Weekend reading links

1. Following Paris, Brussels, Dhaka, Orlando, and Istanbul, the French Riviera town of Nice was the latest to suffer in the growing list of terror attacks. In the context of the terror attack by an unsophisticated attacker who crudely rammed a plain truck through a crowd of holiday revelers, killing 84 people, the NYT has an excellent article which highlights the challenge posed,

And yet this act, whatever its particulars, represents the culmination of long-building trends, in which terror tactics become more rudimentary and the targets more random. It is forcing a recognition that security and intelligence measures, long the core of Western thinking, are of limited utility and can never provide total safety from an individual who decides to kill. This is shifting pressure onto more abstract and unproven counterterrorism methods that do not promise to halt violence but merely ameliorate underlying political or social drivers. And it is straining the politics of Western countries, where leaders have spent the past 15 years describing terrorism as a war that could be won. The populations targeted by terrorism are confronting a difficult new reality, in which the danger can be managed or policed but perhaps never entirely overcome...

In 2008, Pakistani militants killed 166 people in Mumbai, India, attacking what experts call “soft” targets: places such as hotels and train stations that are populated but, because of their seeming randomness, rarely defended. At security conferences in Western capitals, officials and analysts began to worry about whether they could prevent a “Mumbai-style attack” in their own countries. Then came the rise of “lone wolf” attackers who acted on their own, without training from or often even contact with the terrorist groups they claimed to serve. Attacks are planned within the minds of individuals whose intentions remain hidden until the shooting begins.

Such attacks predate the Islamic State, though the group emphasizes them, disseminating propaganda that provides tactical guidance and ideological justification available to anyone with an internet connection. The use of a truck in Nice was new only in the specifics and in the degree to which it has forced a realization increasingly difficult to ignore: In the world of lone wolves and Mumbai-style attacks, more barricades and metal detectors and monitoring programs can improve security, but can’t guarantee it absolutely.

2.  In the context of the failed military coup in Turkey, MR points to this paper by Jonathan Powell and Clayton Thyne which clearly indicates that while coups are far less frequent today, they are much more likely to succeed,

3. The third big global story is the rise of right-wing populism that underpinned the Brexit vote and the rise of Donald Trump in the US. Dani Rodrik draws the distinction between globalization 'shocks' from immigration and trade and foreign investments. He argues that the former sets the stage for the emergence of right-wing parties (much of Europe) and the latter of left-wing ones (Latin America).

He also makes the case for the left to embrace an alternative to unfettered free market capitalism and hyper-globalization,

Consider just a few examples: Anat Admati and Simon Johnson have advocated radical banking reforms; Thomas Piketty and Tony Atkinson have proposed a rich menu of policies to deal with inequality at the national level; Mariana Mazzucato and Ha-Joon Chang have written insightfully on how to deploy the public sector to foster inclusive innovation;Joseph Stiglitz and José Antonio Ocampo have proposed global reforms; Brad DeLong, Jeffrey Sachs, and Lawrence Summers (the very same!) have argued for long-term public investment in infrastructure and the green economy. There are enough elements here for building a programmatic economic response from the left.

A crucial difference between the right and the left is that the right thrives on deepening divisions in society – “us” versus “them” – while the left, when successful, overcomes these cleavages through reforms that bridge them. Hence the paradox that earlier waves of reforms from the left – Keynesianism, social democracy, the welfare state – both saved capitalism from itself and effectively rendered themselves superfluous. Absent such a response again, the field will be left wide open for populists and far-right groups, who will lead the world – as they always have – to deeper division and more frequent conflict.

4. In a reflection of the rise of "alternative" investment class in a world of ultra-low yields, Brookfield, the Toronto-based asset manager which has $250 bn under management, has raised a $14 bn fund to invest in infrastructure. It would be the largest single commitment to a sector. Brookfield, which bought the owner of London's Canary Wharf, allocates 60% of its investments to developed and the rest to emerging markets, and follows a counter-cyclical investment strategy of buying in distressed periods. It has as partners some of the world's largest SWF's like Singapore's GIC and Qatar Investment Authority and has been acquiring assets in Latin America, including a 2013 acquisition of an integrated system of railroads, ports and inland terminals in Brazil and is investing $7bn to expand the port and terminals.

5. Finally, to Ireland, which claims to have increased its GDP by 26% in 2015. On the back of corporate tax inversions and other forms of corporate re-engineering, Irish exports rose 34%, imports 22%, and investment by 27%. For example, when AerCap, the world's biggest aircraft leasing company, moved its fleet to Ireland, the country gained 35 billion euros in output, without any real economic impact. But even with its super-low taxation rate, corporates have not been satisfied - corporates based in Ireland made $100 bn in profits in 2012, of which, instead of paying $12.5 bn in taxes, they actually paid just $4 bn!

Alphaville puts the Irish growth story in perspective.