The case against US infrastructure mega-spendingOctober 2016 There is consensus among economists, politicians and commentators that America needs a massive infrastructure investment programme – even the two presidential candidates agree. In the name of balance, our lead feature sets out the counter argument. Cover storyThe case against US infrastructure mega-spendingFinally, our book review returns to 2008, when a fresher faced Barack Obama beat Hillary Clinton to the Democratic nomination. Game Change – a must read – has plenty of juicy insights for those obsessed with the current race for the US presidency. Also at the rear of the magazine, as usual, our spies report back from their latest conference crashing exploits. And our ever-popular infographic seems to show, mirroring the cover story, that higher infrastructure spending by American states does not lead to faster economic growth or even better infrastructure. David Folkerts-Landau Group Chief Economist and Global Head of ResearchWelcome to the ninth issue of Konzept – Deutsche Bank Research’s flagship magazine. On our last cover was a Rubik’s cube in European yellow and blue with the squares arranged as a question mark. That was before Britain voted to leave the EU. Had we known the result we may have chosen an exclamation mark instead. But four months on, markets have recovered from their initial shock – sterling’s recent slide notwithstanding – while economic data seem to have ignored the referendum completely. Do we risk making a similar mistake again in the US presidential election? After Brexit it would be brave to write off Donald Trump. Hence in this issue we focus instead on one intriguing element of the race: that in spite of disagreeing on almost everything, Hillary Clinton and Donald Trump have both included massive infrastructure investment plans in their manifestos. In fact, almost everyone in America seems to agree that huge fiscal spending programmes are a good thing. In our cover feature John Tierney makes the case against this consensus view.Not that we’re bearish on the prospects for America – far from it. Our chief global strategist, Binky Chadha, argues in another feature that labour productivity growth may soon pick up again thanks to a stronger dollar and tight labour market. This is another contrarian view and has major implications for asset classes globally. We also take issue with those blaming a lack of corporate capital spending for America’s economic woes and in addition have a few suggestions on the thorny issue of company tax reform.As ever we include some shorter pieces at the front of the magazine to whet your appetite. One article close to my heart is about how new and better data are accelerating gender diversity initiatives – particularly at financial services firms. Other articles range from an explanation of how to compare the signals from credit and equity derivatives when forecasting market returns, to the popularity of movies in China. Rineesh Bansal also argues why stocks are behaving more like bonds these days and bonds like stocks. To send feedback, or to contact any of the authors, please get in touch via your usual Deutsche Bank representative, or write to the team at research.haus@db.com.EditorialKonzept Articles06 ECB responsible for lack of reform08Equities and bonds—or bonds and equities10 Taxing companies—US and them12 Data and diversity—strength in numbers14 Listening to derivatives—turn down the vol16 China at the movies—stars in their eyes Columns44 Book review—Game Change45 Conference spy—commodities46 Infographic—infrastructure spending and growthFeaturesAmerica’s fiscal consensus— a bridge too far 19Productivity— the comeback kid 38The age of US capital 30Konzept Konzept6Konzept7the mid-1930s. One has to ask whether the ECB’s aggressive, unconventional and untested monetary policy culminating in negative rates has contributed to Europe’s woes. Never has a region depended so much on the dogma of technocrats not directly elected. Do we want to risk the most important economic project in history? Future generations will not forgive our naïve trust in the ECB’s monetary policy.But not only is the weak economy raising doubts about monetary policy and its effectiveness, more worrisome is that Europe’s problems are structural rather than cyclical. Peripheral countries do not generate enough growth to reduce high levels of indebtedness and unemployment. This is due to a lack of reforms in labour markets, legal systems, welfare systems and tax systems. Governments haven’t acted because they haven’t had to. The ECB’s ultra-loose policy and promise to do “whatever it takes” have made kicking the can down the road the more attractive option – at least in the short term.Politicians need compelling reasons to risk their job on reforms, particularly those in the periphery who lack broad support. Up until July 2012, urgency was provided by exorbitantly high interest rate