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	“Alternative Facts” and US Economic Policy by Simon Johnson Project Syndicate, agencies USA   US President Donald Trump has an obvious problem with data that he doesn’t like, as he showed on his first full day in office, by attacking the media for reporting accurately the size of the crowd that attended his inauguration. It should be no less obvious that this same reliance on “alternative facts” poses a severe threat in the realm of economic policymaking.   The number of people who attended the inauguration – far less than Trump wanted to believe – could easily be inferred from the available evidence (including photographs of the National Mall and the number of subway riders). But the discussion has now broadened to the more serious question of whether millions of people voted illegally, as Trump has insisted since the election. He has implicitly conceded that he lost the popular vote by nearly three million votes, but maintained, despite all evidence to the contrary, that massive voter fraud occurred.   Trump is calling for a full investigation, and Democrats should welcome any opportunity to have experts weigh the evidence carefully. But the real danger must be fully appreciated: Trump is not alone in his self-serving disregard for reality. Other prominent Republicans, including in the House of Representatives, have been living in their own world for some time.   The most obvious example is climate change. An overwhelming majority of scientists agree that the climate is changing – and that human activity, including carbon dioxide emissions, plays a role. In any scientific or other investigation, there is always some margin of error or room for reasonable disagreement. But the Republican strategy has long been to claim that the climate is not changing or that any change has nothing to do with people and their cars, factories, and power plants.   Those who believe this now have power in the United States. Exactly what they will do with (or to) the federal Environmental Protection Agency remains to be seen, but the initial signs are that scientific researchers will be muzzled or their activities shut down. Similarly, NASA’s important earth-science initiatives may be shunted off to other government agencies – where they can be defunded and left to die.   This is the strategy that begins to emerge as a form of government: deny there is a problem (despite the facts), cut funding for politically inexpedient research, and claim that all outcomes are rosy.   The first application of this approach to economic policy came quickly, when Trump’s press secretary, Sean Spicer, refused to say what the unemployment rate is – dodging a question that would have required him to state the actual number. The official unemployment rate, as measured by the Bureau of Labor Statistics (BLS), currently stands at 4.7%. But Trump has repeatedly claimed that true unemployment is 42% – a number based on the assumption that everyone who does not have a job, including retired people and students, would like to work.   One can now expect the BLS to face some funding problems along with various kinds of political pressure. Under former President George W. Bush, for example, access to documents in EPA libraries was – at least at one point – restricted. And the Congressional Budget Office has already been instructed by congressional Republicans to change how it calculates the effects of tax cuts, in order to make them appear more beneficial for the economy than government spending programs.   These issues will come to a head when Trump begins to appoint people to the Board of Governors of the Federal Reserve System. There are currently two vacancies on the seven-member board – and more positions may open up soon (the terms of both the chair and vice chair expire early next year).   It seems entirely plausible that Trump will prefer people who think the “true” unemployment rate is 42% to those who share the view that it is 4.7%. This and other strange beliefs could have a major effect on monetary policy – for example, by tending to strengthen the hand of those who want to keep interest rates lower for longer.   The US has had a slow and difficult recovery from the financial crisis of 2008; everyone can agree on that. But do we want a Fed that looks at the facts in deciding when and how much to raise interest rates? Or do we want officials whose “facts” are completely at odds with the actual state of the economy? If the US gets the latter, the result will be high inflation – not a good outcome for most Americans. The last time that happened, in the 1970s, lower-income people bore the brunt of the pain.   If Trump insists on dispensing with fact-based decision-making, a similar outcome can be expected. And many of those who voted for him can expect the worst of it.   * Simon Johnson, is a former chief economist of the IMF, a professor at MIT Sloan, a senior fellow at the Peterson Institute for International Economics. Visit the related web page
	Secret Companies allow corrupt cash to flood key Real Estate Markets by Inter Press Service, agencies   The governments of Australia, Canada, the UK and the US need to close glaring legal loopholes to prevent the corrupt elite from laundering the proceeds of grand corruption in their local real estate markets, a major anti-corruption watchdog urges.   The Berlin-based Transparency International (TI), a global anti-corruption movement working in over 100 countries, has issued a new report, Doors Wide Open: Corruption and Real Estate in Key Markets, in which it identifies the 10 main problems related to real estate and money laundering in those four countries and makes recommendations on how to address them.   The report focuses on four countries that are known hot-spots for the corrupt to invest and launder money.   “Governments must close the loopholes that allow corrupt politicians, civil servants and business executives to be able to hide stolen wealth through the purchase of expensive houses in London, New York, Sydney and Vancouver,” said José Ugaz, Chair of Transparency International.   “The failure to deliver on their anti-corruption commitments feeds poverty and inequality while the corrupt enjoy lives of luxury,” Ugaz added.   Real estate has long provided a way for individuals to secretly launder or invest stolen money and other illicitly gained funds, TI informs, adding that according to the Financial Action Task Force (FATF), real estate accounted for up to 30 per cent of criminal assets confiscated worldwide between 2011 and 2013.   “Not only do expensive apartments in New York, London or Sydney raise the social status of their owners and allow them to live in luxury, they are also an easy and convenient place to hide hundreds of millions of dollars from criminal investigators, tax authorities or others tracking criminal behaviour and the proceeds of crime.”   The international anti-corruption group found that despite anti-corruption promises by government in the countries covered in the report, current rules and practices have failed to detect and prevent money laundering in the real estate sector.   “Strikingly, Australia, Canada and the US rely almost exclusively on banks to stop money laundering, even though a slew of middlemen including real estate agents, accountants, tax planners, lawyers and others participate in deal-making.“   This makes all cash deals, which do not require the involvement of a bank and which represent a significant proportion of high-end sales made to overseas investors, especially difficult to track, says TI.   Only the UK requires that checks are made on people selling real estate in order to identify suspicious activity and identify the real owners of the property.   However, TI emphasises that the same checks by real estate agents are not required on the buyers – where the highest risk of money laundering exists – leaving a gaping hole in the sector’s defences against corrupt money.   The report also finds that offshore companies pose a serious risk in all four countries because they are able to purchase property without needing to disclose any information relating to who ultimately owns and controls them to any government authority. The UK has committed to establish a registry to collect and publish this information.   None of the countries analysed have tests in place for professionals working in the real estate sector in order to assess whether they are aware of their anti-money laundering obligations, TI informs and adds that very little information is published regarding any sanctions applied to real estate agents, lawyers, accountants and notaries for facilitating money laundering into the real estate sector.   Transparency International makes the following recommendations:   • Governments should require all middlemen to identify and keep records of the real, beneficial owners of legal entities, trusts and other legal arrangements in real estate sales.   • Governments should require that both domestic and foreign politically-exposed-persons, their family members and close associates purchasing property be automatically identified as high-risk clients. Additional preventive measures such as enhanced due diligence should be implemented.   • Governments should require foreign companies that wish to purchase property to provide beneficial ownership information. This information should be kept in a central beneficial ownership registry and made available to competent authorities and the public in open data format.   • Governments should require real estate agents to register with a designated public authority for anti-money laundering supervision in order to operate in the real estate sector, and be tested to show they know the rules. Anti-money laundering training should be made compulsory upon registration.   • Governments and professional associations should introduce rules requiring lawyers, accountants and other professionals who are not registered with the relevant anti-money laundering supervisor to be prohibited from engaging in real estate deals. Visit the related web page
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