March of the Middle Class

THE Group of 20 economic summit in Hamburg does not start till Friday but already the protesters have gathered.

There has been a ‘ G20 not welcome’ march, a ‘ Hamburg shows attitude’ one, and the authorities are particularly concerned about a ‘ Welcome to Hell’ protest planned for Thursday.

The pictures of people wearing masks depicting world leaders have already appeared in news bulletins. Doubtless there will be other, less benign pictures in the next few days.

We live in a world where people are allowed to make public protests, and that, I suppose, is to the good. But the attacks are troubling. For a start the G20 may just be a talking shop, but it is a welcome one because it is not just one for the rich world.

It brings together both the leaders of the main developed G7 countries with the leaders of emerging economies, including China and India, but also representatives from Africa and Latin America.

These countries create more than 80pc of world GDP. Getting the leaders of the developed world together with those of the emerging one must be worthwhile. Next, it is troubling because of the odd coalition of protesters. On the one hand there are the anti-Trump groups attacking US policy on the environment. Angela Merkel has acknowledged their concerns, pushing the G20 towards meeting the carbon-reducing targets of the 2015 Paris Agreement from which Trump has withdrawn the US. But he is also against free trade and that is one of the targets of the protesters too.

Oxfam was there in force over the weekend attacking inequality. Which is fine, except that global inequality has declined more rapidly in the past 30 years than at any stage in human history. A study by the Brookings Institution in Washington last week showed that by 2020 more than half the world’s population will have middle class living standards. In another decade there could be more than 5bn in the global middle class. Thanks to trade and better communications (and, let’s be frank, investment from China) Africa is the fastest-growing continent.

So as the protests mount, remember that for the emerging world what has happened to the global economy is a huge success story. And freedom of trade creates wealth.

The great Hanseatic League seaport of Hamburg was built in the Middle Ages on wealth generated by a free-trade zone from the Baltic to the North Sea – and is still, on most measures, Germany’s richest city.

Lessons from America

THE so-called ‘great rotation’ was evident yesterday before US markets closed ahead of Independence Day. This is the idea that as the high-tech fever wanes, investors will switch money out of the fast-growing but very highly-rated technology companies and into lower-rated but stodgier sectors, such as banks and oil companies.

The shares of the latter climbed again, pushing the Dow Jones index to another high. By contrast, the Nasdaq, which reflects the tech stocks, languished. In a sense, American investors are becoming a bit more like British and European ones, for the weighting of high-tech stocks is much lower on this side of the Atlantic.

More interesting is the resilience of the US market in the face of rising interest rates.

It shows that if the tightening of monetary policy is done slowly and with due warning it need not undermine confidence.

There is a lesson here for the Bank of England and the European Central Bank.

4th of July Brexit boost?

INDEPENDENCE Day, the Fourth of July, is not widely celebrated in the UK for obvious reasons. But here are some numbers, courtesy of Statista.

Some 219m Americans plan to celebrate it, with two-thirds having a barbecue or picnic. According to Nielsen, the consumer research group, last year they grilled nearly $400m of chicken, and a similar amount of hamburger meat. They drank 61m cases of domestic beer and 850m bottles of imported beer. That means two-and-a-half bottles for everyone in the land. Who says Americans don’t take their drinking seriously?

And isn’t this an export opportunity, postBrexit, to persuade them to drink more bitter instead of that stuff they manage with at the moment?