American politics

Trump’s legacy—the shame and the opportunity

The invasion of the Capitol and the Democrats’ victory in Georgia will change the course of the Biden presidency

Four years ago Donald Trump stood in front of the Capitol building to be sworn into office and promised to end “American carnage”. 

His term is concluding with a sitting president urging a mob to march on Congress—and then praising it after it had resorted to violence. 

Be in no doubt that Mr Trump is the author of this lethal attack on the heart of American democracy. His lies fed the grievance, his disregard for the constitution focused it on Congress and his demagoguery lit the fuse. 

Pictures of the mob storming the Capitol, gleefully broadcast in Moscow and Beijing just as they were lamented in Berlin and Paris, are the defining images of Mr Trump’s unAmerican presidency.

The Capitol violence pretended to be a show of power. In fact it masked two defeats. While Mr Trump’s supporters were breaking and entering, Congress was certifying the results of the president’s incontrovertible loss in November. 

While the mob was smashing windows, Democrats were celebrating a pair of unlikely victories in Georgia that will give them control of the Senate. The mob’s grievances will reverberate through the Republican Party as it finds itself in opposition. And that will have consequences for the presidency of Joe Biden, which begins on January 20th.

Stand back from the nonsense about stolen elections, and the scale of Republicans’ failure under Mr Trump becomes clear. Having won the White House and retained majorities in Congress in 2016, defeat in Georgia means that the party has lost it all just four years later. The last time that happened to Republicans was in 1892, when news of Benjamin Harrison’s humiliation travelled by telegraph.

Normally, when a political party suffers a reverse on such a scale it learns some lessons and comes back stronger. That is what the Republicans did after Barry Goldwater’s defeat in 1964, and the Democrats after Walter Mondale lost in 1984.

Reinvention will be harder this time. Even in defeat, Mr Trump’s approval rating among Republicans has hovered around 90%—far better than George W. Bush’s 65% in the last month of his presidency. Mr Trump has exploited this popularity to create the myth that he won the presidential election. YouGov’s polling for The Economist finds that 64% of Republican voters think Mr Biden’s victory should be blocked by Congress.

Perhaps 70% of Republicans in the House and a quarter in the Senate connived in his conspiracy by vowing to attempt just that—to their shame, many of them persisted even after the storming of Congress. As an anti-democratic stunt, it had no precedent in the modern era (nor any chance of success). 

And yet it is also a sign of Mr Trump’s malign grip. After seeing how he ended the careers of loyalists like Jeff Sessions and almost single-handedly elected others, like Florida’s governor, Ron DeSantis, those facing primaries remain terrified of provoking him.

The election myth that Mr Trump has spun may thus have broken the feedback loop needed for the party to change. Ditching a failed leader and broken strategy is one thing. 

Abandoning someone whom you and most of your friends think is the rightful president, and whose power was taken away in a gigantic fraud by your political enemies, is something else entirely.

If something good is to come from this week’s insurrection, it will be that this way of thinking loses some of its purchase. The sight of a Trump supporter lounging in the Speaker’s chair should horrify Republican voters who like to think theirs is the party of order and of the constitution. 

To hear Mr Trump inciting riots on Capitol Hill may persuade parts of middle America to turn their back on him for good.

For Mr Biden, much depends on whether Trump-sceptic Republicans in the Senate share those conclusions. That is because the victories for Jon Ossoff and Raphael Warnock, the first African-American to be elected as a Democrat to the Senate from the South, have suddenly opened up the possibility that government in Washington, dc, will be less plagued by Republican obstruction and Trumpian stunts.

A week ago, when the conventional view was that the Senate would remain in Republican control, it looked as if the ambitions of Mr Biden’s administration would be limited to what he could accomplish through executive orders and appointments to regulatory agencies. 

A 50-50 split in the Senate, with the vice-president, Kamala Harris, casting the tiebreaking vote, is as narrow a majority as it is possible to get. It will not miraculously let Mr Biden bring about the sweeping reforms many Democrats would like, but it will make a difference.

For example, Mr Biden will be able to get confirmation of his choices for the judiciary and for his cabinet. Control of the legislative agenda in the Senate will pass from the Republicans to the Democrats. 

Mitch McConnell, the outgoing Senate majority leader who spoke powerfully this week against Mr Trump’s institutional vandalism, was a master of blocking votes that might divide his caucus. That created the gridlock in Washington that voters usually blame on the president’s party.

Democrats may also be able to get some measures through the Senate via reconciliation, a procedural quirk that allows budget bills to pass with a majority of one or more, rather than the 60 votes needed to avoid a filibuster, which will remain, however much the leftist wing of the party would like to drop it.

Where Republicans come in is in the scope for cross-party votes. The more they feel that Middle America was horrified by the riot, the more likely that some of them will reject the nihilism of blocking everything for the sake of it. 

The more their caucus is at war with itself, the freer they will be to do their part to restore faith in the republic by accomplishing something.

For Republicans, the cost of the cursed deal their party did with Mr Trump has never been clearer. The results in November provided signs that a reformed party could win national elections again. 

American voters remain wary of big government and have not handed one party more than two consecutive terms in the White House since 1992. 

But to become successful and, more important, to strengthen America’s democracy once more rather than pose a threat to it, they need to cast off Mr Trump. 

For, in addition to being a loser of historic proportions, he has proved himself willing to incite carnage in the Capitol. 


Millions of new jobs will emerge in health care and tech as society ages and digital transformation changes the nature of work



Taking care of an aging population—and their pets—and working on the nation’s digital transformation are likely to offer the most well-paying job opportunities in the next decade.

Those filling jobs will increasingly be older adults, and the health-care and high-tech fields are among those poised for the most growth, according to the Labor Department’s projections for employment in 2029. 

The agency’s economists review scholarly articles, expert interviews, historical data and other sources to estimate demand for specific occupations, combined with macroeconomic modeling to anticipate changes in the economy’s structure.

For workers to thrive over the coming decade they can expect to need more education and be willing to refresh their skills.

Meanwhile, home aide and restaurant jobs are expected to grow by the millions, but that work tends to pay among the lowest wages. Individuals looking for work in office support and manufacturing fields will find fewer positions.

Health-Care Jobs Lead Growth

Employment in health-care occupations is expected to grow 15% in the next decade, well ahead of 3.7% overall growth, according to the Labor Department’s study, which compares expected growth to 2019 levels and doesn’t attempt to account for the pandemic and related economic downturn.

Part of that growth—driven by baby-boomer aging—will occur in better paying jobs, such as nurse practitioners. 

Their numbers will rise by more than 50%, an increase of 111,000. Nurse practitioners, who usually require a master’s degree, were paid a median annual salary of $109,820 in 2019. 

Physician-assistant jobs, also requiring a master’s degree and paying about $112,000, are expected to grow 31.3%. Registered nurses, a job that usually requires a bachelor’s degree and paid about $73,000 in 2019, will see their ranks swell by 220,000, an increase of 7%.

Over the next decade, home-health aide jobs will grow the most out of nearly 800 job titles, with an expected addition of 1.16 million positions, the Labor Department says. The job requires a high school diploma. 

But while the hiring pace should be strong, wages may not be. The median annual pay for the job in 2019 was $25,280, less than half the median wage for all occupations.

Other jobs in the medical field will increase as well:

• Medical and health services managers—an occupation with a median annual wage of about $101,000 in 2019 and which requires a bachelor’s degree—will rise by nearly 32%.

• Not all of the trends driving the health-care boom are tied to aging. The Labor Department projects the number of psychiatrists to rise 12% by 2029. Community and social services jobs will increase by 13%, adding 350,000 jobs.

• Gains will be slower in other medical fields. Physicians and surgeons, among the best paying jobs, will only grow at about the same rate as the overall economy. And don’t expect a baby boom. Obstetricians and pediatricians will shrink in number as the population ages.

High Tech, Energy Jobs Boom

The shift to a digital economy will drive demand for high-tech workers. Computer and math occupations will grow 12.1% in the next decade—three times faster than the overall workforce.

Software developers, a role that paid a median wage of $107,500 in 2019, will be among four occupations adding the most jobs in the next decade, growing by 316,000. There will also be a heightened need to protect data, driving a 30% boost in the number of information security analysts, a job that paid about $100,000 in 2019.

Energy jobs are also among the fastest-growing occupations. Wind turbine technicians and solar photovoltaic installers will see their numbers rise by more than 50% from 2019 levels, though that is from a base of a few thousand. Meanwhile, jobs in oil and natural gas—for example, derrick operators, roustabouts, and rotary drill operators—will rise nearly as much, as the U.S. shale boom continues.

The outlook is mixed in other occupations:

• As demand for companionship increases, so too will the need to care for pets. The number of veterinarians and vet assistants will rise 16% from 2019 levels. Jobs in animal-care work—groomers, dog-sitters and the like—will see their numbers grow 23%, while animal-trainer employment will increase 13%.

• Other occupations are expected to lose jobs over the next decade. The office and administrative support sector, which includes secretaries, administrative assistants, bookkeepers, and customer service representatives, is projected to lose nearly 1 million jobs, as machine learning and other forms of automation supplant clerical workers. The shift toward remote work caused by the pandemic could accelerate that change.

• As robotics technology improves, the Labor Department projects the economy to shed 420,000 production jobs. The e-commerce boom, which increased during the pandemic, will also shrink sales jobs. Cashiers will see their numbers fall by 270,000.

U.S. Workforce Ages

By 2029, more than a quarter of the U.S. workforce will be 55 or older, up from 12% in 1999 and 23.4% last year. 

This is driven in part by the size of the baby boom generation and people living and working longer, says William F. Ziebell, chief executive of the benefits and human resources consulting division at Gallagher, a global insurance brokerage, risk management and consulting services firm.

The growing share of older workers will increase demand for workplace flexibility, something the coronavirus pandemic has helped accelerate. “Retiring on time doesn’t necessarily mean going off to Arizona or Florida—it could mean moving into more of a part-time role,” says Mr. Ziebell.

Greater generational diversity could strain traditional organizational structures, says Karin Kimbrough, chief economist at professional networking site LinkedIn.

Employers may have to adapt—a 35-year-old could be running a team of people with 60-year-olds on it. Employees, in turn, will see their career paths take a different shape. 

“People might find their careers aren’t quite so linear,” says Ms. Kimbrough. “You could pick up a career later in life and be very comfortable not being that high up. But these workers will still be engaged, which is better for the economy and society.”

The recruiting process will likely span broader geographies and criteria as a result, requiring workers to have to compete more by demonstrating their skills, with educational pedigree and experience becoming less important than they are today.

Preparing for the Job Market of 2030

Even with the focus on skills, the faster-growing occupations will still require more education.

Occupations that require a master’s degree will grow the quickest over the next decade, projected to rise 15%. 

That compares with around 6% growth among jobs requiring all other degree types. 

Jobs that demand a bachelor’s degree for entry-level positions will increase the most in absolute terms, by 2.4 million jobs, compared with an additional 400,000 jobs that require a master’s degree.

However, employers are increasingly looking for workers who take initiative in updating their skills through, for example, online certification programs.

A decade ago, employers were skeptical of such programs, says Brian Kropp, chief of human resources research at consulting firm Gartner. 

“Now that perspective is very different,” he says. 

The programs show people have in-demand skill sets and that they value improving themselves through continuous learning.

The half-life of skills is quickening in pace, Mr. Kropp says. 

The number of skills employers are looking for has surged, with companies listing about 33% more skills on job ads in 2020 than they did in 2017, according to a Gartner analysis. 

Only about half of the skills demanded in 2017 ads still feature in current job ads. Top technology companies, for example, increasingly seek experience with “mobile operating systems” and DataDog, a cloud-based applications platform. 

Demand for skills involving “user interface,” meanwhile, is on the wane. 

US cash mountain: the agony of choice

Companies face big dilemma of what to do with all their money

Sujeet Indap

Slack co-founder Stewart Butterfield insisted on raising far more VC than his software company required in the mid-2010s © Bloomberg

In the mid-2010s, Stewart Butterfield, the co-founder of Slack Technologies, insisted on raising far more venture capital than his young software company needed. 

His theory was that, since VC cash was bountiful at advantageous terms, it would be irresponsible not to take it. 

That dynamic seemed to play out in 2020 in the public company capital markets too. 

Rock-bottom interest rates sent high-grade companies scurrying into debt markets to raise cash that was superfluous.

The 30 biggest investment-grade offerings last year in the US raised $289bn. 

Those cash machines Apple and Google together borrowed $18bn. 

But with the money now in the bank — something like an extra $1.5tn across the S&P 500 — companies face a far harder task: deciding what to do with it all.

According to the “pecking order” theory in corporate finance, companies should prefer their own profits for financing their operations. 

Another school of thought contends that companies can lower their overall cost of capital and increase their value by issuing debt.

Yields for investment-grade companies typically fell below 2 per cent in 2020. 

Accessing bond markets allowed companies to refinance existing debt not only at lower interest rates but at maturities pushed out several years.

The temptation of cheap cash is to spend it riskily. 

Using the money for dividends or buybacks increases net leverage. 

But, predictably, some private equity investors are transacting so-called dividend recaps, where debt funds big paydays.

Companies can use new and old cash balances to deleverage their balance sheets, too. 

Bank of America analysts recently highlighted drugstore chain CVS. 

The company raised billions in early 2020 as a safeguard. 

As conditions eased later in the year, CVS offered to buy $6bn in outstanding debt, with $4bn of that coming from new borrowings and the rest reducing the cash balance.

Acquisitions are another way to reduce cash. 

In September, Salesforce, a tech company thriving in the work-from-home world, announced an expensive $28bn agreed offer for a cutting-edge disrupter. 

Appositely, the target was none other than Mr Butterfield’s Slack Technologies. 

Pension funds need a radical rethink

Fragmented schemes with limited investment horizons are detrimental to savers and the economy

Robin Harding

© James Ferguson

Good pensions finance good infrastructure. 

Good infrastructure pays for good pensions. 

This crucial relationship only gets noticed when they both go missing — as the US, UK and several other countries are finding out. 

Having largely dismantled the defined benefit corporate pensions of yesteryear, they now struggle to turn fragmented individual pensions into the long-term investments their savers and their economies require. 

Fixing this is vital. It will not be easy.

Given the human lifespan, pension savings are the natural source of capital that can be tied up for 30, 40 or 50 years. 

In return, they earn the premium that comes from volatile or illiquid assets, which is all the more valuable when interest rates are low. 

But as Bank of England governor Andrew Bailey noted in a speech, something has gone wrong. 

“We live in a time where there appears to be no shortage of aggregate saving, but investment is weak,” he said. UK pension funds allocate just 3 per cent of their resources to unlisted equity.

The UK hopes to address this problem by easing regulations, allowing defined contribution pension funds — where individuals bear the investment risk — to hold more illiquid assets, and loosening caps on fees to allow for complicated investments such as infrastructure. 

But even if such changes have no unintended consequences, they will not address the fundamental challenge of a fragmented pension system, where decisions fall to individuals and it is hard to link their lifespan to the assets they own.

It is time to consider a more radical transformation, away from employer-based pensions towards large, permanent vehicles that can pour money into infrastructure and private equity if that makes sense. 

Traditional pension funds for public employees and sovereign wealth funds such as Temasek and the Government Investment Corporation of Singapore already do this. 

This is not a matter of who takes the investment risk — for better or worse, defined contribution is here to stay — but of how the money is managed.

A look at the options available to me as a Financial Times employee through its defined contribution pension plan makes the difficulty clear. 

There are about 200 different equity, bond and property funds, from a range of providers, actively or passively managed, covering different regions of the world. 

They all show yesterday’s market price. The choice is left to the individual.

This creates a series of problems. The best investment brains in the world spend their days trying to figure out which asset or region will outperform. An individual has no chance — although they may choose to avoid any option that seems risky.

Even if there was an infrastructure fund, or a venture capital fund, and the default channelled savers towards them, this structure would pose a problem. 

The fund managers have no idea who their investors are, or when they are likely to retire. They know it is pension money, and therefore likely to be “sticky”, but they still have to provide regular prices for the fund and keep cash on hand in case some investors suddenly cash out. 

The structure is simply not suitable for illiquid, long-term investments, to the detriment of savers and the economy.

It is worth asking, also, whether employer-based pensions still make sense. When employers took the investment risk, the arrangement was logical, but all it creates now is fragmentation. 

Every time people change jobs, they get new pensions; small plans have high fixed costs. There are economies of scale: the smaller and more numerous the schemes, the more gets wasted, and the harder it is to make sophisticated investments. 

Giving everyone their own personal pensions is a mistake for the same reason.

Consider, instead, the following structure. The government licenses a modest number of not-for-profit pension plans, perhaps based on existing endowments, trusts or public sector funds. 

Employers would decide their pension contributions, as they do today, but then make the payments to whichever plan their employee selects. 

The plan would decide how to invest the money, subject to regulations, and employees could not withdraw the funds until retirement.

This would still be a defined contribution system but it would work quite differently. 

The pension plans would quickly become large, giving them economies of scale, lower costs and the resources to handle sophisticated investments. 

They would know exactly when they needed to pay out pensions and could plan liquidity accordingly. 

The burden on companies and individuals would disappear. This is a structure for low-cost, long-term investment.

It may seem paternalistic. 

Certainly, individuals who want to manage their own investments should be allowed to. 

But consider also where the current set-up is heading. 

The OECD recently warned governments against tapping into private pensions to fund pet projects such as renewable energy. 

There is growing demand for state investment to build infrastructure and for public pensions because private provision is inadequate.

The old defined benefit pension plans were great economic institutions: sophisticated pools of private capital with a long investment horizon. 

Sadly, the security they offered pensioners is no longer achievable. 

We must strive to offer defined contribution pensions of similar quality instead. 

New Covid variant will increase stress on global economy and widen inequality

Policymakers need to take more action to tackle rising risk that short-term problems will become embedded

Mohamed El-Erian

A pharmacist puts a plaster on the arm of a New York nursing home resident after administering a dose of the BioNTech/Pfizer Covid-19 vaccine © Bloomberg

As the new Covid-19 strain triggers tighter restrictions on economic activity and limits even more the movement of people, it has become increasingly clear that the road to vaccine-induced immunity will now have more potholes.

Already it was a journey that was likely to add further stress to the great disconnect between a buoyant and profitable Wall Street and a struggling Main Street.

The change should force policymakers and markets to pay more attention to three other features of this Covid era that are also consequential for the longer-term: the unusually large dispersion in performance in big economies, a significant worsening in inequality and deeper economic scarring.

Because it spreads much faster, the new Covid-19 variant has altered the health risk assessments of both individuals and governments. 

This inevitably imposes even bigger pressures on economic and social interactions even though the mutation is not thought, at least as of now, to change the treatment of the disease or immunity formation. 

Economists have no choice but to push out their expectations for a 2021 economic recovery.

Inevitably the new strain will amplify the dispersion in economic performance around the world. Europe is experiencing further disruptions to the movement of people and goods and accelerating the fall into a double-dip recession. 

So it is probable that we will see previously unthinkable differences in the growth rates of big economies. This may well include as much as a 20 percentage point annualised difference between the most stressed G7 economies and China for 2020, according to my calculations. 

Even within the G7, growth dispersion will be at exceptionally high levels.

Once again, an already excessive level of inequality in many countries will worsen. The burden of the mutated virus environment is suffered disproportionately by the disadvantaged segments of society.

Once again, the wealthy are likely to benefit if central banks feel compelled yet again to inject liquidity into markets. Once again, large companies with access to capital markets will benefit at the expense of smaller ones who rely on banks and local lenders.

Once again, the inequality of opportunity will rise as more schools go online and the young unemployed face a higher risk of the type of prolonged joblessness that can render them unemployable over the medium term.

Because the new Covid-19 variant both worsens the immediate economic hit and delays the subsequent recovery, short-term problems are more likely to become structural ones, and, thus, harder to solve.

If left unchecked, this would translate for most countries into lower longer-term productivity growth, higher household financial insecurity and a higher risk of disorderly financial volatility. This also risks undermining the social fabric and fuel greater political polarisation.

Meanwhile, on the global stage, dispersion in economic performance would aggravate cross-border tensions and lead to further weaponisation of trade tariffs and investment sanctions as well as other “beggar-thy-neighbour” policies.

Policymakers were already facing a very complex task in simultaneously delivering improved public health, restoring normal economic and social interactions and respecting individual freedoms. They now need to take on even bigger challenges.

Governments must urgently speed up pro-growth domestic reforms, rebalance their mix of fiscal-monetary policy and strengthen social safety nets. At the international level, we need much better multilateral policy consultation and co-ordination.

Central banks need to carefully consider their response to greater volatility in markets, including currencies, as the appropriate choices vary significantly from country to country. 

On financial sector issues, they must improve their understanding and prudential supervision of non-banks lest continued excessive risk-taking there undermine economic wellbeing.

As we head into 2021, investors will likely maintain an attitude that has served them well this year: put your faith in central banks’ ability to shield financial markets from any and all economic and corporate shocks.

This will encourage more irresponsible risk-taking by investors and debt issuers. It will also fuel investment approaches that fail to account for a longer term in which governments and central banks themselves face massive and persistent policy and operational challenges.

The writer is president of Queens’ College, Cambridge university, and adviser to Allianz and Gramercy