Welcome to The Spectator, I am this summer’s research intern (Part 2)
If you are from Part 1, thank you very much for reading. If you are new, as you may derive from the title, I have already rocked (I mean walked) my way to 22 Old Queen Street since 25 June.
Presently, I am working with a group of wonderful people, gaining valuable experiences and shaping myself to be a prim and proper journalist/fact-checker. Lucky me, I was in time for the magazine’s 190th anniversary celebration, watched the RAF centenary flypast on the Spectator building’s rooftop, and I pray (and work) hard to pitch and publish a story (or more) by the end of my stint.
As mentioned, The Spectator adopts a no-CV policy and interested applicants are to complete an aptitude test making up of various tasks. It took me a week or so to complete three of them (please find the answers in Part 1), and a while more for the remaining on an IMF document and the German army, simply because my mind was undercharged. I received a notice that my Mead fellowship application was through to semi-final (I went on to be a finalist thereafter) around the same time I applied for this intern position. So my mental power was literally divded into two and as a result, I begin to lose track and break down in the toilet.
Yes, the German army made me cry (but also made me laughed, as I came across this article recently). The only thing I could think of when I read “Provide a one-page summary on the parlous state of the German military”, was NATO. Looking back, I only have flimsy recollection of how I filled in the rest of the blanks but if there’s a task which I can re-do, perhaps this will be the one.
Here is my answer. Again, please note that it is not perfect, just enough to kill my summer in a meaningful way and do pardon me if you feel like I am spilling beer on your brand new shirt as you read.
5045 German main battle tanks (MBT) observed the developing, in 1989, of the peaceful revolution which led to the reunification of West and East Germany. Their theoretical purpose was to offer the first line of resistance against the Eastern Bloc, allotting time for the NATO Alliance to organise its response.
25 years later, their numbers have shrunk to 225, a number that would be impressive for a military parade — Russians showcased a little more than a 100 MBTs at their recent Victory Parades — but not for a contingent aiming to protect a country.
These figures tell a good chunk of the story; the German’s spending in military forces has diminished over the years and floats well below the GDP 2% required by the NATO bylaws. However, as usual, figures do not tell the whole story. German military’s roots are deeply connected with the nation’s most ominous historical period, when under the Nazi’s leadership, the Wehrmacht– as the military was known then, waged war across the Europe.
The problematic relationship between Germany and its military in the aftermath of World War II has been softened by the threat posed by the Eastern Bloc, only to explode once the threat was no more.
The country overlooked for nearly half a century the traditions of the military, for the sake of its self-defense, after safely putting the newly-regulated Bundeswehr – as the military is currently called — under the control of the Parliament. With the dissolution of the Soviet Union, the spending was reduced, and the Bundeswehr stopped using conscription and became made of volunteers, a fact that later brought the public opinion to believe it was mostly composed of right-wing nostalgic. The Bundeswehr, in turn, became more vocal about the need for military values and traditions, which seem to be found in the country’s controversial past only.
A recent white paper addressed the future of the Bundeswehr, recognising the need to bring Germany’s military up to speed with the other NATO countries. From 2014, Germany deployed its soldiers overseas in peace keeping and peace enforcing missions and is part of quick response forces deployable against the threat of further Russian expansion towards Europe and the Baltic Sea, showing awareness of its new missions, which changed from preparing to defend the land from invasion to target possible threats abroad at an early stage.
Such difference in scope implies untapped resources and capabilities but there is no doubt that Germany could deploy them, if it so wishes, as it did after 1972 Olympic Games with the creation of the GSG-9 counterterrorism unit. The main hurdle between the current Bundeswehr and its future modern self, rests in the wide distrust of the people towards uniforms, a mere corollary of the wider issue of accepting the country’s past, which can be addressed only one step at a time. By turning around the “we come second and conquer through economy” mentality, Germany will be able to put at use its professional soldiers, provided that they will be equipped with adequate gears and not with broomsticks — yes, it happened at a NATO readiness exercise. It’s a long journey ahead, but it appears to be the only viable option.
Last but not least, here is my answer to the final task, “Summarise this IMF examination of Piketty’s argument (Extra points: find any independent validation of his r > g theory)”. I worked in a lab before so I am no stranger to certain domain-specific terms on academic papers and I am not afraid to formulate them into simpler expressions for easy reading. However, as I do not have an economics/finance background, I did ask a friend to proofread the task after I finished (and he could not stop laughing at my Two Cows Economics entry), to make sure I am not citing the wrong sources or in the worst-case scenario, misunderstood Piketty totally.
A rock-star economist according to the Financial Times, Thomas Piketty is a scholar who focuses his interests on wealth inequalities.
If his thoughts from “Capital in the Twenty-First Century” were included in the Two Cows Economics, they would probably go as follows:
“You have two cows. The first inherits acres of lands from its family and will prosper until the end of time. The other cow either tolerates the first or promotes a revolution to prosper until the end of the time”,
it literally means that in a capitalistic economy where wealth is mainly accumulated through intergenerational savings, there is a need to strike a balance between the growth of wealth and salaries or, from the society’s perspective, the growth of capital and income.
Figures at hand, Piketty claims that in time, the growth is bound to become unbalanced, and to create more inequality, widening the gap between those who own the capital and those who live on their income… Marx, anyone?
Moving from (classical) economy towards sociology, the author then argues how wealth inequality can last as long as it is politically sustainable, implying that a certain amount of inequality is tolerable while it may not be the case for another amount. If all of the above is true, a progressive tax on wealth will accomplish to keep the balance or, at least, the unbalance at tolerable levels.
According to a paper by IMF’s Carlos Goes, however, while apparently sound and logic, Piketty’s conclusions have yet to be proven empirically. Using growth rate as a proxy for the growth of incomes, and the other variables introduced by Picketty such as capital, labour and savings rate, Goes tried to validate Piketty’s propositions using a model accounting for decades of data from 19 advanced economies.
Surprisingly, no noteworthy evidence was found in the gap between capital growth and growth rate influence the capital share in national income. Moreover, data suggest that inequality decreases in three countries out of four when the gap between the growth of capital and the growth rate widens, thus disproving Piketty’s theory.
The main contribution of Piketty’s work is that it brought to the attention of policymakers the inequality topic from a scientific perspective. Some of its flaws were identified by Goes when his study failed to ex-post validate Piketty’s propositions or when he addresses the theme of the cyclicality of savings rate.
Due to the resonance of Piketty’s book, its content has been scrutinised at lengths by many, and despite its staunch defense by many illustrious liberal economists, Piketty’s conclusions seem to be flawed in several points that need to be addressed:
- government bonds cannot be a proxy of capital growth: the larger asset is, the more of it is invested in much riskier business, as shown by the asset classes held by top billionaires, according to CNBC;
- Piketty’s data usage has been consistently deemed not transparent to say the least by those who ventured to examine the sources he tapped upon to draw his conclusions, according to Forbes;
- Piketty did not consider government transfers in his data sets, based on another article by Forbes;
- a tax hitting on capital would instinctively reduce the portion of it available for investments and, consequently, to create occupation; and
- the tolerance to inequality needs to be entirely proved on a scientific level, to further postulate the need for a capital taxto avoid the breaking of the system.
Piketty’s theory would have seemed old even to Gordon Gekko, when he remembers that the country built by the Carnegies and the Mellons is no more — a remark that can very well be read as a reminder that the old capitalism based on asset inheriting was already history of the past in the Eighties, and that theories against it should belong to the same place.
After all, how many second-generation billionaires are there in the famous Forbes ranking? Five in the top 20, it seems: meaning that outstanding labour can, in time and with great luck, become capital.
Paraphrasing Chris Rock, who said that, “if poor people knew how rich rich people are, there would be riots on the streets”, it seems that the best option, for the time being, would be to raise a curtain between the two cows and let them mind their own problems unaware of the problems of the other. However, the blue-collar cow had already seen the other and its issue needs to be tackled. Just not, according also to Goes, looking into the gap between capital growth and growth rate.
I don’t mean to show off, as I said many times, my answers are not and will never be perfect. I just hope whoever that reads this, will realise The Spectator truly values meritocracy. Since the very beginning, I was not asked about my background, what have I done in the past, what did I study or if an influencer had written me a recommendation letter. Everything is based on what I can do and how to make the best out of what I know.
I am not speaking in favour of the magazine but the truth is, in London where journalism is so competitive (about 40 people applied for the Spectator research intern position this year and I am very very lucky to be one of three who got selected) and relational, an opportunity like this is indeed once in a life time, especially for the BAMEs or someone (like myself) who gradually became clueless on the best way to sell my skills on a cover letter.
It’s not the end of the World if you are not selected this year, just keep your faith and try again later. I got rejected by the BBC journalism trainee scheme twice (2017 & 2018); I was on the longlist for this year’s Paul McClean Graduate Trainee Scheme but didn’t make it further; ironically The Telegraph said no to me twice too (so when I was offered this internship, my first reaction was WTF rather than WTS — Welcome to the Spectator) :P
