10 ★ FINANCIAL TIMES Tuesday 3 March 2020
Letters
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to the FT Editorial Complaints Commissioner: [email protected]Britain’s Labour party celebrated its
1 20th birthday last month in opposi-
tion. With voting under way for a
leader to succeed Jeremy Corbyn, the
campaign to date suggests it will face a
long route back to power. None of the
candidates has used the opportunity to
gain a mandate for the changes in pol-
icy and management that will be
neededforareturntogovernment.
The outcome is crucial not just for
Labour, but for British democracy.
Hopes of a political realignment, with
new centrist parties or a revival of the
Liberal Democrats, have not been real-
ised. The UK needs a viable Labour
opposition able to hold Boris Johnson’s
Conservativegovernmenttoaccount.
Though candidates have been play-
ing to the party’s leftwing membership
who will elect the leader, they have
shown a worrying reluctance to break
with the ill-fated Corbyn era. Lisa
Nandy, who has gone farthest, is run-
ning last among party members
according to polling last week. The
frontrunner, Keir Starmer, has com-
mitted to nationalising rail, mail and
water as well as scrapping tuition fees.
He has limited himself to saying the
2019manifestowas“overloaded”.
Continuity with a leadership that in
December saw the party return the
fewest MPs since 1935 would be a grave
error. Whoever takes over must be
ready to acknowledge the mistakes. An
unappealingleaderwasonlypartofthe
problem. Policy was by turns scatter-
shot — throwing anything that seemed
potentially appealing into the mani-
festo — or alienating for traditional
Labourvoters,pursuingpetcausesand
controversialforeignpolicystances.
There are broader challenges, too.
Social democratic parties across
Europearestrugglingtoholdtheirbase
together as nationalism rises. Deindus-
trialisation has reduced the resonance
oftraditionalclass-basedpolitics.
Labour’s next leader should remem-
ber that it wins when it is a national
party. Regaining its heartlands in small
towns in the north and Midlands of
England or shoring up support in big
cities will not be enough. As ex-leader
Tony Blair has suggested, it must build
a new coalition, including tailoring its
message to suburban voters who
helpedMrBlairtothreevictories.
There is fertile ground for a revival.
Public interest in immigration and
Brexit is fading; climate change, pov-
erty and housing are all rising con-
cerns. A canny Labour leader can lay
claimtothisagenda.
The party will struggle when it tries
to be radical in both economic and
foreign policy. The 1945 Labour gov-
ernment combined the pledge to build
a welfare state with a robust commit-
ment to UK national security; prime
minister Clement Attlee had been dep-
uty premier to Winston Churchill in
thewartimecoalitiongovernment.
Not only must Labour look like it
supports modern Britain, it must also
become a champion of Scotland’s place
within it. There is no route back to
a majority without a revival north of
the border. Elections to the Holyrood
parliamentin2021willbeanearlytest.
A centre-left party has an opportunity
to highlight the Scottish National
party’sfailuresinpublicservices.
Without the parliamentary theatre
of Brexit, however, the public may pay
cursory attention to the new leader.
Taking on internal party management
— especially in handling anti-Semitism
— will be essential to establish credibil-
ity and make headlines. Whoever wins
must find key areas that can demon-
strate Labour’s capacity to change. The
contenders have focused on reassuring
Corbyn supporters. The next leader
must start to reassure the rest of the
country, or Labour will spend its 125th
anniversaryinoppositiontoo.Regaining its heartlands in English north and Midlands is not enough
Labour contenders are
neglecting hard choices
Fear can be contagious. The world
needs a co-ordinated economic
response to the fast-spreading strain of
thecoronavirus,notonlytoaddressthe
disruption to finance, commerce and
industry directly but also to reassure
thepublicandrestoreconfidence.
The OECD, the Paris-based club
of mostly rich countries, has warned
that the virus and associated shut-
downs could cut its global growth fore-
casts in half. Factory closures in China
alone would shave 0.5 percentage
points off growth, the OECD said. A
more widespread outbreak would cut
the expansion of the world economy
from 2.9 per cent to 1.5 per cent this
year. Even the more benign scenario is
enough to push the global economy
into a recession, defined as growth
below2.5percent.
Given China’s role as the world’s
workshop, providing components and
raw materials to factories, the shut-
down has disrupted the supply chains
that underpin modern manufacturing.
US port managers have warned that
tradevolumescouldfallbyafifthinthe
firstthreemonthsofthisyearwhilethe
costofleasingbigcontainersshipsisfar
below normal seasonal levels. The oil
pricehasfallenbelow$50abarrel.
The damage, however, is by no
meanslimitedtomanufacturing.Tour-
ism and transport have already been
hit: companies have cut back on busi-
nesstravel,conferenceshavebeencan-
celled and airlines have warned that
profits will fall as customers either
obey government measures to halt the
virus or take matters into their own
hands and stay away. IAG, owner of
British Airways and Iberia, warned
investors last week that the disruption
wouldhurtprofits.
Other service activity could suffer if
the virus is not contained. Concerns
about virus risks could lead customers
to stay away from restaurants, cinemas
and other public spaces; shoppers tak-
ing matters into their own hands has
the same effect as an enforced shut-
down. Bankers and investors are work-
ing out contingency plans to shift oper-
ations outside of big cities. Uncertainty
can be self-sustaining as drops in
spending feed on themselves and busi-
nessescancelspendingplans.
On Tuesday, when G7 finance min-
isters and central bankers discuss their
response, they need to be prepared to
doeverythingtheycan.
Policymakers at the US Federal
Reserve, the Bank of Japan and the
European Central Bank have already
said they are ready to respond to the
crisis and provide support. While the
disruption is the kind of “supply
shock” that is difficult to fight with
monetary policy, easing can restore
someofthemissingdemand.TheBank
of Korea eased lending terms for small
businesseslastweek.
The virus has come at a particularly
difficult time. The global economy was
already struggling — unlike during the
swine flu epidemic. The trade war and
the battles of the car industry already
hurt manufacturers. The rise of
populism has made co-ordinating
responses difficult: the world lacks the
sort of leadership that Gordon Brown,
then prime minister of Britain, showed
in 2009 when he assembled the G20 to
addressthefinancialcrisis.
Until the public can see a way out
of this situation, the fear factor will
exacerbate the economic impact.
Efforts to halt or slow the spread of the
virus have so far taken place on the
nationallevel.
There must also be a visible interna-
tional response. Over the past decade,
as nationalism has taken root, the
world has fragmented. The corona-
virus is forcing nations to demonstrate
that they are still capable of co-operat-
ingforthecommongood.A co-ordinated response is needed to protect health and prosperity
Coronavirus calls for
more global co-operation
This year’s US presidential poll will be
my children’s election not mine: that
simple fact could make all the
difference to the outcome.
The demographics of the 2020 poll
— which faces critical Super Tuesday
primaries on March 3 — will be like no
other in US history. According to a
new study from the Pew Research
Centre, baby boomers like me and the
generations above us will account for
less than 40 per cent of voters in 2020,
down from 68 per cent in 2000.
Meanwhile, my kids — part of
Generation Z, those aged 18 to 23 now,
by Pew’s definition — will make up 10
per cent of eligible voters, up from 4
per cent in 2016 when President
Donald Trump was elected. They will
be more diverse (only 55 per cent
white) and thus more likely to vote
Democratic than my boomer
generation and above which is three
quarters white and more likely to vote
Republican.
“The boomers and older
generations don’t have the voting
clout that they had in 2000,” says
Richard Fry, one of the authors of the
Pew report. So the electoral tide is
slowly turning against me.
Or is it? Everything will depend on
whether all these whippersnappers
can get out of bed to go to the polls.
The record of 18- to 24-year-olds on
that score is far from stellar, says
William Frey, demographer at the
Brookings Institution. The voter
turnout rate for 18- to 24-year olds in
2016 was 43 per cent, compared with
71 per cent for those 65 or older.Young voters punch below their
demographic weight by not turning
out — and young Asian voters like my
kids, who are ethnically Chinese, turn
out in an even smaller proportion.
“It’s possible that older generations
will form a larger share of actual
voters in 2020 than their share of the
electorate,” says the Pew report,
pointing out that Boomers and above
accounted for 43 per cent of eligible
voters in 2016 but cast nearly half the
ballots.
But Mr Frey counters that young
people turned out very strongly in the
2018 midterm elections, when those
18 to 29s saw turnout rise by 16
percentage points from only 20 per
cent in the previous midterms to 36
per cent in 2018. (Midterm turnout is
always below that of a presidential
election). Still, 66 per cent of eligible
voters over 65 turned out in the same
election. The kids cleaned up their
electoral act — but my generation still
outvoted them.
So in 2020, young voters will still
probably account for a smaller share
of actual votes as opposed to potential
votes. “The question is how much
below their weight they are going to
punch, but I’m still very certain that
there is going to be a much bigger
youth turnout in 2020 than in 2016,”
says Mr Frey.
My kids are not off to a good start,
though. As college students, they need
to apply for absentee ballots to vote in
our Illinois primary on March 17. I
offered to go online and sign them up
myself — until someone pointed outthat would technically be voter fraud.
Eventually, I hounded one of them
into requesting a ballot, but the other
has resisted parental entreaties.
Kristina Blagojev, 20, a student at
the University of Illinois at Chicago,
mailed her ballot request in with time
to spare. She’s leaning toward Bernie
Sanders and has no intention of
“throwing away my voice” by not
getting a ballot. But she told me a lot
of her friends, while fully intending to
vote, tend to say, “‘I’d have to buy an
envelope, I’d have to buy a stamp, it’s
just a lot of effort’, and they put it off
so long until it’s primary day and
they’ve thrown away their vote”.
I didn’t think it tactful to point out
to a member of the generation that cut
its milk teeth on technology that it
takes 10 seconds to request a ballot
online.
Ethan Scott, 19, a student at DePaul
University in Chicago, already has a
firm plan to come home to vote where
he is registered for the primary. He
follows the election closely, and taught
me a thing or two about some of the
candidates.
If motivated voters like Ethan and
Kristina turn out in this year’s poll,
especially in swing states, this really
will be Generation Z’s election — and
most likely the Democrats’. If they
don’t, Boomers will dominate, and
most likely Donald Trump will win.
It’s all down to the demographics —
not to mention complicated
technologies like the postage stamp.[email protected]Generation Z
must play its
part in race for
the White House
Notebook
by Patti Waldmeir
Reducing the federal fund
rate would be a mistake
President Donald Trump as well as
several respected economists have
called for the Federal Open Market
Committee to reduce the federal funds
rate to combat the threat of a recession
stemming from the spread of the
coronavirus. This would be a mistake
for two reasons.
First, given the already near record
low funds target range (1.50-1.75 per
cent), any lower rate will not stimulate
either household consumption or
business investment given the
widespread uncertainty and concern
throughput the country regarding the
ultimate spread of the virus. Second,
lower interest rates will further
disincentivise bank lending, as the
banks need to cover operating costs,
including bad debts, and make a
worthwhile margin of profit.
Lower rates will make it much more
difficult as the recent sharp decline in
bank stock has proved. If economic
stimulus is deemed necessary to avert
a recession, fiscal spending should be
employed. Either government
spending should be diverted
temporarily from other projects, or the
Treasury should take advantage of the
currently low rates and increase
borrowing to finance the healthcare
sectors of the economy as they work
quickly to eliminate the threat of a
pandemic.
Speed is all important, and targeted
fiscal stimulus will be more effective
than hoping that lower interest rates
will change the mindset of worried
consumers and business executives.
Stefan D Abrams
Managing Member,
Bryden-Abrams Investment Management,
New York, NY, USSelect and develop most
promising treatments
The usual central bank playbook isn’t
equal to the task at hand. Unregulated
spread of the novel coronavirus
represents an existential crisis to our
assumptions in a global economy, a
possibility that markets have begun to
price in. Modest, carefully targeted
fiscal stimulus holds the potential to
halt the panic and prevent unthinkably
grave damage to the economy and our
quality of life.
Although there are no approved
treatments and rapid diagnostics in the
US, there are several very encouraging
leads. The speed and unpredictability
of an outbreak ensures that once
demand is assured, it’s too late for
effective intervention. Governments
can step in and reduce uncertainty for
private corporations. After selecting ahandful of promising treatments and
tests, reimbursement could be
guaranteed for all the items that can be
produced up to a specified threshold.
For example, Gilead could be pledged
$100 for each treatment course of
remdesivir it produces, up to 10m
treatments. That mere $1bn
investment would have the potential to
rapidly improve real and financial
conditions over the coming year.
Peter Overholser
Klamath Falls, OR, USMany of those affected by
virus may not even notice
That there is a pandemic is now clear,
but it is not organic — it is
psychological: fear. We are faced with a
virus which for the vast majority of
people (about 80 per cent-plus) is
comparable to a mild cold — so mild, in
fact, that they may not notice anything
out of the ordinary. Those at risk are
those that are always at risk from
seasonal flu — and, ironically, it is
perhaps possible that all of the
publicity about good hand washing (by
far the most important practical
measure) may actually reduce the
impact of both.
The truth is that people die on our
roads every day, but we would not
dream of closing down the motorways
or banning driving; “obviously” that
would be “disproportionate”; the
consequent economic and social
impact would be “too high”. World
leaders need to demonstrate calm
objective judgment, because there
really are circumstances where the
“cure” can be worse than the disease.
Peter Reid Smith
Symington, UKAll airlines receive state
aid in some form
You report (February 29) that EU
regulators are to assess whether a
€400m loan to Alitalia by the Italian
government constitutes state aid. Of
course it does. However, that is neither
unique nor ultimately relevant.
All airlines receive state aid in some
form; direct loans are only more
visible. Aid covers nearly the entire
panoply of resources that make up an
air transportation system, of which an
airline is only a part. It includes state-
financed airports, federal air traffic
control, and government-subsidised
aircraft manufacturing, including
export and sales finance incentives.
In the US, certain airlines receive
federal payments for “essential air
service” where it is not sufficiently
provided by the market alone (Alitalia
may provide some elements of such
service). Moreover, China, Russia andthe UAE are unabashed state aviation
regimes through either direct
ownership in airline capital structures
or monopolised infrastructure. China
especially, completely subsidises
operating losses resulting from excess
capacity and below market pricing.
From a national competitive
perspective alone, the EU might take a
less regulatory and more constructivist
approach to its aviation marketplace:
the “level playing field” concept is
appealing in the western law and
economics tradition, but irrelevant to
the larger playing field outside the EU,
where public and private co-operation
is inherent and explicit. That Rome has
otherwise ratified and codified its own
legal interpretation of state aid might
invoke whether Brussels can ultimately
assert a superior legal forum, including
even the extent of its law and policy
legitimacy.
Matt Andersson
President,
Indigo Aerospace,
Chicago, IL, USMaybe life becomes less
about our own existence
John Tippler writes (Letters, February
28) that if he had died 20 or 30 years
ago, he would have gone into a state of
non-existence and therefore not have
missed anything. That is true; but
other people close to him would have
missed the opportunity to learn from
his wisdom and experience.
Perhaps by the time we reach 60 or
70 years of age, life becomes less about
our own existence and more about how
we can shape those that will remain
when we are gone.
Jeremy Klein
Chief Investment Officer,
Edison Asset Management Corp,
Ottawa, ON, CanadaIn your editorial “The global struggle to
contain the coronavirus” (February
29), you reference the need to establish
“social distancing” to reduce the spread
of the disease. While this is true there
will be some countries who will be
better able to carry out this policy than
others. America is not one of them.
It has been reported that 40 per cent
of Americans do not have the financial
resources to pay off $400 in emergency
spending. It is also likely that many of
these people do not have health
insurance either. If the decision is to go
to work sick or be turfed out on thestreet because of a failure to pay the
rent, just how do you think most of
these people will respond? The
problem will be compounded by the
fact that many low wage service jobs
also have heavy public contact as well.
If the US is going to want people to
self-quarantine after falling ill with
Covid-19, it will have to create the
conditions that will allow them to do
so. This will mean legislation
preventing the eviction of people with
the disease for a failure to pay rent. A
legal prohibition on dismissing a
person in self-quarantine is alsonecessary. And if people are expected
to remain at home, then there must be
some mechanism to give them enough
money to do so. The federal
government should also make it plain
that it will pick up the tab for Covid-
treatment so that the uninsured do not
avoid treatment because of their
inability to pay.
To do less than all these things will
ensure that, should Covid-19 become
established in America, it will spread
like wildfire.
Guy Wroble
Denver, CO, USIf Covid-19 takes hold in the US, it will spread
OPINION ON FT.COM
What should be done about the coronavirus?
Gavyn Davieslooks at the tools macro
policymakers have to fight the disease’s impact
http://www.ft.com/coronavirus
UK Budget must borrow to spend
Chancellor Rishi Sunak should not raise taxes
in his first Budget, writesHoward Shore
http://www.ft.com/opinion‘That oven-ready trade deal will
have to defrost’China’s candidate has
a deep understandingof Wipo’s strategic goal
There is no factual basis in the
allegation that China “steals”
intellectual property and tries to
“control” the World Intellectual
Property Organisation (“Don’t give
Beijing control of intellectual property
group”, Comment, February 24). The
truth is, instead of control, China has
contributed to global IP protection.
China’s continuous investment in
science and technology for 40-plus
years has enabled it to move from a big
manufacturer to a major innovator. It
is now the world’s second-largest
investor in research and development,
top applicant for patents and third
largest holder of valid patents, and the
only middle-income economy in the
top 20 in Wipo’s Global Innovation
Index. These achievements cannot be
dismissed as “stealing”.
The aforementioned allegation has
led to the current campaign for the top
office of Wipo being politicised, in
which some are being pressurised into
withdrawing support for China’s
candidate, Wang Binying. This is
undermining the principle of fair and
professional competition. The fact is,
Ms Wang has worked in Wipo for
nearly 30 years and served as deputy
head for 10 years. She has a deep
understanding of Wipo’s strategic goal,
company culture, the challenges and
vision for the future. She is the
strongest of all the candidates, highly
respected by her colleagues, and
recognised extensively by member
states for her leadership and executive
capability. China joined Wipo more
than 30 years ago and has since
engaged in international co-operation
and been committed to helping other
developing countries seek development
through IP. By nominating a candidate
for the top office of Wipo, China hopes
to make greater contribution to global
IP protection.
The allegations that China has gained
“control” over four UN specialised
agencies and “often steer the UN
agenda to suit its interests” are even
more absurd. As the largest developing
country and second largest contributor
to the UN budget, China is supporting
the UN and contributing to multilateral
co-operation by nominating high-
calibre professionals to work for the
UN. The Chinese nationals currently
heading some offices are international
civil servants who are elected by and
act in the common wills of member
states. They have outstanding
capabilities and professional
achievements, and follow the principle
of objectivity and neutrality. It is in fact
the accuser that is always attempting to
steer the UN agenda to suit its own
interests.
In this day and age, such bullying
behaviour and power politics should be
rejected by all. The candidates for
director-general of Wipo deserve an
objective, fair and professional
campaign.
Liu Xiaoming
Ambassador of China to the UKMARCH 3 2020 Section:Features Time: 2/3/2020 - 18: 56 User: dana.prince Page Name: LEADER, Part,Page,Edition: LON, 10 , 1