating force (a deadly disease) that originated in our leading geopolitical rival (an external threat) and that plainly requires a strong, even authoritarian government response. If there was ever a crisis tailored to the conservative mind-set, surely it would be this one, with the main peril being that conservatives would wildly overreact to such a trigger.

So what has happened? Well, several different things. From the Wuhan outbreak through somewhere in mid-February, the responses to the coronavirus did seem to correspond — very roughly — to theories of conservative and liberal psychology. Along with infectious-disease specialists, the people who seemed most alarmed by the virus included the inhabitants of Weird Right-Wing Twitter (a collection of mordant, mostly anonymous accounts interested in civilizational decline), various Silicon Valley eccentrics, plus original-MAGA figures like Mike Cernovich and Steve Bannon. (The radio host Michael Savage, often considered the most extreme of the right’s talkerswas also an early alarmist.)

Meanwhile, liberal officialdom and its media appendages were more likely to play down the threat, out of fear of giving aid and comfort to sinophobia or populism. This period was the high-water mark of “it’s just the flu” reassurances in liberal outlets, of pious critiques of Donald Trump’s travel restrictions, of deceptive public-health propaganda about how masks don’t work, of lectures from the head of the World Health Organization about how “the greatest enemy we face is not the virus itself; it’s the stigma that turns us against each other.”

But then, somewhere in February, the dynamic shifted. As the disease spread and the debate went mainstream, liberal opinion mostly abandoned its anti-quarantine posture and swung toward a reasonable panic, while conservative opinion divided, with a large portion of the right following the lead of Trump himself, who spent crucial weeks trying to wish the crisis away. Where figures like Bannon and Cernovich manifested a conservatism attuned to external perils, figures like Rush Limbaugh and Sean Hannity manifested a conservatism of tribal denial, owning the libs by minimizing the coronavirus threat.

Now we are in a third phase, where Trump is (more or less, depending on the day) on board with a robust response and most conservatives have joined most liberals in alarm. Polls show a minimal partisan divide in support for social distancing and lockdowns, and some of that minimal divide is explained by the fact that rural areas are thus far less likely to face outbreaks. (You don’t need a complicated theory of the ideological mind to explain why New Yorkers are more freaked out than Nebraskans.)

But even now, there remains a current of conservative opinion that wants to believe that

  • all of this is overblown, that
  • the experts are wrong about the likely death toll, that
  • Trump should reopen everything as soon as possible, that
  • the liberal media just wants to crash the American economy to take his presidency down.

Where does this leave the theories of conservative and liberal minds? It’s too much to say that they don’t describe anything real. A certain kind of conservative personality (a kind that includes more than a few of my own friends) really did seem particularly well attuned to this crisis and ended up out ahead of the conventional wisdom in exactly the way that you would expect a mind-set attuned to risk and danger, shot through with pessimism and inclined to in-group loyalty to be.

At the same time, the behavior of what you might call “normie” Republicans — not Very Online right-wingers or MAGA populists but longtime Fox News and talk-radio consumers — suggests that any such conservative mind-set is easily confounded by other factors, partisanship chief among them. The fact that the virus seemed poised to help Democrats and hurt the Trump administration, the fact that it was being hyped by CNN and played down by Hannity, the fact that Trump himself declined to take it seriously — all of this mattered more to many Republicans than the fear of foreign contamination that the virus theoretically should have activated or the ways in which its progress seemed to confirm certain right-wing priors.

So one might say that the pandemic illustrates the power of partisan mood affiliation over any kind of deeper ideological mind-set. Or relatedly, it illustrates the ways in which under the right circumstances, people can easily swing between different moral intuitions. (This holds for liberals as well as conservatives: A good liberal will be as deferential to authority as any conservative when the authority has the right academic degrees, and as zealous about purity and contamination when it’s their own neighborhood that’s threatened.)

But the right’s varying responses to the pandemic also illustrate two further points. The first point is that what we call “American conservatism” is probably more ideologically and psychologically heterogeneous than the conservative mind-set that social scientists aspire to measure and pin down. In particular, it includes an incredibly powerful streak of what you might call folk libertarianism — which comes in both highbrow and middlebrow forms, encompassing both famous legal scholars predicting minimal fatalities from their armchairs and “you can’t stop the American economy … for anything” tough guys attacking social distancing on Twitter.

This mentality, with its reflexive Ayn Randism and its Panglossian hyper-individualism, is definitely essential to understanding part of the American right. But it’s very much an American thing unto itself, and I’m doubtful that it corresponds to any universal set of psychological tendencies that we could reasonably call conservative.

The second point is that on the fringes of the right, among QAnon devotees and believers in the satanic depravity of liberalism, the only psychology that matters is paranoia, not conservatism. And their minimizing response to the coronavirus illustrates the unwillingness of the conspiratorial mind to ever take yes for an answer — meaning that even true events that seem to vindicate a somewhat paranoid worldview will be dismissed as not true enough, not the deepest truth, not the Grandest of All Grand Conspiracies that will someday (someday) be unraveled.

In his novel “Foucault’s Pendulum,” a sendup of crackpot esotericism that anticipated “The Da Vinci Code” years before its publication, Umberto Eco captured this spirit by describing the way that self-conscious seekers after hermetic wisdom and gnostic mysteries approached the rise of Christianity:

… someone had just arrived and declared himself the Son of God, the Son of God made flesh, to redeem the sins of the world. Was that a run-of-the-mill mystery? And he promised salvation to all: you only had to love your neighbor. Was that a trivial secret? And he bequeathed the idea that whoever uttered the right words at the right time could turn a chunk of bread and a half-glass of wine into the body and blood of the Son of God, and be nourished by it. Was that a paltry riddle?

And yet they, who now had salvation within their grasp — do-it-yourself salvation — turned deaf ears. Is that all there is to it? How trite. And they kept on scouring the Mediterranean in their boats, looking for a lost knowledge of which those thirty-denarii dogmas were but the superficial veil, the parable for the poor in spirit, the allusive hieroglyph, the wink of the eye at the pneumatics. The mystery of the Trinity? Too simple: there had to be more to it.

This is where the pandemic-minimizing sort of conservative has ended up. They are confronted with a world crisis tailor-made for an anti-globalization, anti-deep-state worldview — a crisis in which China lit the fuse, the World Health Organization ran interference for Beijing, the American public health bureaucracy botched its one essential job, pious anti-racism inhibited an early public-health response, and outsourcing and offshoring left our economy exposed.

And their response? Too simple: Just a feint, a false flag, another deep state plot or power grab, another hoax to take down Trump. It can’t be real unless Hillary Clinton is somehow at the bottom of it.

When Pete Buttigieg Was One of McKinsey’s ‘Whiz Kids’

Among the hoops that candidates for plum consulting jobs at McKinsey & Company had to jump through in late 2006 was a bit of play acting: They were given a scenario involving a hypothetical client, “a business under siege,” and told they would be meeting with its chief executive the next day. How would they structure the conversation?

One contender stood out that year: a 24-year-old Rhodes scholar named Pete Buttigieg.

“He was the only one who put all the pieces together,” recalled Jeff Helbling, a McKinsey partner at the time who was involved in recruiting. Mr. Buttigieg soon won the other candidates over to his approach.

[Read: Pete Buttigieg vs. Bernie Sanders and Elizabeth Warren on tuition-free college.]

“He was very good at taking this ambiguous thing that he literally had no background on and making sense of it,” Mr. Helbling said. “That is rare for anyone at any level.”

The preternatural poise that got Mr. Buttigieg hired at McKinsey has helped him rise from obscurity to the top tier of the 2020 Democratic primary presidential contest.

On the way there, he ticked all the boxes. Harvard. Rhodes scholar. War veteran. Elected mayor of a midsize city before age 30.

Mr. Buttigieg sells his candidacy, in large part, on his mayoralty of South Bend, Ind., and a civic revitalization there rooted in the kind of data-driven techniques espoused by McKinsey. His nearly three years at “the firm” set him apart from many of his campaign rivals, underpinning his position as a more centrist alternative to progressive front-runners like Senators Bernie Sanders and Elizabeth Warren.

Yet Mr. Buttigieg’s time at the world’s most prestigious management-consulting company is one piece of his meticulously programmed biography that he mentions barely, if at all, on the campaign trail.

As Mr. Buttigieg explains it, that is not a matter of choice. For all of his efforts to run an open, accessible campaign — marked by frequent on-the-record conversations with reporters on his blue-and-yellow barnstorming bus — McKinsey is a famously secretive employer, and Mr. Buttigieg says he signed a nondisclosure agreement that keeps him from going into detail about his work there.

But as he gains ground in polls, his reticence about McKinsey is being tested, including by his rivals for the Democratic presidential nomination. Senator Warren, responding last month to needling by Mr. Buttigieg that she release more than the 11 years of tax returns she already had to account for her private-sector work, retorted, “There are some candidates who want to distract from the fact that they have not released the names of their clients and have not released the names of their bundlers.”

Beyond Mr. Buttigieg’s agreement with McKinsey, this is something of an awkward moment to be associated with the consultancy, especially if you happen to be a Democratic politician in an election year shadowed by questions of corporate power and growing wealth inequality. The firm has long advocated business strategies like

  • raising executive compensation,
  • moving labor offshore and
  • laying off workers to cut costs.

And over the last couple of years, reporting in The New York Times and other publications has revealed episodes tarnishing McKinsey’s once-sterling reputation: its work advising Purdue Pharma on how to “turbocharge” opioid sales, its consulting for authoritarian governments in places like China and Saudi Arabia, and its role in a wide-ranging corruption scandal in South Africa. (All of these came after Mr. Buttigieg left the firm.)

Just this week, ProPublica, copublishing with The Times, revealed that McKinsey consultants had recommended in 2017 that Immigration and Customs Enforcement cut its spending on food for migrants and medical care for detainees.

After a campaign event on Wednesday in Birmingham, Ala., Mr. Buttigieg remarked on the latest revelations. “The decision to do what was reported yesterday in The Times is disgusting,” he said. “And as somebody who left the firm a decade ago, seeing what certain people in that firm have decided to do is extremely frustrating and extremely disappointing.”

The Buttigieg campaign says he has asked to be let out of his nondisclosure agreement so he can be more forthcoming about that formative time in his life. A McKinsey spokesman said Mr. Buttigieg “worked with several different clients” during his time with the firm, but “beyond that, we have no comment on specific client work.”

But interviews with six people who were involved in projects that Mr. Buttigieg worked on at McKinsey, along with gleanings from his autobiography, fill in some of the blanks.

Mr. Buttigieg was recruited by McKinsey at Oxford. The company seeks out Rhodes scholars like him, banking that their intellects will make up for their lack of M.B.A.s from traditional recruiting grounds like Harvard Business School.

Yet even during the recruitment process, Mr. Helbling recalled, Mr. Buttigieg made it known that, like many applicants, he saw the business experience on offer at McKinsey as a good job “in the near term,” in his case an asset on the way to a career in public service.

The work he did in his first year and a half at the firm — nearly a 10th of his adult life — is effectively a blank slate, though tax records give some hints. In 2007, his first year with the company, he filed tax returns in Illinois, where he worked out of the Chicago office, as well as in his home state of Indiana. But he also filed in Michigan, and in the city of Detroit, where he worked on a McKinsey project. In 2008, he filed a return in Connecticut (McKinsey has an office in Stamford). The next year, he filed in Connecticut and in California.

In early 2009 Mr. Buttigieg was spending his days, and many nights, in a glass-walled conference room in suburban Toronto. He was analyzing Canadian grocery prices, plugging the numbers into a database running on a souped-up laptop his colleagues nicknamed “Bertha.” PowerPoint slides and spreadsheets crept into his dreams.

He knew this wasn’t his calling.

“And so it may have been inevitable that one afternoon, as I set Bertha to sleep mode to go out to the hallway for a cup of coffee, I realized with overwhelming clarity the reason this could not be a career for very long: I didn’t care,” Mr. Buttigieg wrote in his autobiography, “Shortest Way Home.”

It was the only experience at McKinsey that Mr. Buttigieg wrote about in any detail. His next act at the firm didn’t merit a single complete sentence in the book. But it was a radically different, and for him far more interesting, public-spirited project: More than four years before he would be deployed as a Navy Reserve officer, he was heading to Iraq and Afghanistan.

McKinsey’s focus in Iraq during the latter part of George W. Bush’s presidency and the early years of Barack Obama’s was to help the defense department identify Iraqi state-owned enterprises that could be revived. The idea was to provide employment for men who might otherwise join the insurgency against the American-led occupation.

The McKinsey consultants on the ground in 2006 and 2007 were almost exclusively military veterans like Alan Armstrong, who flew fighters for the Navy and had an M.B.A. from the Wharton School at the University of Pennsylvania. Mr. Armstrong, in an interview, said that while the reasoning behind the program was sound, the ongoing insurgency and a crippled infrastructure — electricity, for example, was spotty or nonexistent — made execution very difficult.

But the program was popular among the top brass at the Pentagon. In 2006, the defense secretary, Donald H. Rumsfeld, met with the team in Iraq and asked about the “whiz kids” from McKinsey, which struck Mr. Armstrong as an obvious parallel to the Vietnam War era, when whiz kids of an earlier generation had worked for another defense secretary: Robert S. McNamara.

“McKinsey was more than willing to play along — they were being paid extraordinary rates to keep playing,” Mr. Armstrong said.

Another former McKinsey consultant who worked in Iraq recalled a surreal moment preparing a PowerPoint presentation while on a convoy to a shuttered food-processing factory, under the watchful eye of a burly private security guard. “It felt like we were completely half-assing everything — it wasn’t particularly effective,” he said.

Other former McKinsey consultants who worked on the Iraq project, Task Force for Business and Stability Operations, have a more positive recollection of the firm’s work.

“Over all I’m very proud of it,” said one consultant, who had met Mr. Buttigieg in Washington, where most of the McKinsey consultants assigned to the project worked when not visiting Iraq. Four of the six former McKinsey employees spoke on the condition that their names not be used, citing confidentiality agreements or the press policies of their current employers.

ImagePete Buttigieg’s living quarters in Baghdad, where he recalls spending two nights in 2009.
Credit…Buttigieg campaign

By 2009, the security situation in Baghdad was stable enough that McKinsey allowed in some nonveterans like Mr. Buttigieg, who had studied Arabic at Harvard. He went to Iraq aware of the stark similarities between the American experiences there and in Vietnam decades earlier.

At Harvard, his senior thesis had drawn parallels between the United States’ seeking to “save” Vietnam from “godless Communism,” and the 17th-century Puritan ministers who had come to America to civilize “savage lands.” In his autobiography and in an interview that has drawn charges of out-of-touch elitism from some quarters, he reflected on that history by quoting a passage from “The Quiet American” by Graham Greene: “Innocence is like a dumb leper who has lost his bell, wandering the world, meaning no harm.”

“I had protested the Iraq war,” Mr. Buttigieg said in an interview with The Times. “But I also believed that it was important to try to do my part to help have good outcomes there.” He found echoes, he said, of “the stories I had studied about well-intentioned Americans sometimes causing as many problems as they addressed.”

Mr. Buttigieg recalled spending only two nights in Baghdad, where McKinsey consultants were quartered in a building near the Tigris River, and “going to a ministry.” He never left the city during his time there, he said.

“Remember I’m like the junior guy, kind of new,” Mr. Buttigieg said. “It’s not like I was the one whose expertise was needed to sort out what was going on in the provinces.

“Eventually I knew what I was doing a little more and was more useful by the time I got to the Afghan side.”

Mr. Buttigieg spent more time in Afghanistan. While Iraq had a fairly well-educated populace, a modern road system and large oil revenues, Afghanistan was far less developed. But the mission was similar: identify small and medium-size businesses to nurture so that they could employ Afghans, providing an attractive alternative to joining the Taliban while fueling economic growth.

Citing his nondisclosure agreement, Mr. Buttigieg declined to specify in the interview what he had worked on, though he mentioned having looked at opportunities in the agricultural industry — onions, tomatoes, olive oil — as well as paint manufacturing.

“They had some things to work with,” he said, “but would have benefited from support on things like business planning, more resources on how to plug in and eventually connections to markets too.”

In the years after Mr. Buttigieg left McKinsey, that program came under criticism from the Special Inspector General for Afghanistan Reconstruction. McKinsey had been awarded $18.6 million for the project, but the watchdog wrote in an April 2018 report that it had been able to find just one piece of related work product: a 50-page report on the economic potential of the city of Herat.

A former McKinsey consultant who worked in Afghanistan described a more extensive McKinsey presence there, involving work in the mining industry and a government transparency project, along with the Herat study.

“One of those sounds just exactly like what I was doing,” Mr. Buttigieg said. When asked which one, he said, “I can’t think of a way to answer that without getting in trouble with the N.D.A.”

Mr. Buttigieg’s work on the Afghanistan project ended in late 2009, close to the time he was commissioned as an officer in the Navy Reserve. And that October, when he was still several months from leaving McKinsey, he set in motion the next phase of his life: He registered as a candidate for office with the State of Indiana.

The next year, he lost a bid for state treasurer, after emphasizing his McKinsey experience during the campaign. (He recounted at one campaign event that after his Rhodes scholarship, “I came back and went into business, and I worked for a company where my job was to do math. I’m a card-carrying nerd.”) In 2011, at age 29, he was elected mayor of South Bend.

Mr. Buttigieg at a campaign event in Iowa last month.
Credit…Tamir Kalifa for The New York Times

The full range of Mr. Buttigieg’s work at McKinsey isn’t clear, though in his autobiography he says that he worked on other projects, including “energy efficiency research” to help curb greenhouse-gas emissions for a client he didn’t name. He also found time in the summer of 2008 to travel to Somaliland, the autonomous region in the Horn of Africa. He went as a tourist, but while there talked to local officials and wrote an account of his experience for The International Herald Tribune.

Mr. Buttigieg has been asked on the presidential campaign trail about his time at McKinsey and, in several interviews this year, has sought to reconcile the company’s recent troubles with his own work there.

For Mr. Buttigieg, the solution to McKinsey’s ethical pitfalls may come in a rethinking of the rules that business abides by. Maximizing shareholder value, the North Star of modern American capitalism, has a downside when the rules of the game leave many people worse off, he said.

“The challenge is that’s not good enough at a time when we are seeing how the economy continues to become more and more unequal, and we are seeing the ways in which a lot of corporate behavior that is technically legal is also not acceptable in terms of its impact,” he said. “There has got to be a higher standard.”

As China Talks Begin, Trump’s Trade Negotiator Tries to Keep President From Wavering

WASHINGTON — In the middle of his crowded dinner in Buenos Aires with President Xi Jinping of China, President Trump leaned across the table, pointed to Robert Lighthizer, the United States trade representative whose skepticism of China runs deep, and declared, “That’s my negotiator!

He then turned to Peter Navarro, his even more hawkish trade adviser, adding, “And that’s my tough guy!” according to aides with knowledge of the exchange.

Now, with talks between China and the United States set to begin this week in Beijing, Mr. Lighthizer, aided by Mr. Navarro, faces the assignment of a lifetime: redefining the trade relationship between the world’s two largest economies by Mr. Trump’s March 2 deadline to reach an agreement.

And he must do it in a way that tilts the balance of power toward the United States. His approach will have significant ramifications for American companies, workers and consumers whose fortunes, whether Mr. Trump likes it or not, are increasingly tied to China.

First, however, Mr. Lighthizer will need to keep a mercurial president from wavering in the face of queasy financial markets, which have suffered their steepest annual decline since 2008. Despite his declaration that trade wars are “easy to win” and his recent boast that he is a “Tariff Man,” Mr. Trump is increasingly eager to reach a deal that will help calm the markets, which he views as a political electrocardiogram of his presidency.

Mr. Trump has repeatedly told his advisers that Mr. Xi is someone with whom he can cut a big deal, according to people who have spoken with the president. On Saturday, Mr. Trump called Mr. Xi to discuss the status of talks, tweeting afterward that good progress was being made. “Deal is moving along very well,” Mr. Trump said.

The administration has tried to force China to change its ways with stiff tariffs on $250 billion worth of Chinese products, restrictions on Chinese investment in the United States and threats of additional levies on another $267 billion worth of goods. China has responded with its own tit-for-tat tariffs on American goods. But over a steak dinner during the Group of 20 summit meeting in Argentina, Mr. Xi and Mr. Trump agreed to a 90-day truce and to work toward an agreement that Mr. Trump said could lead to “one of the largest deals ever made.”

Mr. Lighthizer — whose top deputy will meet with Chinese officials this week ahead of more high-level talks in February — has played down any differences with Mr. Trump and views his role as ultimately executing the directive of his boss. But the trade representative, who declined to be interviewed, has told friends and associates that he is intent on preventing the president from being talked into accepting “empty promises” like temporary increases in soybean or beef purchases.

Mr. Lighthizer, 71, is pushing for substantive changes, such as forcing China to end its practice of requiring American companies to hand over valuable technology as a condition of doing business there. But after 40 years of dealing with China and watching it dangle promises that do not materialize, Mr. Lighthizer remains deeply skeptical of Beijing and has warned Mr. Trump that the United States may need to exert more pressure through additional tariffs in order to win true concessions.

When Mr. Lighthizer senses that anyone — even Mr. Trump — might be going a little soft on China, he opens a paper-clipped manila folder he totes around and brandishes a single-page, easy-reading chart that lists decades of failed trade negotiations with Beijing, according to administration officials.

Bob’s attitude toward China is very simple. He wants them to surrender,” said William A. Reinsch, a former federal trade official who met him three decades ago when Mr. Lighthizer was a young aide for former Senator Bob Dole of Kansas. “His negotiating strategy is simple too. He basically gives them a list of things he wants them to do and says, ‘Fix it now.’

Mr. Trump’s selection of Mr. Lighthizer last month to lead the talks initially spooked markets, which viewed the China skeptic’s appointment as an ominous sign. It also annoyed Chinese officials, who had been talking with the Treasury secretary, Steven Mnuchin, a more moderate voice on trade and the primary point of contact for Liu He, China’s top trade negotiator. Mr. Mnuchin has urged the president to avoid a protracted trade war, even if that entails reaching an interim agreement that leaves some issues unresolved.

Mr. Mnuchin, who attended the G-20 dinner, helped Mr. Trump craft an upbeat assessment declaring the Buenos Aires meeting “highly successful” in the presidential limousine back to the airport, according to a senior administration official.

The disparate views among Mr. Trump’s top trade advisers have prompted sparring — both publicly and behind the scenes.

During an Oval Office meeting with the trade team the fall of 2017, Mr. Lighthizer accused Mr. Mnuchin and Gary D. Cohn, the former National Economic Council director, of bad-mouthing him to free-trade Republican senators.

The argument grew so heated that the White House chief of staff, John F. Kelly, quickly pulled the combatants into the nearby Roosevelt Room and away from the president, where the argument raged on for a few more minutes, according to two witnesses.

Emily Davis, a spokeswoman for the United States trade representative, disputed the account.

Mr. Lighthizer has since worked to increase his own face time with Mr. Trump. He has joked to colleagues that he has more influence with Mr. Trump during winter months because he is able to hitch a ride on Air Force One during the president’s flights down to Mar-a-Lago, which is several miles from Mr. Lighthizer’s own $2.3 million waterfront condo in Palm Beach, Fla.

He used that access to argue to Mr. Trump that the United States has never had more leverage to extract structural reforms on intellectual property, forced transfer of technology from American companies and cybercrime. But while Mr. Trump has jumped at the chance to claim victory in changing China’s ways, experts say that what Mr. Lighthizer is demanding would require significant shifts in how Beijing’s central government and its manufacturing sector coordinate their activities, and that might simply not be possible in the short term.

“Good luck with that,” Mr. Scissors said.

Those who know Mr. Lighthizer say he will try to force concessions through a combination of pressure tactics, like tariffs, and public condemnation. Mr. Lighthizer — who described his own negotiating style as “knowing where the leverage is” during a 1984 interview — typically presents few specific demands during initial talks while publicly bashing efforts by the other side.

He used that approach during recent talks with Canada and Mexico to revise the North American Free Trade Agreement, criticizing foreign counterparts as intransigent and characterizing complaints by American businesses as pure greed.

Mr. Lighthizer’s unsparing view of China comes, in part, from his childhood in Ashtabula, Ohio, an industrial and shipping town on the Great Lakes hit by the offshoring of steel and chemical production. For much of his career, Mr. Lighthizer was a lonely protectionist voice in a Republican Party dominated by free traders, alternating between jobs in government and a lucrative private law career representing large American corporations like United States Steel in trade cases against China.

Mr. Lighthizer found his way into Mr. Trump’s orbit through his work in the steel industry, where he gained prominence by filing lawsuits accusing Japan and China of dumping metals into the United States, in violation of trade laws. In 2011, Mr. Lighthizer caught Mr. Trump’s eye with an opinion piece in The Washington Times, in which he defended Mr. Trump’s approach to China as consistent with conservative ideology and compared the future president to Republican icons like Ronald Reagan.

Taciturn in public and self-deprecating in private, Mr. Lighthizer sees himself as a serious player on the world stage: Two recent guests to Mr. Lighthizer’s Georgetown townhouse were greeted by the stern visage of their host staring down at them from an oil portrait on the wall.

The trade adviser is guarded around Mr. Trump, often waiting until the end of meetings to make his points and quietly nudging the president away from actions he views as counterproductive, current and former officials said. That was the case in mid-2017 when he cautioned the president against withdrawing unilaterally from the World Trade Organization, adding for emphasis, “And I hate the W.T.O. as much as anybody.”

He does not always get his way. In the wake of a new trade agreement with Mexico and Canada this fall, Mr. Lighthizer urged Mr. Trump to consider easing steel and aluminum tariffs on those countries and replacing them with less burdensome quotas. Mr. Trump rejected his plan, according to negotiators from all three countries.

A poker-faced Mr. Lighthizer broke the news to his Mexican and Canadian counterparts by declaring the proposal was inoperative, one of the officials said.

The president also ignored Mr. Lighthizer’s advice in early December when he announced that he intended to begin the six-month process of withdrawing the United States from Nafta in order to pressure House Democrats into passing the new United States-Mexico-Canada Agreement.

That threat undermined months of quiet negotiations between Mr. Lighthizer, labor groups and Democrats like Senator Sherrod Brown of Ohio and Representative Nancy Pelosi of California to try to win their support for the new trade deal. Mr. Trump has yet to follow through on his threat, and Mr. Lighthizer continues trying to work with Democrats to get the new trade deal approved.

Bob is trying to provide stability and focus in a completely chaotic environment,” Mr. Brown said. “I can’t speak for Bob, but I am certain he is frustrated. How could you not be frustrated as the U.S. trade representative for a president who knows what his gut thinks but hasn’t put much of his brains into trade?

 

How to Steal the Populists’ Clothes

The continued electoral success of populists in Europe, Africa, Asia, Latin America, and in the United States shows that while their policy proposals may be fanciful, their mode of conducting politics is effective. To win at the ballot box, mainstream politicians should apply three lessons that populists have mastered.

.. Rather than complaining about populist successes, established political parties should take a page from the populist playbook. Three lessons, in particular, cry out for attention.

The first lesson is to connect to the people you wish to represent by learning about them and winning their trust.

.. The complacent assumption that people will always vote along party or class lines is obsolete.

.. After a decade of economic malaise, voters are skeptical of mainstream politicians who offer rote promises of growth and improved standards of living. In the eyes of disenchanted workers, those in power have simply been feathering their own nests. Even in many of the world’s strongest economies, workers are earning less in real terms than they did ten years ago.

.. the twin threats of automation and outsourcing have made employment more precarious, and sapped workers’ bargaining power.

.. Who is to blame for this state of affairs? Those who vote for populists clearly hold establishment politicians responsible

.. Contrary to popular belief, recent research finds that technology is not the primary driver of labor’s declining share of income. Rather, the worsening plight of workers is due to

  • lost bargaining power and union density,
  • welfare-state retrenchment,
  • offshoring, and the
  • growth of the financial sector as a share of the economy.

the effective tax rates “paid by the world’s 10 biggest public companies by market capitalization in each of nine sectors” have fallen by nearly one-third since 2000, from 34% to 24%.

since 2008, personal income-tax rates across all countries have increased by 6%, on average.

Against this backdrop, the emergence of populist parties and politicians should come as no surprise. When a majority of people becomes poorer, there will be stark consequences at the ballot box. And yet, in one country after another, the political establishment has been remarkably slow to recognize this.

.. Meanwhile, the populist presidential candidate, Jair Bolsonaro, proposes giving every Brazilian a gun so they can defend themselves. To the elites, this sounds (and is) preposterous. But for Brazilians who worry about their own safety, he is at least showing that he understands their top concern.

.. Before winning the French presidency and a parliamentary majority last year, Emmanuel Macron .. sent volunteers across the country to listen to voters’ concerns.

.. populists is to use simple, intuitive messaging to signal your goals. Yes, slogans like “I’ll protect your jobs” and “Make America great again” sound simplistic. But where are the sophisticated alternatives?

.. In the United Kingdom’s Brexit referendum, the Remain campaign, phlegmatically led by then-Prime Minister David Cameron’s government, argued that leaving the European Union would result in lower GDP, lost trade, and disruption to the financial sector.

.. Such arguments completely missed what concerned most voters. By contrast, the Brexiteers promised to “take back control” of the UK’s borders and claimed – falsely – that the National Health Service would enjoy a windfall of £350 million ($490 million) per week.

.. Academics, pundits, and political, business, and civil-society leaders have been far too slow to articulate new economic and social policies that have broad-based appeal.

.. it takes a commitment of time and energy to understand the plight of the electorate and to frame solutions in a clear, simple way.

.. The third lesson from the populist playbook is to be bold.

.. people are seeking a transformational vision of the future, not slight improvements. After 30 years of pragmatism and incremental change, it is time for a new tone.

.. Recall that in 1945, Winston Churchill, having delivered victory for Britain in World War II, lost the general election.

The winner, Clement Attlee, promised what was effectively a new social contract for war-weary Britons still living under rations. His government went on to provide free universal health care, unemployment insurance, pensions, decent housing, and secure jobs in nationalized industries. And all this was done with the national debt still at 250% of GDP.