The A-List

Historically, the drive for tax reform in the US has focused on the individual income tax. The ideal, epitomised by the Tax Reform Act of 1986, has been to broaden the tax base and thereby reduce statutory tax rates in a revenue-neutral manner.

American observers, however, now believe that the so-called fiscal cliff deal that President Barack Obama and congressional Republicans agreed to on the first day of the year has effectively taken individual income tax reform off the table indefinitely.

Thus it appears that there is no potential for a tax reform deal in the traditional sense. But there is a growing need for it on the corporate side of the ledger that may yet become a vehicle for meaningful tax reform. Read more

Currency wars may be all the rage but they are merely a symptom of a much more deep-rooted problem. We are witnessing the return of economic nationalism. At the 2009 London Group of 20 summit, it seemed for a fleeting moment that nations had learnt how to work together to solve the world’s economic and financial problems. That dream no longer holds. Persistent economic stagnation has left our political leaders increasingly looking for national solutions to what have become deeply-entrenched international problems.

It is not so much that nations are becoming deliberately more protectionist. Rather, the cheerleaders for globalisation have gone into hiding. They can no longer so easily claim that the forces of internationalisation have brought benefits to all. Without those cheerleaders, however, the temptation to pursue economic nationalism becomes ever greater. Read more

It is easier to make money than sense out of China’s banks. These big four state-owned commercial banks are huge profit centres, but many who see vulnerabilities in China’s economy think these banks are the problem when they actually reflect symptoms of distortions elsewhere. China’s banks are in fact too secure – and their performance could be improved by strengthening competition and breaking up the “too big to manage” entities.

Many critics cite inflexible interest rates that are deemed too low relative to inflation as the issue. Others point to excessive government interventions fomenting risks such as a property bubble. Still others remind us the state-owned banking behemoths are sitting on a mountain of household deposits that feed into temptations to misuse captive funds given lax governance safeguards. Read more

Having solved its urgent problem, the eurozone needs to deal with a new dilemma: that of an appreciating currency. There is a growing number of countries seeking to weaken their own currencies. Indeed, in the last six months, the euro has appreciated by 11 per cent against the US dollar and by 8 per cent in nominal trade weighted terms. It has appreciated by a lot more against the Japanese yen. Read more

It may seem hard not to be pessimistic about the global battle to manage the huge risks of climate change, a defining challenge of this century. The most recent UN climate change summit in Doha made only modest progress. It made crystal clear that the pace of international action is not consistent with the scale and urgency of the challenge the world faces.

Given this backdrop, it is not hard to see why there is so much pessimism. However, if one takes a step back and examines what is happening at national and provincial levels, a wholly different picture is emerging. Read more

David Cameron made a well-received intervention here in Davos on his priorities for the Group of Eight, which he chairs this year, but inevitably the focus of attention has been the speech he made about Europe, before leaving London.

He was wise to lay his egg at home, as it would have been in the lead balloon category here. Davos Man, and his fur-clad trophy wife, are europhiles, almost to a fault. The eurosceptic tendency is very thin on the ice. You might think that there would be a natural constituency in the alpine confederation, but the Swiss who show up in Davos are typically those who bemoan their lack of influence in the councils of Europe and wish their compatriots weren’t, well, so damned Swiss about it all. Read more

In London, the G20 has rather faded from view since Gordon Brown’s great event in Docklands in the spring of 2009, when a $1tn global stimulus was announced. (We await a final audit of this figure). It is hard to bring to mind any solid achievements to which it can claim credit since then. But in Davos, where Gs x & y are part of the currency of debate over breakfast, it is still alive and kicking. Indeed one reason why there is such a large Russian presence here is that Russia holds the presidency this year. They will be followed by the Australians in 2014. After digesting that recherché fact, who dare suggest that one does not learn interesting things in the Swiss mountains? Read more

David Cameron’s speech on Europe was predominantly tactical. So, too, are the reactions from Berlin and Paris. But the British prime minister’s speech raises questions of broad significance for the whole of the European Union. Should the EU be redefined as a permanently two-level edifice? And if so, how? Read more

At a session on the crisis of confidence in business the moderator told us that after the initial presentations there would be plenty of time “for your interrogatives”. As the presenters talked movingly of the crucial need for businesses to communicate clearly and fully with their stakeholders, I had the leisure to ponder why the word “question” has become somehow too blunt and vulgar to use in polite company. Read more

David Cameron is making three assumptions in seeking to change the basis of Britain’s EU membership and then put this “new settlement” to an in-out referendum. That our partners want Britain in at any price. That they will negotiate a new treaty in which Britain’s demands can be easily accommodated. And that the British government will be able to determine the timetable. All these assumptions are highly questionable. Read more