Amla's ideal

Mark Nicholas in Cricinfo



"I thought I could add value and I'd like to believe I have added value. I'm really surprised some people have suggested it was not my choice. You don't look like me in this world without being firm on what you want to do." - Hashim Amla, one week ago



There was something almost chilling about it: "In this world." An unfair world. A world where Muslims are mistrusted because a radical few threaten the perception of a beautiful faith. Amla's journey has long been challenged. The beard. The objection to wearing a beer sponsor's endorsement. Apartheid. That backlift! And more. Yes, a singular man.

To relinquish the cricket captaincy of your country is a painful thing. Many have shed tears. Many more have felt the sweat from their neck and the quiver of their lip. A lifetime's ambition tossed away out of choice.

But neither the many, nor the many more, have had as much at stake as Amla. He stands for an ideal. He speaks for the marginalised. He is hope. He is strength. He is faith. His elevation made all things possible. But he chose to give it away. He confirmed this invasive and weighty position was not for him.
Of course he added value. Each moment spent with Amla is valuable. His calm is an ever- present, a blessing. He speaks wisely and on an even keel. Amla will tell you that it is never as good as you think it is and it is never as bad as you think it is. In the age of confident youth, his counsel is worth its weight in runs.

The trouble was, no runs. A period of famine at a time of defeats withers the mind. For South Africa, the runs mattered most. Thus, on top of the sheer overload of responsibility came the fear of failure. It is a captain's bad dream. Silly, really. Years of dreams to get you there and then night after night with dreams that examine your ability to cope.

Probably - and this notion comes without evidence - Amla was the choice for a nation that needed his background to make a statement. Transformation comes in many forms but if the leader represents its credentials, the on-sell is more straightforward. AB de Villiers was one choice, Amla the other. If the choice is too difficult to call, go with the better messenger. Better still go with Amla, who is the message. In his heart he must have known this. What a burden.

He did just fine, representing his people with honour and commitment. He had some bowlers, though not the depth of attack given to his predecessors. He won some series and then came badly undone in India, a spill that cost his country the treasured record of not having lost away from home since 2006.

The clue to his mind was in the way it applied itself to batting. In India, all he could dare was frozen defence. Set free, few men have used a bat to express themselves so accurately. Amla has an untroubled rhythm and flow. He plays thoughtful innings that reach crescendos and then return to their foundations so that each part is rebuilt in the anticipation of overwhelming performance. These innings adapt to their environment and to the format for which they are intended. In them he unites South African discipline with Asian flair, and vice versa - the perfect hybrid. But in India there was none of this. Indeed, he appeared broken. Against the spinning ball on pitches of wretched bounce, block after rigid block tortured his soul.

He might have survived his own assessment had the first Test against England, in Durban, been less stressful, or simply had a better result. But no. He was back in India, fighting to survive something he knew was lost. And that something was his conviction that he could do the job better than the next man. Without it, the game was up. At the press conference announcing closure, he said as much.

It might seem odd that he stood down having made 200 in Cape Town and saved the game. But he made 200 because he had already released his mind. In a single decision he had come from unbearable weight to the lightness of being. No mask, no message, just an innings with clear purpose and a rewarding conclusion.

Much is asked of international captains. Some treat these questions lightly; Brendon McCullum for example. Others wear them better than imagined; Misbah-ul-Haq for sure. One or two close shop: MS Dhoni is a man of smoke and mirrors. A few bunker down and later emerge rebooted: Alastair Cook. Occasionally a heart is worn magnificently on its sleeve: think Graeme Smith.

Smith's part in the new age of South African cricket is a remarkable sporting story. By his own estimation, it took five years to be any good at the job. In that time he learned more about himself than he thought was there. He was utterly without prejudice and therefore above suspicion. He was able to separate political issues from performance; to forgive if not forget; to rally and to cry. He spoke comfortably of shortcomings and shrewdly of ambition. Perhaps most notably, he converted a suspect and awkward batting technique into a mechanism for sustainable and substantial run-making.

Amla must have wondered how on earth he did it all. But there was a difference. Smith represented something already there. Amla was the chosen face of something long fought for but still not achieved. About that there remains great bitterness. So much so that cricketers of the past - those who represented South Africa before and during isolation - are not recognised by the regime of the present. I'll wager Amla hates that every bit as much as Smith mourns it. In the world occupied by the two most recent out-going South African cricket captains, all men are equal.

While Haroon Lorgat, the CEO of Cricket South Africa, resolutely denies quotas at international level, the agenda is clear. But it is not organic. In a Machiavellian way, Amla was a ticket. De Villiers is not. South African cricket is at the crossroads. The next route taken may define its place at the top table of the game. Amla simply could not reconcile such a responsibility alongside the need to win tosses and take a gamble; give speeches; make life-changing decisions for and about players; hold catches; stop boundaries; score runs and sleep tight.

His decision was made for the greater good and for personal harmony. It is a brave thing to abandon a dream. And a smart thing. His stock has risen and his impression will hold firm. De Villiers is a wonderful alternative and his voice must be heard. South African cricket is lucky to have such men in their ranks. It would be wise to give them equal standing and a decisive say in the future.

Meanwhile, the former captain's resilience and clarity have made South Africa stronger than a week ago. England will be more than aware of this.

Beware the great 2016 financial crisis, warns leading City pessimist

Larry Elliot in The Guardian

Albert Edwards joins RBS in warning of a new crash, saying oil price plunge and deflation from emerging markets will overwhelm central banks, tip the markets and collapse the eurozone.

 

Are the doommongers right – are we heading for a big global economic fall? Photograph: Dennis M. Sabangan/EPA

The City of London’s most vocal “bear” has warned that the world is heading for a financial crisis as severe as the crash of 2008-09 that could prompt the collapse of the eurozone.


Albert Edwards, strategist at the bank Société Générale, said the west was about to be hit by a wave of deflation from emerging market economies and that central banks were unaware of the disaster about to hit them. His comments came as analysts at Royal Bank of Scotland urged investors to “sell everything” ahead of an imminent stock market crash.

Sell everything ahead of stock market crash, say RBS economists



“Developments in the global economy will push the US back into recession,” Edwards told an investment conference in London. “The financial crisis will reawaken. It will be every bit as bad as in 2008-09 and it will turn very ugly indeed.”


Fears of a second serious financial crisis within a decade have been heightened by the turbulence in markets since the start of the year. Share prices have fallen rapidly and a slump in the cost of oil has left Brent crude trading at barely above $30 a barrel.

“Can it get any worse? Of course it can,” said Edwards, the most prominent of the stock market bears – the terms for analysts who think shares are overvalued and will fall in price. “Emerging market currencies are still in freefall. The US corporate sector is being crushed by the appreciation of the dollar.”

The Soc Gen strategist said the US economy was in far worse shape than the country’s central bank, the US Federal Reserve, realised. “We have seen massive credit expansion in the US. This is not for real economic activity; it is borrowing to finance share buybacks.”

Edwards attacked what he said was the “incredible conceit” of central bankers, who had failed to learn the lessons of the housing bubble that led to the financial crisis and slump of 2008-09.

“They didn’t understand the system then and they don’t understand how they are screwing up again. Deflation is upon us and the central banks can’t see it.”

Edwards said the dollar had risen by as much as the Japanese yen had in the 1990s, an upwards move that pushed Japan into deflation and caused solvency problems for the Asian country’s banks. He added that a sign of the crisis to come was the collapse in demand for credit in China.

“That happens when people lose confidence that policymakers know what they are doing. This is what is going to happen in Europe and the US.”

Europe has shown tentative signs of recovery in the past year, but Edwards said the efforts of the European Central Bank to push the euro lower and growth higher would come to nothing in the event of a fresh downturn. “If the global economy goes back into recession, it is curtains for the eurozone.”

Countries such as France, Spain and Italy would not accept the rising unemployment that would be associated with another recession, he said. “What a disaster the euro has been: it is a doomsday machine in favour of the German economy.”

The warning from Edwards came as stock markets had a respite from the wave of selling seen since the start of the year. The FTSE 100 index rose by 57 points to close at 5,929, while the Dow Jones Industrial Average was up by 10 points in early trading in New York.

The mood in equity markets was helped by intervention by the People’s Bank of China overnight to support the yuan, with the Chinese currency moving higher on foreign exchange markets.

But the slide in the oil price continued, with Brent crude falling a further 3.5% to close in London at $30.45. Oil has not been below $30 a barrel since 2003.

Edwards joked that after years in which he has tended to be a lone voice, other institutions were also becoming a lot gloomier about global prospects.

He was referring to the RBS advice, which warned that investors face a “cataclysmic year” where stock markets could fall by up to 20% and oil could slump to $16 a barrel.

In a note to its clients the bank said: “Sell everything except high-quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small.” It said the current situation was reminiscent of 2008, when the collapse of the Lehman Brothers investment bank led to the global financial crisis. This time China could be the crisis point, RBS said.

It’s time for Europe to turn the tables on bullying Britain

Joris Luyendijk in The Guardian


So far all the talk has been of David Cameron’s demands. But the EU would hold all the power in post-Brexit negotiations, so it should spell out how it would make an outgoing Britain suffer

 

‘The best way forward for Europe is to threaten to hit the English as hard as we can.’ Illustration: Robert G Fresson

As the European Union faces the worst and most dangerous crisis since its creation, not only is Britain refusing to help, it is actually using this historic moment of weakness to extract “concessions” from its fellow members. This is the back story to the “Brexit” referendum, in which the government is threatening to leave the EU unless its demands for a “better deal for Britain” are met. Indeed, why merely kick a man while he’s down if you can go through his wallet too?

The negotiations in Brussels over this deal are entering their final stages: last week cabinet members were told they’d be free to campaign for an exit whatever the outcome of the talks. So this makes it high time for Europeans to take a cold and honest look at the British. Or rather, the English. Scotland is largely pro-EU while Wales and Northern Ireland, with their smaller populations and the less imminent threat of secession, have far less influence. How to deal with the English, then, over Brexit?

Step one is to ask if this referendum is actually a once in a lifetime opportunity to cut the English loose. Why not let them simmer in their splendid irrelevance for a decade or more, and then allow them back in – provided they ask really, really nicely. The English will still be in Nato, and what are they going to do? The United States values Britain as its proxy seat at the European table. With that seat empty, why would Washington keep its poodle?

Meanwhile half of British trade is with the EU, but only 11% of EU trade is with Britain. As the Oxford-educated Polish politician Radoslaw “Radek” Sikorski – one European who knows how to talk to the English elite – characterised the balance of power post-Brexit: “No prizes for guessing who would have the upper hand in the negotiations.” So if the English want to be a little Russia or mini-Turkey – former empires suffering from debilitating withdrawal symptoms – why not let them?

But then there is the unprecedented refugee crisis, the euro mess, the ever-growing terrorist threat, and the Russian invasion of Ukraine. Together they make this a really bad time for further instability. Yes, we would strangle or crush the English in the post-Brexit negotiations, the way any group of nations comprising 450 million people would to an opponent eight times smaller who has just tried to blackmail them.

But here’s step two. We must recognise that the English elite has chosen its moment well. Europe is vulnerable, and we just cannot afford another distraction from our real problems. Which means we must help the pro-EU camp in England.

One way to do this would be to meet at least some of the English demands. This is what David Cameron is clearly hoping for, but it would be a historic mistake. If the UK is rewarded for its cynical act of extortion there will be referendums all over the place, paralysing Europe for a decade.

This is why the best way forward for Europe is to threaten to hit the English as hard as we can. We must stop treating membership of the EU as a favour granted by England, and instead make the English feel their vulnerability and dependence.

First and foremost, this means a change of tone. For many mainland Europeans the EU offers the promise of freedom from the threat of nationalism. But the English have a different experience. They are taught to believe that nationalism is what saved them from Adolf Hitler and, as a consequence, they see no need for a post-national political entity. This is why for England, the EU is an economic rather than a cultural and political project. Read pro-Europe newspapers such as the Financial Times or listen to English pro-Europe politicians, and every argument is framed around the country’s national interest.

In other words, the English attitude towards the EU is transactional rather than transformational – therefore appealing to the European ideal or England’s better self is pointless. Instead we need to spell out all the ways in which we will make the English suffer if they leave. Using explicit threats may seem to be a very un-European thing to do, but think again: for nearly all England’s mainstream politicians and pundits, “un-European” is a compliment.

So let us start talking now, out loud in Brussels as well as in Europe’s opinion pages and in national parliaments, about the offer we are going to make to the Scots, should they prefer Brussels to London in the event of Brexit. Let’s also discuss in which ways we are going to repatriate financial powers from London to the European mainland. It is strange enough that Europe’s financial centre lies outside the eurozone, but to have it outside the EU? That would be like placing Wall Street in Cuba.

‘How electrifying it would have been if Cameron had demanded an end to the insanely wasteful practice of moving the European parliament back and forth between Strasbourg and Brussels.’ Photograph: Emmanuel Dunand/AFP/Getty Images

Clearly multinational corporations from China, Brazil or the US cannot have their European HQs outside the EU. So let’s have an EU summit about which European capitals these headquarters should ideally move to. Make sure the English can hear these discussions, and in the meantime keep an eye on how the value of commercial real estate in London plummets.

Or consider the UK-based Japanese car industry – would Greece, with its excellent port and shipping facilities, not be its ideal new home? Oh yes, and sooner or later, the 1.3 billion Indians will object again to not having a permanent seat on the UN security council when 55 million English do. Let’s work out what favours we want from India in exchange for our support.

The best way for the EU to prevent Brexit is to start preparing for it, loudly. But this is not enough. European politicians and pundits must not be shy of cutting England down to size. This is the chief problem for those in England trying to make the EU case: they must acknowledge first how irrelevant and powerless their country has become. Except that is still a huge taboo.

Seen from China or India, the difference between the UK and Belgium is a rounding error: 0.87% of world population versus 0.15%. But this is not at all how Britain sees itself – consider the popular derogatory expression “a country the size of Belgium”.
But alas, what a missed opportunity this referendum is. A child can see that the EU needs fundamental reform and just imagine for a moment that England had argued not for a better deal for Britain, but for all of us Europeans.

How electrifying it would have been if Cameron had demanded an end to the insanely wasteful practice of moving the European parliament back and forth between Strasbourg and Brussels. If he had insisted on a comprehensive overhaul of the disastrous common agricultural policy, on the long overdue reduction in salaries and tax-free perks for Eurocrats, and on actual prosecution of corrupt officials. Instead he has set his sights on largely symbolic measures aimed at humiliating and excluding European migrants, safeguarding domestic interests versus those of the eurozone and, no surprises here, guarantees for London’s financial sector.

Ultimately, as far as the EU is concerned, the English are only in it for themselves. All the more reason, then, for Europeans to stop imploring them to stay in, and begin using their strength in the negotiations. 

Australia bet the house on never-ending Chinese growth. It might not end well

Lindsay Davis in The Guardian

Assumptions about coal and iron ore exports helped build Australian prosperity. But with China’s economy threatening to unravel, a less rosy picture is emerging

 

Chinese tourists in Sydney. The two countries have prospered through their close economic ties but there could also be a downside. Photograph: David Gray/REUTERS


Over the last couple of decades, China has undergone profound change and is often cited as an economic growth miracle. Day by day, however, the evidence becomes increasingly clear the probability of a severe economic and financial downturn in China is on the cards. This is not good news at all for Australia. The country is heavily exposed, as China comprises Australia’s top export market, at 33%, more than double the second (Japan at 15%).

Is 2016 the year when the world tumbles back into economic crisis?



A considerable proportion of Australia’s current and future economic prospects depend heavily on China’s current strategy of building its way out of poverty while sustaining strong real GDP growth. To date, China has successfully pulled hundreds of millions of its people out of poverty and into the middle class through mass provision of infrastructure and expansion of housing markets, alongside a powerful export operation which the global economy has relied upon since the 1990s for cheap imports.

Though last week’s volatile falls on the Chinese stock markets alongside a weakening yuan sent shockwaves through the global markets, Australia’s exposure lies much deeper within the Chinese economy. The miracle is starting to look more and more fallible as it slumps under heavy corporate debts and an over-construction spree which shall never again be replicated in our lifetimes or that of our children.

As of the second quarter of 2015, China’s household sector debt was a moderate 38% of GDP but its booming private non-financial business sector debt was 163%.Added together, it gives a total of 201% and its climbing rapidly. This may well be a conservative figure, given it is widely acknowledged the central government has overstated GDP growth.

Australia, though it frequently features high on lists of the world’s most desirable locations, currently has the world’s second most indebted household sector, at 122% of GDP, soon to overtake Denmark in first place. Combined with private non-financial business sector debt, Australia has a staggering total of 203%, vastly larger than public debts at all levels of government.

Australia’s long-term bet on China was and still is conceptually simple – an incredibly flawed assumption that the country would never cease to consume increasingly more iron ore.

The assumption ran right to the top. Back during the Labor (Rudd/Gillard/Rudd) administrations of 2007-13, the bureaucrats at the Reserve Bank and the treasury, alongside the then treasurer Wayne Swan, forecast that China would import so much iron ore up to 2029 that the only way so much steel could be consumed was if they built more houses than there were people. There would also be infrastructure projects like airports, highways, exhibition centres and sports stadiums.

This was just the base forecast. The best-case scenario manufactured by Australian bureaucrats would liken parts of China to resemble the planet Coruscant from the Star Wars movies (the political centre of the galaxy, whose surface is covered by an entire city). With incredible complacency, politicians from both sides of parliament basked in the glory and reacted smugly when the US and the eurozone hit a brick wall.

So what did Australia do with this rosy outlook? Like a letter of guarantee, the financial services industry used it to convince the international wholesale lending community that the Australian economy was as safe as houses. Lenders around the world were facing an indefinite period of zero interest rates and were desperate for better yield. Australia must have seemed a good place to put their money.

For a time, the Australian bet looked good. The banking and financial system collected all the debt they could source from overseas wholesale lenders, underpinning increasingly greater expansion into Australia’s already grossly overvalued residential housing market.

Like most other nations in the Asia-Pacific region, the problem for Australia now is that riding on the back of China’s economic growth is no longer a “letter of guarantee” but a statement of significant overexposure to a bad bet and risky mortgage debt. The current downturn in China is smashing the Australian mining industry via lower demand for commodities amid increased global supply, especially in iron ore.

As well as hitting Australia hard, the mining export-driven states and territories (Western Australia, Queensland and the Northern Territory) will suffer the most.Population growth rates are falling in these regions, growth is softening and underutilization (unemployment and underemployment) is steadily rising. Spillover effects into the other states are likely, which could impact the country’s largest and most leveraged asset class: the housing market.

This may leave little desire for international wholesale lenders to provide credit to the banking and financial system in the future as Australia’s economic prospects deteriorate. It is becoming obvious both domestically and internationally that the country is beset with a massive housing bubble, driven by debt-financed speculation. Without Australia’s lenders importing an ever increasing sum of credit, the overleveraged and overvalued housing market will run into trouble.

Government and industry have managed over the last decade and a half to instill severe complacency in Australia, hoping policymakers’ two big bets on the finance, property and mining sectors would continue to pay dividends far into the future. While these bets paid off in the short-term, genuine productivity-enhancing policies which would diminish the incredible and mostly unearned wealth millionaires and billionaires have siphoned off could then be ignored.

With the Chinese economy beginning to falter, the fear is Australians must now figure out where their economic future lies for the next generation who have been brainwashed into believing that digging up rocks and flipping houses by accumulating a gargantuan mountain of private debt is how a modern western country builds its future. The results will not be pretty.

China share turmoil: How it affects the rest of the world

Andrew Walker BBC World Service


Image copyrightAFP



A slump in Chinese shares has prompted stock markets across Asia, Europe and the US to fall sharply. Why is this so significant?

What's behind the fall in China?

The wider story is that China's economic growth is slowing and there are concerns that the transition to a slower and more sustainable rate of growth might be disruptive.

That was true of the period of several weeks of volatility the market experienced after it peaked in June last year.

It's true this time too and the link is perhaps rather more direct now.

Why? Because the immediate sparks for the latest bout of instability were warning signs about the wider economy.

The first day when trading was suspended, figures showing a continued decline in manufacturing were one of the factors that set things rolling downhill. On the second day of suspension it was the sliding currency which raised concerns about whether it was a sign that the economy was slowing down more sharply than thought.

Image copyrightGetty Images

What does this mean for the rest of the world?

The direct financial impact of lower share prices in China is moderate. There is not enough foreign investment in the Chinese market for it to be a major problem. The London consultancy Capital Economics has said foreigners own just 2% of shares

The issue is more about whether the financial turbulence shines a light on wider issues about the economic slowdown in China: is the economy heading for what's called a "hard landing", too sharp a slowdown?

China is now such a big force in the global economy that it would inevitably affect the rest of the world. It is the second largest economy and the second largest importer of both goods and commercial services.

Image copyrightAFP

It's not just stocks.

The prices of many commodities have been affected, notably crude oil. It's not just about China, for sure. Abundant supplies have been every bit as important in the oil market in the last eighteen months. But China's problems have been a significant factor adding further downward pressure to the price of crude oil. The price of Brent crude has fallen by about half since mid-June, when the first stage of the Chinese stock market slide began.

China is such a large buyer of industrial commodities that the possibility of lower-than-expected sales to the country has also undermined the prices of copper and aluminium, for example.

Gold has gained ground a little this week. It is seen by many as a safe investment, protection against both inflation and more general financial instability.

There is certainly a possibility of that kind of "safe haven" effect in other markets if the Chinese stock price falls make investors more wary about risks. In the currency markets, the most likely candidates are the yen and the Swiss franc. The dollar could also be affected, though the US currency already has a strong tailwind from the Federal Reserve's interest rate policy. The Fed started to raise rates last month and that has been encouraging investors to buy dollars. But it's a bit early to draw any firm conclusions.

Some of the currencies that investors might sell if they become more risk averse have shown some impact. Turkey, Brazil and South Africa all have problems of their own and their currencies have weakened in the last few days.

There is also some sign this week of investors putting money into safe government bonds or debts, those seen as having negligible risks of default, such as the US, Germany, the UK and Switzerland.

Image copyrightReuters

What about ordinary Chinese people?

Those who have borrowed money to buy shares in the last year have already been hit very hard. But most people don't own shares - only one person in 30 does, according to Capital Economics.

For most Chinese the wider issue is about the health of the country's economy. If China manages a smooth transition to a slower and more sustainable growth rate, it is likely to still be fast enough to generate rising living standards for most people. A more disruptive slowdown would mean many business failures and job losses.

What might the Chinese authorities do next?

They have several options to stimulate the economy which can affect the stock markets. They could cut interest rates, they could relax the rules on bank lending or they could increase spending. They could also encourage the currency, the yuan, to fall further to stimulate exports. There are problems with these options. Anything that encourages more lending could mean more distressed borrowers in the future. A falling currency has already fed into the stock market drama.

In addition the authorities have taken steps more specifically targeted on the stock market. They have extended restrictions on large investors selling shares. State investment funds have been buying shares. These measures can have an impact but they are unlikely to provide a definitive solution.
How worried should we be?

Views vary about how healthy the Chinese economy is. Capital Economics have been consistently relatively upbeat about China and they said in a note to clients this week:

"We continue to believe that growth is more likely to pick up than weaken over coming months."

But the investor George Soros is more gloomy, telling an economic forum in Sri Lanka:

"China has a major adjustment problem. I would say it amounts to a crisis. When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008."

A crisis there would be serious for the rest of the world, particularly countries and firms that export to China.

How much inequality is too much?

BBC Business

Image copyrightiStock

The richest 10% of Americans earn half of all of income. In Britain, the top 10% hold 40% of all the income.

Inequality isn't just an issue for rich countries: a billion people have been lifted out of poverty since 1990, but inequality has also been rising in many countries too.

Four experts talk to the BBC World Service Inquiry programme about the effect inequality has on growth and prosperity.

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Deirdre McCloskey: Capitalism is not the enemy

Deirdre McCloskey is Distinguished Professor of Economics, History, English, and Communication at the University of Illinois at Chicago. The daughter of a Harvard Professor, her brother became a university cleaner.

"You can't force people to take advantages that are placed in front of their nose, and that's my brother's case. No amount of income redistribution or socialist schemes to give my brother more opportunities would have made any difference at all to his life.

Image copyrightGetty Images

Image captionOccupy protesters have highlighted the gap between the wealthiest 1% and the other 99%

"If people strive, some of them succeed and get rich, at least momentarily until other people strive and compete with them. This striving turns out to be good for all of us.

"The percentage of people in the world living on $2 (£1.30) a day - an appalling level of income - has halved in the last 30 years. That's not by foreign aid or redistribution. It's by letting the economy function in a more innovative way.

"The wrong way to cure inequality is to attack the people who are taller, or have better parents, or live in richer countries. The way to do it is to uplift the poor. I approve of being taxed to help the very poor. But I don't want to kill the goose that laid the golden eggs. Capitalism is not the problem, it's the solution.

"The growth in the last couple of centuries has been astounding. It's a factor of 30 - about 3,000% per head for the average English or American person. Explosive, unprecedented growth. Meanwhile, inequality has gone up and down a little bit.

"If you were to make a rule that the chief executive could only earn 50 times the shop floor employee, that would not reduce inequality substantially.

"I'm very relaxed about [inequality] as long as it's not force or fraud that caused it."

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Jared Bernstein: Inequality impedes growth

Jared Bernstein is a senior fellow at the Center on Budget and Policy Priorities in Washington DC, and a former economic advisor to President Obama.

"I was a member of the President's economics team during the worst recession we've had since the Great Depression. The responsibility to try to turn that around was huge.

"This wedge of inequality between growth and the income of working families undermines the basic incentive that hard work will be rewarded.

Image copyrightGetty Images

"I call it the shampoo cycle - bubble, bust, repeat. And because middle and low income families lack the income growth they used to see, they borrow to make the difference. That creates large leverage bubbles which explode and hurt growth.

"Once wage inequality gets too high, and you have lots of low income people stuck in tough neighbourhoods that are segregated by income and race, and they have fewer libraries and a more difficult learning environment, you begin to see this connection between high levels of inequality and barriers to opportunity.

"You don't necessarily see that in today's economy because that's a cumulative process, but it's very possible that we'll see that in economies 20 years from now when these children come into the job market.

"If you go back to the period where productivity and incomes for middle class families were growing together - in the US that would be back to the mid 1970s - you'll see that the top 1% held about 10% of all income.

"Now it's 20 times that. That's too much. I'm not saying we necessarily have to get back to the late 1970s level, but I do think that a good metric here would be that the income of middle income families would grow closer to the rate of productivity growth, and that's something that we haven't seen for a while."

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Jonathan Ostry: Opportunity more important than inequality

Jonathan Ostry is deputy director of the Research Department of the International Monetary Fund.

"We don't have a threshold level for how much inequality is too much. We don't have a magic number. Sometimes a rise in inequality is perfectly compatible with healthy growth and prosperity, and in other cases the rise has gone way too far.

"When China opened up, it not only took off in terms of economic growth, but there was a marked and quite significant increase in income inequality. I'd be prepared to venture that was a good increase in inequality. Sometimes you need to have a little bit more inequality in order to get growth going as part of deregulating of your economy.

Image copyrightGetty Images

Image captionThe Bolsa Familia programme to tackle poverty was a centrepiece of former Brazilian President Lula's social policy

"Think of the very high levels of inequality that prevailed in Brazil when President Lula came to office, and the steps he took with the Bolsa Familia conditional cash transfer programmes. His policies were successful without jeopardising economic growth.

"I would want to be sure that in a country with a lot of inequality those at the bottom still had opportunities to be well-educated, to have adequate nutrition, and were not shut out from credit and banks. Likewise if there was a fair degree of equality, but nevertheless those at the bottom didn't have adequate opportunities, I'd be concerned.

"So for me it would be more a question of whether there were adequate opportunities for the less well-off in society. Provided that was the case I wouldn't be overly concerned that a given level of inequality was causing great harm.

"[However] it turns out that income equality is an important factor in separating countries that have been successful at sustaining growth for long periods, versus those that have enjoyed spurts of growth which have fizzled out rather quickly. Too much inequality can undercut the ability to sustain growth.

"In more equal societies, those that are more socially cohesive, governments are able to take measures that have buy-in from the population at large. Therefore they can right their economies more quickly.

"In more unequal, less socially cohesive societies, people don't buy the notion that if the economic ship is righted, everyone will benefit. They're more likely to oppose the painful short-term measures that governments need to take to right the economic ship. And so righting that ship becomes much more difficult in less equal societies."

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Branko Milanovic: Beware rising inequality within countries

Professor Branko Milanovic has spent his career studying inequality, and is now a visiting professor at the City University of New York.

"We need inequality. Perfect equality, everybody having the same income, doesn't exist anywhere, nor has it. Obviously some countries - maybe China during the cultural revolution - came relatively close, but some inequality has always existed.

"Without inequality you lack incentives to do practically anything - to work, to invent new things or to invest. Nobody is going to do things for nothing and we know that monetary rewards are really crucial, so this is the good part of inequality. We should not forget that inequality is indispensible for the development of a society.

"Globalisation has been very good for the middle classes in the emerging markets - China in particular, parts of India, Thailand, Indonesia. They are still not level in terms of income with the middle class in the rich world, but it's improving, On the other hand, we have essentially a stagnation of middle class incomes in rich countries, a very interesting and a potentially politically destabilising development.

Image copyrightGetty Images

Image captionThe economic disparity between the wealthiest and poorest in China is stark

"If the gaps keep on increasing as they've increased in the last 20 years, you would end up with two types of societies within a single country. If there is no sufficient middle class and if the poor really are very far from the rich, then you really cannot speak of a single society.

"We could end up with a kind of a global plutocracy, this global one per cent or even half a per cent that are very similar among themselves, but really belong to different nations.

"We might have a situation that most of global inequality is due to inequalities within nations which was more or less the situation 200 years ago. So we may be really going back to the situation that existed before the industrial revolution."

Two-thirds of Tory MPs want Britain to quit European Union

Toby Helm and Henry McDonald in The Guardian


Party sources say Brexit support is rising – despite David Cameron’s preference for staying in EU – but U-turns are possible

 

David Cameron with the European commission president Jean-Claude Juncker. Photograph: Ints Kalnins/Reuters

Two-thirds of Conservative MPs now support Britain’s exit from the European Union, despite David Cameron’s clear preference for staying in, according to senior sources within the party.

Key figures in Tory high command say analysis of public statements and private views expressed by their 330 MPs shows that at least 210 now believe that the UK would be better off “out”.

The surge in support within the parliamentary party for leaving will greatly encourage “out” campaigners, who believe many people will take their lead from local MPs when they decide which way to vote. However, party managers say the total number of Tory MPs who will join the campaign to leave could turn out to be significantly fewer – around 110 – if in the next few months opinion polls begin to point towards a close result or a win for the pro-EU side.

“Certainly at least two-thirds want to leave as it stands,” said a senior party figure. “But if things are very tight some will be bought off by offers of patronage and will be reluctant to take a different line to the prime minister. Plenty will not want their careers blighted by being on the wrong side of such an important debate.” The Observer has also been told that soundings taken by MPs show the “vast majority” of grassroots activists now want to quit the EU – and that most will not be swayed by whatever deal Cameron achieves in his attempt to renegotiate UK membership.

EU referendum expected in September as hopes fade of deal next month



Last week Cameron, in effect, conceded that his party was split from top to bottom over Europe when he agreed that members of his government, including cabinet ministers, would be allowed to speak out against the official line during the campaign, which is expected to be later this year.

While the holders of the top offices of state – including the chancellor, George Osborne, the foreign secretary, Philip Hammond and the home secretary, Theresa May – are likely to back staying in, other senior ministers, including the work and pensions secretary, Iain Duncan Smith, the leader of the House of Commons, Chris Grayling, and the Northern Ireland secretary, Theresa Villiers, want to campaign to leave.

The spotlight will inevitably now turn to Boris Johnson, who attends cabinet in his role as mayor of London and sees himself as a future leader of the party. A longstanding critic of the EU, Johnson has yet to indicate whether he will campaign to stay in or leave.

The ability of Villiers to remain as Northern Ireland secretary if she sides with the “out” campaign was being called into question on Saturday night as opposition MPs said leaving the EU would not be in Northern Ireland’s interests, could harm the peace process and damage Northern Ireland’s economy. The Liberal Democrat MEP Catherine Bearder, who speaks for her party on the referendum campaign, said Villiers should stand down, saying a Brexit would not be compatible with her role. “It would be highly inappropriate for Theresa Villiers to remain in her post while campaigning to leave the EU,” Bearder said. “Leaving Europe would risk stoking sectarian tensions and undoing years of peace-building, much of it funded through EU peace programmes.

“It would also fundamentally transform the UK’s relationship with the Republic of Ireland and put at risk the open land border we currently share. Government ministers should not be able to campaign for an EU exit if this completely goes against their role and responsibilities.”

Osborne: PM giving ministers free rein on EU referendum is not a U-turn



The only Irish nationalist party represented in the House of Commons also questioned whether Villiers could remain in her post. Colum Eastwood, new leader of the Social Democratic and Labour party, said Britain’s departure from the EU could put at risk Northern Ireland’s £1.6bn of trade with the Irish Republic. “While Theresa Villiers is obviously entitled to engage in the internal and long-running Tory battles over Europe, her role as secretary of state for Northern Ireland places upon her a separate responsibility. That role should require her to represent the best interests of people in the north. A Brexit is not in our interest. It is not in the interest of our economy or in the interest of our society,” he said.

“All the evidence, all the major voices in our agricultural and business communities, have warned that a Brexit would devastate the fundamentals of our economy.”

Meanwhile, the EU spokesman of the strongly Eurosceptic Danish People’s party, Kenneth Kristensen Berth, said he did not believe the UK should leave. “I fully understand the British people’s scepticism, but the answer is not to leave now. The answer is to work within the EU framework to slim down the EU cooperation, and that’s a job that will be significantly harder without the British.”

James McGrory, chief campaign spokesman for Britain Stronger In Europe, said: “It shows how isolated Ukip and the Leave campaigns are when even rightwing Eurosceptics in other countries are arguing that Britain should remain in Europe.

“Europe needs reform, but leaving altogether would take us to very extreme fringes of the international community, where even far-right outfits like the Danish People’s party don’t want to be.”