An economist’s ranking of the best and worst leaders of 2023 | David Woo

The world is entering into a new age of nationalism in which the outcome for countries with and without competent political leaders will become even more extreme. With the growing confrontation of the unipolar vs multipolar world, which countries have the best and the worst political leaders right now? Is Biden a better leader for the US than Putin is for Russia? How does Xi Jinping fare against Modi? What about Rishi Sunak, Justin Trudeau, and Anthony Albanese? What about Lula da Silva? In this video I will try to answer these questions using 3 quantifiable metrics that measure economic growth and development. I look lThe results of my ranking of the best and worst world leaders will surprise you. David Woo, a former top-ranked Wall Street global macro strategist tells it as it is. You may not agree with everything he says but he will make you reassess everything you thought you knew.

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#politics #leadership #geopolitics
00:00 Introduction
00:48 The new age of nationalism is here
03:08 What makes a good head of state
06:03 A new framework for ranking political leadership
14:37 So who is the worst leader?

If there is a single take-way from 2023 it is  that rivalry between nations is intensifying. In the new age of nationalism, the outcome  for countries with and without competent   political leaders will become even more extreme.  Which countries have the best and the  worst political leaders right now? 

Is Biden a better leader for the US  than Putin is for Russia? How does Xi   Jinping fare against Modi? What about Rishi  Sunak, Justin Trudeau, and Anthony Albanese? In this video I will try to answer these  questions using 3 quantifiable metrics.   The results of my analysis will surprise you. —–

Gordon Brown, ex British prime minister,  summarized the zeitgeist of our time when   he said that nationalism is  the new ideology of our age. According to Brown, the hyper-globalisation of the   last 30 years is giving way to  what he calls “lowbalisation”:   a globalisation-lite defined by near-shoring,  friend-shoring and shortening supply chains.

Brown observes that, against this backdrop,  nationalism is replacing neoliberalism,   otherwise known as the Washington consensus,  as the dominant ideology of the age.    Brown, like many people on the left, is concerned  about the rise of nationalism that played a major  

Role behind the two world wars of the last century  that killed 100 million people between them.  I am not as pessimistic as Gordon Brown  about nationalism in the 21st century.   I believe national feelings, when channeled in  a positive way, can help bring people together,  

Especially in ethnically diverse countries,  to work towards a shared common good. I think   national identification can give  people a sense of purpose.    However, I agree with Brown about what the demise   of the Washington consensus means for  the national decision-making process:   When globalization was on the rise, economic  considerations drove political decision-making. 

Today, with nationalism on the rise, political  considerations are driving economic decisions.    Is this a bad thing?    It can be but it does not have to be.    For example, the new reality might force  politicians to work harder to serving the   interest of all citizens, and  not just the economic elite.   

In my mind, only one thing is  certain about the age of nationalism   The fortune of any country will depend ever more  on the quality of its political leaders.    And the difference in outcomes  for countries with and without   good political leaders will be even more extreme.  

My contention is that the quality of political  leaders has never been more important    So which countries have the best political  leaders and which the worst right now? ——- Before we delve into the answer, it is necessary to define what makes  a good or even great political leader   

By political leaders, I mean  of course the heads of states,   whether they be presidents, prime ministers,  or in the case of Germany, the chancellor.    A good leader needs to have a clear  vision for his or her country that   serves the interest of the majority  of the citizens of that country.   

A clear vision is necessary to  give direction and set goals    But having a clear vision is not enough.  A good leader has to be able to  turn his or her vision into reality   To do so, a good leader needs to be a  good communicator, because half of the  

Game is about convincing others that his  or her vision is right for the country    The other half of the game is about  assembling a strong team of competent   people to execute the plan, the  policies. In short, to get it done  

So a good leader needs to make wise  appointments. You are only as good as your team.   Many people think that integrity and moral  fiber are important qualities in a good leader   I don’t disagree but I think we should be   careful not to exaggerate the  importance of these qualities   

Integrity matters only insofar that  a corrupt leader who can be bought or   blackmailed can harm the interest  of the majority of the citizens.    To me, more important than integrity is courage,   courage to make unpopular decisions,  courage to take on entrenched interests.   

But these qualities that we want from our  political leaders are difficult to quantify.    Is French President Emmanuele  Macron a better communicator   than Canadian Prime Minister Justin Trudeau?    Does Chinese President Xi Jinping have a clearer  vision for China than Vladimir Putin for Russia?   

Is US President Joe Biden less corrupt  than Brazilian president Lula da Silva?    Does Indian Prime Minister Narendra Modi have more   courage than Australian Prime  Minister Anthony Albanese?    If there are no straightforward  ways to answer these questions,   how can we produce an objective  ranking of these leaders?   

Unless of course we only focus  on the ends and not the means.    I don’t know about you, but I think when  it comes to judging our presidents and   prime ministers, the only thing  that should matter is results.    In my opinion, there are no excuses  for failure for those with enough  

Hubris to seek the highest office of the land.    In the age of nationalism, competition  between countries will be greater than   ever as will be the stakes.  There is no room for error.    Political leaders shouldn’t get  any points for just trying.   

Now let’s build a result-oriented framework  for ranking our political leaders.  ———- How should we go about ranking the  performance of our political leaders?   We need metrics, ideally quantifiable metrics  that we won’t have any difficulty agreeing on.    Economic growth is important, quantifiable  and comparable across countries.  

Economic growth is important because  without it there is no possibility   of improving the standard of  living of the average citizen  Sure, you can tax the rich to give to the poor but without economic growth even the  rich will become poor eventually.   

Also, in a world in which every  country is striving to grow faster,   if you don’t grow you will just be left behind.    Indeed, economic growth matters, arguably  even more so in the age of nationalism.    In my view, economic growth  should the most important  

Metric for judging the relative  success of our political leaders  So what does economic growth in 2023  tell us about our political leaders?   Given India, China, and Indonesia were the 3  fastest growing major economies in the world,   one might think that Narendra Modi,  Xi Jinping and Indonesian President  

Joko Widodo were good leaders  for their countries (Chart 1) Based on this logic, one might also decide  that former Argentinian President Alberto   Fernandez and German Chancellor Olaf  Scholz were poor leaders given the rather   terrible economic growth performance  of Argentina and Germany. (Chart 1)  

But you guessed it. Absolute GDP  growth is not a good metric for   ranking the performance of political leaders   This is because economic  theories tell us to expect   poor countries to grow faster than rich countries   If lower middle income countries like  India or upper middle income countries  

Like China and Indonesia grew faster  than high income countries like Germany,   it says more about the relatively  low levels of labor productivity in   these fast growing countries than  the competency of their leaders.    A more useful metric is the difference between  economic growth and trend economic growth.   

On this chart I have plotted the difference  between GDP growth in 2023 and average GDP   growth over the previous 10 years for the  19 sovereign members of the G20. (Chart 2) Brazil, Mexico, Russia and Japan grew  faster in 2023 than their growth norm. In contrast, Argentina, Saudi Arabia,

Germany and Turkey grew more slowly than  they did in the previous decade years?  Using this metric, India drops  down from1st place to 6th place, while China falls from 2nd place to 15th place.   The US is in the 9th place,  right in the middle of the pack.  

So does this mean that we can declare  President Lula da Silva , Lopez Obrador,   and Putin the best political leaders in 2023?    Not so quick.  ————- What about the quality of growth? A political leader can in theory juice  the economy by taking on more debt,

In other words by borrowing from future growth.    Every political leader does this  at times but some political leaders   use fiscal policy more aggressively than others.   What you observe on this chart is the  the cyclically adjusted primary balance,   primary balance because it  excludes interest payments,  

As a share of GDP for members of the G20 Club,  as calculated by the international monetary Fund   What you can see is that it varies greatly.   The US, Japan and China are running massive  cyclically adjusted primary deficits,   whereas Mexico is running a primary surplus.  

Since our focus is on what political leaders did  or did not do to boost economic growth in 2023, we   should look at the difference in the primary  balance between 2023 and the previous year.    What we see here is that Brazil,   Turkey, Russia and the US considerably  loosened their fiscal policy in 2023.

  In the case of Russia, this is understandable.   Wars are expensive. Russia in fighting  a war that Moscow views as existential   which means that Russia is prepared to  pay any price, economic or otherwise,   to continue the war until victory.    The good news for Russia is that Putin’s  fiscal prudence over the past 10 years and more  

Means that Russia has one of the lowest levels  of public debt in the world as a share of GDP.   This means Russia has room to run up its debt.  There are no such excuses for Lula, Turkish  president Erdogan, and of course Joe Biden  

For different reasons, each of  these leaders have resorted to   fiscal excess to pander to their political bases.   Indeed, one of the great economic ironies  of 2023 is that the deterioration of the   US fiscal balance is nearly  as great as that of Russia. At least in this respect, Putin objectively was a  

Much better leader for Russia  than Biden was for the US.    Three political leaders who deserve  positive mentions are Italian Prime   Minister Giorgia Meloni, Alberto Fernandez, and  Australian primie Minister Anthony Albanese.    Under their watch, Italy, Argentina and Australia   all witnessed an improvement of their  cyclically adjusted primary balance.     

Meloni defied her critics and passed a budget  for 2023 that put Italy on a stronger fiscal   footing that in time will allow her  to pursue a more pro-growth policy.    Albanese is also proving to be a pragmatic leader.

If it weren’t for the tight fiscal ship he ran  in 2023, inflation might have gone out of control   and the Reserve Bank of Australia would have had  to resort to much more aggressive interest rate   tightening that would have undoubtedly tipped the  economy into a recession.  ——-

But economic growth has no meaning for the  welfare of the citizens unless it creates   jobs so that people can better their  lives and those of their families.    In this sense, changes in the unemployment  rate are a good measure of whether economic   policies of political leaders lead to  improved lives for the average citizen. 

  When we look at the change in the unemployment  rate for the G20 countries in 2023,   it is reassuring to see that in  Brazil, Russia and even Turkey,   countries that have loosened fiscal policy  to support growth, the unemployment rate fell In other words, the fiscal  deterioration at least did some good.  

In contrast, in the US, where fiscal  policy was similarly loosened, there   was no such effect and the unemployment  rate was unchanged on the year. (Chart 5) I have said this in other videos and I will say it again. US fiscal policy under Biden  has been nothing short of a disaster.    

It says a lot about the leadership of both Rishi  Sunak, the British Prime Minister, and Trudeau,   that the British and the Canadian economies were   among only a handful of countries that  saw an increase in unemployment rate.    I am going to cut Sunak some slack  by acknowledging the fact that he  

Inherited an economy that was nearly run to the  ground by his clueless predecessor Liz Truss.     But Trudeau has no excuses. He has been  Prime Minister since 2015. The question is   that given his poor economic policy record, why do  Canadian voters keep voting him back into office? 

And What about India? Despite the fact that the  Indian economy was the fastest growing economy in the world in 2023, it could not create jobs  faster than the growth in the labor force.    This may be why the extremely low labor  participation rate of India remains at just 40%.   

2023 was a good year for India but  it should have been a great year.    This is because India, as well as Mexico, was  the biggest beneficiary of the growing tension   between the US and China that resulted in  a surge in foreign direct investments in   India as multinational companies sought to  diversify their supply chains from China.   

Under Modi’s first term, India embarked on many   ambitious reforms. No doubt the pace  of reforms has slowed in his second   term. I suspect this won’t change as we  head into the Indian election in 2024. ——- I argued at the outset of this video that  economic growth should be the most crucial  

Metric for doing a cross-country ranking of  the performance of our political leaders.   I also argued that we need to take into  account different aspects of economic   growth to ensure that we have a  balanced and robust methodology.   We looked at 3 key aspects of economic  growth: difference from trend growth,  

The quality of growth, and whether  growth benefits many citizens.     Now we are ready to combine  them into a single ranking.    I am going to make it simple.    For each of the 19 sovereign members of the G20,  

I am just going to just add up the rankings  they received for the 3 growth attributes.    For example, Brazil was in 1st place  for difference from trend growth,   was in 19th place for quality of growth, and  1st place again for broad growth participation.   1+19+1=21.    So Brazil has 21 points.   

I am going to do the same for all 19 countries.    The political leaders of countries with the  least number of points will be winners and   those with the largest number  of points will be losers.  So here are the results: (Chart 6) Mexico, Italy, and Japan take the top  3 places, followed by Brazil in 4th. 

  Russia, Indonesia, South  Africa are tied in 5th place   India is in 8th place   Australia took 9th place, the highest  ranking among the Anglo-Saxon countries    South Korea is in 10th place   Next come the US, China, Canada  and the UK tied in 11th place.  Argentina and France are tied in 15th place.  

Turkey is in 17th place.    Germany, in 18th place, is dead last.    Saudi Arabia is excluded from the  final ranking given the IMF does not   publish its estimates of the kingdom’s  cyclically adjusted primary balance.    Before I tell you what I think about these  results, I want to state the obvious:  

This is far from being a perfect ranking  of the performance of political leaders.    The ranking is only based on what is  observable in 2023. Many actions of   political leaders in 2023 have consequences  that will only be felt in the future.  

Another obvious problem with the  ranking is that it does not take   into account of the non-economic  performance of political leaders.    However, in defense of my focus on the economy,   I would point out that in surveys  after surveys across countries,   voters say that economics related issues  are the most important issues for them. 

  Another shortcoming of the ranking  is that it does not adjust for luck.    Luck is as important for countries  than it is for individuals.   For example, as I already mentioned,  both the Mexican and Indian economies   are huge beneficiaries of the growing  tension between the US and China.   

Another example is the Japanese economy  that got a big boost from a very weak   yen in 2023 that was the result of interest  rate increases by the rest of the world.    These developments made AMLO,   Modi, and Japanese prime minster Fumio  Kashida the luckiest leaders in 2023.   

In contrast, Anthony Albanese and South  Korean president Yoon Suk Yeol were less   lucky as the weakness of the Chinese economy  weighed on their economies more than others.    But leadership is also about how  to deal with luck, good or bad.    The fact that Australia still finished in the  

Top half of our ranking says much  about the leadership of Albanese.    The same is true about Italy’s Giorgia Meloni.    However astonishing is the fact that Italy  finished in second place while Germany in   last place, it comes down to a stark difference  in leadership between Meloni and Olaf Scholz. 

Whereas Meloni has turned out to be a  better Prime Minister than expected, Scholz has turned out to be a terrible  leader in every possible way.    There is a clear voter regret in Germany, with  his party SPD only polling an embarrassing  

15% right now. For 20024, Scholz needs to  ditch the dangerous Green Party and join   forces with the CDU before the economic damage  he is doing to Germany becomes permanent.    But what about the US, China and Russia? Biden, Xi  and Putin? How did they fare against each other?   

Russia finished ahead of both  the US and China in the ranking.    I think this result speaks for itself. Two  years into the Ukraine war and given the   massive sanctions that the west has thrown  at Russia, the fact that the Russian economy  

Is widely expected to grow 3% in 2023 is a  testament of Putin’s impressive leadership.    I don’t think there is  another way of looking at it,   regardless of whether you think he was  right or wrong to have invaded Ukraine.    The US and China are tied in 11th place.   

But both Biden and Xi Jinping should  be probably much lower in the ranking.    Biden because his foreign policy  has done more to destabilize the   world than under any US president in memory.    Future historians will not forget his  decision to fight to the last Ukrainian  

And his mollycoddling of Iran that is likely  behind the Hamas attack on Israel on Oct 7.  What about Xi Jinping? He finished 11th place  in the ranking only because 2022 was such a terrible year for him and for China  that 2023 could not be much worse.   

What happened to China over the  past 2 years raises not only   serious questions about Xi’s leadership  but China’s entire governance system    I have no idea if Xi’s centralization  of power and the decision making process   around himself are because he is power  hungry or that he believes it will serve  

The best interest of the majority  of China’s 1.4 billion citizens.    Frankly speaking I don’t care and nor should you.    We should only judge him by the results.    And the results so far have been terrible.    Examples include the delayed re-opening  of the Chinese economy in 2022,  

And the delayed response to  China’s housing crisis in 2023.   Warren Buffet says that only when tides go  out you can see who has been swimming naked.    There is nothing like a crisis that allows  us to assess our political leaders.    Between Biden, Putin and Xi,  

I think it should be very clear which  two have been swimming naked all along.