10 ★ FINANCIAL TIMES Friday2 August 2019Letters
FRIDAY 2 AUGUST 2019Email:[email protected]
Include daytime telephone number and full address
Corrections:[email protected]
If you are not satisfied with the FT’s response to your complaint, you can appeal
to the FT Editorial Complaints Commissioner: [email protected]Britain will be a hostage to
fortune — and the EU
Using game theory, Professor Pasquale
Scaramozzino shows how weak the
UK’s negotiating position will be in a
no-deal Brexit (Letters, July 31). Our
leaders should also read the Institute
for Government’s recent paper
“Preparing Brexit: No Deal” which
makes crystal clear how the process
will be much more difficult after
Brexit, when the UK would be treated
as a “third country”. In this scenario,
any agreement would require the
support of all EU27 leaders, followed by
ratification by the European, national
and some regional parliaments. What
opportunities for hostage-taking!
Richard Morgan
Friston, E Sussex, UKCertain conditions make
the threat more credible
Professor Pasquale Scaramozzino
(Letters, July 31) maintains that a
threat to quit his university for a lower
salary from a lower-rated institution
would be ignored by his employer as it
wasn’t credible, and compares this to
the UK’s “no deal” option for leaving
the EU.
I wonder whether his hypothetical
threat would be quite so empty if we
also assumed that the alternative
institution offered him much greater
influence on how his department was
run, removed constraints he currently
faced on liaising with academics
outside of Europe, and spared him one
whole tier of bureaucracy.
Charles Mercey
Tellisford, Somerset, UKI voted Leave, but not for
the demolition of the UK
Like Ali Athar (Letters, July 31) I did
not vote Leave out of hatred of Europe
but because since 1991 I have been
exasperated with the European
Commission’s propensity to interfere in
areas where it has no business to go,
such as decreeing which items should
bear VAT. Thus I was not influenced by
any slogans or promises from Vote
Leave, Nigel Farage or Dominic
Cummings; my view was formed years
ago. But I certainly did not vote for the
demolition of the United Kingdom at
the behest of a party that once included
“unionist” in its title. Nor did I vote for
companies, small and large (in which I
may hold shares), to find their cash
flow and profits ransomed to measures
to combat no-deal Brexit and the
attendant uncertainty.
The dilemma is particularly acute
here in Putney which voted heavily
Remain. Our MP, Justine Greening,whom I admire and respect, is a
prominent Remainer. She is a doughty
fighter on her constituents’ behalf, for
instance opposing expansion of
Heathrow airport, but her efforts are
stymied by her own government’s
policies. Similarly, I value Wandsworth
council, which also attempts to act in
our interests.
David Cameron’s misguided attempt
to stave off the disintegration of the
Conservative party will likely ensure its
destruction. Where that leaves Ms
Greening and the council, I have no
idea.
Elizabeth Balsom
London SW15, UKEU law has primacy over
those of member states
Reporting on the proceedings before
the German Constitutional Court about
an element of the European Central
Bank’s quantitative easing programme,
Claire Jones writes: “The legal
ramifications go far beyond this one
case; they also concern whether the
judgments of Germany’s highest court
should take precedence over European
law.” (“German constitutional court to
rule on ECB bond buying”, July 31.)
From a European Union law
perspective, the outcome is clear. As
early as 1964, the European Court
established the primacy of European
law over the laws of the member states,
in the Costa v ENELcase. A declaration
attached in 2007 to the EU treaties
recalls this overriding of national law
by EU law. Without such primacy, how
could a union based on the rule of law
function effectively, from a single
monetary policy to its trade policies,
and all other areas of competences
attributed to it?
René Smits
Professor of the Law of the Economic and
Monetary Union,
University of Amsterdam,
the NetherlandsFiscal policy may
now be unavoidable
I fully agree with Merryn Somerset
Webb (“ECB purchases of equity would
be a dangerous step”, July 27). Finally,
someone (perhaps it had to be a
woman) has had the courage to say
that the king is naked.
During the last quarter of a century
we have seen a complete turnaround of
the old idea that the task of central
bankers essentially consists of retiring
the punchbowl when the party gets too
hot. Nowadays, the recipe seems to be
the reverse. So far so good.
Nonetheless, to continue on that path
seems to me a rather desperate gesture
that signals the exhaustion ofmonetary policy. The Japanese have
been trying all the tools of monetary
policy with scant results. But what if we
accept the theory that we have entered
a “secular stagnation”? In that case,
swimming against the tide could be not
only futile but also dangerous, in the
sense that we would be artificially
delaying painful adjustments that the
system requires in order to function
properly again.
In spite of the display of the full
resources that the art of central
banking can provide, sooner or later
fiscal policy may be the unavoidable
last resort.
Carlos Mora
Montreal, QC, Canada
Former Ambassador of Uruguay to the
Netherlands and Saudi ArabiaNo time for solutions
based on fizzy drinks
It’s appealing to think we can save the
climate with fizzy drinks, as suggested
in Nathalie Thomas’s otherwise
excellent article “Hydrogen rises as
clean fossil fuel alternative” ( July 30).
But if the carbon emissions from
making hydrogen are captured and re-
used to make fizzy drinks, the storage
and hence climate benefit is shortlived
— not much longer than until that fizzy
drink gets opened.
One could argue that by reusing the
carbon from hydrogen you replace
fossil carbon otherwise used for
fizziness. However, since we need to
achieve net-zero emissions, there is no
space for such re-used fossil carbon.
The climate has no time for short-term
solutions based on fizzy drinks: clean
hydrogen is either made from
renewable energy or the fossil carbon is
stored permanently.
Øyvind Vessia
Brussels, BelgiumIn Gideon Rachman’s column “Hong
Kong is a flashpoint in new cold war”
( July 30), and in your editorial “How
Beijing should handle Hong Kong”
( July 31), no references are made to
Taiwan, which is surprising.
A few years before the British colony
reverted to China, Sir Percy Cradock, a
former ambassador to China and a
one-time foreign policy adviser to
prime minister Margaret Thatcher,
observed that if Beijing breached the
Joint Declaration with Britain on
Hong Kong it would destroy any
prospect of inducing Taiwan to enterinto a similar “one country, two
systems” arrangement.
It needs remembering that the “one
country, two systems” policy was
originally devised by Beijing to
facilitate the re-incorporation of
Taiwan with the motherland; the 1984
Joint Declaration on Hong Kong was
based on the principles of this policy.
Early next year the people of Taiwan
will hold their presidential election,
and a major issue will be relations with
the People’s Republic, including a
possible declaration of independence
by the island. Beijing has statednumerous times that if such a
declaration were made the People’s
Liberation Army will invade Taiwan.
If the situation in Hong Kong
worsens, due to foreign meddling — as
China believes — or otherwise, and it
leads to intervention by the PLA, the
“one country, two systems” policy will
be seriously jeopardised, with Sir
Percy’s warning justified, and the
result may not be the cold war posited
by Mr Rachman but a hot war over
Taiwan.
Bryn Rowlands
Malmesbury, Wilts, UKTaiwan could be the next ‘flashpoint’
Correction
cTaiwanese president Tsai Ing-wen
defeated pro-Beijing candidate Eric Chu
in a 2016 election, not former president
Ma Ying-jeou as incorrectly stated in an
article on August 1.‘What if this huge waste of money is
all for nothing?’Post-consumer spark of
joy is perfect for Japan
Leo Lewis is absolutely right to lament
Japan’s wasted nostalgia and gadget
fetish (“Japan’s reverence for the Sony
Walkman is a deadweight”, To k y o
Notebook, July 31). Its launch 40 years
ago coincided with the publication of
Japan as Number One — Lessons for
Americaby Harvard professor Ezra
Vogel. Today’s Japan still has a rightful
claim to be “number one”, but it is
mindset, not gadgetry; quality, not
quantity, where Japan now leads the
world. Just look at the empirical
evidence from global rankings on, for
example, income equality, social
mobility and civil sanity. Of course,
there can be no product that
demonstrates Japan’s new-found global
leadership in “quality of life”.
However, may I suggest that
“KonMari” — Marie Kondo’s post-
consumer spark of joy — is the perfect
symbol for the current version of
“Japan as Number One”. Just as
Walkman did 40 years ago, KonMari
has captured the imagination of global
consumers and, slowly but surely, is
changing spending patterns and
lifestyle choices. A tidy wardrobe
sparkling with joy is so much better
than a giant yellow Walkman in the
Ginza.
Jesper Koll
Tokyo, JapanUS tax net applies to its
citizens wherever they live
Aaron Schaal (Letters, July 29) states
that the relation between taxes paid
and benefits received is a fundamental
pillar of taxation. However, this is not
the dominant pillar (or principle) of
taxation, and most taxes are actually
based on the “ability-to-pay” principle.
Clearly, this principle is to be applied
for the taxation of US tech companies
in Europe.
Also, physical presence is not a
necessary condition for taxation, and
there is nothing unique in the fact that
US tech companies can be taxed in
Europe, regardless of their physical
presence there. One is reminded of the
US tax net, which applies to all US
citizens, irrespective of their country of
residence.
Prof Tine Stanovnik
Ljubljana, SloveniaHave a dig at one leader,
have a dig at them all
In her reviewofTannhaeuser( July 29)
Shirley Apthorp chooses to share the
thought that Valery Gergiev has “a
political background dubious enough
to fit right in at Bayreuth”.
To be sure, the eminent — and
familiar to western audiences —
Russian maestro is a close ally of
Vladimir Putin; and these days one
cannot lose with a dig at the Russian
president, however gratuitous. But
may we assume that FT reviews will
also include the information that a
British artist is a Johnsonian Brexiter,
an American a staunch Trumpian?
David C Speedie
Charlottesville, VA, USHow do you spend your first day in a
new job? Personally, I spent mine
missing my phone charger.
Jacob Rees-Mogg put me to shame
— marking his arrival as a UK
government minister last week by
issuing a style memo to officials.
Documents were to have a “double
space after full stops” and “no comma
after and”, he ordered.
I don’t really understand Mr Rees-
Mogg’s punctuation rules. I suppose
putting a double space after full stops
is the type of thing you have time for
when you don’t change any nappies.
But what about the rest of us?
I admit, however, that Mr Rees-
Mogg has his finger on the pulse.
Sixteen years since the publication of
Lynne Truss’s guide to its proper use,
Eats, Shoots and Leaves, we remain
fascinated by punctuation.
There is now even a whole book on
a single mark.Semicolonby Cecelia
Watson is billed by its publisher as “a
page-turning, existential romp
through the life and times of the
world’s most polarising punctuation
mark.” I might wait for the inevitable
sequel on the apostrophe — a best-
selling series beckons — but the
highlight of this volume is surely the
1837 duel in Paris between two law
professors over whether a sentence
should have a colon or a semicolon.
Tragically, both the professors
survived. And their spirit is alive
today in the form of grammar
sticklers such as Mr Rees-Mogg.
But this passionate fury over
punctuation masks a dirty secret: itdoesn’t really matter.Has anyone ever
read the words “a panda eats, shoots
and leaves” and believed they
described a firearms incident?Would
Bob’s Donuts be tastier than Bobs
Donut’s?The pedants are revolting,
and not in the way they think.
If you think less of those who
confuse “its” and “it’s”, you’re
destined to underestimate a large
chunk of the tech industry’s finest
minds.
In my experience, the major reasons
that writing is misinterpreted are: 1)
the reader is reading too fast; 2) the
author has bad handwriting; and 3)
someone has forgotten to print the
last page. Punctuation doesn’t even
make the list. If misplaced
punctuation really did obstruct
meaning, the internet would be
effectively unusable.
Sticklers will point out that there
are legal cases in which punctuation
proved decisive. I’m afraid that’s the
law for you — quite often, it’s the
intellectual equivalent of a coin toss.
There are probably landmark cases
decided on the basis of font size.
Compared with other rogue factors
such as, say, drunk legislators or
hanging chads, I feel confident that
punctuation has had a small role in
setting society’s rules.
There is an aspect of the stickler
mindset that strikes me as deeply odd.
Punctuation is part of your individual
style, your personality. Even if you are
sure that your way is correct, why
would you want it adopted by
everyone? If I were a minister and allmy civil servants started using
pointless long dashes — yes, these
ones — I would worry that I was living
inThe Truman Show. And creating a
team of yes-people.
When I lived in Colombia, I noticed
a habit for writers to put commas
between the subject and verb. (The
equivalent of: “These fields, are the
best in England.”) This usage was
messy and grammatically wrong. I
took pleasure in pointing out
examples to friends. In hindsight,
picking on the Colombian comma was
a coping strategy. On matters of
politics and culture, I was always a
newcomer, my insights painfully
limited. Finally, here was something
that I could challenge without fear of
contradiction.
Our stickling over punctuation is a
displacement activity. Unlike climate
change and the growth of artificial
intelligence,these disagreements
seem narrow and resolvable. Unlike
today’s politics, it is a world where the
educated still enjoy an advantage.
The playwright Harold Pinter once
castigated an actor during rehearsal:
“I wrote dot, dot, dot, and you’re
giving me dot, dot.” Pinter had a valid
point about the length of his dramatic
pauses; the rest of us have no such
excuse. We fretabout punctuation
precisely because the steaks are so
small. And if you felt your heart rate
increase as you read that typo, then
you need to find something more
important to worry about.[email protected]Coming to blows
over the rules
of punctuation
Notebook
by Henry Mance
There are many reasons to be a public
company, from the ease of raising cap-
ital, to the ability to compensate found-
ers and employees with share options.
But there is also an increasing number
of reasons not to be. That truth is
reflected in new statistics showing that
between 2000 and 2018, the number of
private equity-backed companies in
the US rose from less than 2,000 to
nearly 8,000. Publicly listed companies
in this period, by contrast, fell from
7,000 to about 4,000, according to the
Milken Institute.
Globally, asset owners have now
placed about 14 per cent of their assets
in private markets (mostly private
equity and real estate), up from virtu-
ally nothing a couple of decades ago,
according to Willis Towers Watson, a
risk management firm. It predicts this
will rise to 20 per cent in 10 years.
Certainly, liquidity in global public
equity and bond markets has declined
since 2008 — which many regulators
cite as theirbig financial risk concern
at the moment — whereas financing for
private deals has grown. To the extent
that all this erodes the public market
system, which is the main vehicle
through which individuals can benefit
from wealth creation in many modern
societies, it is not only an economic
worry but a political one, too.
Many leaders of public corporations
cite the problems of quarterly capital-
ism as adriver of these trends. In the
past decade or so, pressure from share-
holder “activists” has vastly increased.
This has forced some executives to
move to boost short-term share prices
that might not be in a company’s long-
term interest. There are plenty of other
downsides to being public these days.
In the age of sustainable investing, pop-
ulism and #metoo, CEOs and boards
are under tremendous pressure to
state their “values.” They must show
progress on diversity (which can meandifferent things in different countries),
embrace “stakeholder capitalism”, and
of course articulate and execute smart
corporate strategy in the midst of
geopolitical and economic shifts. All
this must be achieved while companies
make sure they are protecting the
share price (it is still a fiduciary duty to
keep it as high as possible). Little won-
der the average public company CEO
has a shelf life of about three years.
Meanwhile, there are many upsides
to being private. Research some years
ago comparing the investment behav-
iour of private and public companies
of similar sizes and types found that
private companies were able to invest
about twice as muchin productive
capital expenditure. The key difference
seemed to be the pressure that public
companies are under from investors in
public markets.
One result has been the $1tn that
US companies paid out in share buy-
backslast year. The traditional defence
is that this is a good use of corporate
funds in the absence of value-enhanc-
ing investment opportunities. But it is
also telling that this cash dump was
done when the market was close to
its peak — a strange time to argue that a
company’s stock still has room to rise.
Corporate debt has risen to record
levels too, as many firms have engaged
in a tax arbitrage in which profits go to
offshore accounts, while debt is raised
at record low rates in order to pay out
investorsat home. A public company
debt bubble is one of the other financial
risks on the horizon.
All this speaks to perhaps the great-
est economic issue of our time: how to
reform capitalism and restore trust in
free-market, liberal democracies. Pop-
ulists are not the only ones to have lost
faith in public markets. Investors’ con-
fidence has eroded as well. This worry-
ing trend should be a focus for policy-
makers on both sides of the Atlantic.Going private looks appealing to both firms and fund managers
Investors and companies
shun public markets
Cutting interest rates and yet inadvert-
ently tightening monetary policy is a
trick few central bankers would be
proud of pulling off. This week, the US
Federal Reserve managed it. The Fed-
eral Open Market Committee delivered
a quarter-pointcut in rates, its first
reduction since 2008. But the remarks
from Jay Powell, the Fed chair, in the
subsequent press conference seemed
to convince investors that the cut was
an anomaly.
The financial markets duly under-
took a sharp correction, with traders
reducing the number of further cuts
expected in the medium term, equities
falling rapidly and the yield curve
inverting further. It seems unlikely
that Mr Powell intended this reaction,
and his communication skills as Fed
chair are still a work in progress. But
the Fed’s task at the moment is not
easy. It has to contend with a US presi-
dent perennially injecting uncertainty
into the US economy with destructive
trade policy and continually sniping at
the central bank, and with investors
who may have got ahead of themselves
in pricing in a series of cuts.
Whether the economy really needed
an interest rate cut can be debated.
Growth slowed in the second quarter as
net trade and business investment —
both affected by Donald Trump’s trade
war — weakened sharply, while con-
sumption grew rapidly.
However, what the economy cer-
tainly needs is a central bank that
stands ready to react quickly, particu-
larly on the downside, if growth weak-
ens and inflation continues to under-
shoot. Mr Powell, unfortunately, failed
to convey that impression.
The damage was done during the
press conference following the deci-
sion, in which Mr Powell said that
the ratemove was a “mid-cycle adjust-
ment to policy” rather than the begin-
ning of a long series ofcuts. Forwardguidance on interest rates can play a
valuable role, but generally in specific
circumstances such as a commitment
to hold rates down to prevent deflation.
On this occasion, it surprised and dis-
appointed the markets and injected
unwelcome volatility.
Of course, it is not the job of the cen-
tral bank to validate the expectations
of financial markets. Mr Powell did not
intend for his words to have the effect
that they did, given that he also wel-
comed the looser financial conditions
arising from expectations of looser
monetary policy that have supported
the economy this year. If the Fed thinks
investors have it badly wrong and that
their misconceptions will make policy-
setting harder than normal, the way
to correct it is through consistent and
broad-based messaging over a period
of time, not by springing a surprise in a
post-meeting press conference.
The Fed’s job has been made consid-
erably more difficult by the interplay
of monetary policy with Mr Trump’s
trade war. Mr Powell cited uncertainty
over trade as one of the reasons for
cutting — a perfectly reasonable analy-
sis but one with the potential to create
moral hazard by insulating Mr Trump
from the effects of his own actions.
The fact that the president continually
batters awayat the Fed in public also
complicates the task. It is all too easy
for any monetary easing by the Fed
to look like a concession to the White
House.
The central bank cannot get into
a game of cat-and-mouse with the
administration over trade policy or
public criticism. It needs to block out
the noise and explain how it has
formed its view of the economy and
monetary policy, and what it will need
to see in terms of incoming data to
change it. This week’s decision was a
reasonable one, but the Fed needs to do
better explaining it.Jay Powell needs to improve his communication of monetary policy
The Fed’s actions are
undermined by its words
РЕ
ЛИЗПare under tremendous pressure to
Пare under tremendous pressure to
state their “values.” They must showstate their “values.” They must showПare under tremendous pressure toare under tremendous pressure toare under tremendous pressure toare under tremendous pressure toООДД
Гulism and #metoo, CEOs and boards
Гulism and #metoo, CEOs and boards
are under tremendous pressure toare under tremendous pressure toГulism and #metoo, CEOs and boardsulism and #metoo, CEOs and boardsООТIn the age of sustainable investing, pop-
ТIn the age of sustainable investing, pop-
ulism and #metoo, CEOs and boardsulism and #metoo, CEOs and boardsТОIn the age of sustainable investing, pop-
ОIn the age of sustainable investing, pop-
ulism and #metoo, CEOs and boardsulism and #metoo, CEOs and boardsОIn the age of sustainable investing, pop-In the age of sustainable investing, pop-ВИdownsides to being public these days.
Иdownsides to being public these days.
In the age of sustainable investing, pop-In the age of sustainable investing, pop-Иdownsides to being public these days.downsides to being public these days.ЛЛ
In the age of sustainable investing, pop-Л
In the age of sustainable investing, pop-downsides to being public these days.downsides to being public these days.ААГterm interest. There are plenty of other
Гterm interest. There are plenty of other
downsides to being public these days.downsides to being public these days.Гterm interest. There are plenty of otherterm interest. There are plenty of otherterm interest. There are plenty of otherterm interest. There are plenty of otherРРУУ
Пthat might not be in a company’s long-
Пthat might not be in a company’s long-
term interest. There are plenty of otherterm interest. There are plenty of otherПthat might not be in a company’s long-that might not be in a company’s long-ППАmove to boost short-term share prices
Аmove to boost short-term share prices
that might not be in a company’s long-that might not be in a company’s long-А"What'sulism and #metoo, CEOs and boards"What'sulism and #metoo, CEOs and boards
are under tremendous pressure to
"What'sare under tremendous pressure to
state their “values.” They must showstate their “values.” They must show"What'sNews"downsides to being public these days.News"downsides to being public these days.
In the age of sustainable investing, pop-
News"In the age of sustainable investing, pop-
ulism and #metoo, CEOs and boardsulism and #metoo, CEOs and boardsNews"VK.COM/WSNWSIn the age of sustainable investing, pop-VK.COM/WSNWSIn the age of sustainable investing, pop-
ulism and #metoo, CEOs and boardsVK.COM/WSNWSulism and #metoo, CEOs and boards
are under tremendous pressure toVK.COM/WSNWSare under tremendous pressure to
state their “values.” They must show
VK.COM/WSNWSstate their “values.” They must show
progress on diversity (which can meanprogress on diversity (which can meanVK.COM/WSNWS