GIS Dossier: Argentina digs itself out of a hole
Nearly 20 years after its historic default, Argentina is still trying to climb back to economic equilibrium. Years of corruption and mismanagement frittered away profits from natural resource exports, while a “gradualist” approach to reform still ended in Latin America’s largest-ever bailout from the IMF. This GIS Dossier reviews our predictions and analysis for one of South America’s largest countries, trying to regain economic stability and influence on the international scene.
A choice for economies: Freedom or socialism
Some say the global economy is slowing down due to Brexit and the U.S.-China trade dispute – but these developments are not the real dangers. Far more insidious is the trend toward increased government influence in economies and large public debts. Yet, even many economists have adopted the notion that government intervention and high debt can be a good thing. These policies have been tried before and failed. Worse, they can end up limiting freedom.
Italian gold and populist publicity
Italy’s Deputy Prime Minister Matteo Salvini has revived a five-year-old proposal to use his country’s gold reserves to bring down the budget deficit. The idea is problematic for several reasons – but that is not the point. Mr. Salvini is likely using this controversial plan to make headlines and burnish his populist credentials ahead of the European Parliament elections. While he may take the gold idea further, his real goal is to enlarge and lead a pan-European alliance of euroskeptics.
Big government means high taxes
There is a growing myth that the rich are not paying their fair share in taxes and that the middle class is therefore overtaxed. This is not the case. High-income taxpayers across the OECD pay more than their share of the national income. The blame for heavy tax burdens in Western democracies lies squarely with the voters, who have consistently chosen larger government.
GIS Dossier: The Italian case
Politically and financially, Italy has come to be regarded as a weak link in the European Union. Its shaky banks and enormous public debt almost blew apart the euro area during the debt crisis of 2010-2012, and could still do so. Its government, a marriage of populists on the left and right, claims to be the precursor of a protest wave that will sweep this year’s European Parliament elections. But as usual, it is hard to tell whether Italy is headed for disaster or more of the same.
A year of change for the European Union?
The European Union, which still lacks a post-Brexit vision of itself, will be changing the leadership of almost all its leading institutions over the next few months. Candidates are already jostling for position to take over at the European Commission and the European Central Bank, and surprises could be in store. With non-mainstream parties likely to gain seats in the May European Parliament elections, the EU-27 seems headed for even less harmony and more dissension.
2019 Global Outlook: Economic reform in France
Another year, another missed opportunity for fiscal reform in France. Like his predecessors, President Emmanuel Macron has ended up mostly raising taxes instead of decreasing the size of government and reducing expenditures. The “national dialogue” to come following the Yellow Vest protests could bring better democratic representation – and with it, more economically responsible governance. But entrenched interests will put up stiff opposition.
U.S. interest rates: Where will they take us?
U.S. President Donald Trump worries that the Federal Reserve is raising interest rates too quickly. In fact, the Fed has engaged in only moderate tightening so far. By mid-2019, it is likely to end the cycle and hold rates steady, since the U.S. central bank is probably focusing on restricting the money supply rather than reaching an interest rate target. At that point, Mr. Trump will no longer be able to blame the Fed for any fiscal trouble and will have to implement reforms if he wants to spur growth.
Opinion: Yellow Vests are a symptom of France’s dysfunctional democracy
With the Yellow Vest protests, France has finally fractured between its metropolitan areas and a resentful low-wage periphery. What started as a tax revolt has become a diffuse and unstructured uprising against an unaccountable ruling caste. Many of the movement’s demands would only perpetuate France’s administrative and social centralism, yet its appearance shows that this political model may no longer be sustainable.
Essay: As Russian history repeats itself, Putin becomes Yeltsin
Russia’s pension reform continues to reverberate in domestic politics. For the first time ever, President Vladimir Putin has assumed full personal responsibility for an unpopular decision that directly infringes on the lives of most Russians. The effects are already visible in his slumping popularity and in the startling results of gubernatorial elections in several regions. Mr. Putin could be looking for an electoral out as he follows the downhill path of his predecessor, Boris Yeltsin.