The Great Reset | Tuomas Malinen | Negotiator 54

Summary

The channel’s audience voted for the year’s closing episode and chose Tuomas Malinen on the Great Reset. He argues the V-shaped recovery is artificial — built on record global debt and debt moratoria that suspend normal bankruptcy law — and reads the World Economic Forum’s programme as a path towards greater state control sold on attractive language. The episode covers central bank digital currency and why it makes the central bank a competitor to the banks it supervises, Acemoglu and Robinson’s narrow corridor, and Malinen’s own recipe: take the economic hit, keep the freedoms.

What is discussed

• Voted in by the audience. Over half of the channel’s YouTube poll asked for Malinen again as the year’s closing episode. He notes that a search for an economist to debate him on this subject has so far failed — one agreed and then withdrew on hearing the topic.
• The recovery is a construction. Global debt is heading past 350 per cent of GDP with an unprecedented single-year jump, and moratoria have stopped creditors filing for bankruptcy — the European Banking Authority’s first report found French, Spanish and Italian banks making heavy use of them.
• Zombies multiply. A zombie company cannot service its debt costs from operating profit, and suspending bankruptcy law manufactures them. What happens when the moratoria end is the open question.
• Malinen’s reading of the WEF. The stated goals — reducing inequality, environmental values — he considers entirely worth supporting; his objection is to what he sees underneath them, a consistent increase in state control, with the EU recovery fund as the clearest instance.
• The green revolution argument. In zero-rate conditions companies have already made the green investments they consider profitable, so directed public money supports the ones that would not otherwise happen.
• Belt and Road as the parallel. Countries deep in debt to China are now being offered forgiveness in exchange for the financed projects themselves — debt forgiveness always has a price.
• Central bank digital currency. Simply an account for everyone at the central bank — which makes it the commercial banks’ competitor while remaining their supervisor and lender of last resort, and in a banking crisis could sweep every account into it.
• A hundred years of freedom. Slavery ended technically in the 1860s, a middle class arose from the 1910s, and human societies are five thousand years old — the freedoms to own, move, try and take risks are very recent.
• The narrow corridor. Acemoglu and Robinson’s corridor runs between anarchy and despotism, and stays open only while citizens keep the state in their grip; Miettinen ties it back to Why Nations Fail and an episode with Mika Maliranta.
• You will own nothing. The 2030 vision Malinen objects to most is renting everything from an unnamed entity — his question is simply who that entity is and from whom you would be renting.
• His definition of fascism. Not camps but the complete union of corporate power and the state, power concentrated in an elite, and individual freedom sacrificed to the common good — which is what he considers the forum to be advancing.
• Fear is the mechanism. People are frightened of the virus, of an economic crisis, of losing their jobs — understandably; but if the answer is to ask the state for protection, the scenario follows on its own.
• China, already there. Reports in autumn 2020 of the accounts of Chinese critics of the party being frozen — not credit scoring but political scoring, with housing, food and employment as the levers.
• Islands of freedom. Gold-backed banking and crypto as counterweights to central bank dominance, plus well-capitalised banks that cannot be absorbed — and, at national level, a local currency; Malinen says he would not have said this a year ago.
• What Europe should be. A union of independent states with a common trading area and payment systems, without the concentration of power in Brussels.
• Where the recovery actually comes from. Technology. Malinen has studied two hundred years of growth and reads physics as a hobby; he expects large breakthroughs in energy, movement and flight, and notes that private companies already invest heavily in green technology without the state directing it.
• The closing warning. Miettinen’s summary — social justice yes, investment yes, a fourth industrial revolution yes, but not on those terms — and Malinen’s: next year will be a year of struggle, and much of where the world goes after the pandemic gets decided in it.

Watch

The recording lives on the Neuvottelija channel: The Great Reset | Tuomas Malinen | Neuvottelija 54. A Finnish edition of this episode is published at www.neuvottelija.fi.