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Project 2025

TO: Editors of The Economist:

Thank you for publishing the essay by Paul Dans. After endless “explanations” and “denials” of what is in Project 2025, we now have it straight from the horse’s mouth.

Dans underscores the necessity of reform citing the looming U.S. financial crisis. The country has $36 trillion in debt. The 2025 budget includes $7 trillion in expenditure, $1.9 trillion more than expected revenue, thereby increasing the debt by $1.9 trillion. Without aligning federal spending and revenue, the country faces economic stagnation and a loss of confidence by the creditors financing the debt.

Not all that $7 trillion is being well spent. An overhaul is long overdue. But a woodchipper and a chain saw are not the tools for the job. The ill-conceived attack on waste and fraud in the federal bureaucracy has produced its own waste – of time and money. By violating laws and norms, the so-called DOGE is upending countless lives of government employees and the people they serve, and having to back pedal on many of its initiatives. The loss of institutional knowledge is a serious setback for future functioning of the government; the baby is being thrown out with the bathwater.

What needs to be reformed is how we govern. There is only one president. As Dans wrote: the executive power is invested in the president. “Execute” is a synonym for “administer;” the president administers – runs – the government, in accordance with the laws set by Congress, whose job it is to “legislate.” The judicial branch adjudicates controversaries. That is why there are three branches of government specified in the Constitution.

The policies of the current administration are clearly designed to benefit higher income families at the expense of lower income families. Looking for cuts in nutrition programs or health services or education, while extending a massive tax cut for wealthy taxpayers, is indefensible. A country that has been blessed with unprecedented wealth should continue to find resources for providing those threatened services. The U.S. has the know-how and the capacity to repair physical and digital infrastructure, increase housing supply, assure adequate energy, clean the environment, improve healthcare, and fund the research that will make all these goals possible.

The entire population will benefit when all members of society have the wherewithal to enjoy comfortable and productive lives. The influence of “big money” got the country into dire straits. Restoring the vote to people rather than dollars would be a start. The amount of money spent on elections is obscene. Corporate executives and lobby-funding organizations can vote at the local library like everyone else. Repeal Citizens United and we will be on the way.

So Close: How the U.S. Ceded Solar Energy Leadership to China

Bell Telephone Laboratories (better known as Bell Labs) was established in 1925 as the research and development arm of AT&T and Western Electric. Bell Labs’ scientists and engineers were responsible for innovations in electronics and telecommunications that paved the way for many of the basic essentials of modern life. Silicon transistors, fiber optics, the laser, electronic switching and the photovoltaic solar cell are all products of Bell Labs research.

In 1954 Bell Labs researchers produced the first silicon solar cell, which generates electricity when light strikes a silicon chip. The technology was too expensive for heating and lighting homes, but the U.S. Navy employed solar cell technology to power the radio transmitter on its Vanguard satellite launched in 1958, replacing heavy mercury batteries. Solar cells became a staple of the U.S. space program.

In 1973 the world oil crisis led the government to search for alternative energy sources, and funding for solar power research and development took off, involving thousands of scientists and engineers, financed principally by the new Federal Energy Research and Development Administration and the Solar Energy Research Institute.

All of that changed with the election of Ronald Reagan in 1980. His conservative government favored free markets and limited government. In his first year in office U.S. government spending on solar energy research fell by 60%. Reagan’s personal reaction was to remove the solar panels installed by President Carter on the roof of the White House. Cheap oil and reduced Federal spending forced the solar energy industry to shrink.

With a different perspective on the potential for solar energy, Germany began in the 1990s to subsidize both the manufacturers of solar panels and the consumers purchasing them. In the new century China subsidized the development of solar energy, dedicating itself to rapid growth and reduced cost. Today, China produces 77.8% of the world’s solar panels.

Germany and China recognized the necessity of government funding for scientific research. The process of discovery is expensive because it is “hit and miss;” uncertainty and long-shots are not favored by profit-oriented businesses. Initial investigation takes commitment without guarantee of success. Ironically, the history of Bell Labs proves the point: Bell Labs owed its success to its monopoly status. As a government-sanctioned monopoly, Bell Labs was free to “follow the science” without concern for profitability.

Is the U.S. playing such a role in Artificial Intelligence research? According to a 2024 report, the U.S. led other countries in number of machine learning models, private investment in AI and number of AI data centers. However, generative AI is more widely used in China than in the US. And China is the world leader in AI patents.

In January, President Trump announced the Stargate Project, a $500 billion joint venture to fund AI infrastructure, focusing on building the first data center in Texas. Stargate comprises technology partners NVIDIA, Microsoft and ARM, with financial backing from Oracle, OpenAI, Japanese Bank SoftBank and the Emirati sovereign wealth fund MGX. By 2029 the project plans to build a network of data centers across the U.S., providing the infrastructure to support AI research.

Addressing the extreme energy requirements of these data centers will benefit future renewable energy technology, reducing dependence on fossil fuels.

America, the Biblical

David Aikman worked as a journalist for Time magazine from 1971 to 1994, including time as Beijing Bureau Chief. In his book titled The Beijing Factor, published in 2003, he wrote about a group of American tourists in China attending a lecture by a scholar from the Chinese Academy of Social Sciences.

The lecturer told his audience that his academy was challenged to discover why Europe rose to dominance over China in the 17th century after lagging behind it:

At first, we thought it was because you had more powerful guns than we had. Then we thought it was because you had the best political system. Next we focused on your economic system. But in the past twenty years, we have realized that the heart of your culture is your religion.                                                                        The Beijing Factor, by David Aikman, Page 5

The Chinese scholars recognized Judeo-Christian religion as a key cultural differentiator from the cultural tradition of China. Historically religion has played an essential role in Western politics and life. Nations have been founded and shattered on religious belief and religious freedom.

The American tourists listening to the Chinese scholar came from a tradition that treated religious belief as central to their daily lives. The Pew Research Center, which surveys religious practice, reported 61% of Americans believe God is all-powerful, compared to 25% in Western Europe. A 2024 U.S. survey by Public Religion Research Institute (PRRI) found “roughly three in four Americans continue to identify with a specific faith tradition, and many Americans engage in religious practice routinely,” including regular attendance at services.  A majority of Americans say that religion is important in their lives, including 13% of religiously unaffiliated.

Reference to God appeared among the writings of authors of the Constitution and Declaration of Independence, and in speeches by U.S. presidents from the country’s founding. George W. Bush’s second inaugural address proclaiming “that every man and woman on this earth has rights, and dignity, and matchless value” is drawn from the Torah of Moses. The late Rabbi Lord Jonathan Sacks, chief rabbi of the United Hebrew Congregations of the Commonwealth from 1991 to 2013, traced the adoption of Torah principles to 17th century England:

[The] historic encounter between Christians and the Hebrew Bible in the seventeenth century … led to the birth of liberty in both England and America. The Calvinists and Puritans who led both the English and American revolutions were saturated in the politics of the Hebrew Bible, especially of the book of Devarim [Deuteronomy]. In fact, the modern world offers as near as history comes to a controlled experiment in liberty. Of the four revolutions that mark modernity, two, the English (1640s) and American (1776), were based on the Hebrew Bible, and two, the French and the Russian, were based on secular philosophy, Rousseau and Marx respectively. The first two led to liberty. The second two ended in the suppression of liberty: in France in the Reign of Terror (1793-94), in Russia in the form of Stalinist Communism.

The U.S. Constitution and laws draw heavily on Judeo-Christian teachings. The Torah’s foundational principles of equality before the law, individual rights, the importance of justice and the rule of law are reflected in the Constitution and Bill of Rights: “that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” The Ten Commandments inspired the Founding Fathers in establishing the U.S. legal system. Prohibitions against murder, theft, and lying are considered fundamental moral principles of a just society.

Deuteronomy institutes a judicial system under which all people are equal under the law. Local tribunals heard civil cases, higher courts had jurisdiction over capital crimes, and the highest court held appellate jurisdiction. Compassion was a requisite for leaders of all levels. Judges were held to the highest level of compassion and moral conduct. Judges did not always meet those standards and were themselves judged. Disputes among scholars on the meaning of God’s laws were settled under the command to “follow the multitude,” the standard for majority rule.

Specific rules are set for the minimum number of witnesses in charges against a person; courts must show no favoritism; punishment must be commensurate with the crime. The Torah’s “an eye for an eye,” not to be taken literally, expresses the principle of compensation. The Torah in total is a commentary on how people are to relate to one another. It brings a balance between individual rights and social responsibilities. Those responsibilities include taking care of the disadvantaged, protecting widows and orphans, feeding the poor, and doing unto others as you would have done to yourself. Each person shares responsibility for society as a whole. The principle of separation of church and state originated with the Mosaic Code that made civil authority independent of the priesthood. Both the Torah and the U.S. Constitution are set up to create a better society based upon solid principles and with built-in methods to prevent and correct corruption.

In rejecting rule by a monarch, the Founding Fathers chose to be governed by principles of biblical origin. Those principles are solemnly regarded and expressed with pride. The freedoms they encompass are credited with unleashing the economic power that makes the U.S. the envy of countries and people around the world. In reality, those principles often are honored only in the breach. The equality that they promised can too easily succumb to the biases of one group against another, or be usurped by wealthy individuals and corporations, potentially transforming a democratic government into an autocracy.

During Biblical times, the Prophets served as the moral conscience of both the kings and the people. The Hebrew word for Prophet is Navi which means bringer (of message), not soothsayer (forecaster of the future). In the modern USA, there are similar individuals who have acted and act as the moral conscience of the nation. They bring correcting messages to both its leaders and people as a whole.

Judeo-Christian religious practice has not been adopted by the Chinese on the recommendation of the scholars of the Academy of Social Sciences. China has come to challenge the U.S. economically, politically, and militarily. Technological innovation will define the future, and it is there that competitive advantage is most critical. Technology has long been a strong suite for the U.S., putting people on the moon, defeating disease, raising living standards, and creating things that no one had imagined before. Expanding on that record of improvement in the quality of life demands renewed devotion to those biblical principles, not least the care for those less fortunate – the poor, the sick, the alone – and reversing growing inequality. That includes reclaiming patriotism, the sense of shared belonging, unity, and a grand narrative of a great nation leading the world into the future.

Lesson Two from Brexit and Trump

One month after the 2016 U.S. presidential election, Fifty Year Perspective compared expectations and results of both the election and the U.K. vote in June 2016 on leaving the European Union, referred to as “Brexit.” The blog post, titled “Lessons of Brexit and Trump,” noted many similarities between voters favoring Brexit and those who voted for Trump.

Media polling projected that Brexit would lose and Clinton would win. The opposites occurred. Brexit passed with a 51.9% favorable vote. The U.K. finally left the European Union in January 2000, following years of negotiations in drafting the withdrawal agreement. Today 55% of adults believe it was a mistake to leave the EU; 31% believe it was right to leave; 14% are undecided.

Here is the text of the December 2016 blog post. Soon U.S. voters will reveal whether they made a mistake in 2016, or in 2020:

 

Three days after the U.S. presidential election of November 8, 2016, the British Broadcasting Corporation published an article by John Curtice comparing the outcome of the election to the vote in the U.K. on remaining in the EU, the so-called Brexit vote. Curtice is a professor of politics at Strathclyde University in Glasgow, Scotland. He began the article by remarking that the dramatic victory for Donald Trump brought a strong sense of déjà vu to many in the U.K.

Curtice mentioned several similarities between Brexit and Trump’s victory. “Both majored on concerns about immigration. Both questioned whether the existing global financial order necessarily benefitted the ordinary man in the street. And both portrayed themselves as the underdogs campaigning against an allegedly complacent and out of touch political establishment.” He attributed these stances to a group referred to in the U.K. as “left behind,” who are voters who “feel they have lost out economically in recent years.” The article compares statistics from exit polls in both the U.S. and the U.K.

Older voters, age 45 plus, favored leaving the EU, while younger voters, age 18-44 preferred to remain in the EU. In the presidential election, older voters preferred Trump; younger voters favored Hillary Clinton. In both cases the older voters were favoring a change from the current policies, under which they felt “left behind.”

Educational level divided the voters in similar ways. “In the U.K., polls suggested a majority of university graduates were keen on remaining in the EU, while those without a degree voted to leave. In the U.S., exit polls indicated college graduates were more likely to vote for Hillary Clinton, whereas those who were not college graduates inclined towards Donald Trump.” In both cases non-college graduates were more likely to reject the status quo.

Variation in voter behavior by race also demonstrated preference for the status quo among non-white voters. White voters favored Trump while non-white voters favored Clinton. Whites favored leaving the EU, while black and ethnic minority voters favored remaining, “put off perhaps by the Leave campaign’s focus on the issue of immigration.”

As facts turned malleable in the run-ups to the votes, the media’s polls, though close, indicated a Brexit loss and a Clinton win. When the results proved otherwise on the morning after, there was a soft chorus of “Wait a minute. If I thought this was likely to happen, I would have voted.” A close election is not the time to sit out the vote.

Close races are playing out in several countries in Europe. Anti-globalization, nationalism, and cultural and racial homogeneity are common themes. The December 4th presidential election in Austria may go to the far-right Freedom Party. The Netherlands anti-Islam Freedom Party is in a tight race in Parliamentary elections scheduled for March. Between late August and late October Germany’s federal elections will see a challenge to Angela Merkel’s Christian Democratic Union by the far-right Alternative for Germany.

France’s presidential election will be a contest between the center-right Republican party, the Socialist party, and the far-right National Front. Marine Le Pen is the candidate of the National Front. François Fillon became the Republican party candidate on November 27th. The Socialist party will choose its candidate in a primary election on January 22nd, with a runoff January 29th if no candidate receives a majority of the votes in the primary.

France’s presidential elections, which are conducted in two stages, require the winner to receive a majority of the popular vote. Assuming no candidate receives an absolute majority in the first round on April 23rd, the top two candidates face each other in the second round on May 7th. The far-right National Front candidate for president, Marine Le Pen, is polling high enough that she is expected to make it to the final round voting against either François Fillon, the centre-right Republican candidate, or the winner of the Socialist party election

Marine Le Pen is not expected to be elected president, according to polls. Similarly, polls placed the chances of Brexit and a Trump win as close, but trailing. All of Europe’s far right parties are emboldened by Brexit and Trump’s victories.

Renewable Energy Sources

Two articles appearing a few days apart in June 2024 suggest that bountiful, cheap, clean energy is on a path to achievability by mid-21st century. The June 22, 2024, edition of The Economist featured a cover story titled “Dawn of the Solar Age.” The Washington Post published an article days later titled “The Stage Is Being Set for an American Nuclear Power Revolution.”  Each article foresees rapid growth in capacity for the respective sources of clean energy.

The growth in solar energy capacity is truly exponential. Capacity doubles roughly every three years. At that rate, capacity increases tenfold every decade. As a share of total energy consumption in 2023, solar energy accounted for two percent, according to the charity Our World in Data. Other sources place that share as high as six percent. The table from Our World in Data reports world consumption in Terawatt Hours. In our homes we are familiar with paying for our own utilization of electricity in Kilowatt Hours. A watt is a measure of electrical power. A watt-hour is a measure of electrical energy supplied by one watt in one hour.

  • A Kilowatt = 1,000 Watts (One thousand)
  • A Megawatt = 1,000,000 Watts (One million)
  • A Gigawatt = 1,000,000,000 Watts (One billion)
  • A Terawatt = 1,000,000,000,000 Watts (One trillion)

A one Megawatt power plant produces 1,000 kilowatts of power as long as it’s operating at full capacity. It produces 1,000 kilowatt-hours of power each hour it operates, or 24,000 kilowatt-hours per day, and 8,670,000 kilowatt-hours per 365-day year.

The 2023 graph of energy consumption by source highlights both the minor role currently filled by solar energy, and the distance solar must go to fulfill its potential. A ten-fold increase per decade will require a number of decades before replacing current levels of fossil fuels. Solar energy will also be called upon to satisfy rapidly growing demand. As The Economist article states, in Africa alone there are 600 million people who currently have no electricity at all. Electricity is projected to be cheap enough that those people will be able to go from having no electricity to enjoying air conditioned buildings. (Click on graph to enlarge.)

Wind energy currently supplies slightly more electricity than solar. It is transitioning to ever larger turbines, longer blades, and new configurations. The growth in this source is projected to make wind energy nearly as plentiful as solar.

Production of nuclear energy is shrinking in the United States. Retired nuclear plants have not been replaced. On July 9, 2024, President Biden signed the Fire Grants and Safety Act after it was approved by the Senate on an 88 to 2 vote. The Act will reduce the time required to get nuclear permitting through the regulatory process and incentivize research into advanced nuclear reactor technologies. Former coal-fired power plants will be retrofitted for nuclear power production.

Georgia Power’s nuclear power Plant Vogtle in Waynesboro, Georgia was completed with its fourth reactor operational in April 2024. There are 94 nuclear reactors operating in 54 nuclear power plants in the United States, and none currently under construction. Of the 59 nuclear reactors under construction world-wide, 25 are in China. The Fire Grants and Safety Act is designed to reverse the trend.

Future energy for airplanes, ships, trucks, and cars requires new solutions that do not include the excessive, extra weight of batteries. Hydrogen offers a solution. Using renewable electricity, hydrogen plants extract hydrogen from water to produce what has been named green hydrogen. Billions of dollars are being invested to develop hydrogen as a fuel for transportation, without generating more pollution in this energy-intensive process.

Benefits of these technologies in terms of reduced carbon emissions will emerge slowly over the next two decades. Exponential growth of renewable energy promises gradual relief from global warming in the second half of this century.

Trust in Government Institutions

Gallup News conducts annual polls of the public’s trust in government institutions and actors. The results of the 2023 poll reveal two worrisome facts: U.S. confidence in national government, judiciary, and other key institutions had decreased significantly since polling began in 2006; and among G7 countries, the U.S. has the lowest level of confidence on the national institutions index. Ranked in order by confidence level, Canada was ranked highest among G7 countries, followed by, Britain, Germany, France, Japan, and Italy.

That index is a composite measure of the confidence a country’s residents have in key national institutions such as the military, the judicial system, the national government and the honesty of elections. In 2006 the U.S. scored higher on the index than the other G7 countries.

Even so, the U.S. remains the dominant voice among the G7. It has the largest Gross Domestic Product (GDP) in the world. Its culture is admired worldwide. It is the world’s leading military power. The U.S. dollar is the world’s reserve currency. In view of all that, does the U.S.’s low rank on the national institutions index matter?

Yes, it matters. As the Gallup report asserts, strong institutions that are credible and instill faith in the legitimacy of the political system are among the best guarantors of a country’s long-term stability. There are many reasons why this is true.

The recent Covid-19 pandemic provides an excellent example. Public health officials, facing an unknown virus, followed established protocol in analyzing the disease and treating those affected. The proof of the correctness of the approach was in the statistics that showed a negative correlation between compliance with vaccination recommendations and frequency of hospitalizations and deaths. One shudders at the thought of what mass rejection of vaccinations for childhood diseases could do to child mortality.

When trust in government institutions is lacking, functions of government may be impeded. Recommended actions, such as addressing global warming, are questioned and opposed. People who do not trust their government to do what is right and fair resist paying taxes. Vital services like health care, education, and transportation are underfunded. Voting becomes a meaningless activity if confidence is lost. Business investment, innovation, and entrepreneurship depend on stable institutions that maintain a favorable legal environment, for example, protection of intellectual property.

A recent article in The Economist traced “healthy skepticism” to the Vietnam war and Watergate scandal in the 1970s. But the article attributes the recent sharp decline in trust to unfounded rejection of the results of the 2020 presidential election and, most directly, erosion of trust in the judiciary as a result of the 2022 overturn of Roe v Wade. The Gallup warning of instability cries for unprecedented national focus. Quoting Sean Morales-Doyle, director of the Brennan Center Voting Rights Program, “Democracy works when people believe in it.”

The Charmed Life Cycle of Baby Boomers

After the deprivation and rationing of the Great Recession and Second World War, Americans looked with optimism toward a future of peace and prosperity. The country entered a period of plentiful jobs, increasing wages, and factories converted from wartime production to a variety of household goods. Feeling a sense of confidence that they would be able to afford children, people no longer put off marriage. With nearly 90 percent of men in the labor force but only one-third of women, the family of a working father and a stay-at-home mother became the norm. While many African American and elderly citizens continued to live in poverty, the vast majority of families enjoyed unparalleled prosperity.

The U.S. recorded 2.9 million births in 1945 and 3.4 million in 1946. In 1954 births exceeded 4 million for the first time and remained above that level for the next ten years. So began the 1946-1964 Baby Boom. Manufacturers and advertisers quickly realized the opportunities offered by this gigantic demographic bulge. Diapers and washing machines were immediate necessities. Baby and toddler clothes, high chairs, toys, swing sets, school supplies, hula hoops, Barbie dolls, to name a few, satisfied the needs of the rapidly growing population. (Click to enlarge photo.)

A 1958 Life Magazine article titled “Rocketing Births: Business Bonanza,” estimated annual expenditures on products and services for baby boom families. In 2024 dollars, $58 million was spent on bronzed baby shoes, a 1950s must-have; $579 million on diaper services; $14.5 billion on toys; and governments spent $29 billion on 62,600 new classrooms.

By 1960 ninety percent of U.S. households had television, and families throughout the country watched the same three channels with the same news programs and the same popular family shows: Leave it to Beaver, Father Knows Best, Ozzie and Harriet. “By some estimates, children raised on shows like The Mickey Mouse Club and Howdy Doody saw more than 500 hours of ads by the age of 6.” And they bought mouse-ear hats to wear while they watched.

Shortly after the 1958 Life Magazine issue came out, marketers discovered baby boomer teenagers. One marketer estimated that teenagers spent the equivalent of $116 billion a year on products in the late 1950s. That included $232 million on lipstick and $869 million on pop records. Weekly allowances and first jobs financed first cars and stylish clothing. Rock music of the 1960s was emblematic of a youthful counterculture for participants who “rejected many of the social, economic, and political values of their parents’ generation; they initiated a sexual revolution and introduced greater informality into U.S. culture.” Student activists organized demonstrations against the war in Vietnam on college campuses.

(Click to enlarge chart.)

Births between 1965 and 1980  are referred to as Generation X. Births hit a low point of 3.14 million in the mid-1970s. As the baby boomers started families, they created an “echo boom” in population, with a 1990 peak of 4.16 million births. Growing up during a period of significant social change, baby boomers as parents tended toward a structured style of discipline and focus on education and hard work. The echo boom of 1981-1996 created the generation that came to be known as millennials.

Today baby boomers are in their 60s and 70s. As they become grandparents, have they become less relevant to the economy? Hardly! “Now, as older adults and retirees with waning obligations and a lot of disposable cash, boomers continue to hold a significant chunk of American wealth and the consumer power that goes with it — and in turn, products and services for boomers have proliferated.” Travel – if health allows, financial planning, long-term care, modifying homes for aging in place, learning to use technology. For less active individuals, new options might include armchair travel, urban hiking, or an elderly version of the “The Y” – Young Men’s Christian Association (YMCA), call it the Old Men’s Christian Association – “The O.”

A columnist for the St Louis Post-Dispatch wrote that he is at an awkward age, too old to work, but too young to run for president.

See you baby boomers at “The O.”

Return-to-Office Mandates

After World War II ended, the nation’s labor force returned to civilian life. By the end of 1945 more than four million soldiers returned to civilian status. More than six million women held wartime jobs in factories and three million volunteered with the Red Cross. Government archives reporting on women in the labor force during World War II reported on the aftermath:  “After the war, most women returned home, let go from their jobs. Their jobs, again, belonged to men. However, there were lasting effects. Women had proven that they could do the job and within a few decades, women in the workforce became a common sight.”

At the beginning of 1948 the post-war pattern of families with working fathers and homemaker mothers was well established. The labor force participation rate for men aged 16-64 was 87 percent, and for women, 32 percent. As the chart illustrates, the two rates moved toward converging over the following seven decades. By the start of 2020, the rate for men had fallen to 69 percent, but the rate for women increased to 58 percent. The Covid-19 pandemic of 2020 and its aftermath disrupted employment trends for both men and women.

Between February and April of 2020 the United States lost over 22 million jobs. The first months of job recovery saw females returning at a slower pace than males, but when the opportunity for remote work became common, it is credited with fueling a record rate of female labor force participation. A study by the San Francisco Federal Reserve found that participation changed for different subsets of the female labor force: “…women without a college degree disproportionately dropped out of the labor force during the pandemic, perhaps to care for children or sick relatives. However, we find that women with a college degree or more increasingly joined the labor force during this period, potentially because of more opportunities to work from home.”

Now Return-to-Office (RTO) mandates are threatening to erase the gains. While a recent survey by McKinsey found that nine out of ten women want to work remotely all or part of the time, a global survey found that almost two-thirds of CEOs expect employees to return to offices five days a week by 2026.

The appeal of remote working is shared by male and female workers alike, both part-time and full-time, according to various surveys. Businesses have contrasting views on the benefits of office-only work: while some see higher productivity when people work from home, others stress the advantages of in-person collaboration. Examples abound of workers planning to quit if given an RTO mandate, and of workers willing to accept less pay for a remote work opportunity.  All this is occurring in a demographic environment of fewer births, an aging population, and a smaller work force.

What Is a Cult?

Amanda Montell, linguist and author of “Cultish: The Language of Fanaticism,” concludes that the United States has a relationship with cults well beyond that found in other developed countries. “The U.S. is an exception … and full of believers” compared to other countries with high living standards, strong education levels, and long life expectancies.

Prominent U.S. examples of cults over the last half-century include the Manson family, the Symbionese Liberation Army, the Peoples Temple, and the Branch Davidians. Charles Manson was leader of a commune in California beginning in the late 1960s. Manson claimed he was Jesus; he predicted an apocalyptic race war in the U.S. and carried out several murders in 1969 in an effort to instigate it.

The Symbionese Liberation Army was a militant far-left organization active from 1973 to 1975. Its spokesman Donald DeFreeze espoused Marxist and Black nationalist ideology in committing a series of murders, armed bank robberies, attempted bombings, and the kidnapping of newspaper heiress Patty Hearst

Jim Jones led a Christian religious movement known as Peoples Temple, active in California in the late 1960’s. He introduced his followers to a belief he called Apostolic Socialism influenced by Marxism. Accusations of fraud and abuse caused Jones to relocate to his Jonestown compound in Guyana. Relatives of Jones’ followers called for an investigation into their welfare. A group including a U.S. Congressman visited Jonestown in November 1978. Following the visit, Jones ordered his followers to commit a mass murder-suicide, killing over 900 men, women, and children.

David Koresh was an apocalypse believer who led a group that had its origins in the Seventh Day Adventist church. He assumed control of an offshoot called the Branch Davidians located in Waco, Texas, in 1983. Accusations of child abuse led to a trial and an ATF raid in February 1993. A two-month standoff ended in a fire that destroyed the compound and resulted in the deaths of 76 members of Koresh’s group.

These four narratives illustrate characteristics commonly shared by cults. Each had a self-appointed charismatic leader directing them. Followers accepted authoritarian control by an idealized leader. Followers adhere to their leader’s doctrinaire beliefs and may not question those beliefs without fear of reprisal. Followers share the same language and talking points. Followers become isolated from family and friends who do not share the leader’s beliefs.

Turning to the elephant in the room, is today’s MAGA Republican party a cult? In her book, Montell cites oratorical similarities between Donald Trump and Jim Jones. Both loved “coining zingy, incendiary nicknames for their opponents,” comparing Trump’s “Fake News” and “Crooked Hillary” to Jones’s “Hidden Rulers.” Catchy phrases could win over an audience “even when their statements didn’t contain any rational substance…. It’s riveting to watch someone on a podium speak from a place so animalistic that most of us don’t let ourselves behave that way even with our closest friends.” Phrases acquire emotional power that “a leader can exploit to steer followers’ behavior.”

Eugene Robinson, columnist for the Washington Post, said it this way: “The problem is that since Trump’s takeover of the party, the mainstream GOP position – on any given topic, at any given moment – is his position. This is true even if it means Republicans must say the opposite of what they said yesterday, and even if it means saying things that are demonstrably untrue.”

Today’s Republican Party displays elements common to cults. That is important to understand inasmuch as the United States has produced cults over the past 60 years that have ended in violence and mass deaths.

Germany’s Labor Shortage

Like many aging countries, Germany is experiencing a labor shortage that only promises to become more severe. Its 84 million residents make it the 19th largest country in population, and its labor force is the world’s 15th largest. It has the 4th largest Gross Domestic Product, behind the U.S., China, and Japan. Its 3.1% unemployment rate is half the average for the EU. And its economy is stagnating.

Germany’s chamber of commerce reports that half of Germany’s companies are struggling to fill vacancies. A November survey estimated 1.8 million jobs were unfilled. Shortages were most severe in the manufacturing and construction industries. Large shortages existed in professions such as education, medical care, childcare, and logistics. Applications for apprenticeship positions have declined for over a decade.

Like many similar countries, Germany’s fertility rate is well below the level necessary for the population to reproduce itself. Germany’s median age of 46.7 years is exceeded only by that of Japan.  The number of workers at or near retirement age exceed the number of youth aging into the labor force. By 2060 the labor force is set to shrink by about a third unless changes occur in labor force participation rates, retirement dates, or immigration, and the population will fall by 25%.

Immigration is the only change capable of significantly improving the labor shortage. On January 19, 2024,German lawmakers approved an overhaul of citizenship rules to make gaining citizenship easier. The measure passed over the objections of center-right opponents who say the new rules devalue German citizenship.

The new law makes people eligible for citizenship after five years in Germany rather than six or eight. Children born in Germany automatically become citizens if one parent has been a legal resident for five years. Restrictions against holding dual citizenship have been dropped. People being naturalized must be able to support themselves and their families.

Over half of German companies favor recruitment of foreign labor to address the shortage of skilled workers. For Achim Dercks, deputy chief executive of the German Chambers of Industry and Commerce, the implementation of the new law will be crucial to fill the workers gap, but he warns, “This will only happen very gradually.”

Opponents of large inflows of migrants cite the challenges that followed the arrival of over a million refugees in 2015. Yet, Germany’s status as the world’s 3rd largest exporter will be at risk without immigrants to maintain and enlarge its labor force.

An Exclusive Interview with Uncle Sam

Two years away from the 250th birthday of the United States, the country is going through one of its darkest periods. Anger, hatred, incivility, and violence have intensified in an unusually extreme time of polarization. Uncle Sam, who has lived through 248 years and is beloved by all Americans, agreed to an interview with the author of Fifty Year Perspective, Keith Zeff.

KZ: Thank you for sitting down to talk. I hope you are well. The traditional caricature of you as a strong, self-assured elderly gentleman and respected leader is less in evidence. These days the news tends to portray you as tired, fearful, and sad.

US: I am sad. Everybody says they love America – left, right, center – but I don’t feel any love.

KZ: How would you describe our current milieu from your 248-year perspective?

US: There is a breakdown in trust. The advice and recommendations of the medical profession are not trusted. Scientific opinions are not respected. News organizations are assumed to be biased. Congress is seen as more interested in power than in governing. Even Super Bowl LVXIII is rumored to have been rigged.

KZ: What are people missing here?

US: As we learn more about the complexity of the world, John Q. Public has no choice but to elicit advice from specially trained  experts about health, environmental risks, road safety, food quality, voting integrity, climate threats, judicial impartiality, border security – all the things for which we depend upon local, state, and national authorities. You may not agree with what the government does – and not everyone will; but you will have to live with its decisions until its leaders ask you to support them for re-election, initiate a recall process, or sue to stop enforcement by the government.

KZ: Where is the distrust coming from?

US: The “booming” economy is not working for everyone. People who want to work can’t, for lack of childcare. Employers who want to hire can’t fill jobs for lack of a growing skilled labor pool. There is extreme disparity in income and wealth. Many so-called “essential workers” cannot earn enough to support even a small family. Parents do not see a path to a better life for their children.

KZ: Do you see a way out of this state of affairs?

US: Look, I’ve been around for a very long time. I haven’t lived almost 250 years without compromise. Leaders need to accept that they may not get everything they want. As the saying goes, “Don’t let the perfect be the enemy of the possible.” You will lose the possible and never attain the perfect.

KZ: Do our founding fathers provide any guidance from how they governed?

US: Most people today say they share the values of the founding fathers. Freedom, equality, justice, and individual rights are acclaimed, even if not universally adhered to. That was true of the founding fathers themselves, many of whom owned slaves, and they admitted to their own hypocrisy as they declared that all men are created equal. But we cannot know how they would have governed if they were alive today; the world has changed too much. Alexander Hamilton, the first Secretary of the Treasury, could not Google “national debt” on a smart phone to see how much was owed to France following the War of Independence. And John Adams didn’t check a YouGov poll before signing the country’s first Declaration of War in 1812 against Great Britain. Today’s immediacy and universal accessibility of information can alter the course of events.

KZ: Then how should decisions be taken?

US: Thomas Jefferson approached politics through the Enlightenment focus on human reasoning. (He also believed the Constitution should be replaced every 19 years.) James Madison, the “Father of the Constitution,” worried that 1830s political battles over states’ rights threatened the survival of the union. Just before his death he wrote, “The advice nearest to my heart and deepest in my convictions is that the Union of the States be cherished and perpetuated.”

For nearly 250 years the union has been preserved, largely on the basis of pragmatically made decisions that sustained, or in the case of the Civil War, restored the country. We have fallen into governance based upon power. It’s not even ideology; it’s vengefulness. It’s winning elections rather than solving problems. Anyone is free to invent their own facts and challenge the actions of decision-makers. I didn’t live to be 248 years old by being greedy and power-hungry, but by seeking out advisors I respected, acting rationally and sustainably to balance order and liberty. We need to shun those impulses which lead to mob rule.

KZ: Thank you for your invaluable insight. I know your people will be glad to hear from you.

2024 Election Platforms

Election Day is November 5, less than nine months away. Republicans and Democrats do not typically know who their presidential standard-bearers will be this far in advance. But this is not a normal election. Plenty has been written and said to comprise lists of what the likely candidates propose to accomplish in a second term in office.      For President Joe Biden:

 

Restore woman’s right to abortion

Address climate change through regulation and market forces; lower gasoline prices

Defend the NATO alliance; support Ukraine

Protect LGBTQ rights; support gender-affirming care

Ban firearms known as assault rifles; enact universal background checks; document sales in gun shows

Protect access to the ballot box; defend, protect, and preserve democracy in the United States

Increase funding for border patrol and enforcement; provide a path for people in the United States to apply for legal status and citizenship

Support workers organizing unions and their right to bargain

Provide two years of free community college education; offer free pre-school education; limit cost of child care based on family income; restore child tax credit to levels of American Rescue Plan Act

Cap monthly cost of insulin for all patients

Raise taxes on households earning over $400,000 a year and on businesses; narrow the gap in tax rates between earned income and capital gains

De-risk supply chains from China and invest in economies of target nations

Modify or end the filibuster

How much of this Biden can achieve will depend on the balance of power in the Senate and House of Representatives after the election. A defeat for Trump may free more moderate Republicans to return to bipartisanship and enact Biden’s programs.     For Former President Donald Trump:

Roll back efforts to encourage adoption of electric cars; reverse proposed new pollution limits; exit the Paris Climate Accords

Cut off aid to Ukraine; re-evaluate NATO’s purpose and mission

Pass a bill that there are only two genders

Allow trained teachers to carry concealed weapons

Begin deportation operation against unwanted immigrants

Build more of the border wall; secure the U.S.-Mexico border by moving thousands of troops currently stationed overseas

End birthright citizenship

Reimpose travel ban targeting seven Muslim-majority countries

Repeal the Affordable Care Act

Institute tariffs of 10% on most foreign goods; phase out import of Chinese essential goods, including electronics, steel, and pharmaceuticals

Terminate the Department of Education; cut funding for any school that has a vaccine or mask mandate

Promote prayer in public schools

Eliminate civil service protections for selected federal employees; require federal employees to pass a new civil service test

Approve federal takeover of Washington, DC

The two campaigns have one thing in common: Each candidate plans to continue the agenda he followed in his first term in office. Now that voters know what to expect, they have one question to answer to know how to vote in November: Do they want a repeat of 2017-2021? Or do they want a repeat of 2021-2025?

Changing Faces of Immigration

Meet Z.S. He is a 28-year-old who has dealt with a lot of setbacks. He is a high school graduate whose parents are migrant workers. He has worked in a factory and on an assembly line. Last year he decided to try taking the walking route to America. Traveling through Mexico he faced the risk of deportation, gangs and robbers. After scrounging together thousands of dollars to pay a smuggler, he eventually arrived at Tijuana just south of the U.S. border.

Z.S.’s story may sound familiar, but it is not the one most often heard. Z.S. is Chinese. His full name is Zheng Shiqing, and his journey did not start in Mexico but in Yunan province in China. He arrived by plane in Quito, Ecuador, after traveling through Thailand, Morocco, and Spain. Attempting to enter Colombia, he was robbed of his money and phone at gunpoint, and returned to Quito.

Zheng Shiqing crossed the border from Ecuador to enter Colombia at the city of Tulcan. There he found some 100 local businesses serving hundreds, if not thousands, of weekly Chinese migrants making the same journey. Once he reached the coastal city of Necocli he could take a boat to the edge of the infamously dangerous Darien Gap. He crossed Panama, Costa Rica, Nicaragua, Honduras, El Salvador, and Guatemala before crossing into Mexica at Tapachula. He feared deportation and the gangs in Mexico more than the rainforests he had already crossed. He stayed in Tapachula long enough to save enough to pay a smuggler for a flight to Tijuana.

Zheng Shiqing is far from alone. In the fiscal year ending September 30, 2023, (FY 2023) over 28,000 Chinese citizens were met by U.S. Customs authorities, a tenfold increase over the previous year. Chinese immigration to the U.S. was low in the 1980s while China’s economy was booming. “UN data shows the number of people from China seeking political asylum in the US and elsewhere around the world has sharply risen during Xi’s rule – climbing from nearly 25,000 in 2013 to more than 120,000 globally in the first six months of 2023.” Monthly arrivals in the U.S. increased rapidly following China’s easing of Covid-19 restrictions. A high number of Chinese arrivals had previous residences in Hong Kong and Xinjiang, home of the Uyghur minority.

China is not the only surprise. In FY 2023, “There were almost 97,000 encounters with Indian migrants in the U.S.,” nearly a fivefold increase since FY 2020. The increase is attributed to borders re-opening post-Covid-19, oppression of Sikhs and other religious minorities in India, and the backlog in visa processing. Widespread success of previous Indian immigrants is also a factor in pulling more people to the U.S. Almost a third of Indians arrived via the Canadian border. FY 2023 also recorded the arrival at the southern border of 43,000 Russian immigrants.

Immigrants to the U.S. through Mexico had come primarily from Mexico and Central America. In FY 2023 for the first time, immigrants from these countries numbered fewer than half of the 2.5 million entering through Mexico. Along with the more distant countries noted above, migrants from Venezuela arrived in numbers exceeding those from China and India.

What attracts people from around the world, in the tens of thousands annually, to risk their money, their safety and their lives to travel to a country with racial prejudice, extreme polarization, gun violence, and anti-immigrant bigotry? “This increasingly global migration to America’s borderlands says something about the enduring power of the idea that America is a land of opportunity.” The U.S. is known on China’s version of TikTok as “the Big Beautiful.” This is an expression of what political scientist Joseph Nye Jr. called “soft power,” the ability to influence others without resorting to coercion. For the United States, soft power flows from its music, fashion, sports, media, and culture. The strength of the U.S. economy with its tight labor market is likely factored into immigrant decision-making.

Immigration to the U.S. is changing. As FY 2023 data show, this is no longer primarily a Latin America encounter. The growing numbers coming across the borders require enacting new policies and structures that recognize new realities. Legislation that recognizes moral and humanitarian concerns, international laws and agreements, and geopolitical interests must be on Congress’s agenda. Immediate action is required to manage current migration flows and eliminate case backlog that allows entrants’ status to remain unresolved for years.

Not All Authoritarians Are Divine

A favorite poem of mine in high school was Ozymandias, by Percy Bysshe Shelley. I knew the poem was based on an ancient Egyptian ruler, but until I read a recent book by Toby Wilkinson titled Ramesses the Great: Egypt’s King of Kings, I didn’t realize that even the name of the poem’s king came from historical archives.

When Ramesses II succeeded his father, Seti I, he chose for his throne name Usermaatra, which combines the words for powerful, chosen and the name of the sun god Ra. The 1st Century BCE Greek historian Diodorus Siculus referred to Ramesses by a Greek version of his throne name Osymandyas, hence the title of Shelley’s poem.

Ramesses II ruled from 1279-1213 BCE, longer than any other Egyptian king. Early in his reign he led his army in a battle against the Hittites for control of the city of Kadesh, located in western Syria. Ramesses’ forces were tricked by a Hittite spy whose misinformation led the Egyptians into a trap. The battle eventually ended in a draw and a peace treaty, yet Ramesses presented it as a great victory to enhance his reputation. Over the next 60 years of his reign he created colossal statues of himself and countless building projects throughout his empire always inscribing, on walls and columns, details of his great victory at Kadesh.

Over the centuries, man and nature reduced many of Ramesses’s monuments to rubble or reuse in later structures. Shelley’s poem envisions a ruined statue of Ramesses II with only its lower torso and legs remaining. The poem, printed here, is in the form of a 14-line sonnet.  “Nothing beside remains” exposes the ephemeral nature of great power. Like King Charles I, as described in my essay, “A Warning From 17th Century England,” Ramesses was an authoritarian ruler who believed his power was divinely ordained. The 21st Century has no Ramesses II or King Charles I claiming divine authority, but authoritarianism is on the rise globally. Concentration of power in an authoritarian leader can descend into despotism. Authoritarianism threatens the power of courts, legislatures, ballot box, and democracy.

A Warning From 17th Century England

One of the many year-end lists of best books of 2023 included a history of 17th Century England. It is titled “The Blazing World: A New History of Revolutionary England 1603-1689,” by Jonathan Healey. A brief description concluded, “This account of a time of religious and political turmoil, intellectual ferment, scientific innovation and media upheaval … abounds with contemporary resonances.” I was hooked.

Elizabeth I, daughter of King Henry VIII, ruled as Queen of England and Ireland from 1558 until her death in 1603. She died without an heir, so her cousin, King James VI of Scotland, succeeded to her throne, becoming King James I of England, and uniting Scotland, England, and Ireland under one crown.

The three countries had differing religious practices. Catholicism was dominant in Ireland. King Henry VIII of England had rejected Catholicism in the 16th Century and founded the Church of England, governed locally by bishops. Reformation in Scotland gave rise to the Church of Scotland, governed by local ministers and elders.

In 1625 Charles replaced his father, James VI and I, as king of England, Scotland, and Ireland. But the three remained sovereign states with their own parliaments, judiciaries and laws. That is when the politics became fraught. Charles, believing his position was divinely decreed, determined he could govern as he wished without the approval of parliament. His subjects opposed his policies as well as his marriage to the French Catholic Henrietta Maria. His religious practices were challenged by English Puritans and Scottish Presbyterians. His exercise of power was considered tyrannical. King Charles ultimately raised his own army and in 1642 engaged in civil war against English and Scottish armies. He was defeated in 1645 and, after surrender, escape, recapture, trial, and conviction, he was executed by beheading for high treason in 1649.

More battles followed as the monarchy was eventually replaced by a republic, the Commonwealth of England, Scotland and Ireland, headed by Oliver Cromwell as Lord Protector. The Commonwealth lasted until 1660, when Charles’s son Charles II was restored to the throne. Politics during his reign was described by Jonathan Healey as “intensely partisan, and increasingly bad-tempered, focusing on mockery and character assassination.” In 1685 Charles II was replaced by his brother, James II. Three years later, in the “Glorious Revolution” of 1688-89, a Catholic King James II was overthrown by his Protestant daughter Mary and her Dutch husband William of Orange.

Throughout the turbulent century printing presses churned out new types of publications – folios, pamphlets, broadsheets, dailies – printed in backstreets and sold on corners. Royalists, Parliamentarians, Puritans, and others spread their propaganda to a public eager for political news. Religious polarization turned violent. Kings accepted or rejected legislative and judicial decisions. Kings, parliaments and local government commissions vied against each other for dominance. Vote counts in parliamentary elections were manipulated. Pliable judges were preselected to guarantee desired outcomes in high-profile trials.

Kings believed that they ruled by divine right. Obedient followers allowed self-absorbed leaders to become ever more assertive and aggressive. All considerations fell to the single motivation to maintain power. The parallels are apparent today in the United States and many countries throughout the world. There is a lesson here for the 21st Century. Danger lies in delegating extreme authority to a single office or person.

A Debt Reduction Plan

In “Reviving the American Dream,” several positive signs of progress toward avoiding recession were highlighted. Constructive assessments by liberal and conservative think tanks concurred regarding economic goals and what is necessary to achieve them: promoting job creation and supporting strong families is shared by conservative and liberal sources alike.

As with the key legislative packages of the first two years of the Biden administration – Infrastructure Investment and Jobs Act, Safer Communities Act, and CHIPS and Science Act – achieving those goals come with big price tags. A recent paper produced by the Peter G. Peterson Foundation, a nonpartisan organization dedicated to addressing America’s long-term fiscal challenges, is titled “The Debt Crisis Is Here.” The paper addresses three prerequisites to reducing the growth of the national debt: save Social Security, reform Medicare, and implement tax reform.

The Foundation recommends the establishment of a Bipartisan Congressional Committee on Fiscal Responsibility. The U.S. debt-to-GDP ratio has surpassed 120%; that is, the total U.S. national debt is 20% greater than U.S. Gross Domestic Product, the total value of goods produced and services provided in the country during one year. The strategic objective of the Commission would be to reduce the U.S. debt-to-GDP ratio to 70%.

Why 70%? “The debt-to-GDP ratio of 70% is a recognized stable level for advanced economies,  which shows the burden of debt relative to the country’s total economic output and therefore its ability to repay it.” As illustrated on the chart, the debt-to-GDP ratio over the last decades of the 20th Century was around 40%. Achieving the 70% objective “would require a substantial realignment of fiscal policy and a multi-decade plan.”

Various scenarios of tax rate hikes and cost cuts were analyzed to push the ratio to 70% or lower within 10, 20, and 30 years. Doing so by only raising taxes proved unfeasible because that would consume private investment capacity and allow interest on the debt to continue rising. Only cutting outlays would necessitate annual cuts of 22%, an unacceptable level. Achieving the objective 70% in 10 years would induce a major recession. “A combination of raising all taxes by 1.5% permanently, and a reduction in outlays of 8.2% (including spending cuts and interest cost reductions as a result of lower debt) would achieve the goal of debt-to-GDP to 70% in about 20 years.”

To save Social Security, recommendations included raising the maximum income subject to the payroll tax; use a more accurate calculation for cost-of-living increases; gradually raise the age for social Security benefits to 69; remove disincentives for retirees to return to the workforce; cover newly hired state and local workers under Social Security; and diversify Social Security Trust Funds investments from Treasury bills.

To reform Medicare, proposals included allowing consumer choice among competing private healthcare plans; eliminate Medicare Advantage price benchmarks to remove inflation-prone, inefficient fee-for-service costs; raise the age of eligibility; and restrict states’ use of provider taxes to finance Medicare.

Proposed reforms to tax policy included paring back the use of preferential tax breaks; tax capital gains and dividends as ordinary income; end the Alternative minimum Tax and itemized deductions; tax state and municipal bonds; tax exclusions at higher income levels for health insurance benefits, retirement accounts, charitable giving, and mortgage interest; eliminate other tax loopholes, corporate tax subsidies, and deductions.

The Peterson Foundation paper notes that the nation has never experienced the debt explosion that has occurred since 1981, years generally characterized by peace. “Public debt diverts investment dollars away from the private sector and toward U.S. Treasury bonds,” slowing economic growth and lowering living standards. A 20-year commitment to a debt reduction plan is hard to imagine in the current Congress. Although business and the American public support establishment of a bipartisan congressional commission on fiscal responsibility, as with gun control and abortion, policies favored by public opinion fall to the obstruction of a minority.

Reviving the American Dream

The politics of low taxes, small government and a laissez faire attitude toward the market economy, often referred to as “neoliberalism,” is being ushered out the door by institutions supporting a “bottom-up” economy that provides well-paying jobs and support for families to grow the middle class, replacing neoliberalism’s “trickle-down” economy with its focus on tax breaks and benefits for the wealthy and big corporations.

Remarkably, impetus for this change originates from both liberal and conservative institutions. American Compass is led by Oren Cass, a former aide to Mitt Romney. It is reviewed in a recent blog post. The hypothesis advocated by American Compass is “that a labor market in which workers can support strong families and communities is the central determinant of long-term prosperity and should be the central focus of public policy.” American Compass recognizes that markets require rules and institutions to work well as “a means to the end of human flourishing and exist to serve us (not the other way around.)”

Cass has set the organization’s goal “to ensure that every person, no matter her starting circumstances, can find a vocation that allows her to support a family, live in a community where she can build a good life, and then give her children even greater opportunity than she had.” For those workers whose wages are insufficient to support a family Cass introduced a “wage subsidy” that functions similarly to the earned income tax credit. The safety net would shift from a goal of maintaining people of low income to a goal of moving them into middle class. The wage subsidy is financed through taxing wealthier workers and paying low wage earners.

The Roosevelt Institute is a liberal think tank founded in 1987 with the goal of advancing “progressive policies that bring the legacy of Franklin and Eleanor Roosevelt into the 21st century.” Its recent publication, Sea Change: How a New Economics Went Mainstream, is largely a confirmation of the economic policies of the Biden administration, including public funding of particular economic sectors and rebalancing power in the economy. Those policies have generated a doubling of investment in construction of manufacturing facilities; challenged corporate concentration; supported workers’ demands for higher wages; absorbed financial risks in developing new technologies; and directed investment to address climate change.

From the Trump administration’s Operation Warp Speed to develop mRNA vaccines, to the bipartisan legislation passed in the first two years of the Biden administration, change is evident. The Roosevelt Institute report highlighted the break from how the government responded to recession: “Rather than worrying about spending too much—as policymakers did when they crafted a response to the Great Recession— policymakers in 2021, decided that going too small was a bigger risk. They prioritized getting money into people’s pockets and workers back into jobs instead of stabilizing the financial sector.” The recession created by Covid-19, although far deeper than recessions of the past 40 years, saw employment recover in just 28 months, compared to the 76 month recovery following the recession in 2007, or the 48- and 32-month recoveries for recessions in 2001 and 1990, respectively. (Click on graph to enlarge.)

Between February 2020 and June 2022 employment restored the 22 million jobs lost when the pandemic began. Since June 2022 an additional 4.7 million jobs have been added, nearly returning job growth to its pre-pandemic trendline. The unemployment rate which had hit a peak of 14.7% when the pandemic started was back to 3.7% in November 2023. Average hourly employee earnings were up 6% from June 2022, while consumer prices over those 17 months increased 3.8%. The U.S. rate of inflation reached 9.1% in June 2022; the November 2023 rate was 3.1%.

These positive signs of progress have relieved most fear of a new recession. Equally encouraging is the convergence of liberal and conservative assessments as to what economic goals should be and what is necessary to achieve them – promoting job creation and supporting strong families is shared by conservative and liberal sources alike.

Losing the American Dream

As a presidential election year approaches, pollsters are searching to measure the pulse of those who will be voting in 2024. A question is confounding analysts examining poll results, why is a U.S. economy that is exceeding expectations with low rates of unemployment; healthy job growth; decreasing rate of inflation; and increasing worker pay, not convincing voters that happy days are here again?

A widely shared consensus was expressed recently by former U.S. Secretary of Labor Robert Reich: “the vast number of working non-college grads – some two-thirds of the adult U.S. population – are still bogged down in dead-end jobs lacking any economic security.” So while the economy may be getting better overall, “the rich get richer, the poor grow poorer, and the working middle is under worsening siege.”

Anxiety over a future made uncertain by a pandemic, war, political polarization, recent years of high inflation, and climate change, as well as troubling social issues related to gender identity and abortion, causes even the relatively well off to have no confidence that even if life is relatively comfortable, it’s not going to last.

Not exactly the picture of the  American Dream. David Leonhardt, columnist for the New York Times, has a new book titled Ours Was the Shining Future. His definition of the American Dream is Americans making more money than their parents had, “enjoying better material standards than one’s parents.” Many sources have suggested that a reversal is happening for the first time in the country’s history.

Fifty Year Perspective has documented this reversal in numerous blog posts over the last seven years. A post during the pandemic in March 2022 documented that workers with more years of education were more likely to have occupations suitable for teleworking from home. (Click on image to enlarge.) Without the ability to work from home, workers were in and out of work as the pandemic went through a series of lockdowns.

Several economic trends changed direction in the 1970s. Hourly compensation flatlined in the mid-1970s while productivity continued to grow. From 1948 to 1975, worker pay increased by nearly 100% and productivity increased over 90%. By 2019 worker pay had barely increased beyond its 1975 level. But productivity had increased by almost 260% since 1948, double the rate of increase for workers’ pay. Productivity gains were not benefitting workers.

Prosperity raised living standards for a majority of the population in the U.S. immediately following World War II. The 1970s brought a reversal of the economic gains for middle and lower class families. The share of national income going to the top one percent of households increased dramatically while the bottom 50 percent declined. In 1969 the bottom 50% of households received 21.1% of income and the top 1% received 11.4%. By 2014 relative positions had switched: the bottom 50% received 12.5%  of income and the top 1% received 20.3%.

CEO pay has wildly outpaced worker pay. In 1965 CEO compensation was 19.9 times that of the average worker. The ratio of CEO pay to worker compensation increased exponentially. By 2018 that ratio had increased to 278 times worker pay. Dips occurred during the 2001 recession and the Great Recession of 2007.

Union membership peaked in the U.S. in the 1950s at over 30% of wage and salary workers. By 2019 it had fallen to 10.8%, denying workers representation in contract negotiations. In August 1981, President Ronald Reagan set a precedent by firing 11,359 air traffic controllers, members of the PATCO union, who had gone on strike. Use of strikes as a negotiating tool declined after President’s Reagan’s intervention.

The U.S. has a progressive income tax, which means that the highest rate of taxation on income applies to the highest income earners. In 1950 the top rate of 91% applied to incomes above $4.9 million in today’s dollars. The 70% top rate in 1980 when President Reagan was elected applied to incomes over $765,000 in today’s dollars. Reagan ran on a commitment to lower income taxes. He oversaw the top income tax rate cut from 70% in 1982 to 50% in 1981, then to 38.5% in 1986, and 28% by the time  he left office in 1989. Leonhardt notes that between the mid-1940s and mid-1970s “raises won by unions most often reduced profits without damaging the economy.”

The American Dream is about intergenerational mobility – the ability to enjoy higher material standards than one’s parents. For the immediate post-war period that hope was realized for an increasing portion of the population. A study tracking economic mobility measured the percentage of 30-year-olds who were earning more than their parents at age 30. In 1947, 77% of 30-year-olds were earning more than their parents had. In 1963 that number had increased to 94.1%. Then between 1963 and 2010, the last year of the study, this measure of intergenerational inequality had decreased to 55.2%.

Lax antitrust enforcement shares responsibility for limiting economic mobility. A post in September 2018 documented impacts of trends in corporate concentration through mergers and acquisitions, antitrust enforcement, lobbying and competitiveness. Corporate concentration allows businesses to raise prices while keeping wages low. Under a lenient U.S. antitrust policy companies can dominate a whole industry and can thereby lower wages because workers have fewer alternative employers.

An earlier post in April 2023 discussed the Supreme Court’s January 21, 2010, opinion in Citizens United v. Federal Election Commission, (FEC). Election spending restrictions in place for over 100 years prior to Citizens United were overturned by the Supreme Court decision, which enabled “independent political spending,” provided it was not coordinated with a candidate’s campaign. A decision two months later, SpeechNow.org v, FEC, paved the way for super PACS to raise practically unlimited sums on political campaigns. As Leonhardt notes in his book, “Into the mid-1970s, only six hundred registered lobbyists worked in Washington. Today. more than twelve thousand do.”

Bleak as this picture is, there is hope in small steps toward rectifying the mistakes of the past fifty years. “Reviving the American Dream” is the next Fifty Year Perspective topic.

Demography As Destiny – Part Two

Following the rise in births in mid-20th-century, and again at the century’s end, annual births in the U.S. have been steadily declining. Add to that an aging population with deaths on a constant upward trend, and soon the inevitable will occur: the U.S. will record more deaths annually than births.

The latest population projections from the U.S. Census Bureau place that year as 2038. That is according to the “main series” of alternative scenarios for the course of population growth to the end of the 21st century. Scenarios assuming lower and higher net migration shifted the transition year to 2036 and 2042 respectively.

Once the population stops growing due to natural increase, defined as births minus deaths, net migration, the other component of population change, will set the course of population projections. New projections offer four scenarios for net migration.

The current U.S. population is estimated to be 340 million. The main series of projections foresees the U.S. population reaching a peak of 369 million in 2080 before starting to decline. The low migration projection would reach a peak of 346 million in 2043, while the high projection would result in population growth beyond year 2100 total of 435 million. A zero migration projection would result in the population declining after 2024 to a total of 226 million by 2100.

The message these projections present is clear: unless net migration reaches and maintains a level of 1.5 million per year, the U.S. population will age and decrease. An aging population has a higher proportion of elderly to working age people. This ratio, called the dependency ratio, was discussed at length in a May 2015 Fifty Year Perspective blog post. Many countries that in the past have had four or more workers to support each elderly person are moving toward a ratio of 1.5 per elderly person, or less.

An exception is the continent of Africa. A later blog post in April 2019, and another in October 2023, documented the high percentage of young people in African countries, and the future of the world’s labor force residing in rising proportions in African countries.

There is wide variation among the four projections newly released by the U.S. Census Bureau. However, all of them promise significant change in the world’s national populations, government stability, and economic viability. One of the first two posts of Fifty Year Perspective, in June 2014, was titled “Demography as Destiny.” Graphic displays presented the dramatic changes occurring in age structure over time and between continents. The new population projections for the U.S. reveal equally dramatic changes in the size of the population.

Not So Different?

Polarization in the United States expresses itself in clashes of conservatives vs liberals, Republicans vs Democrats, and rural citizens vs urban citizens. Urban voters are more liberal than rural voters on social and political issues. A 2018 Pew Research study found 62% of urban voters identifying as Democratic vs 31% identifying as Republican.

Rural residents tend to be more conservative and vote Republican than urban residents. However, the same Pew study found the gap between Republican and Democratic voters to be much narrower: 54% of rural voters identified as Republican vs 38% who identified as Democratic. As recent as 1998 rural voters were virtually evenly divided between Democratic and Republican.

During the Covid-19 pandemic, political scientist Elizabeth Currid-Halkett conducted hundreds of hours of phone interviews with rural residents, combining anecdotal with social and economic data to create her book, The Overlooked Americans: The Resilience of Our Rural Towns and What It Means For Our Country. She concludes that division between urban and rural populations are “driven by extremes, not by the views of ordinary Americans.” Democrats and Republicans answered “almost identically … on topics of equality and democracy.” She found rural areas to be doing as well as cities in terms of home ownership, employment, and income.

Alternatively, Jonathan Rodden, another political scientist, in an interview on WBUR, the Boston National Public Radio station, argued that “the major axis of conflict in American politics right now isn’t necessarily left versus right, but rural versus urban.”

How different living in rural areas is from living in urban areas was on display in a Wall Street Journal story several years ago titled, City vs. Country: How Where We Live Deepens the Nation’s Political Divide. The article featured El Dorado Springs, Missouri, population 3,600, two hours south of Kansas City. With more than 30 churches, the population is older, virtually all white, overwhelmingly Christian, and mainly Republican. Until 2023 El Dorado Springs was represented in the U.S. House of Representatives by Vicky Hartzler, who was raised on a farm in Archie, Missouri. El Dorado Springs High School principal, Dave Hedrick, herds cattle as a hobby to relieve stress from work.

The Pew study enumerated three demographic forces that have “reshaped the overall U.S. population in recent years: growing racial and ethnic diversity, increasing immigration and rising numbers of older adults.” These trends have had different effects on rural and urban communities. While white people have become a minority in most urban counties, they are an 89% majority in rural counties. Rural areas have not experienced the concentration of immigrants occurring in urban areas. And the share of population age 65 and older is higher in rural areas than urban areas. Rural areas also have a smaller share of young adults.

Changes in the U.S. economy have favored urban areas over rural areas. One matter on which urban and rural majorities agreed is that rural areas receive less than their fair share of federal dollars. So, to return to the question, are rural and urban areas so different, certainly their lives are very different – what they do, to whom and what they are exposed, what their career options are, what cultural amenities are available. But Elizabeth Currid-Halkett found they are happy where they live.

Growth and Decline in World Populations

What at one time seemed a never-ending growth in world population that would eventually overwhelm the earth’s capacity to feed the people, now is presented as a looming population peak followed by rapid decline. United Nations population projections  are reviewed and revised periodically to take into consideration current trends in birth rates.

In order for a population to grow, the average birth rate must be at least 2.1 births per woman. Birth rates vary widely from country to country, but they have declined throughout the world. Some of the world’s highest rates are found in Africa, where Nigeria’s birth rate in 2021 was 4.6 and Senegal’s 3.9. India’s birth rate is just above replacement at 2.2, while China’s rate of 1.7 reveals a population that has already peaked.

Current projections of world population anticipate a peak will be reached well before the end of the 21st Century; some projections foresee that happening as soon as the 2060s. As rates continue to fall, population projections are revised downward. The UN 2022 series includes high, medium, and low variants. The medium variant projects a year 2100 world population of 10,355,000,000, an increase of 27% over the population estimate for 2025 of 8,155,600,000.

Chart 1 displays the UN population projections for each continent in 2025 and 2100. (Click on chart to enlarge) Three of the six continents are expected to have more people in 2100 than in 2025: North America’s increase is 17% and Africa’s is 159%, more than doubling. Oceania, which includes Australia, is projected to increase 48% to a 2100 total of 68.6 million. Asia is projected to decrease by two percent and Europe by 21%. Thus, in 2100 Africa would represent 37.8% of the world’s population, double its 2025 share; Asia would represent 45.2% of the world’s population, down from 58.9% in 2025. The rest of the world would have 17% of the population.

Whether population increases or not, every continent will record a significant increase in median age. Once again, Africa stands out. See Chart 2. Starting from a median age of 19.1 in 2025, Africa’s median age is projected to nearly double, to 35.1. Median ages in other continents vary from early 30s to early 40s in 2025, to mid- to upper-40s in 2100. Europe’s median age will be 49.6.

The implications for the Year 2100 labor force are critical. The working age population, roughly 20-64, is shrinking in relation to total population in all continents except Africa. The trend is vividly displayed in Chart 3. Africa’s working age population is projected to increase both in percent and total number, while decreasing for other continents, with all continents ending between 49% and 53% of total population.

Population age 20-64 comprises an area’s labor force. The sizes of the labor force in each continent in 2025 and 2100 are displayed in Chart 4. In 2100 Africa will have 37% of the world’s labor force, more than double its share in 2025. Asia’s share of the world’s labor force will be 46% of the world’s total, down from 62% in 2025.

Using data aggregated to the geographic level of continents obscures a host of local variation between countries. China’s median age is projected to be 10 years over Asia’s average, while Indonesia’s will be 2.5 years below Asia. Similarly, Asia is projected to have 52% of its population age 20-64, compared to 46% for China and 54% for Indonesia.

Variations are more extreme among African countries. Central African Republic’s (CAR) 2025 median age of 15.1 years will be well below Africa’s average; South Africa’s 2025 median will be well above Africa’s. By 2100 CAR is projected to increase to 33.9, while South Africa’s will increase to 40.8. Percent of population of working age in CAR is projected to increase from 38% to 60.2%; South Africa’s is projected to decrease slightly, from 57.6% to 57.1%.

Countries with population decline and shrinking labor force place a greater burden on their workers to support government functions. A shortage of caregivers for elderly may occur, and entitlement programs may be difficult to fund, including policies that support children.  A deficit of young workers may result in declining innovation. For these reasons, countries in Europe and North America may look to Africa as a source for young workers. That prospect is already on the minds of migration policymakers. Yet European countries display conflicting signals, as “Workers Wanted” signs coincide with barbed-wire border fences. More severe shortages of workers in Europe may change minds.

But those growing populations in Africa have greater potential than to become Europe’s unskilled or semi-skilled workforce. Or worse yet, suffer recolonization under domination of China, which is already a major financier of infrastructure projects in sub-Saharan Africa. With an abundance of universities throughout Africa, the future should offer opportunities for young generations to improve their lives at home.

Insecurity’s Susceptibility to Authoritarianism

The recent blog post on values, “Are There Universal Values?” progressed to a discussion of security and insecurity. People who feel insecure, physically or economically, are apt to embrace traditional values of family and religion and have lower levels of trust and tolerance. Authoritarian regimes exploiting those insecurities promise protection while reducing personal freedoms.

Age of Insecurity, a recent book by Canadian-American documentary filmmaker, writer, and activist Astra Taylor, examines in depth the insecurity that grows from liberal capitalism. Because capitalism relentlessly pursues growth, it is engineered “less to meet and fulfill our current needs than it is to generate new ones.” These needs can only be met “through additional consumption – consumption of new lifestyles, experiences, products, upgrades, and apps with features we suddenly can’t live without.” Taylor refers to this kind of insecurity as “manufactured insecurity.”

The liberal capitalist order, Taylor asserts, has ushered in a decline of the welfare state over the last fifty years. She compares the security that comes with civil and political rights (called negative rights –  “freedom from” rights) to positive rights: “the right to a decent home; to medical and mental health care; to education; to support in disability and old age; to meaningful and remunerative work; to a healthy environment, and so forth.”

Citing Ronald Inglehart’s 1977 book, The Silent Revolution: Changing Values and Political Styles Among Western Publics, she reviews his early surveys that became the quadrennial World Values Survey (WVS). His surveys found older people valued “maintaining order in the nation” and “fighting rising prices.” Their children valued “giving people more say over political decisions” and “protecting free speech.” As a by-product of increasing post-World War II material security, Inglehart believed that so-called “higher” social needs gained prominence.

Taylor maintains that Inglehart’s surveys revealed “that varying levels of insecurity and security can have profound cultural and political consequences. Security or its absence can usher along the forces of reaction or of progress. It can stifle democracy or strengthen it.” Inglehart attributed the rise of authoritarianism to spiraling insecurity. Taylor concludes, “If we want to mitigate authoritarian threats, we cannot repeat the postmaterialist mistake of ignoring economic concerns… When people feel insecure, it is easier to convince them that immigrants are taking their jobs, that vaccines are a conspiracy, and that professors are indoctrinating students with ‘gender ideology.’”

Unnatural Disasters

A Wall Street Journal article in October 2018 reported that some areas may become uninsurable due to disaster risk probabilities, or the cost may become so high as to make insurance prohibitively expensive. Five years later this prediction has come to pass: insurance companies, in contrast to some businesses and numerous individuals and politicians, acknowledge climate change is causing unusually frequent and fierce flooding, fires, hurricanes, heat waves, and drought.

Between 2020 and 2022 U.S. insurers paid out nearly $300 billion to cover losses from natural disasters, three times the total for the three years from 2013-2015. To sustain their business model, insurers are forced to either significantly raise premiums or cease providing coverage for these events. Major property insurers, including Allstate, American Family, Farmer’s, Nationwide, and State Farm, have announced they will stop providing coverage in some regions.

Some states have filled the void left by property insurers by providing state-run non-profit insurance coverage for high-risk homeowners, funded by customers’ premiums. In Florida, the Citizens Property Insurance Corporation insures one out of every eight homeowners, with an average annual premium of $6,000. Before Hurricane Idalia struck Florida the state reported significantly depleted reserves and faced imposing a surcharge on millions of policyholders. California’s plan, with a much lower premium of $1,300, has accumulated a deficit of over $300 million.

If property owners cannot obtain coverage, or balk at paying large premiums, they face covering costs for any property damages out of pocket. Many choose to go uninsured. That introduces a new set of critical problems. Homes that are damaged may become abandoned. Homes that cannot be insured may be impossible to sell, or have reduced value. Clusters of abandoned houses following a disaster depress real estate markets and can cause schools and businesses to close.

Going forward, commercial property insurance cannot be expected to take on unpredictable environmental risks. Responsibility falls to governments to prevent damage rather than recover from it. Land use restrictions, which control where to build, and building codes, which control how to build, are designed to avoid property damage due to floods, hail, fire, wind, etc. State and local governments have been lax in adopting and enforcing such codes. With disasters now occurring in areas not previously subject to extreme climate events, governments must adapt codes to the new realities of climate change or risk a reduced tax base.

An article titled Climate Change and U.S. Property Insurance  concluded, “No state has yet developed a comprehensive plan to tackle the issue of building and land-use practices in a warming world. Nor has the federal government developed a strategy.” The insurance industry has signaled that the old way of protecting property is no more.

Are There Universal Values?

Surveys are ubiquitous, especially global surveys. Cross-national surveys tell us what countries have the highest high school math scores, the highest obesity rates, the highest gross domestic product, the lowest infant mortality rate, the highest church attendance, the slowest population growth, the highest per capita car ownership, … I could go on forever. Surveys serve to define a population’s culture or describe a population’s behavior or attitudes relative to others. Surveys may warn us of trends that are not healthy or sustainable.

Surveys may also guide diplomatic relations among nations. Global divisions between East and West, and between North and South are fitting settings for survey and analysis. Such is the focus of the World Values Survey, or WVS. For over forty years the WVS has conducted surveys every five years; the seventh survey, completed 2017-2022 in 92 countries, included over 129,000 interviewees. The most recent survey was particularly timely as governments around the world are questioning the imposition of what the West considers universal values. Survey results addressed the question of whether universal values exist.

Analysis of WVS data concluded that cultural values vary along two major dimensions. In the first dimension, values range along a scale from traditional to secular-rational. Traditional values emphasize the importance of religion and traditional families and reject abortion and divorce. Secular-rational values are less concerned about religion and traditional families and are more accepting of divorce and abortion.

Values in the second dimension range between survival and self-expression. Survival values emphasize economic and physical security with low levels of trust and tolerance. Self-expression values prioritize environmental protection, tolerance of foreigners and LGBTQ people, and demand participation in economic and political decision-making.

People in societies shaped by existential insecurity and rigid intellectual and social constraints on human autonomy … tend to emphasize economic and physical security above all; they feel threatened by foreigners, ethnic diversity, and cultural change – which leads to intolerance of gays and other outgroups, insistence on traditional gender roles, and an authoritarian political outlook.

Countries that are more traditional are also more focused on survival. African and Islamic countries are among this group. Countries that are more secular and focused on self-expression include Protestant countries in Europe and English speaking countries. Confucian countries are more secular but in the middle of the survival/self-expression dimension. Latin American countries are more traditional, but also in the middle range of the survival/self-expression dimension.

The study’s authors did not judge the U.S. to be a prototype of cultural modernization. Generally, high-income countries rank toward the secular end on the traditional/secular dimension and toward the self-expression end on the survival/self-expression dimension.

The United States is a deviant case, having a much more traditional value system than any other postindustrial society except Ireland. On the traditional/secular dimension, the United States is far below other rich societies, with levels of religiosity and national pride comparable with those found in some developing societies.

Are there any universal values? The authors assert that the desire for free choice and autonomy is a universal human aspiration but, “as long as physical survival remains uncertain, the desire for physical and economic security tends to take higher priority than democracy.” By instilling fear and insecurity in a society, an authoritarian regime can extinguish self-expression and tolerance. Democracies have failed in Turkey, Hungary, Cambodia, Venezuela, Tunisia, and Nicaragua, among others, and international assessments, such as The Economist’s Democracy Index, have included the United States and India as countries in which democracy is declining.

Rosenwald Schools

As the heat of August intensifies, I am turning away from tense political issues to write about a heart-warming story that only recently came to my attention. Rosenwald Schools have been researched, documented, reported in print, broadcast and video, yet their story is not widely known.

Rosenwald Schools are so-named in recognition of the man, Julius Rosenwald, who funded a foundation to build schools for African American children whose education received a fraction of the government funding provided to white-only schools throughout the South. According to a Smithsonian Magazine article , “Rosenwald was a humble philanthropist who avoided publicity surrounding his efforts; very few of the schools built under the program bear his name.” Nearly 5,000 schools were built across 15 states between 1917 and 1932 with funds from Rosenwald equivalent to $440 million in today’s dollars.

Julius Rosenwald, a part-owner and president of Sears, Roebuck and Company, was introduced by a mutual friend to African American educator and leader Booker T. Washington. The two shared a belief that education was key to African Americans rising from poverty. The one-, two-, and three-teacher schools exclusively served over 700,000 students over four decades. Following the 1954 Brown vs Board of Education Supreme Court decision declaring segregated schools unconstitutional, Rosenwald schools consolidated with white schools, continuing to use Rosenwald buildings in some towns. About 500 Rosenwald School buildings remain standing.

An economist at the Federal Reserve Bank of Chicago, Dan Aaronson, documented a three-year education gap in the rural South between black and white students following the First World War. By 1941 that gap had narrowed to one year. With data collected from Social Security, Census, World War II enlistments and other sources, Aaronson verified the advantages Rosenwald Schools gave their students.

Students who went to Rosenwald schools had higher IQ scores than kids who didn’t. They made more money later in life. They were more likely to travel to the North as part of the Great Migration. They lived a little bit longer. The women delayed marriage and had fewer kids. And crime rates in the area of the schools went down.

Rosenwald Schools alumni include civil rights activist Medgar Evers, poet Maya Angelou, and Congressman John Lewis. Two graduates, Mamie and Kenneth Clark, contributed research critical to the Brown vs Board of Education decision, conducted under a Rosenwald Fellowship. How fitting that Rosenwald graduates contributed to the end of segregated schools.

Bidenomics

By slim margins, bipartisan legislation passed in the first two years of President Joe Biden’s term has begun to show signs of success. Targeting infrastructure, green energy and job creation for middle income workers, economists are attributing recent GDP trends, in part, to the Infrastructure Investment and Jobs Act signed November 25, 2021, the CHIPS and Science Act signed August 9, 2022, and the Inflation Reduction Act signed August 16, 2022.

Recently released Commerce Department data reported spending on manufacturing facilities up nearly 80 percent over figures for 2022. Morgan Stanley economists also reported “a boom in large-scale infrastructure and rebounding business investment in manufacturing.” Those economists have revised their forecasts for U.S. GDP growth upward for 2023 and 2024, “partly as a result of strong business investment in structures, as well as fiscal policy tailwinds linked to the CHIPS Act and the Inflation Reduction Act.”

Some observers argue that the boom is not only the result of the Biden administration’s policy, contending that the boom began as the country emerged from the pandemic. However, economists suggest that such an increase in business activity would not be normal “at a time when higher borrowing costs and tighter lending standards have curtailed other investments.” In fact, when Tesla announced a $770 million expansion of its Gigafactory in Austin, Texas, it issued a statement saying, “The focus of Tesla’s cell production is currently in the United States due to the framework created by the United States Inflation Reduction Act.” Other construction recently attributed to Federal funding include an electric school bus plant in High Point, North Carolina, and improvements to Spokane International Airport in Washington state.

The three major pieces of legislation passed in 2021 and 2022 were originally labeled “Bidenomics” as a slur by Republicans critical of the president’s economic plan. As successes accrue, President Biden has adopted the label with pride. Republicans in several states are happy to carry the successes back to their constituents even though they voted against the legislation.

American Compass Economic Plan

In a previous Fifty Year Perspective post, I described a movement among a small group of Republican leaders who have proposed a fundamental redirection of U.S. economic policy. The group, called American Compass, is led by Oren Cass, a former aide to Mitt Romney during his run for the Republican nomination for president. He was joined by four Republican senators – J.D. Vance from Ohio, Marco Rubio from Florida, Todd Young from Indiana, and Tom Cotton from Arkansas – who presented the organization’s position document on Capitol Hill in June 2023. Their positions present an opening for bipartisan negotiation on national economic policy.

Cass wrote a book in 2018 titled “The Once and Future Worker: A Vision for the renewal of Work in America.” In it he laid out his plan for an economy that replaces an economic policy focused on GDP growth and rising consumption with one based on his hypothesis, “that a labor market in which workers can support strong families and communities is the central determinant of long-term prosperity and should be the central focus of public policy.”

Cass regards the essential challenge for economic stability to be the need for a supply of available labor that is “responsive to market signals,” at a wage rate sufficient to support a family. The goal is “to ensure that every person, no matter her starting circumstances, can find a vocation that allows her to support a family, live in a community where she can build a good life, and then give her children even greater opportunity than she had.”

Cass’s plan includes adoption of an educational system common among countries of the Organization of Economic Cooperation and Development (OECD). The OECD consists of 38 democratic countries with free market economies and includes the most developed and powerful economies in the world. Common among them is a separation of high school students into educational systems targeted to different outcomes. Some guide students toward college and others toward vocational training.

Recognizing that some jobs for which students prepare may not provide sufficient income to support a family, Cass introduces the concept of a “wage subsidy.” That is an amount added to a worker’s pay to cover the difference between what the employer will pay and what the worker demands. The difference is made up by the federal government and would replace direct payments to unemployed persons.

Cass proposes this as preferable to setting a minimum wage which employers must pay, possibly causing employers to lay off some workers. The wage subsidy is paid for through taxes, in effect taking tax money from the wealthier workers and paying it to low-wage workers. It may cost the government the same as what is paid to poor people who do not work, by instead subsidizing work, increasing jobs and employment.

A substantial share of the safety net would shift from a goal of maintaining people in poverty to a goal of moving them out. The result would be a two-tiered antipoverty policy: “for those capable of earning an income, a labor market with adequate opportunity and wages for all; [or] where self-sufficiency is not possible, a safety net.” Cass would shift implementation of this resource transfer model “to people at the local level who can tell the difference between different people’s capacity to work and make a difference in their lives.”

Cass also advocates for a rebalancing of environmental policy that “prioritizes industrial expansion over further environmental quality,” contending that current policy does not adequately consider effects on employment. While consistent with his focus on workers and families, he does not address environmental quality as a dominant issue. His proposals set a stage for bipartisan negotiation.

Bipartisan Green Shoots

From a recent (June 2023) document come these four quotes by a conservative political organization:

But the free market alone does not guarantee that individual and public interest will in fact align. Market fundamentalism’s basic error is to misunderstand this point.

Rather than rewarding businesses for taking on potentially ruinous levels of debt, by allowing them to deduct interest payments from their taxes, the law should make the downside more costly for investors and do more to protect workers and communities caught up in an ensuing bankruptcy.

Yet while the right talks frequently about the consequences of broken families for children’s futures, and declining marriage and fertility for the economy’s growth, it has rarely recognized that supporting families must therefore be a central element of economic policy.

When workers organize, they are able to support each other and assert their voice and dignity within the workplace. They also develop the power to counterbalance capital, creating the balance of power and mutual dependence that capitalism requires.

Not what you would expect from a conservative organization? But this conservative organization makes it a point that mainstream conservativism has drifted toward libertarianism, much to the detriment of the country. Libertarians believe that the market economy should be free of restraints imposed by government regulation. It’s a free country and the economy offers opportunity for everyone. If someone cannot thrive, so be it. Anyone can become president; just look at the 44th and 45th for proof.

The new organization goes by the name American Compass. Its executive director is Oren Cass, a former aide to Mitt Romney during his run for the Republican nomination for president. Four Republican senators – J.D. Vance from Ohio, Marco Rubio from Florida, Todd Young from Indiana, and Tom Cotton from Arkansas – presented the organization’s position document on Capitol Hill in June. The document, titled “Rebuilding American Capitalism: A Handbook for Conservative Policymakers” is the source of the four quotes above.

Lest someone argue these do not sound like conservatives, note that the organization supports abortion restrictions, opposes gun laws and makes excuses for Donald Trump’s behavior. But that does not mean there is no space for bipartisan cooperation on foundational discussions to improve capitalist economy.  Wide differences will emerge as to how to strengthen domestic manufacturing or restore voice and credibility to labor unions, but there is enough agreement on goals to find starting points. Here are some of the document’s positions:

      • Promote non-college career pathways.
      • Guarantee workers’ legal right to organize.
      • Support families as they raise children.
      • Channel investment to national priorities.
      • Eliminate the trade deficit.
      • Discourage financial engineering.

Some points may be challenged out of the box. For example, encouraging more domestic manufacturing may instigate higher prices for consumers. A proposal to prohibit unions from engaging in partisan politics would put labor at a disadvantage unless corporate lobbying is restrained as well. For some, the very suggestion of a national industrial policy is intolerable.

American Compass aims to refocus politics from economic growth to lifting living standards for workers, families, and communities. The first signs of the economy emerging from the Great Recession were called Green Shoots. Agreement to focus on living standards may encourage emergence of bipartisan green shoots.

Anti-Poverty Policy

The recent blog post, Rethinking the Federal Budget, described U.S. underperformance in provision of numerous services that provide for the population’s education, health, infrastructure, and well-being in preparation for their future; and it reviewed misappropriation or underfunding of the budget necessary to meet needs. The post stated, “Poor education and healthcare beget poverty. Inadequate infrastructure places good jobs out of reach, limiting potential for some workers to raise their income. More to the point, a subset of the US population carries the burden of all these shortcomings.”

The emphasis was on the level of taxation required to meet those needs. However, government actions, or inaction, beyond budgeting make it likely a life in poverty will be passed from generation to generation. That is the subject of a just-released book by sociologist Matthew Desmond titled Poverty, By America.

Desmond notes that in order for households to receive a higher allocation of food stamps, an unmarried partner of the head of household must not live in the same residence. The cost of maintaining two households increases poverty, defeating the purpose of providing food stamps.

Low wages leave workers unable to afford basic necessities. Raising the minimum wage is purported to increase unemployment, even though, as Desmond asserts, “the employment effect of raising the minimum wage is inconsequential.” Unionization is opposed by major corporations. Workers want the right to bargain collectively for better wages and working conditions. Union households have on average 10-20% better pay than non-union households, and nearly 30% when benefits are included.

Several states have passed legislation to limit the use of non-compete clauses. Non-compete clauses barring employees from working for a rival business restrict workers’ ability to find employment in the industry in which they have experience, trapping them in their current jobs.

Low pay causes high employee turnover. Research by the Good Jobs Institute has documented significant reductions in employee turnover after increasing worker pay. Sales, productivity, and customer loyalty increased as well. Desmond adds, “When poor workers receive a pay raise, their health improves dramatically. Studies have found that when minimum wages go up, rates of child neglect, underage alcohol consumption, and teen births go down.”

Research on policy counterproductive to reducing poverty has a long history. Desmond’s examples are not new. Instead, Desmond’s objective is to acknowledge that the general public’s pursuit of personal interests contributes to the plight of low-income households. Shoppers shop for the lowest price on the goods they purchase, disregarding the effect on wages. Homeowners oppose intrusion of higher density/lower cost housing in their neighborhoods. Scarcity of housing drives up cost of what low-cost housing exists. Quality of education varies with the taxable property of school districts. Public benefits offered by the federal government, such as tax deductions for interest on mortgages and student loans, disproportionately accrue to higher-income households.

Desmond argues that those who these arrangements favor must be willing to forego some of their advantages, and repudiate the pretense that the U.S. cannot afford to reduce poverty.

 

Rethinking the Federal Budget

A US default has once again been averted, and the debt ceiling will be raised. Suspending the debt ceiling, even temporarily, provides an opportunity to evaluate the budget-setting process. Time for a rethink.

The current approach would lead one to believe that the objective is for the government to spend as little money as possible. Rather than starting with the current budget and looking for places to cut, an evaluation of needs would be a preferable way to ascertain whether adequate support is being provided for all those non-defense discretionary services – schools, roads, space exploration, energy, courts, public safety, veterans benefits and a safety net for the poor, among others – that make up 15% of the 2023 fiscal year budget, and are the targets of budget-slashers.

What is a reasonable way to look at needs? Consider this: The US, the wealthiest country the world has ever known, is falling short in preparing for its future, as attested by its international rankings:

Ranking 15th or 28th or 36th suggests that the US can do a lot better in preparing its people for a fulfilling life. A theme of Fifty Year Perspective is that everything is related to everything else. That is true of this list. Poor education and healthcare beget poverty. Inadequate infrastructure places good jobs out of reach, limiting potential for some workers to raise their income. More to the point, a subset of the US population carries the burden of all these shortcomings. For the future health of the US economy, maximizing the productivity of everyone in the work force will be necessary to offset the effects of an aging population.

Clearly the tax cuts of the last two decades were mistakes. They did not pay for themselves. The 2017 Trump tax cuts cost $1.7 trillion dollars in lost revenue. Those 2017 tax cuts combined with the Bush tax cuts and their extensions through Obama administration years have cost $10 trillion since their creation.  Raising taxes on high-income individuals and corporations would only go so far. The goal should be an equitable budget that increases opportunity for more persons to thrive and contribute to economic growth; a budget that includes enough revenue to pay down debt, not just make interest payments, looking to a future when borrowing, if necessary, does not generate interest payments that claim 10% or more of budget dollars.

Congressional District Boundary-setting

“Reinventing American Democracy” was the objective of a 2018-2020 commission by the American Academy of Arts and Sciences, involving a broad and diverse group of hundreds of American citizens. The report of the commission is titled Our Common Purpose. Its recommendations for the US Supreme Court were cited in the recent Fifty Year Perspective blog post, Supreme Court Reform.

Among the report’s 31 recommendations, the Commission addressed the process of delineating congressional districts for each state. That recommendation stated: “Support adoption, through state legislation, of independent citizen-redistricting commissions in all fifty states. . . with the goal of establishing national consistency in procedures.”

The method for establishing congressional district boundaries is left to the individual states by the Constitution. In most states districts are drawn by state legislatures. Other states use independent commissions. The process is unavoidably politicized; how lines are drawn can favor one party over another.

In 1812 the Massachusetts legislature created a map with a district that appeared to be in the shape of a salamander. Although Governor Elbridge Gerry was unhappy about the highly partisan districting, he approved the map. Such political manipulation of congressional district boundaries came to be known as gerrymandering. Over 200 years later gerrymandering is still a time-honored tradition practiced by both political parties. Court challenges have successfully blocked some of the most egregious instances.

We have only to look at Massachusetts, the birthplace of gerrymandering, for its consequences. The state has a Republican governor but Democrats control both houses of the state legislature. US congressional district maps are drawn and adopted by the state legislature and approved by the governor to become law.

The 2021 redistricting was approved largely along party lines by the Democratic-controlled legislature and signed by the Republican governor. The legislature had sufficient majorities to override a veto by the governor. The first map displays US congressional district boundaries for Massachusetts’ nine districts; blue indicates Democrats hold 100% of the nine seats in the US Congress. (Click on map to enlarge.)

In the 2020 presidential election, the popular vote in Massachusetts was 66% for Joe Biden and 32% for Donald Trump. Biden won in every county in the state. But as shown on the second Massachusetts map, which displays voting in the 2020 presidential election by municipalities, several areas of Trump supporters are evident in red.

Without knowing the density of population in the Trump areas, it is not possible to say for certain that a Republican-leaning US Congress seat could have been carved out. The first district, encompassing the westernmost part of the state, includes many of the Republican-leaning municipalities, yet a Democrat was elected to the seat.

Gerrymandering is alive and well in Georgia. In a state where Biden beat Trump by just 0.2% and both US senators are Democrats, nine of Georgia’s fourteen US congressional seats are held by Republicans and just five by Democrats. The third map illustrates 2020 presidential election results by county.  Four of the Democrats represent districts in and around Atlanta, in the blue counties in the northwest part of the state. The fifth is in the southwest corner of the state. The blue counties on the east central part of the state include Augusta. Those mostly low-density counties are divided between two Republican-held districts.

The Republican governor and Republican-controlled state legislative houses are in full control of redistricting. The US congressional district map was signed into law on December 30, 2021, and allowed the Democrats to retain a district in southwest Georgia while losing a district northeast of Atlanta to Republicans, for a net loss of one US congressional seat for Democrats.

Redistricting in several states were challenged as illegal gerrymanders prior to the 2022 midterm elections but were used in the elections anyway. Cases have come before state courts in Alabama, Arkansas, Florida, Georgia, Louisiana, New Mexico, New York, North Carolina, Ohio, South Carolina, and Utah, and some states may be forced to again reconfigure their House districts. The US Supreme Court, in hearing some of the state cases, will set precedent.

In particular, a North Carolina case now before the Supreme Court (Moore v. Harper) could affirm the “independent state legislature” doctrine, which limits or even bars state courts from overturning state legislatures’ decisions on congressional maps. Should the court affirm the “independent state legislature” doctrine in the North Carolina case, there would be no chance for the independent citizen-redistricting commission recommendation by the American Academy of Arts and Sciences to become a national standard.

Supreme Court Reform

Before the Supreme Court came under daily scrutiny of its judicial neutrality and ethical standards, it was under the microscope, along with other branches of government, in efforts to improve our democracy.

In 2020 the American Academy of Arts and Sciences published a report with recommendations from The Commission on the Practice of Democratic Citizenship. The report is titled Our Common Purpose: Reinventing American Democracy for the 21st Century. In 2019 the Commission conducted forty-seven “listening sessions” around the county hearing views on democracy from Americans of different demographic and political backgrounds.

The report included proposals for a wide range of democratic processes: Redistricting, campaign finance, voting and elections, citizen engagement, civic infrastructure, social media, and national service. Included was a detailed proposal for restructuring the Supreme Court. The recommendation proposed,

Establish, through federal legislation, eighteen-year terms for Supreme Court justices with appointments staggered such that one nomination comes up during each term of Congress. At the end of their term, justices will transition to an appeals court or, if they choose, to senior status for the remainder of their life tenure, which would allow them to determine how much time they spend hearing cases on an appeals court.

The report stated that federal legislators have the power to enact eighteen-year terms on the Supreme Court with the balance of their life service in lower courts with no loss of salary for the remainder of their careers. (Justices who retire under the current system automatically transition to senior status.) Each president would be responsible for two nominations during a four-year presidential term, resulting in a less partisan process.

In April 2021, President Biden created the Presidential Commission on the Supreme Court of the United States. Its 280-page report submitted in December 2021 by the 34-member commission, described various proposals for reforming the court, but was not tasked with making recommendations. The commission found bipartisan support for implementing 18-year term limits, but disagreement over expanding the size of the court beyond its current nine seats. The Biden Administration has opposed both reforms. Comments before the commission expressed belief that term limits could be perceived as founded on the view that judges are partisan, political actors, and would threaten the basic structural principle of judicial independence. Others simply did not want to change a practice that has worked well for over 230 years.

Since the report’s release, news sources have revealed unreported instances of questionable ethics by Supreme Court justices:

Annual luxury vacations provided to Justice Thomas and his wife by billionaire Harlan Crow

$80,000-100,000 consulting fees paid to Justice Thomas’ wife by a conservative legal activist

Legal recruiting by Chief Justice Roberts’s wife for placement of lawyers at firms that appear before the court

Property sold by Justice Gorsuch to the CEO of a law firm with regular business before the court

These recent disclosures prompted a Senate Judiciary Committee hearing on May 2, 2023, to discuss ethics reforms for the Supreme Court. Comments by both Republican and Democratic committee members expressed a desire for the court to be more transparent. The legality of Congress imposing ethics standards was questioned, an argument that was countered by a former conservative federal judge, J. Michael Luttig, and Laurence Tribe, a liberal Supreme Court litigator and Harvard professor.

The Committee invited Chief Justice Roberts to attend the hearing. He declined, citing “separation of powers concerns and the importance of preserving judicial independence.” Roberts attached a “Statement on Ethics Principles and Practices” signed by all nine justices describing the ethical rules they follow about travel, gifts and outside income.

As the debate on court reform expands, parties to the debate show no signs of agreeing to change from current positions.

Blue Cities in Red States

Is there a relationship between which states are recording rapid employment and population growth and which political party dominates in those states? Growth has tended to be in warmer parts of the country, and many of those Sun-Belt states tend toward Republican voting.

County level maps for the 2020 presidential election reveals concentrations of Democratic voting in southern states that had mostly Republican-voting counties. And those Democratic-voting clusters are generally the states’ denser population areas. In some states the population in metro areas comprises over half the state’s total.

Texas, with its 254 counties, is a case in point. Counties colored in red on the Texas map voted for Donald Trump in 2020, and counties in blue voted for Joe Biden. (Maps of each state were produced for Wikimedia Commons. Click to enlarge maps.) The state has three metropolitan areas of one million population or more. They are Dallas-Fort Worth-Arlington (#1 on the map),  Houston-The Woodlands-Sugarland (#2), and Austin-Round Rock-Georgetown (#3). The state’s population increased by 15.9% between 2010 and 2020, while the three metropolitan areas’ total population increased by 21.1%; the non-metropolitan areas increased 9.3%. The metropolitan areas’ share of state population increased from 56% to 58.5%.

Metropolitan area growth may explain changing voting patterns at the level of state elections. Greg Abbott was first elected Texas governor in 2014 by a margin of more than 20%. In 2018 he won a second term by just over 13%. His margin in 2022 was 11%. Along the state’s southern border, Democratic candidates unexpectedly won two of three open seats. Trump won the state by a margin of 5.6% in 2020.

Florida represents a slightly different situation. It has three metropolitan areas of one million or more people: Miami-Fort Lauderdale-Pompano Beach (#1), Tampa St Petersburg-Clearwater (#2), and Orlando-Kissimmee-Sanford (#3). They represent 63.1% of the state’s population. The metropolitan and non-metropolitan rates of growth were practically the same. Trump’s margin of victory was 3.4% in 2020.

North Carolina has two metropolitan areas of one million people or more. They are Charlotte-Concord (of which 15% is in South Carolina, #1 on map) and Raleigh-Cary (#2). The metropolitan areas grew at more than double the rate of the state as a whole, and in 2020 represented 35% of the state. Trump won North Carolina by 0.34%.

Two states that Trump lost by very narrow margins in 2020 had their results contested by the Republican Party (and Fox News). Arizona’s two metropolitan areas of one million or more population are Phoenix-Mesa-Chandler (#1) and Tucson (#2). The two together grew by 13.6% between 2010 and 2020, somewhat faster than the state’s 11.9%, and nearly three times the rate of the non-metropolitan areas. The metropolitan areas in 2020 comprised over 82% of the state’s population. Biden’s margin in the 2020 election was 0.3%. The state’s county configuration creates a unique pattern, with a few large low density counties voting democratic.

Georgia has one metropolitan area, Atlanta-Sandy Springs-Alpharetta (#1 on map), with a population over one million. The metro area grew over 15% between 2010 and 2020, three times the rate of non-metro areas. In 2020 the metro area comprised just under 57% of the state’s population. Biden’s margin of victory in Georgia was 0.23%.

David Brooks, in a recent opinion piece in the New York Times, questioned why the fastest-growing states were mostly red. Are people attracted to Southern states by their lower taxes and cost of living? By lower energy costs? By friendlier business climates? On further analysis, he noted that the growth was not occurring in the “red” parts of the red states, but in the large metropolitan areas. “Republicans at the state level provide the general business climate, but Democrats at the local level influence the schools, provide many social services and create a civic atmosphere that welcomes diversity and attracts highly educated workers.”

Are the metro area voters conservative on economic issues and liberal on social issues? If so, what can be expected of state-level politics as metro populations become ever-larger shares of state populations? All five of these states, including the two that voted for Biden in 2022, have Republican majorities in both houses of their state legislatures. All except North Carolina have Republican governors. Recent voting patterns suggest demographic changes are linked to shifts in party control at state level.

How Did Citizens United Work Out?

A citizen of Switzerland who has lived in the United States for decades is among the small group of billionaires donating hundreds of millions of dollars to various political causes. That’s supposed to be illegal. Among his donations are contributions to election campaigns of Democratic candidates and progressive causes.

In writing for the Supreme Court’s January 21, 2010, opinion in Citizens United v. Federal Election Commission, (FEC) Justice Anthony M. Kennedy wrote, “With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.” History has proven Justice Kennedy mistaken.

Election spending restrictions in place for over 100 years prior to Citizens United were overturned by the Supreme Court decision, which enabled “independent political spending,” provided it was not coordinated with a candidate’s campaign. Justice Kennedy’s transparency has been sidestepped by donors contributing funds to organizations that are not required to disclose donors’ names.

Two months after Citizens United, a District of Columbia Court of Appeals ruling in SpeechNow.org v. FEC “effectively paved the way for super PACs — ushering in an era of groups accepting massive donations and spending practically unlimited sums so long as they don’t coordinate with candidates or political parties.” As explained in reporting by OpenSecrets, “While super PACs are required to disclose donors, the ultimate source of those funds can be concealed behind contributions from shell companies or dark money groups.”

As a result, the citizen of Switzerland and other billionaires, foreign and domestic, make unlimited donations to candidates and on partisan issues before federal and state legislatures. OpenSecrets estimated the two court decisions resulted in spending on the 2022 federal and state midterm elections exceeding $16.7 billion, as “dark money” was increasingly routed through shell companies or nonprofit groups, money not reported to the FEC.

The 2020 presidential election was the first that benefited Democrats over Republicans. Per OpenSecrets, “That’s a continuation from the 2018 midterm elections when Democrats benefited from more dark money than their Republican counterparts at the federal level for the first time since Citizens United.” And yet, “Democrats have consistently called for closing loopholes in campaign finance law that allow secret donors to bankroll pricey political ads.”

Although 63% of Democrats and 55% of Republicans favor reducing the influence of money in politics, “Republicans have defended dark money and remain opposed to efforts to unmask secret political donors. Wealthy donors have said in private they make dark money donations to avoid backlash from their customers and employees.”

Allowing wealth to be a determinant of political influence violates the democratic principle of one man, one vote. Regardless of whether one agrees with some of the causes supported by that Swiss citizen living in Wyoming, no individual or organization should be allowed to use wealth to subvert democratic government.

What Does “Limited Government” Look Like?

It’s budget time in the US Congress. What needs more money and what can be cut? What is untouchable and what is unnecessary? Can the conservative goal of “limited government” be met? Can the liberal goal of providing a wide safety net be achieved? And what do the legislators’ constituents want?

The perennial partisan stalemate over the size of the federal budget for the coming year is at an impasse. The nebulous concept of “limited government” is raised against a growing list of wants and needs that can only be satisfied by increased borrowing or taxes.

Between March 16th and March 20th, 2023, The Associated Press-NORC Center for Public Affairs Research surveyed 1,081 adults concerning their opinions regarding US government spending. Questions covered the size of the US budget and whether the government was spending the right amount for a list of services. When asked if the US government is spending too much, too little or the right amount, 60% said too much, 16% said too little, and 22% said about the right amount. By this survey, the majority of those interviewed believe government services should be cut.

The survey went on to ask where cuts could be made. Of sixteen areas, in only one did a majority of respondents say too much was being spent. That area was assistance to other countries; 69% said too much was being spent. Areas for which a majority said too little was being spent included education, health care, infrastructure, Social Security, and Medicare. When combining the “too little” numbers with the “about the right amount” numbers, little room is left for cutting. (Click on table to enlarge.)

The services provided by federal, state, and local levels permeate every area of support for individuals, families, and businesses with quality education from pre-kindergarten through post-graduate; support for science and innovation; insurance against unemployment, old age, ill health, and poverty; regulation of competition, finance, and money; courts and legal system; protection of intellectual property; infrastructure; political and social stability; protection against foreign enemies, pandemics, natural disasters, and crime; zoning and the use of land; public service news; and management of the economy and public finances.

Is providing all desired services even possible? Social Security long-term solvency could be extended by eliminating the cap on income subject to the payroll tax. Beyond Social Security, the options are raising the debt limit to authorize more borrowing, or raising taxes. The case for raising taxes has been presented in a previous Fifty Year Perspective post. That post reported multiple comparisons among countries, with the US falling behind many EU countries in education, healthcare, income inequality, and poverty. EU countries’ government expenditures are larger relative to GDP and have higher marginal tax rates than the US. And for good measure, the 2023 ranking of the world’s happiest countries ranked seven EU countries happier than the US.

China’s Population Problem

China silences critics of the Communist Party

China imprisons minority Uyghurs in forced labor.

China requires foreign-owned businesses to divulge intellectual property.

China disregards patent protections.

China reneged on commitments to Hong Kong’s freedoms.

China threatens Taiwan’s independence.

China uses technology to spy on its citizens.

China places restrictions on where its citizens can live.

None-the-less, China needs some love.

Globalization has enabled China’s authoritarian government to lift nearly 800 million people out of poverty over the last four decades. China moved from state-owned enterprises to a more productive economy of fast-growing privately owned enterprises. And yet, as of 2020 some 600 million Chinese lived below China’s poverty line (about $5.00 per day). Chinese President Xi Jinping intends to spread “common prosperity” more widely among the population by enlarging the economy. But China faces both a looming demographic crisis and trade restrictions from Western countries.

China’s population fell by 850,000 in 2022. China’s one-child policy between 1980 and 2016, along with more education and career opportunities for women, have resulted in a fertility rate well below that required for a stable population size.  China’s working-age population peaked in 2015 and began to fall; it is expected to be nearly 25% smaller in 2050 than 2015. The number of people 65 and over will double by 2050.

The last three years have brought vast changes in globalization. Covid-19 caused temporary reductions in Chinese manufacturing facilities, and shipping bottlenecks greatly increased the time required to get products to market. Multi-national corporations looked for shorter and more resilient supply chains, both for sustaining economic growth, and for avoiding overreliance on China. Concern over security has prevented some Chinese technology from entering US and EU markets. US legislation denying China access to advanced technology is intended to maintain US superiority.

According to US Treasury Secretary Janet Yellen, “We do not want a retreat from the world, causing us to forgo the benefits it brings to the American people and the markets for businesses and exports,” but concern remains over economic decoupling from China.

Xi Jinping sees these events as a clear threat. In February he declared, “Western countries led by the United States have implemented all-around containment, encirclement and suppression of China, which has brought unprecedented grave challenges to our nation’s development.”

Nathan Gardels, editor-in-chief of Noema Magazine, warns, “The path to war in Asia is all but certain if China, which over the last few decades has ‘arrived late’ to modernity in spades, becomes convinced that its future will be blocked by the West.”

In another recent article in Noema Magazine, China’s Looming Demographic Disaster – NOEMA (noemamag.com) a sociologist and historian at George Mason University, wrote that instability in China “is not something that Western nations should hope for.” Better for the West to help China “improve its economy and manage its aging population. That is likely to be a more effective path to winning cooperation on vital issues of climate change and regional peace, and to help China’s citizenry pursue their own goals of greater freedom and security.”

Goldstone asserts that China’s demographic future make it unlikely it will overtake US or EU economies. China also faces competition from its South Asia neighbors whose labor costs have risen much slower than China’s and are now one-third of China’s. Those neighboring countries – India, Malaysia, Philippines, Thailand, Vietnam – comprise an alternative supply chain that The Economist refers to as Altasia.

An unstable China is not safe for the rest of the world; neither does it ensure security for the mainland population. Sharp declines in China’s fertility and labor force will thwart Xi Jinping’s ability to deliver on his commitment to “common prosperity” and create what Goldstone predicts as angry populism and widespread popular uprising against China’s leadership. The best course of action is for the US to continue pursuing quiet diplomacy even as China pursues “wolf warrior diplomacy.” While China tightens national security on social media, combats domestic protestors, and denounces the West for all challenges to China’s rise as a global economic powerhouse, the US should continue, as Secretary of State Antony Blinken has done, to accentuate diplomacy while reinforcing the idea of a relationship grounded upon a rules-based international order. The outcome should encompass a vision of an Asia and Western alliance where partnerships foster prosperity, freedom, and sustainability for all.

Guns and Gun Deaths

In case you are feeling like gun violence has become more frequent in recent years, you are not imagining it. It’s real.

In 2019, the year prior to the Covid-19 pandemic, the United States recorded 14,414 firearm homicides, according to data from the Centers for Disease Control and Prevention. That number increased in 2020 by 34% to 19,384, and by another 8% in 2021, to 20,966. Firearm homicides decreased slightly in 2022.

Over the same period, the number of gun purchases was tracked by the Federal Bureau of Investigation through the National Instant Check System (NICS). The annual figures for gun purchases were 13.5 million in 2019, 22 million in 2020, 20 million in 2021, and 16.4 million in 2022. In 2018 there were an estimated 120.5 guns per 100 people. Gun sales would suggest that number has increased since 2018.

As of 2018, the U.S. had a rate of 4.46 firearm deaths per 100,000 people. That is nearly seven times higher than the second highest death rate (Israel) among the world’s major democracies, and twenty-one times the average of  the world’s major democracies. Comparable firearm death rates for some Central and South American countries are three to four times the U.S. rate.

Figure 1 graphs countries’ firearm death rates per 100,000 people on the vertical axis, and their number of guns per hundred population on the horizontal axis. The relationship between the number of guns in a country and the firearm death rate varies among the world’s major democracies. (Click to enlarge figure.)

The U.S. does not appear on Figure 1. The scale of the horizontal and vertical axes must be increased to display the U.S. data. Figure 2 makes that adjustment. The U.S. had 4.46 homicide deaths per 100,000 people and 120.5 guns per 100 people. All the data points from Figure 1 fit in the rectangle in the lower left corner of Figure 2. (Click to enlarge figure.) The time period for each country’s data varied between 2015 and 2019, and firearm death rates can vary widely from year to year. The U.S. firearm death rate peaked at 6.32 in 2021, falling to 6.04 in 2022. Comparable figures for each country for more recent years would change the figures somewhat but the pattern would be the same.

Shocking as these statistics are, they do not suggest that gun violence will be reduced simply by decreasing the number and availability of guns. Better gun violence data, stronger gun safety laws, violence intervention programs, and police training are among recommendations proposed by activist organizations such as the Giffords Law Center. Until such recommendations are enacted at state and national levels, these numbers will not come down.

 

Dealing with Deficits

The recurring Congressional battle of the budget is playing out again: What can be cut? Should the borrowing limit be raised? Can funds be moved from A to B? Historically, the battle ends with Republicans and Democrats agreeing to raise spending while cutting taxes and making up the difference with more borrowed money. Deficit spending is the norm.

Thinking only of the deficits that result from the government spending more than it expects to take in ignores the daily deficits that are keeping America from reaching its potential. We have:

  • Healthcare deficits
  • Educational achievement deficits
  • Infrastructure deficits
  • Environmental quality deficits
  • Racial equity deficits
  • Affordable housing deficits
  • Work force development deficits
  • Community safety deficits

A Fifty Year Perspective blog post reported the United States spends far less, as a percent of Gross Domestic Product, than other OECD countries in providing citizens with infrastructure and social services necessary to lead productive lives. Americans need more federal spending to eliminate these deficits.

The U.S. has a lower rate of taxation on wealthy families and individuals than 23 of 38 OECD countries. Raising the U.S. top income tax rate is a reasonable response for eliminating budget deficits as well as government services deficits.

Don’t Write Off the 118th Congress, Yet

Thanks to an inauspicious beginning to the 118th Congress, the consensus among many observers is, don’t expect much from the 2023-2024 session. If fifteen votes were required before agreement was reached on a Speaker of the House, how can it be expected to tackle the debt ceiling, inflation, immigration, or anything else of consequence?

There is another angle from which to view the current state of American politics, and that is in terms of momentum. The fact that the 2022 mid-term elections took an unexpected turn is widely agreed. But the context in which the mid-terms occurred suggests the turn began in the months prior.

A retrospective of President Joe Biden’s first two years in office comprises significant legislative successes, some with surprising levels of bipartisan support. Biden signed five Democratic-sponsored acts that received Republican votes:  Infrastructure Investment and Jobs Act on November 25, 2021, Safer Communities Act (including gun background checks) on June 25, 2022, CHIPS and Science Act (including support for domestic manufacturing) on August 9, 2022, Respect for Marriage Act (approving same-sex marriage) on December 13, 2022, and Electoral Reform and Presidential Transition Improvement Act on December 23, 2022.

The level of support varied widely among the 215 Republicans in the House of Representatives, from as few as 4% voting for Electoral Reform, to a high of 23% for Respect for Marriage.  The support from the 50 Republican Senators was higher, from 25% for Respect for Marriage, and 38% for Electoral Reform, to 39% for Infrastructure Investment. Votes for each act and both House and Senate members appear in Chart 1. Senators are elected for six years, giving them less anxiety over quick retribution, and credit or blame for a larger body of work. Representatives in the House run for re-election every two years, so the calendar is more of an issue for them when voting.

Chart 1 – Click to enlarge

 

 

 

 

 

 

Chart 1 displays the names of Republican congressmen who voted for each of the five Democratic-sponsored acts, and when their current terms end. For Republican senators it shows if they were re-elected and have terms ending in 2028 (in red font), if their terms end in 2024 or 2026 (in blue font), or if they did not return to Congress in 2022 (in black font). If not returning, the reason is listed, which, in all cases for senators, is retirement. For Republicans in the House of Representatives, members who were re-elected are shown with end of current term of 2024 (in red font), and reason for not returning in black font. Three Republican representatives who did not return to Congress lost their primary elections; one representative was defeated in the mid-term election.

All representatives who retired had announced they would not run in the 2022 mid-term elections. The chart leaves open questions of what motivated these retiring Republican members of Congress to vote for the five acts. Did retiring give senators and representatives freedom to vote conscience rather than party ideology? Similarly, did years remaining on their terms free senators from possible retribution? Eight Republican senators voted for one or more acts and successfully ran for re-election.

There were a total of 46 representatives who voted for one or more of the five acts and won re-election. The Respect for Marriage Act received the most Republican votes: 47 voted for that act and 37 of them were re-elected. Over two-thirds of Americans support same-sex marriage, so arguably, voting was less motivated by ideology and more by public opinion. Only one other act, the Chips & Science Act, received more than 20 Republican House votes, and only half of them were re-elected. The act is to benefit U.S.-based manufacturing, especially for advanced semiconductors. Republican Party leadership urged members to vote against the bill, partly in retaliation against Democrats for pushing through reconciliation on a separate bill at about the same time.

The Safe Communities Act, which includes gun background checks, received only nine Republican House member votes, even though 90% of Americans favor background checks. Party ideology probably explains why seven of the nine did not return to Congress. That act received far more Republican support in the Senate. The Infrastructure Investment Act received the greatest Republican support among senators; 16 of the 19 who voted for the act returned for the next Congress, including four who were re-elected. Few Republicans disagree with the need for massive investment in the nations roads, bridges, and transit systems. Opposition focused on what the act will add to the national debt.

Chart 2 – Click to enlarge

 

 

Chart 2 lists three major pieces of legislation passed by the 117th Congress without a single Republican voting in favor. The American Rescue Plan Act, signed into law on March  11, 2021, included funding for vaccinations, Covid relief for schools, families, and unemployed persons, and for lower health insurance premiums. The Build Back Better Act, signed November 19, 2021, funded programs addressing climate change and renewable energy, childcare and universal pre-Kindergarten, Medicare and public housing. The Inflation Reduction Act, signed August 16, 2022, funded energy security and climate change, extended Affordable Care Act subsidies, negotiated drug pricing, and a 15% corporate minimum tax.

Democrats had majorities in both houses of the 117th Congress. The 118th Congress is split with Republicans in control of the House of Representatives and Democrats in control of the Senate. That difference will make passage of any major legislation less likely. But losses by far-right candidates in the 2020 mid-term election, and Republican defections from leadership directives, may foretell further bipartisanship. As the benefits of laws passed in 2021 and 2022 begin to take form in bridges, wind farms, and chip factories, Biden will have many opportunities to preside over infrastructure dedications and factory openings. Many of the Republicans senators and representatives who voted against that legislation are lining up for shares of those benefits for their districts.

Dana Milbank characterized the Republican agenda for the House of Representatives by citing their priorities mentioned by leadership in an interview by Fox News: Inflation was mentioned only once, jobs once, economy twice, and investigations 20 times, including FBI, DOJ, China, Covid-19, Fauci, and Hunter Biden’s laptop. Extending the admittedly limited bipartisanship of the 117th Congress would be far more beneficial.

Migration as Employment Policy

High on the to-do list of the executive and legislative branches of the federal government is immigration policy. Who is allowed entry to the country, what is their reason for entering, the circumstances of entry, legal or otherwise, are subject to myriad regulations so complex as to be almost incomprehensible.

Migrants have various reasons for leaving their native countries: better work opportunities; better living conditions; better education; safety from persecution and violence; escape from devastation of natural disasters or environmental danger; reunification with family; marriage.

For a country with extremely contentious politics and polarization, the choice of the U.S. for the million or so people arriving as migrants annually is remarkable. The U.S. is home to over 43 million immigrants, more than any other country, by a factor of at least 3:1. As a percentage, 14% of the U.S. population is foreign born, less than Canada with 22%, and Australia with 28%. Over 12 million U.S. immigrants were born in Mexico, 2.4 million in China, and 2.3 million in India.

Three-quarters of immigrants are as likely as U.S.-born residents to have a bachelor’s degree or more. Immigrants from South Asia are most likely to have at least a bachelor’s degree. Immigrants from Nigeria and South Africa are more likely to have post-graduate degrees than other immigrant groups. The percentage of immigrants employed in STEM occupations is higher than U.S.-born residents. Immigrants accounted for 26% of U.S.-based Nobel Prize winners from 1990 through 2000.

Immigrant-led households contributed a total of $330.7 billion in federal taxes and $161.7 billion in combined state and local taxes in 2019. Residents of immigrant-led households had $1.3 trillion in collective spending power (after-tax income) in 2019. There were 3.2 million immigrant business owners, accounting for 22 percent of all self-employed U.S. residents, and generating $86.3 billion in business income.

Pew Research finds 66% of adults surveyed in 2019 saw immigrants as strengthening the country through hard work and talent, while 24% saw them as burdening the country by taking jobs, housing and health care. The statistics do not bear out the fears of those opposing immigration.

Welcoming immigrants of all education levels looks like a ready-made remedy for U.S. labor shortages. From scarcities of farm workers to shortages of technology workers, immigration has produced qualified workers of all skill levels. Increased immigration has the potential to solve worker shortages without fueling inflation, while expanding the U.S. economy. Immigrants have driven economic growth in the past, and they can do so in the future.

Election of 1860

On November 6, 1860, Abraham Lincoln was elected 16th president of the United States, having won 39.8% of the popular vote and 180 of 303 electoral votes. The years leading up to that election encompassed events not unlike those surrounding the election of 2020: A divided country; a president elected without a majority of the vote; conspiracies and violence; pressure on a vice-president to deny the electoral college vote; and contested mid-term elections. The country’s thirty-three states split over the issue of slavery. Lincoln represented the anti-slavery Republican Party. Its platform did not oppose slavery in the existing fifteen southern and border states, but opposed its extension into new territories.

Lincoln was opposed by three major candidates. Northern Democrats selected Stephen Douglas as its candidate. Southern Democrats convened independently, selecting Vice President John Breckenridge as their nominee. The Constitutional Union party nominated an ex-senator from Tennessee, John Bell, for president. Douglas received 29.5% of the popular votes but only 12 electoral votes. Breckenridge had 18.1% of the popular votes and 72 electoral votes. Bell received 12.6% of the popular votes and 39 electoral votes.

Lincoln and the Republican Party won seventeen free states in the north and west. Breckenridge won eleven southern slave states, nine of which did not have the Republican ticket on the ballot. Bell won the three remaining southern slave states. Douglas won only the border state of Missouri and half the electoral votes in New Jersey, splitting the state with Lincoln.

Following Lincoln’s victory the country was torn by rumors. Conspiracies proliferated of a march on Washington to prevent Lincoln’s taking office. Secessionists were said to be bribing federal troops, cutting telegraph wires, and sabotaging the rail lines. Lincoln would be assassinated en route to Washington. Plans were made to stop the counting of the Electoral College votes.

It fell to the Vice-president, John Breckenridge, who had lost the election to Lincoln, to certify Lincoln’s election, a role taken by Mike Pence in 2020. As told in Jon Meacham’s new book, And There Was Light: Abraham Lincoln and the American Struggle, “A hundred plainclothes police from New York and Philadelphia” were engaged to secure the route Breckenridge would take to the House chamber. Breckenridge declared Abraham Lincoln duly elected as President.

Following Lincoln’s victory, eleven southern states voted to secede from the Union and formed the Confederate States of America to preserve the institution of slavery. The Confederates’ attack on April 12, 1861 on the Union’s Fort Sumter began the Civil War, prompting five additional southern states to join the Confederacy.

Lincoln deployed executive power at times even though his actions were ruled unconstitutional by Chief Justice Roger Taney, a southerner. Lincoln was guided by his belief that slavery was wrong and the U.S. was chosen to end it. He was willing to compromise as long as he maintained a path to his ultimate goal of abolition. At times he took action that offended Black and white abolitionists, allowing Black soldiers to be paid less than white soldiers, and considering voluntary colonization of freed slaves in Africa or Latin America. But he always based his decisions on the ultimate goal of ending slavery.

Mid-term elections in 1862-1863 produced victories for Republicans in Ohio and Pennsylvania over opponents regarded as “rebel sympathizers.” The wins were vindication for Lincoln’s policies in his first two years in office. Following Lincoln’s victory in the 1864 presidential election, assassination conspiracies surfaced. Pro-slavery journalists denounced Lincoln as a tyrant, despot and usurper, likely influencing John Wilkes Booth to conspire with four others to assassinate Lincoln, Vice President Andrew Johnson, and Secretary of State William Seward.

While Lincoln’s occasional hesitation in pursuit of ending slavery caused abolitionists to question his commitment, he knew he had to bring his country along gradually toward that goal. The division he encountered is not unlike that confronting executive, legislative, and judicial levels of government today. In Jon Meacham’s words:

A president who led a divided country in which an implacable minority gave no quarter in a clash over power, race, identity, money, and faith has much to teach us in a twenty-first century moment of polarization, passionate disagreement, and differing understandings of reality…. His story illuminates the ways and means of politics, the marshaling of power in a democracy, the durability of racism, and the capacity of conscience to help shape events.

A Year-end Report Card

We live in the wealthiest country the world has ever known. We enjoy amenities of daily life unknown to the most powerful royalty of centuries past. For the most part these conveniences are not limited to those with upper income: 98% of households have electricity, 97% have telephones, 93% have public water, 93% have television, 90% have air conditioning, 86% have Internet access. And yet, we lag behind most other democracies with market-based economies on a variety of measures of development and equity.

The Organization for Economic Cooperation and Development (OECD) conducts triennial surveys of member countries’ student performance in reading, science, and math. The latest available results for 78 countries is the 2018 survey: China had the top score for all three subjects; the United States ranked 13th for reading, 18th for science, and 32nd for mathematics.

CEO World Magazine ranks countries based upon the quality of their healthcare systems. For 2021 South Korea had the highest score; the United States ranked 30th out of 89 countries surveyed.

The World Economic Forum evaluates countries’ infrastructure, including roads, railroads, seaports, electrification, and water quality. For 2019 the Netherlands had the highest score; the United States ranked 10th out of 100 countries. In 2017 the American Society of Civil Engineers estimated U.S. total infrastructure needs over the following 10 years required investment of over $4.5 trillion.

Government budget-making entails deciding what services to provide and the level of support for each service. Countries are compared by measuring government spending as a percent of the countries’ Gross Domestic Product (GDP). OECD ranked 32 countries according to percentage of national GDP represented by government spending. The percentage would be higher for governments that spend at a higher level for infrastructure and social services. For each country’s 2020 total government expenditures as a percent of GDP, France ranked highest and the United States ranked 19th out of 32 countries. For each country’s 2020 expenditures for individual consumption (healthcare, housing, education, etc.) as a percent of GDP, Sweden ranked highest and the United States ranked 31st out of 32 countries.

Revenue from personal income taxes is a major source of government income. Countries vary widely in the maximum tax rate levied on citizens’ personal income. Of 38 OECD countries, Japan had the highest maximum income tax rate, the United States ranked 23rd.

OECD ranks 38 countries by their respective poverty rates. Data for 2021, or the latest available for each country, scored Iceland with the lowest overall poverty rate; the United States ranked 29th. For population age 17 and under, Finland had the lowest poverty rate; the U.S. ranked 25th. For population age 66 and above, Iceland had lowest poverty rate; the U.S. ranked 33rd.

A population’s savings rate indicates the availability of income to acquire financial or non-financial assets. Country saving rates as a percent of country GDP were recorded by OECD in 2021 for the latest available year. Norway had the highest saving rate of 35 countries; the United States was 6th from the bottom.

Income inequality is a measure of the distribution of income within a population, calculated as the population’s Gini Coefficient. In 2021 the OECD ranked countries by their respective Gini Coefficients. A high Gini Coefficient indicates income is less evenly distributed; a low Gini Coefficient indicates income is more evenly distributed. The United States had the 5th highest Gini Coefficient of 37 countries.

The sum of these measures has produced situations such as Montgomery County, Maryland, described as having the state’s largest concentration of millionaires, along with a poverty rate that increased from 5.1% to 8.5% since 2000. Sadly, all of the negative attributes of our society are concentrated on a small subset of our population, too often passed from generation to generation. One has to ask: Is this the country we want?

On January 3rd, 2023, the 118th U.S. Congress will convene. As described in the previous Fifty Year Perspective post, mid-term voters’ expectations of their elected representatives require acknowledging the “complex relationships between and among numerous components on the federal agenda: inflation, labor force, immigration, education, environment, social services, infrastructure, public safety, demographics, tax revenues.”

118th Congress Agenda

The mid-term elections are over and a divided Congress goes to work in January for a two-year term. The elections seemed at times to be more about personalities than policies. Hopefully that will change when the term begins.

Among the voters’ top issues in the 2022 mid-terms were the economy, education, healthcare, energy, and violent crime. Addressing these issues requires understanding complex relationships between and among numerous components on the federal agenda: inflation, labor force, immigration, education, environment, social services, infrastructure, public safety, demographics, tax revenues.

The enduring effects of the Covid-19 pandemic have flowed through many of these issues. First the economy went into free-fall as 22 million jobs disappeared. Twenty-nine months later the number of employed persons recovered, but six months after that, millions of people remain out of work.

The reasons are diverse, and include a transformation in attitudes toward work. Some workers took early retirement, some returned to schooling to prepare for a different career, some must care for elderly parents or small children, some used pandemic relief funds to delay a return to work. Disturbingly, an estimated six to seven million men of prime working age are simply sitting on the sidelines, even as eleven million jobs remain unfilled.

Shortage of workers has cascading effects. Low unemployment fuels inflation. An abundance of vacant jobs means lower GDP and less tax revenue. Increasing immigration quotas to address worker shortages faces political backlash. Revenue shortfall requires either raising taxes or cutting services. Cutting funding for education or child care would ignore the additional demand that the pandemic has placed on those services.

All of these issues relate back to the country’s demographics. A report published in July 2022 by the Congressional Budget Office (CBO) projected U.S. population to 2052.  The 30-year average rate of growth is quite low, 0.3 percent per year, totaling 369 million people in 2052. The rate of growth has been below one percent since 2007 and falling; for the fifty years before that the rate varied between one and two percent but has been on an overall downward trend following the post-World War II baby boom.

The average age of the population is increasing. The number of people aged 65 and over, those eligible for Social Security and Medicare, will increase faster than those 25-54, the prime working age group. Perhaps the CBO report’s most startling finding concerns immigration: “Population growth is increasingly driven by net immigration, which accounts for all population growth in 2043 and beyond.”

All of which points to a packed agenda for the 118th Congress.

The Challenge to Diverse Democracy

When the United States was founded in the eighteenth century as a self-governing democratic republic, it was “a time when similar undertakings had miserably failed in every country where they had been tried.” So wrote Yascha Mounk in The Great Experiment: Why Diverse Democracies Fall Apart and How They Can Endure.

From the outset the enjoyment of promised freedoms in the new United States was not shared by all. The country’s practices have not always been consistent with its principles as stated in the Declaration of Independence and Constitution. Individual freedom and fundamental rights of free speech, freedom of religion and assembly, and due process of law have been denied to minorities, and expansion of voting privileges to all citizens took over a century. Nearly 250 years later the fulfillment of the great experiment is incomplete.

In a sense, the United States is presented with another great experiment: A globalized world has delivered a highly diverse population that challenges the democracy’s commitment to provide fairly distributed opportunity to all its citizens.

Unfortunately, rather than embracing diversity, an us-versus-them mindset has emerged. Fear of being replaced by successive waves of immigrants, specifically “people of color,” has gripped a large share of the U.S. population. The growing minority populations, projected to surpass the white population by 2045, is regarded by some as an existential threat. At the same time, shifting cultural norms are a source of distress for sectors of the population.

A previous Fifty Year Perspective post quoted Columnist Jamelle Bouie’s views on conservative electorates’ “anxieties, fears, anger, resentment, rage, about changing cultural and demographic facts about the country.” Bouie suggested that populist anxieties can only be calmed by Republican politicians, identifying them as “the only actors on this stage who have the agency to do something.”

However, results of 2022 mid-term elections suggest a different path may emerge. Election officials oversaw an efficient and peaceful election. Widespread challenges to election results did not occur. Candidates embracing conspiracy theories over the 2020 presidential election received solid rebuke. Voting on abortion issues reflected the 60% majority of Americans who favor legalization. Voters generally swung to more moderate candidates, both Democratic and Republican.

Eight days after the mid-term elections, the Senate advanced a bill protecting same-sex marriage, with bi-partisan support. A similar bill had passed the House of Representatives in July, also with bipartisan support, a recognition that seven in ten Americans support same-sex marriage.

Given recent political history, it would be unwise to believe the 2022 mid-terms foretell depoliticization. Nevertheless they were a refreshing bit of good news. Just possibly, the mid-term elections may launch a period of political moderation and bipartisanship.

Religious Freedom 1790-1791

On May 29, 1790, Rhode Island became the 13th state to ratify the U.S. Constitution. President George Washington had visited New England states in the Fall of 1789, deliberately bypassing Rhode Island, which had refused to call a state convention to ratify. Following the state’s ratification, President Washington made a trip to Newport, Rhode Island on August 17, 1790.

The small Jewish community of Newport presented the president with a letter reflecting on the battles Washington waged to establish the new nation and wishing him success in his administration. The President reciprocated on August 21, 1790 with this letter to the Hebrew Congregation of Newport, committing the new government to counter bigotry and persecution, and assure the safety of all inhabitants:

Gentlemen:

While I receive, with much satisfaction, your Address replete with expressions of affection and esteem; I rejoice in the opportunity of assuring you, that I shall always retain a grateful remembrance of the cordial welcome I experienced in my visit to Newport, from all classes of Citizens.

The reflection on the days of difficulty and danger which are past is rendered the more sweet from a consciousness that they are succeeded by days of uncommon prosperity and security.

If we have wisdom to make the best use of the advantages with which we are now favored, we cannot fail, under the just administration of a good Government, to become a great and happy people.

The Citizens of the United States of America have a right to applaud themselves for having given to mankind examples of an enlarged and liberal policy: a policy worthy of imitation. All possess alike liberty of conscience and immunities of citizenship.

It is now no more that toleration is spoken of, as if it was by the indulgence of one class of people, that another enjoyed the exercise of their inherent natural rights. For happily the Government of the United States, which gives to bigotry no sanction, to persecution no assistance requires only that they who live under its protection should demean themselves as good citizens, in giving it on all occasions their effectual support.

It would be inconsistent with the frankness of my character not to avow that I am pleased with your favorable opinion of my Administration, and fervent wishes for my felicity.

May the children of the Stock of Abraham, who dwell in this land, continue to merit and enjoy the good will of the other inhabitants – while every one shall sit in safety under his own vine and fig tree and there shall be none to make him afraid.

May the father of all mercies scatter light, and not darkness, in our paths, and make us all in our several vocations useful here, and in His own due time and way everlastingly happy.

G. Washington

At the time of his visit, Washington and other government officials with him were working toward states’ adoption of a list of twelve amendments to the Constitution sent to the states for ratification the previous September. Ten amendments became law on December 15, 1791. The First Amendment to the U.S. Constitution states: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

 

NOTE: The states rejected two of the original twelve amendments. The first rejected amendment proposed a ratio to determine the number of people to be represented by each member of the House of Representatives. The second rejected amendment concerned pay for the services of Senators and Representatives.

Is Civil War in the U.S. Future?

In the previous Fifty Year Perspective blog post, the scatter-pattern map of red- and blue-colored counties representing 2020 presidential voting highlighted the political divisions within states. Blue-colored counties indicate more liberal populations, mostly urban areas, while red-colored counties indicate more conservative populations and more rural areas. All states except Oklahoma and West Virginia have counties of both colors.

Changes in voting patterns since the turn of the century are vividly revealed by a comparison of 2000 and 2020 county-level voting maps (as they appear in Wikimedia Commons). Numerous counties changed from blue to red, prominently in the Upper Midwest and along the course of the Mississippi River. Counties that had been light blue or light red became darker shades, signifying the increase in the winners’ margins in each county. Columnist Jamelle Bouie related the changes to conservative electorates’ pre-existing “anxieties, fears, anger, resentment, rage, about changing cultural and demographic facts about the country. It’s not just that the country is becoming less white, though that’s a part of it. But it’s also that the country is becoming less explicitly Christian, less explicitly deferential to Christian belief. It’s becoming more open and tolerant of different sexualities, different gender identities, different religions.”

Coincident with the changes in voting pattern, the intensity of polarization has unquestionably increased over the last two decades. Bouie’s comments came from a discussion involving him and author Tim Alberta titled “Is America Headed for Another Civil War?” Another Civil War is hard to reconcile with a map that looks like the 2020 election results. Instead, Alberta, who is a staff writer for The Atlantic magazine, foresees “some significant scale of semi-organized, lethal, civil conflict that is organized around not just political and ideological disputes, but perceived threats to economies, livelihoods,” and a “struggle for control of the existing state,” rather than overthrowing the state.

Alberta regarded the coronavirus pandemic as validating “the prophecy for so many on the right, of a hostile, weaponized, big government that was coming for them.” He saw the January 6 insurrection as a warning “that there are actual mechanisms within the system that one can leverage to secure minority control, to consolidate minority rule.”

The U.S. population in 2045 is projected to be less than 50% white for the first time, making the U.S. a majority-minority country. The “anxieties, fears, anger, resentment, [and] rage” are apparent in increasing white supremacy demonstrations, antisemitic violence and demonization of immigrants and refugees. Recently, passage of the CHIPS and Science Act to support the U.S. semiconductor industry was withheld until a provision boosting skilled immigration was removed.

What can be done to calm populist anxieties? Bouie, in the article, wrote that Republican politicians are “the only actors on this stage who have the agency to do something… They are the ones who have the ability to keep these things from spiraling out of control. The problem is that doing so would probably doom them in the next election cycles.”

In fact, some elected Republican officials are publicly supporting Democratic candidates in November 8, 2022 elections. Alaska’s Republican Senator plans to vote for the Democratic candidate for Alaska’s House seat. In Arizona, over two dozen current and former Republican elected officials support the Democratic candidate for Senate. Similarly, both current and former Republican elected officials support the Democratic candidate in Pennsylvania’s governor race.

Dissecting Red States and Blue States

Presidential election results tend to be used for designating states as red (for Republican) or blue (for Democratic). A U.S. color map of the 2020 election results displays 25 red states and 25 blue states. Five states, Arizona, Georgia, Michigan, Pennsylvania and Wisconsin, changed from red in 2016 to blue in 2020: these states which Trump had won in 2016 were won by Biden in 2020.

The chart to the right reveals that coloring a state red or blue obscures a wealth of information. (Click on chart to enlarge) Every state had voters for Trump and voters for Biden. The chart ranks the 50 states and District of Columbia by Biden’s margin over Trump in the 2020 election. At the top of the chart the state that gave Trump the largest margin was Wyoming, where Trump’s margin over Biden was 43.4%. The state that gave the most votes to Trump was California, a very blue state. Trump received six million votes in California. Biden, with over eleven million votes, had a 29.2% edge over Trump.

The states in the middle of the chart had the closest vote margins in 2020. Four of the states that changed from red to blue had margins for Biden of 1.2% or less. North Carolina gave Trump the smallest margin among the states he won: 1.3%. No state gave a candidate 70% or more of the total vote. (Washington, DC, however, gave Biden over 90%.)

Overall, 36.1 million Biden voters lived in states won by Trump, and 38.1 million Trump voters lived in states won by Biden. That distorts the mental image of what it means to be a red state or a blue state.

A map color-coded for counties presents a more precise image. The map below was produced for Wikimedia Commons. (Click on map to enlarge.) Shades of blue and red vary in intensity in proportion to the winners’ margins in each county. Note the extensive red shades in Washington, Oregon, California, Arizona and New Mexico, all blue states. Only West Virginia and Oklahoma show no blue counties within their borders.

Typically the blue counties in red states represent urban areas in predominantly rural states. For example, Biden won in only four counties in Missouri, comprising Kansas City, Columbia, and St. Louis Counties and St. Louis City. In Texas most blue counties surround Dallas-Fort Worth, Houston, Austin, San Antonio, El Paso, and some border towns.

Urban areas have more liberal and diverse populations than rural areas. The move to a more conservative politics among rural voters is an expression of what columnist Jamelle Bouie has described as conservative electorates’ pre-existing “anxieties, fears, anger, resentment, rage, about changing cultural and demographic facts about the country. It’s not just that the country is becoming less white, though that’s a part of it. But it’s also that the country is becoming less explicitly Christian, less explicitly deferential to Christian belief. It’s becoming more open and tolerant of different sexualities, different gender identities, different religions.”

An assessment of this viewpoint will follow in the next post on Fifty Year Perspective.

Immorality in Government

Living through this period of confrontation, polarization, hate, and absence of compassion, it is hard to avoid reading about the desperate state of the nation; the trauma has been examined and analyzed thousands of times. The recent publication of a book by a best-selling author, and a documentary by an award-winning filmmaker provide a backdrop for The United States in 2022. The book is They Knew: How a Culture of Conspiracy Keeps America Complacent, by Sarah Kendzior. The documentary is by Ken Burns, The U.S. and the Holocaust.

In her book, Kendzior describes an international conspiracy theory of the last two decades of the 20th Century involving an organization that came to be known as “The Octopus.” She calls it “a vast transnational network of corruption stretching from the DOJ to the CIA to the FBI to numerous private law and technology firms around the world.” Two men investigating the organization were found dead, their deaths ruled suicides.

Kendzior believes The Octopus was a global kleptocracy. The fact that these deaths and others associated with the Octopus were never explained supports the contention in her subtitle, that failure to pursue investigations makes the public complacent. Long histories of abuse by Jeffrey Epstein and Harvey Weinstein, although known to many insiders, were ignored for years.

Similarly, she asks why Americans should trust a government that launched the Iraq War on false pretenses, or did nothing to halt the deception that allowed the financial system to collapse in 2008. In this context, the Trump administration was hardly an aberration. In her opinion, “The Trump administration was a transnational crime syndicate masquerading as a government.”

A characteristic of complacency is “normalcy bias,” what Kendzior defines as “the idea that if a situation is truly dangerous, if massive misdeeds are being committed in plain sight, somebody would intervene and stop them.” The danger of complacency is exposed in Ken Burns’s The U.S. and the Holocaust. Disbelief was a response heard frequently in the documentary. The Holocaust was a conspiracy literally beyond belief.

The documentary is divided into three episodes. The first, covering the years prior to 1938, chronicles Hitler’s rise to become dictator of Germany, his attacks on Jewish-owned business, laws denying Jews German citizenship, establishment of concentration camps, and subjugation of Austria.

The second episode covers 1938 to 1942. Hitler signed the Munich Agreement with Great Britain, France, and Italy, enabling German to annex a part of western Czechoslovakia, but go no further, it was an  attempt to appease Hitler. Hitler violated the agreement, absorbing all of Czechoslovakia and invading Poland in September 1939. France and Great Britain immediately declared war on Germany. Subsequently, Germany invaded the Netherlands, Belgium, Luxemburg, and France in 1940, then Yugoslavia, Greece and the Soviet Union in 1941. Jews were murdered in the occupied countries or were deported to killing centers and put to death along with Roma, homosexuals, and disabled persons.

The third episode, beginning with 1942, documents the plight of Jews attempting to escape the German advance and find refuge beyond Hitler’s reach. Before the end of 1942 the U.S., British and French Allies knew the Nazis had begun murdering every Jewish man, woman and child on the continent. American Jews appealed to President Franklin Roosevelt to offer immigration to those fleeing from the Nazis. Roosevelt insisted that all effort be directed to winning the war. He also knew that the American public was against allowing massive immigration. Agencies in his administration blocked efforts on the parts of Jewish organizations to help Jews escape. The majority of Americans were complacent, refusing to believe that the Nazis could be killing millions of Jews, despite the headlines of almost all daily newspapers.

At the end of the documentary Burns added footage linking today’s white supremacy movement to the Holocaust. The killer of 11 Jews at a Pittsburgh synagogue was reportedly motivated by conspiracy theories about Jewish leaders and immigration. The rioters in Charlottesville chanted, “You will not replace us.” Rioters at the U.S. Capitol chanted freedom while they carried Nazi flags and wore “Camp Auschwitz” sweatshirts.

Kendzior draws a distinction between Trump and Hitler. She calls Trump “an autocrat, a kleptocrat, a criminal, and a racist,” but she does not call him a fascist. “Fascism requires loyalty to the state.” For Trump and his accomplices, “the state is just something to sell. They do not care if the buyers are foreign or domestic.”

Trumpism has made denial of facts acceptable. The lack of morality and honesty in government is stunning. As we approach mid-term elections, the course for democracy will be set for years to come. When extreme candidates take positions restricting voting rights and overwriting election results, voters may understand the immorality of the positions, and their extreme positions will become the candidates’ undoing.

China’s Heat Wave

When Matthew Bossons set out with his wife and daughter for a camping trip, he expected to find mountain streams, cooler temperatures and favorite swimming holes west of Chengdu in southwestern China. Bossons is a Shanghai-based journalist and managing editor of RADII, an on-line publication examining trends from Chinese youth culture.

As he reported in a recent opinion piece in the New York Times, Bossons found “ravaged landscapes, paralyzed cities and populations pushed to extremes” resulting from China’s historic summer heat wave and drought over two months, affecting over 60% of China’s 1.4 billion people.

Chengdu is the capital of the southwestern China province of Sichuan, with a city population of 21 million. It lies less than 40 miles east of the foothills of the Himalaya mountains. When Bossons and his family reached their vacation area, they found the “raging mountain rivers … were no more,” reduced to a trickle. The deep swimming holes “picked out on the internet barely had enough water to reach [his] knees.” The campfire they hoped to gather around at night was banned “to limit wildfire risks in the bone-dry landscape.”

They turned back east, driving toward Chengdu. Where there had been verdant farmland, there were withered cornfields. Bumper-to-bumper traffic was flowing in the opposite direction, carrying people fleeing to higher, cooler ground. “With hydropower output crippled, the authorities had imposed power-saving blackouts that closed businesses and rendered air-conditioners useless…. The city of Chengdu had become practically unlivable”

Sichuan province is located along the upper Yangtze River, the longest river in China and the source of drinking water for more than 400 million people. Reservoirs across Sichuan produce nearly 80% of the province’s electricity. Historically low water levels in the Yangtze have reduced shipping and forced companies to suspend operations.

Throughout China the heatwave and drought have dried lakes and rivers, caused forest fires, damaged crops and livestock, and disrupted electrical service. Inoperable elevators left residents using ropes and buckets to hoist groceries to their upper-floor apartments; some residents drove six miles to charge their cell phones.

China is the world’s largest emitter of carbon dioxide. China also leads the world in renewable energy capacity growth, now accounting for 35-40% of the world’s installed solar and wind energy capacity. The crippling of hydropower production due to the effects of climate change has reopened deliberation over coal-powered energy generation. “To ease the energy crunch, Sichuan is firing up its coal power plants, raising concerns among environmentalists about the potential increase in greenhouse gas emissions.”

As emitter of 27% of global carbon dioxide, how China proceeds is critical to the rest of the world. But beyond that, China’s experience is destined to be repeated elsewhere as a result of global warming. Heatwaves, fires, and floods have featured in 2022 across the globe. China 2022 is a message.

Will the Metaverse “Revolutionize Everything?”

Multinational corporations of all stripes are writing Metaverse into their business plans, even though examples of what the Metaverse might look like almost always involve video games. A much-discussed book by Matthew Ball is titled, The Metaverse and How It Will Revolutionize Everything. This is a startling claim given that hardly anyone can explain what the Metaverse is. Ball provides this highly technical definition:

A massively scaled and interoperable network of real-time rendered 3D virtual worlds that can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments.

To make sense of this definition you need to understand some of its terms: Virtual worlds are computer-generated simulated environments. Rendering is the process of creating a two- or three-dimensional object or environment using computer programing; the more-detailed the object, the more processing power required to display it.

Interoperability is the ability to take content from one virtual world to another. This would make it possible for someone to “buy” an outfit in Minecraft and wear it in Fortnite, two of the most popular video games. Synchronous means two or more players in a game have internet connections capable of transmitting data fast enough that all players share the experience concurrently, without lag time in the transmission. Persistence means that when players take actions in a game, such as destroying an enemy’s fort, the fort will revert to its original condition when the play is completed.

This is all relevant to video games, but so far only a small fraction of the population engages in these virtual worlds. Ball and multitudes of websites offer examples of how the virtualization phenomenon is already touching non-gamers. For example, Amazon uses scores of cameras and sensors in their Amazon Go stores to track and record customers as they pick their own groceries, place them in their bags, and walk out, while an app on the customer’s iOS or Android smartphone records purchases. The app is linked to the customer’s Amazon account for billing, and a receipt is sent.

Two years of Covid lockdowns led millions of skeptics to participate in virtual world activities such as Animal Crossing and Fortnite. Consumers who had known about online grocery services before Covid but never tried them became first-time users. On a smart phone using an app called Instacart, they could tap into their favorite grocery store and shop virtually, viewing pictures of items and their prices, then tap to select what they want. A personal shopper selects the items and delivers them to the customer.

Remote working has proven its value and desirability. The Metaverse promises virtual shared work spaces, sitting around a table with colleagues who are in multiple remote locations. Person-to-person phone conversations may be enhanced similarly, with three-dimensional images of those on the call. Students will be able to virtually enter the historic times and places they are studying.

Sensors, holographic displays, and immersive headsets combine with Peloton-type digital classes to offer enhanced fitness routines. Automakers may drop their new models into a virtual world so players can “drive” the car. Video games incorporate images of consumer products as sources of additional revenue.

A prototype of what entertainment will look like in the Metaverse is a concert Fortnite sponsored in April 2020, featuring rapper Travis Scott. The free concert attracted 12.3 million Fortnite players, earning about $20 million for Scott. Incorporating virtual reality to create unreal special effects, similar events have been “staged” by other digital entertainment companies.

I have only scratched the surface describing what the tech world is promising. Cryptocurrency, virtual travel, digital twins, virtual real estate investment, and more are coming. Is the Metaverse revolutionizing everything? Marshall Ball’s book is an introduction, but enter “Metaverse” into Google and you’ll have enough reading to keep you busy for months.

As for me, I probably won’t be buying a virtual backpack in Fortnite to use when playing Minecraft, but my guess is we will all be facing a learning curve considerably steeper than we climbed when the internet was new, or we bought our first smart phones.

Employment Back to Pre-recession Level After 29 Months

As of July 2022, the number of employed persons in the U.S. had fully recovered to the level of February 2020, the beginning of the recession triggered by the Covid-19 pandemic. Compared to recessions of 1990, 2001, and 2007, the recovery was quick, especially in view of the 22 million jobs lost, compared to 8.7 million lost jobs in the 2007 recession, 2.6 million in 2001, and 1.6 million in 1990. The comparison is strikingly represented by the graph below.

(Click to enlarge graph)

Most major employment categories have surpassed pre-pandemic levels. Exceptions are leisure and hospitality, remaining 1.2 million jobs below pre-pandemic levels, health care 130,000 jobs below, and government 600,000 jobs below. By contrast, professional and business services are almost a million jobs above the pre-pandemic level.

If annual employment since December 2019 continued to increase at the average annual rate of the previous 20 years, current employment would be 2.2 million higher than it was in July. The shortfall could be due in part to workers taking early retirement. Or there could be people who plan to return to the workforce but have not been able to find childcare or caretakers for elderly or disabled family. Or workers who quit their jobs may still be looking for a new job that better fits their lives and financial needs. There are plenty jobs available, nearly two job openings for every unemployed person. Before the pandemic there were always more unemployed people than available jobs.

Looking beyond Bureau of Labor Statistics data, immigration provides another perspective on employee shortfall. Net immigration (the number of arrivals minus the number of departures) has been falling since 2017. A recent study by the University of California, Davis estimated that “by February America was missing roughly 1.8m working-age foreign migrants relative to its post-2010 trend.” Consistent with the slow jobs recovery in the leisure and hospitality sector, the study notes that the sector “draws a quarter of its employees from the foreign-born population” One-fifth of employees in the professional and business services sector are foreign-born; last year that sector was unable to fill 10% of its vacant jobs.

The Pew Research Centre calculates the long-term impact of the fall in migration: “without new arrivals America’s labour force would decline to 163m in 2040 from 166m in 2020. If net immigration were to return to pre-pandemic levels, the labour force would instead grow to 178m by 2040.” The effect on the U.S. economy would be enormous.

Responding to Crises

Ian Bremmer is an American political scientist and founder and president of the Eurasia Group. The firm is a leading global research and consulting company, assessing political risk for major business and investment decisions around the world. He is foreign affairs columnist for TIME magazine and his work has appeared in Financial Times, Foreign Policy, Fortune and others.

He recently published his eleventh book, The Power of Crisis: How three Threats – and Our Response – Will Change the World. In it he discusses what he calls the three powerful threats facing the world in the immediate future: pandemics, climate change, and life-altering new technologies.

Two political realities work against effective management of these challenges: Division and dysfunction in U.S. government and society; and the intensifying US-China rivalry. Bremmer looks to history for guidance in addressing conflicts between international rivals.

Once upon a time there were no rules to govern the development of nuclear weapons and the missiles that deliver them. Then came the Cuban missile crisis, and governments that otherwise didn’t trust one another forged a few early agreements that prevented another crisis …the common menace was clear enough to force the leaders of competing systems, men who despised each other’s values, to sit together and cut deals.

To reach such agreements, Bremmer writes, “We need a crisis frightening enough to force us to look squarely at the risks posed.” Who will take up the gauntlet and lead the world’s response to the three crises? For leadership in forming international partnerships, Bremmer looks to institutions like banks and energy companies “that invest in projects that take years to produce profits” and “must think longer-term than most governments do.”

This week the New York Times published an essay by William MacAskill, a professor of philosophy at Oxford University. The title is “The Case for Longtermism,” which he defines as “the idea that positively influencing the long-term future is a key moral priority of our time.” In his essay he wrote

… as I learned more about the history-shaping events that could occur in the near future, I realized that we might soon be approaching a critical juncture in the human story. Technological development is creating new threats and opportunities, putting the lives of future people on the line. Whether we get a future that’s beautiful and just, or flawed and dystopian, or whether civilization ends and we get no future at all — that depends, in significant part, on what we do today.

MacAskill cites climate change and advanced technology as challenges threatening future generations. MacAskill does not suggest what leadership will emerge to assure there is a future for humanity, but he acknowledges the importance of this point in history: “To be alive at such a time is both an exceptional opportunity and a profound responsibility.”

Words

Words. So many words. In posting two hundred essays to Fifty Year Perspective, I have written over 125,000 words. I’m running out of words.

From the outset in 2014, my objective was to write about trends in the economy, technology, education, politics, environment, and international relations, both worrisome trends and positive directions. There is no better example than existential threats to our one and only planet from increasingly frequent and severe extreme weather events, and the drought and fires that follow.

Other crucial issues have been reported in Fifty Year Perspective:

Lack of trust in health experts threatens our ability to contain pandemics through vaccinations and health practices. See Feb/2022  Apr/2021 Aug/2020

Inadequate access to education and healthcare for low-income families shortens lives and denies the economy the benefits of their participation. See Feb/2020 Feb/2016

Millions of the world’s poorest populations, faced with limited capacity to employ and feed themselves, may be destined to overwhelm wealthier countries as refugees. See Sep/2021

Advances in technology are changing how food and consumer products are produced, with unknown consequences for the future of employment in agriculture and food production. See Dec/2021 Oct/2018 Jan/2017 Jun/2014

Massive collection of personal information by governments and corporations threatens privacy and personal freedom. See Jan/2022 Apr/2016

The growing concentration of economic power of corporations challenges the role of government to enacting and enforcing social and economic policy. See Feb/2022 Sep/2018

Far-right populism  poses a threat to liberal democracy in countries around the world, as well as the U.S. See Jan/2022 May/2020 Aug/2020 May/2016 Feb/2016

While many issues like these have been ineffectively addressed or altogether ignored, remarkable improvements have been achieved in communications, transportation, trade, healthcare, agriculture, and job creation, among others.

As I write this, a ray of hope appears as negotiations, both intra-party and inter-party, find some common ground on gun control, subsidies for semi-conductor chip production, prescription drug pricing, infrastructure, and renewable energy.

I feel safe in saying that solutions to our most serious problems are accessible if words – written words, spoken words – are exchanged in good faith by government leaders in direct negotiations, with guidance from professionals in fields of science, academia and business. I look forward to writing about these solutions in future essays, and invite you, my readers, to share your insights as to encouraging social, economic and political trends.

A Grateful Immigrant

Recently a funeral took place for a woman who had immigrated to the United States from Russia in the early 1990s. Irina (not her real name) was an engineer in Russia and her husband started a small business that achieved some success. That success led the government to forcefully take over the business after threatening the family. They fled to the United States with their son.

Irina was only able to find work cleaning apartments of elderly immigrants supported by charitable organizations. Her husband worked as a taxi driver. She was glad to be free of the bureaucratic pressures and corruption she left behind, and was happy to be able to offer her son a better life. America offered her family a sense of hope.

Irina experienced freedom in America that she did not have in Russia. Irina was not blind to the imperfections in American democracy. To a great extent, the country’s aspirations remain unfulfilled after 246 years. Opportunity is not equal in education, employment, criminal justice, housing, social mobility, healthcare, and even voting, that most basic of rights.

Yet America’s attraction to immigrants is as old as the country, and much of that owes to its founding principles. The principles expressed in the Declaration of Independence offer immigrants hope for a future better than what they lived in their countries of origin.

When a large sector of the native-born American population views government institutions as illegitimate, and political discourse is no longer civil, rational, or truthful, political polarization makes addressing inequality difficult. Social and economic equality require commitment by all parties to the country’s core principles. The alternative is a gradual loss of freedom and security until America is indistinguishable from those countries from which the migrants fled.

May the gratefulness of the immigrant restore our faith in our system of governance.

Looking Forward, Looking Backward

Before I posted the essay “Red Covid” on June 19th, my intent was to write on fewer topics, possibly with less frequency. The political character of the Covid data caught my attention, leading to the “Red Covid” essay posted on that date.

June 19th was Father’s Day. My daughter and son-in-law surprised me with a gift subscription to Ancestry, the on-line genealogy software program. When I retired ten years ago, I hoped to restart my long-term research into family history. That didn’t happen until June 19th. Since then I have been on Ancestry daily, sending messages to other members about missing information about ancestors, and using Censuses to track descendants.

This puts me in an interesting position. Looking backward, I find information about grandparents who immigrated in early 20th Century from Ukraine, Belarus and Lithuania. Looking forward I absorb what is happening in those same countries and what those events portend for the future of the United States, Europe, and the world.

Fifty Year Perspective always has been personal. The complexities of our globalized world, and the impacts of events on us and our future, are less significant for me at age 79, than for my four children and eleven grandchildren. I don’t know about you, my readers, but does coming to maturity in the 2020s sound attractive to you, other than from curiosity about where this is all going?

So, where do I go from here? I’ll continue to write about what is interesting to me and pertinent to the health of the planet and the future of liberal democracy. I am curious to know if you are at a similar stage, and welcome your thoughts as well as your suggestions for topics. I don’t have a Comments button yet, but you can send a message to fiftyyearperspective@gmail.com, or by responding to this email.

We have no choice but to remain positive, without being naïve about what is possible. Our children and grandchildren will have to do the heavy lifting, but we can assure them from our life experiences that it will be worth the effort.

Red Covid: How Politics Changed the Course of a Pandemic

Has there ever been a health threat studied, measured, documented, and reviewed to the extent of Covid-19? The U.S. Centers for Disease Control and Prevention (CDC) records daily figures by state for new cases, total cases, new deaths, and total deaths, looking for causes, trends, correlations, and patterns. A CDC table online included over 50,000 lines of data as of June 10, 2022. Further data is available by age, race and gender.

From the beginning of the pandemic the illness and death caused by the virus was unevenly distributed by both demography and geography. Earliest U.S. cases were in cities that featured prominently in international travel – the Northeast and the West Coast – areas associated with more liberal populations and Democratic party affiliation. Death rates were higher for Black and Latino Americans, populations with lower incomes and jobs that were considered “essential.”

On December 14, 2020, the first vaccine doses for Covid-19 were administered in the U.S. Initially white and Asian Americans were quicker to receive vaccinations than were Black and Latino Americans, populations that already had limited access to healthcare. An exception among white Americans were Republican voters, who more often opposed being vaccinated, compared to Democratic or independent voters, despite evidence of the vaccinations’ effectiveness.

Higher death rates for Black and Latino Americans persisted into early 2021. However, between mid-2021 and mid-2022 that situation flipped, with death rates for white Americans higher than rates for Black and Latino Americans. Data from those CDC records reveal the history of these changes.

Using Covid-19 deaths by state for June 30, 2020, and for June 10, 2022, I separated the states into two groups: states that voted for Donald Trump in 2020, and states that voted for Joe Biden in 2020. I’ll call them Red states and Blue states. By June 30, 2020, over 100,000 deaths had been recorded in the U.S. since the beginning of the year. The death rate for Blue states was 43.3 per 100,000, and for Red states 18.9 per 100,000. At that point in time, before vaccinations were available, higher death rates had occurred in more urbanized, higher density states, predominantly Blue states.

The more recent data, for June 10, 2022, reveals the full impact of vaccination. Total deaths by then had passed one million. The death rate for Blue states reached 216 per 100,000. For Red states the rate was 312, or 44% higher than Blue states. According to surveys by the Kaiser Family Foundation and others, political partisanship remains a stronger predictor of whether someone is vaccinated than demographic factors such as age, race, level of education, or insurance status.

200

On June 2nd, 2014, I posted the first essay on Fifty Year Perspective, titled “Technology and the Future of Work.” Now, eight years later, this is my 200th essay. Topics have covered economy, technology, international relations, environment, politics, employment, inequality and more. (A complete list of all 199 essays and their publication dates is below.) Essays described changes occurring in subject areas, with sustainability being the core principle, that is, will following the current course lead to a desirable future?

Going forward, I am planning to post less frequently, but examine broad topics in depth. For example, I have considered documenting probable permanent changes due to Covid-19, like commercial real estate values or health problems related to anti-vaccine movements.

Another thread could track the many technologies that are addressing global warming.  Many of those technologies are in their infancy. Others are proven but need to be scaled up. Various forms of carbon capture exist but are too expensive and need to improve and spread. Work is underway around the world, often with government seed money.

While long-term challenges like inequality and global warming are yearning for resolution, successfully addressing them is hindered by polarization and threats to our democracy. Examining a variety of subjects – redistricting, judicial independence – may find new policy directions acceptable to a wide audience. Civil conversations about gun control or abortion are hard to come by, but introducing new perspectives may reveal possibilities heretofore not considered.

I want this project to be interactive, so I plan to add a comments feature to essays. I have been warned this will open the door to all manner of obnoxious spam from bots that scour blogs and auto post tons of junk into comments forms. I hope to manage the flow and block offensive comments from appearing.

If you have thoughts or suggestions, I’d like to hear from you. An interactive blog will greatly benefit from sharing of ideas. The list below may jar a thought. Please use the “Contact” button on the home screen until a comments feature is operational.

It’s your turn.

Blog Title Date Posted
Cooperation Is Essential to Existence 5/22/2022
Fifty Years in China 5/8/2022
Natural Disasters and Conflict 4/24/2022
Risking Deglobalization 4/10/2022
Why DID Putin Wait Until Trump Was Out of Office to Invade Ukraine? 3/27/2022
Good Economy? Bad Economy? Two Answers 3/13/2022
Preparing for the Next Pandemic 2/27/2022
Balancing Market Freedom and Government Policy 2/13/2020
Anemic Post-Recession Job Recovery 1/30/2022
Social Mobility and Fairness Correlated to Populism 1/16/2022
Legitimacy of One-Pary Government in China 1/2/2022
Fear 12/19/2021
Technology Is About to Make Economics and Politics a Lot More Fraught 12/5/2021
Desalination 11/21/2021
Are Workers Gaining the Upper Hand? 11/7/2021
The Challenging Course to Reviving the Post-pandemic Economy 10/24/2021
How European Citizens View America 10/10/2021
Climate Migration 9/26/2021
Inequality Tracked Through Six Decades of Graphs Part 2 of 2 9/12/2021
Inequality Tracked Through Six Decades of Graphs Part 1 of 2 8/29/2021
Building Physical and Social Infrastructure 8/15/2021
Social Values and the Role of Government 8/1/2021
A Different Kind of Recovery 7/18/2021
Who Is Helped by Proposed Legislation? 7/4/2021
Can/Must the Social Contract Change? 6/20/2021
Can/Must Capitalism Change? 6/6/2021
2020 Census Count Confirms Social Trends 5/23/2021
Legacy of Fantasy 5/9/2021
Mandatory Vaccination 4/25/2021
“I’m from the Government and I’m here to help.” 4/11/2021
China’s Challenges Foreign and Domestic 3/28/2021
Lessons from the Great Recession 3/14/2021
Maersk Line’s Role in Globalization 2/28/2021
China’s Demographic Time Bomb 2/14/2021
Did the 2020 Pandemic Change Everything?    Part 2 of 2 1/31/2021
Did the 2020 Pandemic Change Everything?    Part 1 of 2 1/17/2021
Making the Case for Stimulus 1/3/2021
News About the News 12/20/2020
How Might This Turn Out? 12/6/2020
“Stakeholder Capitalism Metrics” 11/22/2020
Social Cohesion Lost 11/8/2020
Thoughts on Morality and Freedom 10/25/2020
Another Industry Disrupted 10/11/2020
What Did You Do in the Lockdown? 9/27/2020
Pandemic: Warning and Reality 9/13/2020
Vanishing Liberal Democracy 8/30/2020
Alternative Truths and Consequences 8/16/2020
Live Free and Die 8/2/2020
The Rise and Rise of the Nation State, by Nigel Holloway 7/26/2020
The Idea of America 7/12/2020
Redistribution and Pre-Distribution 6/28/2020
“Build Back Better” 6/14/2020
After Covid-19: Opportunities and Threats 5/31/2020
Roots of Populism 5/17/2020
Democracy, More or Less 5/3/2020
Democratizing Primary Elections 4/19/2020
Infrastructure Is a Priority 4/5/2020
Inflation 3/22/2020
A History of Sand 3/8/2020
Free College Tuition 2/23/2020
Immigation Imperative 2/9/2020
Inequality and Tax Policy 1/26/2020
Yold 1/12/2020
Reunification 12/29/2019
Confronting Consumerism 12/15/2019
Thomas Piketty on Inequality 12/1/2019
Fifty Year Retrospective 11/17/2019
Blaming the Economists 11/3/2019
Destroying Monsters 10/20/2019
Populism Wins and Losses 10/6/2019
Using Atmospheric CO2 to Produce Protein for Food 9/22/2019
Capturing and using Atmospheric CO2 9/8/2019
Allies and Adversaries, and Inconsistencies 8/25/2019
Combating Authoritarianism 8/11/2019
From Democracy to Dictatorship 7/28/2019
Seeking Center 7/14/2019
Insurers Acknowledge Climate Change 6/30/2019
Immigration Policies Will Change 6/16/2019
Who Will Buy Your Cars? 6/2/2019
Good AI 5/19/2019
Nuclear Energy 5/5/2019
Ian McHarg’s Earth Day Lecture 4/21/2019
Africa’s Outlook 4/7/2019
Japan and China 3/24/2019
Made in Japan 3/10/2019
Regulating Artificial Intelligence 2/24/2019
Artificial Intelligence: Benefits and Stresses 2/10/2019
Democracy in 2018 1/27/2019
A Populist Agenda 1/13/2019
Too Big (Part Two) 12/30/2018
Too Big (Part One) 12/16/2018
Governing 1,417,332,945 People 12/2/2018
Climate Change Revisited 11/18/2018
Tourism 11/4/2018
A Plan to Address Income Inequality 10/21/2018
Technology and the Work Force 10/7/2018
Diverging Demographic Destinies: A Fifty Year Perspective 9/23/2018
Market Trends Impacting Inequality 9/9/2018
China’s Marshall Plan 8/26/2018
Attacks in Cyberspace 8/12/2018
Universal Health Insurance 7/29/2018
Confronting Political Discontent 7/15/2018
Who Will Lead? 7/1/2018
Considering Political Discontent 6/17/2018
Time for Remedial Kindergarten 6/3/2018
Early Twentieth Century Progressivism 5/20/2018
African Continental Free Trade Agreement 5/6/2018
Two Authors on Authoritarianism 4/22/2018
Rejection of Expertise 4/8/2018
Globalization vs Sovereignty 3/25/2018
Democracy in Retreat 3/11/2018
Tzfat, Israel 2/25/2018
Government Policy Impacts Inequality 2/11/2018
Liberalism in Retreat 1/28/2018
Endless Conflicts in South Sudan by Nhial Tutlam 1/14/2018
Latin American Elections 2017-2018 12/31/2017
Silicon Savannah 12/17/2017
Manufactured Beef and Other Delicacies 12/3/2017
Divisions Within U.S. Political Parties 11/19/2017
The Democratic People’s Republic of Korea 11/5/2017
“Can We Agree on This?” 10/22/2017
Europe and Israel 100 Years After Balfour 10/8/2017
The Balfour Declaration’s 100th Anniversary 9/24/2017
Changing the Economics of Renewable Energy 9/10/2017
Is Political Turmoil Bad for Business? 8/27/2017
Global Leadership 8/13/2017
New Institutions: Where to Start 7/30/2017
Needed: Improved International Institutions 7/16/2017
The European Union’s Challenges 7/2/2017
Analyzing Twelve Months of Western Elections 6/18/2017
Highs and Lows of Commodity Dependence 6/4/2017
Job Security and Automation 5/21/2017
Public Distrust of Science 5/7/2017
Feast and Famine 4/23/2017
The Bear in the Room 4/9/2017
A History of Inequality 3/26/2017
Populism in Democracies 3/12/2017
Obit: The World’s Foremost Authority 2/26/2017
Brexit and European Migration 2/12/2017
2500 Years of Globalization 1/29/2017
Experimenting with a Universal Basic Income 1/15/2017
Technology Creates and Destroys Jobs 1/1/2017
Delivering on Promises 12/18/2016
Lessons of Brexit and Trump 12/4/2016
China – Two Current Perspectives 11/20/2016
Living With Water 11/6/2016
Urbanization in Sub-Saharan Africa 10/23/2016
Converging Trends in Aging and Employment 10/9/2016
The Other European Migration Challenge 9/25/2016
September 11, 2001-2016 9/11/2016
NATO’s Adaptations 8/28/2016
Zero Marginal Cost 8/14/2016
Artificial Intelligence Summarized 7/31/2016
Swiss Defeat Basic Income 7/17/2016
Brexit from the Irish Perspective  7/3/2016
The Promise of 3D Printing 6/19/2016
Oil Exporters Adjust to Price Decline 6/5/2016
Liberal Democracy and Illiberal Democracy 5/22/2016
Preparing for Industries of the Future 5/8/2016
Information Technology’s Impacts on Politics 4/24/2016
Turkey: At the Crossroads of Geography and History 4/10/2016
Money and Politics in the 2016 U.S. Presidential Election 3/27/2016
One Strategy for Addressing Food Insecurity 3/13/2016
Populist Movements 2/28/2016
Reducing Inequality Benefits Everyone 2/14/2016
The Peace to End All Peace 1/31/2016
The Changing Role of Corporations 1/17/2016
Human Intervention 1/3/2016
Tourists and Terrorists 12/20/2015
International Arms Trade 12/6/2015
Mamluks in the Arab Spring 11/22/2015
Globalization’s Defects 11/8/2015
Competition for Multinational Corporations 10/25/2015
New Economy Jobs 10/11/2015
Singapore at 50 Years 9/27/2015
Visualizing Policy Decisions 9/13/2015
Of Popes and Politics: “Everything Is Connected” 8/30/2015
Reclaiming U. S. Leadership 8/16/2015
A Basic Income for All 8/2/2015
“Robots Are Us” 7/15/2015
Inequality: Getting Better, Getting Worse 6/28/2015
Six Months Until Paris Climate Conference 6/11/2015
Money and Influence 5/25/2015
Disappearing Youth: The World Population in 2050 5/3/2015
Money and Morals 4/12/2015
Examining Inequality 3/22/2015
Global Conflicts: Connecting the Dots 3/10/2015
Redefining State Sovereignty 2/9/2015
Technology Is Solving Some Energy Problems in Developing Countries 1/22/2015
Progress in Use of Renewable Energy Sources 12/30/2014
Replacing Jobs Lost in Recession 12/10/2014
Climate Change, Natural Resources, and Geopolitics in the Arctic 11/22/2014
Paris 2015 UN Climate Change Conference 10/28/2014
Labor Force Participation Trends 10/12/2014
A Role for Business in Social and Environmental Progress 9/3/2014
Investors Concerned Over Climate Change 8/10/2014
Why Are They Growing Tomatoes in Qatar? 7/20/2014
Demography As Destiny 6/26/2014
Technology and the Future of Work 6/2/2014

Cooperation Is Essential to Existence

Confronting extinction has a way of focusing one’s attention. It’s the ultimate existential threat: No survivors.

That was on the mind of Martin Nowak when he wrote a book called SuperCooperators: Altruism, Evolution, and Why We Need Each Other to Succeed. Nowak is a professor of biology and mathematics, which explains why he spent years constructing mathematical models to depict how evolution comprises more than survival of the fittest.

Charles Darwin’s 1859 book On the Origin of Species introduced the theory that populations of all living things evolve over generations through a process called natural selection. Darwin described how organisms change through the principles of mutation and selection, with mutations generating variations, and selection picking those variations best suited to their environment.

Nowak and his co-author, philosopher Roger Highfield, added cooperation as a third principle to mutation and selection. Darwin “was convinced that selection was ruled by conflict.” Individuals most able to adapt to their environment will win the resources to survive and produce more offspring to inherit their traits. Nowak’s research showed that competition among organisms did not always result in the fittest individuals surviving. In some instances organisms sacrificed themselves to assure the survival of their species.

Nowak calls cooperation “the master architect of evolution.”

Our breathtaking ability to cooperate is one of the main reasons we have managed to survive in every ecosystem on earth, from scorched, sun-baked deserts to the frozen wastes of Antarctica to the dark, crushing ocean depths.

Nowak’s research established that such cooperative behavior could be observed across species and at all levels of life from individual cells (like bacteria) to multi-cell organisms (like humans).

In a recent blog post, Peter Diamandis, an engineer and entrepreneur, asserted the indispensable role of cooperation in employing technology to reach a future that enriches the lives of every man, woman and child. Cooperative tools of transportation and information technology shortened the time for people, goods and information to move around the world. Diamandis foresees exponential change in technology leading “further advancements in our tools of cooperation.”

Nowak concludes his book with a sobering thought:

I think that life has evolved in the universe often and has done so for the 13.7 billion years our cosmos has been in existence. But, as far as we can see, we are alone. Intelligent life does not seem to stay around for long. This should give us pause for thought. Now, more than ever, we need to cooperate, and on a global scale. Although we are teetering on the brink of disaster, we are also on the brink of advancing to the next level of cooperation.

 

Fifty Years in China

On February 21, 1972, President Richard Nixon arrived in Beijing, the first U.S. president to visit the Chinese mainland, accompanied by National Security Advisor Henry Kissinger. After a weeklong visit, the two countries issued the Shanghai Communique, stating positions on a number of issues, including their joint opposition to the Soviet Union. Over the next 45 years, every president except Jimmy Carter (who dispatched his National Security Advisor Zbigniew Brzezinski) traveled to China at least once, either on state visits or for meetings.

Relations in the ‘70s, ‘80s, and ‘90s were generally positive, with the U.S. under President Reagan agreeing to allow China to purchase U.S. military equipment, and under President Clinton granting China normal trade relations. China joined the World Trade Organization in 2001. U.S.-China trade increased from $95 million in 1972 to over $120 billion in 2001. Tension over U.S. relations with Taiwan surfaced from time to time, resulting in temporary strains in diplomatic relations.

As U.S. and China economies grew increasingly interdependent, the U.S. consistently imported more than it exported. Annual balance of payments eventually exceeded $300 billion by 2012, making China the largest holder of U.S. debt – or treasuries. As tensions rose over trade, geopolitics, and human rights, President Obama and President Xi met in California and agreed to cooperate on regional and global issues, including climate change.

The Trump Administration’s China policy was disastrous. From both honoring and violating the One China Policy, and from building trust with Xi, then imposing sweeping tariffs, and then relaxing them, the Administration ended with both countries closing consulates, and U.S. Secretary of State Mike Pompeo declaring the end of engagement with the Chinese Communist Party in July 2020.

The new Biden Administration continued some Trump tariffs and sanctions of Chinese officials over human rights issues. Yet the two sides agreed to a joint statement at the November 2021 UN climate summit to cooperate on combating climate change over the next decade. Following the summit, China’s climate envoy stated, “There is more agreement between the United States and China than divergence.”

As 2022 began, China saw a fragmented West, suffering from inconsistent U.S. foreign policy, lack of cohesion in Europe and low standing of NATO. China could claim a rising international profile and strong competition for world leadership. Then February 24 happened: China was surprised by the brutality of Russia’s invasion of Ukraine after declaring its friendship with Russia three weeks earlier at the Winter Olympics in Beijing. David Leonhardt wrote in the New York Times:

The war is arguably the most problematic international development for China in years… It has unified much of the rest of the world — including the U.S., the E.U., Britain and Japan — in support of Ukraine, with a diplomatic boldness that these countries have often lacked in recent years. China’s leaders, on the other hand, are in a partnership with the world’s new villain, Vladimir Putin.

China’s partnering with Russia over the war in Ukraine is a rational counterweight to the democratic bloc. A recent article in The Guardian recognized “the leaders of Russia and China share a common set of security grievances against the US-led bloc, fearing both internal subversion and external limitations on their regional aspirations.” But unlike Putin who wages war against perceived security threats, Xi “interweaves the interests of the Chinese people with pursuit of the global common good.”

Russia’s invasion of Ukraine has fueled a transitional stage in geopolitics, leaving China with a decision to be made. In terms of its political economy, China has far more to gain from contributing to international stability in cooperation with western countries than allying with a Russia that, as described in a wide-ranging New York Times article, is incentivized “to foment political instability.”

On February 28, 2022, the 50th anniversary of the Shanghai Communique, Foreign Minister Wang Yi of China, former U.S. National Security Advisor Henry Kissinger, and officials of both countries met at the Jinjiang Hotel where the Communique had been signed. Minister Wang spoke of the successes achieved by the two countries over the five decades, “by seeking common ground while reserving differences.”

Minister Wang also acknowledged outstanding challenges in the U.S.-China relationship. The war in Ukraine provides an opening for President Biden to request a meeting with President Xi to reaffirm the two countries’ support for the One China policy and the territorial integrity of sovereign countries. With a reset in their relations, the two countries could cooperate in developing new vaccines, reversing climate change, and enforcing principles of the UN Charter.

Natural Disasters and Conflict

“In November 1970, a storm set a collision course with the most densely populated coastline on Earth. Over the course of just a few hours, the Great Bhola Cyclone would kill 500,000 people and begin a chain reaction of turmoil, genocide, and war.

The deadliest known tropical cyclone in history made its way north through the Bay of Bengal into the heart of what was then East Pakistan. In their book, The Vortex, Scott Carney and Jason Miklian describe the turmoil caused when the cyclone devastated a fragile country newly created out of the partition of India.

When British rule over India ended in 1947, the largely Muslim areas of India’s east and west extremes became Pakistan. East Pakistan and West Pakistan were separated by over a thousand miles of Indian territory. Relations between East and West Pakistan suffered from differences in geography, language and culture. Following government reforms by the president of Pakistan, General Yahya Khan, general elections were set for December 1970.

Four weeks before the election, on November 11, 1970, the Bhola Cyclone struck East Pakistan. The government, centered in West Pakistan, was criticized for its relief efforts after the storm. The storm “became a flashpoint for political upheaval in Pakistan.” Although East Pakistan urged postponement, elections proceeded as scheduled on December 7. The Awami League, a political party which had been formed to campaign for East Pakistan’s autonomy from West Pakistan, defeated the Pakistan Peoples Party of Yahya Khan.

“The cyclone, combined with Yahya’s callous, catastrophic mishandling of the aftermath, triggered the political momentum for a revolution.” The administration in West Pakistan refused to form a government with the Awami League, nullifying the election. Rioting degenerated into civil war, widening into the Indo-Pakistani War of 1971, and declaration of independence for Bangladesh on March 26, 1971. The authors described events as “one of the first times that a natural event helped trigger a civil war.” More people are estimated to have died in the war than in the cyclone.

The relation between natural disasters and conflict was the subject of a 2010 Brookings Institution study. The study concludes that “particularly for developing countries with weak governments, a natural disaster can cause political instability. Indeed, in countries such as Guatemala (1976 earthquake) and Nicaragua (1976 earthquake), governments have fallen largely because of popular discontent over the way the disaster response was organized.”

A Foreign Policy article reported on the June 2021 G7 meeting discussion of collective security and climate change action. ”U.S. and U.K. governments started to consider climate change as a security threat and a driver of instability, even referencing it in their defense strategies. One of the main concerns for both U.S. and British defense officials is that climate change can create conditions that will increase hostilities between or within nations.

These conditions include droughts, floods, wildfires, storms, and other natural disasters that may lead to food and water shortages, mass migration, and outbreaks of disease—potentially leading to violent conflicts over land or resources or civil outrage that could destabilize governments.

The latest UN report on climate change warns the world is on a “fast track’ to disaster, not that we haven’t heard this many times before.  “Unprecedented heatwaves, terrifying storms, widespread water shortages,” natural disasters more severe than historical events. Preparing for this future means preparing for conflict as well.

Risking Deglobalization

April 10, 2022

The last thirty years of globalization have recorded huge increases in international trade, world GDP, Foreign Direct Investment (FDI), migration, multinational enterprises, and global value chains. Globalization has lowered costs for consumer goods, and raised living standards for millions of people worldwide. It has also displaced millions of workers in developed countries.

Globalization of financial markets caused a financial crisis in 2007-2009 that led to a deep global recession. Further setbacks to globalization came with Brexit, the United Kingdom’s withdrawal from the European Union; trade wars engaged by the U.S. administration of Donald Trump; the Covid-19 pandemic of 2020-2021, and now, the invasion of Ukraine by Russia.

The severing of supply chains during the pandemic, and the ethics of trading with autocratic regimes that  suppress freedom and human rights, is prompting a reassessment of the costs and benefits of globalization. Limiting trade to long-standing allies, and bilateral versus multilateral trade deals, are finding favor.

However, the costs of a retreat from globalization are counted in trillions of dollars. A recent article in The Economist estimates roughly three trillion dollars in investment would be written off by multinational corporations, as they move manufacturing to less efficient, higher-cost producers, fueling inflation and lowering living standards.

A sharp decrease in FDI would likely have severe repercussions. An article in International Affairs expected FDI “almost to halve investment flows to Africa, Asia and Latin America. Contrary to hopes of fulfilling the [UN] Sustainable Development Goals, millions of people could be thrown back to poverty. While the number of refugees is already at a record high, significantly more people could join the global refugee surge. Societal unrest and more authoritarian tendencies in host states could be the result.”

However, Howard Marks, co-founder of Oaktree Capital Management, in an article in Financial Times, contends that deglobalization “may improve importers’ security, increase the competitiveness of onshore producers and the number of domestic manufacturing jobs, and create investment opportunities in the transition.”

A balance between trade and national security is a more sustainable course for the future of globalization. Groups of regional countries, such as the Association of Southeast Asian Nations and the African Continental Free Trade Area, are banding together as like-minded democracies. The U.S. and the European Union have formed the EU-US Trade and Technology Council to “coordinate approaches to key global technology, economic, and trade issues.”

The London-based Royal Institute of International Affairs summarizes the current globalization debate: “technology has unleashed powerful globalized forces which are here to stay, whether that is in international travel, finance, and trade, or borderless criminal, terrorist, and health threats. Allowing international agreements and institutions to decay only makes the world less efficient,” as well as less healthy and less safe.

Why DID Putin Wait Until Trump Was Out of Office to Invade Ukraine?

March 27, 2022

In a stroke of editorial genius, two letters to the editor appeared sequentially in the March 2, 2022, St Louis Post-Dispatch, six days after Russia invaded Ukraine.

Mr. A wrote:

Isn’t it ironic that Russian President Vladimir Putin waited for Donald Trump to leave office before he invaded Ukraine? Say what you will, but in my opinion, Trump’s foreign and domestic policies were the reason why there was stability during his tenure in office.

Followed by Ms. B, who wrote:

Republican pundits are correct when they say the Ukrainian invasion wouldn’t have happened if Donald Trump were president, but they are wrong as to why that is. In my opinion, the reason is because Russian President Vladimir Putin viewed Trump as an ally trying to achieve a similar agenda as his.

Putin is an anti-democracy dictator. As president, I believe Trump undermined basic democratic principles that ultimately led to the Jan. 6, 2021, attack on the Capitol. Trump suggested pulling out of NATO, which would benefit Putin’s goal of weakening the alliance. Trump also shared classified information with Russian officials, received Russian assistance for his campaign and tried to deplete Ukraine’s resources through the extortion attempt that led to his first impeachment.

After Joe Biden became president, Putin lost a yes-man, and Putin became more isolated in his fight against NATO. Putin no longer had Trump’s unstable hold on democracy, nor does he have an American president trying to increase Ukraine’s vulnerability. Putin is now desperate because he lost the American president who fed into his vanity.

We now have an insider’s view on the question. Marie Yovanovitch has published a memoir titled Lessons from the Edge. She was the U.S. ambassador to Ukraine from 2016 (appointed by President Obama) to 2019 (fired by President Trump). Yovanovitch testified in Trump’s first impeachment hearing.

She spoke in an interview on National Public Radio on March 15, 2022. As the war in Ukraine was in its third week, conversation turned to President Putin’s past history of invasions, and her expectation that, if Putin is not stopped, “there is the likelihood that at some point he will continue moving west.”

As to why Putin invaded Ukraine in February, Yovanovich said,

I think that while Trump was president, Putin probably was feeling that he was getting what he needed from the American president, both in terms of Trump’s disdain for Ukraine as well as Trump’s disdain for NATO, frankly. A number of senior people around Trump have said that if Trump had won a second term, it’s unlikely that the U.S. would have stayed in NATO. So I think Putin was getting what he wanted from Trump and so no need to push in any other ways. When Biden was elected, clearly, he knew that President Biden, who had been very active … in supporting Ukraine when he was vice president, that he probably would not be as amenable to Russian influence in Ukraine, and so I think he looked for other means.

Given Putin’s goal of restoring the Russian Federation, it is likely he would have invaded Ukraine even if Trump had been re-elected. Trump paved Putin’s way by weakening NATO, undermining the EU, and disregarding international norms. Ironically, Putin reversed these trends when he underestimated the West’s cohesiveness in response to the invasion of Ukraine.

Good Economy? Bad Economy? Two Answers

That’s the question: Are these good times for the U.S. economy, or bad times? It depends on who you ask, and both answers have backup supporting data.

The Bureau of Economic Analysis (BEA) released change in Gross Domestic Product (GDP) for the fourth quarter of 2021. GDP grew at a healthy 7.0% in the quarter. Quarterly figures had been in the two to three percent range prior to the pandemic. Then the first and second quarters of 2020 registered negative changes of -5.1% and -31.2% respectively. GDP rose in third quarter 2020 by 33.8%, and since then the economy has surpassed pre-pandemic levels, although still short of the pre-pandemic trend.

Unemployment at the beginning of 2020 was 3.5%. By April it had reached its pandemic high of 14.8%. The Bureau of Labor Statistics reported unemployment was down to 3.8% by February 2022. Americans collecting unemployment benefits reached a 52-year low.

In March and April 2020, 22 million jobs were lost. By February 2022, 90% of lost jobs had been restored. Over the same February 2020-February 2022 period average hourly earnings for all employees increased 10.75%, and consumer spending increased.

Despite the favorable direction these statistics are pointing, polling in January 2022 by Gallup found majorities of respondents did not have favorable views of the economy. When asked to rate current economic condition in the country, 40% answered “fair” and 37% answered “poor.” Asked whether economic conditions in the country as a whole were getting better or worse, 67% answered “worse.”

Inflation, currently at a 40-year high, is a major source of anxiety for families at various income levels. The annual inflation rate in the U.S. reached 7.9% in February of 2022. Prior to the pandemic inflation hovered around 2%. Much of the blame for high inflation belongs to three rounds of stimulus checks provided by the federal government in 2020 and 2021 to ease people and business through the pandemic-instigated recession.

A great deal of that stimulus money went to families with children. The child poverty rate increased to 21.4% during the pandemic. Monthly Child Tax Credit payments brought the figure down to 7.6% by March 2021. Following the end of those payments, the monthly child poverty rate escalated in January 2022 to 17%.

During the pandemic, employees with fewer years of education were less likely to work in occupations suitable for teleworking. They were in and out of work as the pandemic went through a series of lockdowns.

(Click to enlarge graphics)

Add rising medical costs, a larger decline in low-wage jobs than middle- and higher-income jobs, loss of high-paying manufacturing jobs, and the general feeling that the recovery has least benefitted the most vulnerable, and the Gallup polling makes more sense. And even in the third year of the pandemic, Covid continues to complicate daily life.

At the other end of the income and wealth spectrum, the pandemic was kind to those with investments in corporate equities and mutual funds. The S&P 500 gained 26.9% in 2021, the Dow Jones Industrial Average gained 18.7%, and the Nasdaq Composite gained 21.4%. The graph below shows the dollar value that each of four wealth groups owned of corporate equities and mutual fund shares from 4th quarter 2019 to 3rd quarter 2021. All four groups’ assets dipped in the 1st quarter of 2021, followed by trillions of dollars of gains for the top 10% wealth percentile.

As wealth of some individuals increased sharply, others remain flat or declined. Similarly, some sectors of the economy grew while others declined. The term “K-shaped recovery” came to be used to describe the economy. The graphic produced by Investopedia portrays the divergence. Some industries have recovered quickly while others lag. The divergence also applies to low-income employees in hard-hit sectors experiencing slower recovery.

A September 2021 article from Investopedia foresees troubling long-term implications of the K-shaped recovery: “long-term unemployment among people in the lowest income quintile, wealth inequality, a continuing and worsening racial wealth gap, and growing corporate monopolies.”

So, to answer the question, good economy, bad economy? An economy that progressively enlarges the wealth gap is ultimately unsustainable. Health and social welfare problems increase, as does child poverty. Social cohesion, in terms of civic involvement and mutual trust decreases. Crime increases. Social mobility is reduced. Human capital is underutilized. And the sum of these conditions is also bad for business and the economy generally, by placing goods and services beyond the reach of ever larger segments of the population.

That is not just a matter of who you ask.

Preparing for the Next Pandemic

The first approval of a Covid-19 vaccine occurred in late August 2021; protests against the vaccine and against mandates for its use began soon after. Since the beginning of 2022 opposition to Covid restrictions have brought thousands of demonstrators to cities throughout Europe. European Union headquarters in Belgium was attacked by 50,000 demonstrators in January. Thousands protested in Vienna against Austria’s vaccination mandate that started in early February. Demonstrations in Berlin and other German cities draw tens of thousands every week. Demonstrations in Italy, France, Spain, Switzerland, the Netherlands, the United Kingdom and Sweden have each drawn thousands of protestors. Along with similar events in Canada and the United States, demonstrations encompassed virtually all of the major western democracies.

In news stories of the protests, lack of trust in government has been acknowledged by some government officials as triggering the unrest. Due to distrust of those managing the response to Covid-19, and lack of faith in the safety of the hurriedly-developed vaccines, the battle against the pandemic was resisted by significant portions of each country’s population. In the U.S. it didn’t help that the losing party in the 2020 presidential election criticized the new administration’s pandemic response, after earlier minimizing the threat from the pandemic when the party occupied the White House.

Widespread as the demonstrations were, some western countries were more successful than others in getting their population vaccinated and experiencing lower rates of death. As of late February 2022, 95% of Portugal’s population had been fully or partly vaccinated, the highest in Europe and second only to United Arab Emirates. Spain’s population was 88% vaccinated, and Italy’s, 84%. The U.S. population was 76% vaccinated at that time. As of late February, the United States led the western democracies with 2,850 deaths per million population. Spain’s rate was 2,130 per million, and Italy’s, 2,550. Norway’s rate was 292 per million.

Ezra Klein reported in the New York Times on a Johns Hopkins health security report. As of October 2019, the United States ranked first among 195 countries on pandemic preparedness. “Each country is judged on prevention policy, on detection capabilities, on response infrastructure, on health system capacity, on international cooperation and on underlying risk.” Many factors during a pandemic are beyond government control, such as age structure, climate, and GDP per capita.

The importance of trust has been studied in depth as an essential consideration in preparing for future medical emergencies. The Global Health Program (GHP) at the Council on Foreign Relations sought to understand why some nations were more successful than others in limiting Covid-19 infections, hospitalizations, and deaths. The GHP report found national attributes in terms of healthcare capacity and pandemic preparedness were not correlated with cross-country variations in infections and fatalities.

[H]igher levels of trust (government and interpersonal) had large, statistically significant associations with fewer infections for the entire study period…. These results support previous research that has found an association between trust and compliance with public health guidance… Governments and communities maintain or increase the public’s trust by providing accurate, timely information about the pandemic, even when that information is still limited, and by clearly communicating the risk and relevant vulnerabilities.”

In an interview on National Public Radio, Thomas Bollyky, co-author of the GHP study, highlighted U.S. policy addressing government’s role: “Part of our pandemic preparedness guidelines dating back to [George W. Bush’s presidency in] 2006 emphasized a paramount importance of community-specific, clear, consistent risk communication in a crisis like this one.” No country could know with certainty the best response to the sudden appearance of a new form of coronavirus. President Bush’s guidelines called for early detection, international cooperation, stockpiling of medical equipment, and public education. Following the established policy would have placed the U.S. in a better position to reduce Covid-19 infections and deaths.

Balancing Market Freedom and Government Policy

For four decades the American Economic Association (AEA) has presented economists with a number of economic propositions and asked if they agreed or disagreed with each proposition. Compared to previous surveys, the 2021 survey found increased consensus on many propositions.

Over 60% of the 1,442 respondents agreed with the following propositions:

– The distribution of income in the U.S. should be more equal

–  Redistribution of income is a legitimate role for the U.S. Government

–  Universal health insurance coverage will increase economic welfare in the U.S.

–  Addressing biases in individuals and institutions can improve both equity and efficiency

–  Antitrust laws should be enforced vigorously

–  Corporate economic power has become too concentrated

Over 70% of respondents agreed with these two propositions:

–  Immigration generally has a net positive economic effect for the U.S. economy

–  Climate change poses a major risk to the U.S. economy

Over 60% of respondents disagreed with other propositions:

–  The distribution of income and wealth has little, if any, impact on economic stability and growth

–  Easing restrictions on immigration will depress the average wage rate in the U.S.

–  Reducing the regulatory power of the Environmental Protection Agency would improve the efficiency of the U.S. economy

Results of the new AEA survey would please President Harry Truman. He is famous for saying he wanted a “one-armed” economist because his economic advisors would say, “on the one hand, this, but on the other hand, that.” These economists have finally come together, and the consensus is, more government involvement is needed to tame corporate power, reverse climate change, reduce inequality, and support immigration.

But there is a problem. Some prominent voices are saying the government should not enact legislation in support of the activist positions recommended by these economists. In mid-January 2022 articles in both The Economist and the Washington Post presented arguments against government policies that interfere in free markets.

According to Fareed Zakaria, a Washington Post journalist, political commentator, and author, use of tariffs, subsidies, and relief packages  “allows politicians to engage in patronage policies, protectionism and short-term gimmicks to prevent ordinary people from feeling the pain of a crisis.” Jan Piotrowski, business editor of The Economist, argues “greater state involvement in business is unlikely to lead to better outcomes than in the old days, when similarly interventionist tools were deployed. They may well be worse.”

Both authors perceive the same threats in countries around the world. According to Zakaria, “The old obsession with economics over politics was overdone. It achieved great successes [post 1945] but created other problems, such as wage stagnation. But the current emphasis on politics over economics seems more dangerous…. from China to Turkey to the United States, politics is trumping economics.”

During the pandemic trillions of dollars were distributed to revive the U.S. economy. Piotrowski accepts some government intervention, for example in semiconductors and pharmaceuticals, as legitimate on security grounds. But favoring some companies over others through subsidies leads to inefficiencies, and “companies’ focus tends to shift from satisfying consumers towards currying favour with political leaders. Preferred firms grow flabbier and less innovative.” He is also critical of excessive government regulation of how businesses treat employees and what information they must disclose.

The economists’ propositions track closely with hot button issues of a polarized population. As an asset manager told Piotrowski, the world is entering “a political cycle where government has to be responsive to an increasingly fickle and opinionated electorate.”

Anemic Post-Recession Job Recovery

The year 2021 ended with a December gain of 199,000 jobs, slightly above the monthly average for the 2011-2020 decade. But after losing over 22 million jobs at the start of the pandemic, the December gain was half the total economists had projected, and the lowest monthly gain since the start of the Covid-19 recession 22 months earlier. The December gain leaves the economy over 3.5 million jobs below when the recession began in February 2020. As the graph below shows, the loss of jobs in the recession far exceeded that of any recession since 1980, and after 22 months, recovery is behind all those previous recoveries except the Great Recession in 2007.

 

 

 

 

 

(Click to enlarge graph)

Job recovery is facing multiple headwinds. Millions of workers retired during the Covid Recession; in addition to the normal aging of Baby Boomers, over three million workers took retirement earlier than they might have done absent the pandemic. In addition to retirement, the so-called “Great Resignation” saw as many as 4.5 million workers leaving their jobs in a single month. The nearly 900,000 deaths due to Covid-19 included over 200,000 working-age people 18-64 years old. A University of California, Davis article [LINK 2] estimates that during 2020 and 2021 about two million fewer working-age immigrants entered the U.S., half of whom would have been college-educated. And while jobs have been lost to technology for decades, the shortage of workers during the pandemic led to greater use of telemedicine for the overstretched healthcare industry, and increased automation in food service and hotels.

Against so many adverse trends, restoring employment to its pre-pandemic level is like running up a down escalator. The metaphor is apt for much that is happening in the United States overall. Recovery from Covid-19 is thwarted by opposition to accepted health practices. Stimulus payments that eased families through unpaid months of lockdowns left a spike in inflation for the Federal Reserve Bank to manage. Political polarization has prevented progress on a number of issues including election reform, immigration, clean energy, universal pre-k education, and healthcare affordability.

Restoration of the remaining 3.5 million jobs would benefit greatly from wide acceptance of healthcare professionals’ recommendations. Passage of proposals tackling infrastructure needs would directly add new jobs. The very measures that would put the economy back on its pre-pandemic course are victims of  anti-government activism preventing those measures. There couldn’t have been a worse time for loss of trust in government than during a pandemic.

Social Mobility and Fairness Correlated to Populism

Anxiety over populism in democracies has engulfed countries large and small, leftist, and conservative, newly democratic and established, and threatens the very existence of liberal democracy. Populism has been addressed by Fifty Year Perspective in the past, most recently in “Roots of Populism.” The search to explain the rise in populism has centered on distrust of government and its responsibility for rising inequality.

The pursuit of better understanding of causes and cures of populism has launched a flurry of research. A recent working paper from the Center for International Development at Harvard University offers an explanation in its title, “Social Mobility Explains Populism, Not Inequality or Culture.” Research Fellow Eric S. M. Protzer is the author. The working paper is the basis for a book titled Reclaiming Populism, to be published in 2022.

Understanding why people join populist movements is essential to addressing their distrust of government. Explanations have typically cited either cultural roots, such as immigration, social media, globalism, and backlash of older population against younger generations; or economic roots, such as job losses following off-shoring of manufacturing, and individual financial hardship after the international financial crisis.

Protzer challenges the contention that economic inequality explains the rise of populism. Economic outcomes may be fair or unfair. He says, “unfair economic outcomes are linked to the rise of contemporary developed-world populism.” Someone who succeeds by working hard or innovating has received a fair outcome; someone who succeeds by stealing or engaging in nepotism benefits from an unfair outcome.

The paper uses regression analysis to find correlation of populism with social mobility in four settings: US counties in the 2016 and 2020 Presidential Elections; French jurisdictions in the 2017 Presidential Election; the 2019 European Parliament elections; and a cross-sectional regression of 24 developed countries across the world with GDP per capita levels of at least $25,000.

Protzer uses social mobility as signified by the relation between each individual’s income and the income of the individual’s parents when they were the individual’s same age.

In places with low social mobility an individual’s economic success strongly depends on how wealthy their parents were. This situation clearly violates economic fairness… because rewards are allocated according to a standard that is not intrinsically linked to an individual’s potential productivity…. Low social mobility is consistently and significantly correlated with populism.

Protzer makes no claim to have definitively established causality. He concludes that “repeated, compelling correlations” suggest policymakers “focus on questions of economic fairness and social mobility to defuse populism,” by investing in “public goods that create substantive equal opportunity, like education, healthcare, and infrastructure, or market reforms that allow citizens to translate that opportunity to fair rewards.” He cites previous research arguing against redistribution, as such a platform “may be likelier to repulse rather than attract would-be populist voters.” Apart from the merit of Protzer’s policy recommendations, the underlying challenge remains: to restore trust in government.

Legitimacy of One-Party Government in China

A recent post to Fifty Year Perspective described challenges facing China in establishing its strategy toward achieving leadership abroad while maintaining tranquility and stability at home. Technology is central in achieving national and domestic objectives – it serves China’s international military and economic expansion, and underpins intelligent surveillance, early-warning, and control systems within their borders.

China’s President Xi Jinping and the Chinese Communist Party (CCP) have become more aggressive in exerting control over domestic financial markets and in dictating cultural norms. A flood of new regulatory activity targeted monopolies. The expected hit on tech profitability sent stock values down, wiping out billions of dollars in equity.

President Xi encouraged Chinese firms to work toward “common prosperity,” and called for restraint in awarding excessively high earnings to technology firm founders. Investigations into tech firms have generated multi-billion dollar fines and forced withdrawal of planned initial public offerings and delisting of Chinese firms from overseas stock exchanges.

The Cyberspace Administration of China (CAC) is targeting online entertainment “at odds with socialist values.” Internet celebrities generate huge revenue from ads in an industry that the government wants to control. That includes blacklisting celebrities who had committed some transgressions, such as evading taxes or inciting illegal gatherings.

From a Westerner’s perspective, these moves by President Xi and the CAC might bode ill for the relationship between the Chinese government and its people. Chinese investors are threatened by financial losses, and access to favorite web apps and celebrities are subject to being banned. But an article titled “What the West Gets Wrong About China” in the May/June 2021 issue of Harvard Business Review (HBR) suggests three “myths” in Western thinking. The authors draw upon their knowledge from visits to China going back to the early 1990s.

Westerners have assumed that economic prosperity would move China away from authoritarianism to liberalism. However, authors of the HBR article find “many Chinese believe that the country’s recent economic achievements—large-scale poverty reduction, huge infrastructure investment, and development as a world-class tech innovator—have come about because of, not despite, China’s authoritarian form of government.” The authors cite polling indicating 95% approval among Chinese citizens of their government.

Furthermore, the authors add, Chinese regard their single party form of government more legitimate and effective than democracy. Ordinary Chinese citizens believe the CCP produces “relatively competent leaders: They are chosen by the CCP and progress through the system by successfully running first a town and then a province; only after that do they serve on the Politburo.” The traditional Confucian concept of “harmony” embraces respect for authority, even to the extent that pervasive surveillance that rewards or punishes citizens is accepted as “a perfectly reasonable part of the social contract between the individual and the state.”

Finally, the authors cite a distinctive behavior of mainland Chinese: a tendency toward short-term thinking and planning. The unpredictability of life remains within living memory, tempering trust in what the future holds. “Decisions—by both individuals and the state—about how to invest all serve one purpose: to provide security and stability in an unpredictable world.” China’s history influences how people invest and the country’s view of international relations. “This shared quest for predictability,” the authors conclude, “ explains the continuing attractiveness of an authoritarian system in which control is the central tenet.”

Fear

Reading for Fifty Year Perspective exposes me to a variety of perspectives on current events in general and politics in particular. Several of my recent posts have examined causes and effects of polarized politics, and I am no longer surprised at the depressing level of civic discourse. Even so, I have become especially troubled seeing the word “fear” used by American writers describing conditions that would more likely be found in a dictatorship.

Katharine Hayhoe, in her book Saving Us, perceives fear of change as a common factor in “a toxic stew of identity issues” including coronavirus, vaccines and climate denial. “Societal change,” she writes, “is happening faster today than at any time in our lifetimes, and many are afraid they’re already being left behind. That fear drives tribalism, emphasizing what divides us rather than what unites us.”

That type of fear corresponds to what President Franklin D. Roosevelt observed in the famous quote from his first inaugural address: “…the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.” Do not retreat from the work to be done, he was saying, but do what is necessary to advance beyond the challenge.

A far more troubling fear is described by Max Boot in a Washington Post opinion piece. Trying to understand acceptance of patently false conspiracy theories, Boot cited evidence of fear for their safety among Republicans if they voted to impeach Trump in January 2021: “One of the pro-impeachment Republicans, Rep. Anthony Gonzalez (Ohio), is leaving Congress in part, he says, because of the danger to him and his family. Even the 13 House Republicans who recently voted for a bipartisan infrastructure bill have received death threats.”

In his first week as a member of the House of Representatives, Republican Peter Meijer of Michigan joined a dozen GOP representatives who opposed attempts to deny certifying Joe Biden’s election. He expressed his sadness at what he observed: “I had colleagues who, when it came time to recognize reality and vote to certify Arizona and Pennsylvania in the Electoral College, they knew in their heart of hearts that they should’ve voted to certify, but some had legitimate concerns about the safety of their families. They felt that that vote would put their families in danger.”

Katharine Hayhoe’s fear threatens progress, progress in reversing global warming and progress in stopping the pandemic. Max Boot’s fear and Peter Meijer’s fear threaten democracy.

Technology Is About to Make Economics and Politics Much More Fraught

Like a parlor game, we often amaze ourselves with comparisons between the worlds of the past and the present. Who could have foreseen the changes brought by cars, or electricity, or telephones, let alone the Internet? As technology changed, governments adjusted economic and political policies to those changes: For example, allocating bandwidth for communication channels, issuing patents to protect inventions or subsidizing clean energy. Going forward, a number of new technologies on the horizon, in the fields of agriculture, manufacturing and energy, have the potential to foster dramatic transformations in national economies and global politics.

In the field of manufacturing, the combination of Artificial Intelligence (AI), three dimensional printers (3D) and robotics is changing how goods are produced. Design blueprints can be converted into instructions for 3D printers. The process is currently being used to print objects as small as jewelry and larger objects, including components for aircraft and buildings.

3D printing also changes where goods are produced. Instead of requiring large factories for mass production of products that must be shipped to distant end-users, production can occur at small scale, as few as a single unit, for a local user. Input materials can be metals, plastic, carbon fiber, and liquid resin, among others. Robotics reduces demand for human labor. On-demand production also reduces the need for large inventories and unreliable supply chains. Savings on labor and transportation offset advantages of cheap off-shore labor. Five years ago a publication by the National Defense University (NDU) reported, “Commercial firms are taking advantage of these advances. United Parcel Service (UPS) has established a new initiative called ‘Direct Digital Manufacturing’ focused on providing rapid 3D printing of any customer’s design.”

The NDU publication also described how indoor farming is undercutting global trade in high-value fruits, vegetables, and flowers. A factory in Kyoto, Japan produces eleven million heads of lettuce annually. Urban farms and vertical farms “do not require herbicides or pesticides, use 97 percent less water, waste 50 percent less food, use 40 percent less power, reduce shipping costs, and are not subject to weather irregularities. On a larger scale, these processes will seriously reduce the market for long-range shipping of high-value agricultural products.”

Lufa Farms in Montreal, billed as the largest rooftop greenhouse in the world, grows 100 varieties of vegetables and herbs year-round.  Similar greenhouses have been built by Gotham Greens in New York, Chicago, Providence, Baltimore, and Denver. The UK, which imports almost half of its food and 84% of its fresh fruit, is vulnerable to food supply chain interruptions. The Covid-19 pandemic has forced a reevaluation of how food supply chains function under crisis conditions.

Another technology set to impact global agricultural trade is cultured meat. Unlike products such as so-called meatless beef, cultured meat is created from painlessly harvested cells from living animals. Cells are grown in a lab environment, drastically reducing demands for land, water, and energy, as well as moving production close to the end consumer.

Perhaps the greatest technology impacting global trade will be renewable energy. All nations have access to sun and wind. Local generation of energy from renewable sources removes reliance on oil-rich nations.

These trends foretell a comforting future for rich countries with high technical skills and aging populations. But for undeveloped countries, losing the cost advantage of inexpensive human labor may block the path enjoyed by Japan, South Korea, and China whose industrialization led to wide-spread prosperity. As a result, the NDU publication warns that “lack of economic opportunity in conjunction with youth bulges in many of these [undeveloped] nations will have major social and security impacts. Both internal instability and economic migration are likely to increase.” Which brings the discussion back to economics and politics.

Desalination

In 2019 Iranian drones and missiles staged a surprise attack on Saudi Arabia’s oil facilities. An article in The Economist  noted the Saudi’s vulnerability to a wider conflict, adding Saudi officials worry “that a well-placed salvo of missiles aimed at desalination plants could render the Gulf unlivable within days.”

The desert kingdom of 35 million people has very little fresh water and cheap energy costs. Its desalination plants produce half of its water, more desalinated water than any other country, and a fifth of the world’s total.  A decade ago the Saudi minister for water and electricity estimated that the kingdom was using a quarter of the oil and gas produced in the country to generate electricity for its desalination plants.

Water scarcity is pervasive throughout the Arabian Peninsula. Like Saudi Arabia, rulers of Oman, Qatar, Bahrain, Kuwait and United Arab Emirates have used their oil and gas riches to build desalination plants to support their growing populations. Qatar’s domestic water comes entirely from desalination plants, providing free water for its citizens. Plants are proliferating in Israel, Egypt and Jordan; Israel’s five plants on the Mediterranean Sea provide half of the country’s domestic water needs.

These arid regions of the Middle East are half of the desalination story. The world’s 16,000 to 18,000 desalination plants (estimates vary by reporting source) are spread among 120 countries, with 50-70% of the desalinated water produced in the Middle East. Intermittent drought and climate warming have turned water-stressed areas around the world to desalination.

Over 1,400 desalination plants are in the United States. The majority are being used to desalt brackish groundwater. The remainder process seawater along the coasts of California and Florida. Decreased Rocky Mountain snowfall over the past two decades has reduced flow in the Colorado River, a source of fresh water for states in the Southwest United States. Carlsbad, the largest of twelve desalination plants in California, provides 12% of San Diego County’s water; a thirteenth desalination plant is proposed for Huntington Beach.

Desalination has a limitless supply of seawater, while surface water depends on intermittent snowfall and rain. But desalination comes with its own disadvantages. Desalination takes enormous amounts of energy to force seawater through the membranes that filter it, in turn creating environmental impact. The process discharges a brine consisting of concentrated saline and other chemicals that are harmful to aquatic ecosystems. Various efforts are employed to dilute the brine before discharging it back into the ocean. Chemicals in saltwater, such as magnesium, calcium, lithium and pure sodium chloride can be extracted to offset the costs of production.

For nearly one hundred years California has moved water to Southern California from the Colorado River. Starting in the 1960’s, water from the Sacramento and San Joaquin Rivers has been transported hundreds of miles to Southern California via a system of dams, reservoirs, power plants, pumping plants and aqueducts. Although the end user cost of desalinated water is approximately twice the cost of water from traditional sources, the additional expense is deemed necessary for water security. As in other parts of the world, desalination serves as a safeguard against future impacts of climate warming.

Are Workers Gaining the Upper Hand?

The previous post on Fifty Year Perspective, recounted many of the causes of the slow recovery in employment following Covid-19. Closed schools, lack of child daycare and elder care, generous unemployment benefits, repeated spikes in infection rates, and doubts concerning the effectiveness of vaccines extended the recovery.

Even though nearly six million workers remain unemployed and the labor force counts over three million fewer workers than the early-2020 start of the pandemic, millions of workers are resigning their jobs. News media have named the phenomenon The Great Resignation. Why are millions of workers resigning month after month, and how can they afford to remain or become unemployed?

Much is made of the August employment report of 8.4 million unemployed workers, while employers are trying to fill 10.4 million open jobs. In fact, this mismatch goes a long way toward explaining mass resignations. Millions of workers unhappy with their current employment see opportunity for better positions or pay or improved work/life balance in all those job openings.

An elevated level of resignations has historically been an expression of worker confidence in finding employment elsewhere. Tracked since December 2000, resignations had been as high as 3.6 million before the pandemic. Swelling to 4.2 million in August 2021, numbers were highly concentrated in public-facing industries – food service, accommodations and retail accounted for half of resignations. In these and other industries, health concerns and child care issues unique to the Covid-19 pandemic added to the total.

A number of situations are encouraging workers to resign, especially workers in low-paying jobs with irregular or limited hours. Undoubtedly the extra unemployment benefits created a cushion allowing time to consider alternatives. News stories of major national employers raising their minimum wage to $15 or $18 per hour attracted workers earning well less than that. The number of multiple-job holders has fallen by over a million since January 2020, as workers holding two or more jobs could afford to leave one.

Being able to work at home during the pandemic provided flexibility workers do not want to give up. Some employed workers not looking to change jobs received unsolicited calls from recruiters offering work-from-home positions. Workers experiencing burnout or reconsidering the trajectories of their careers took the opportunity to explore new opportunities or new careers. For older workers nearing retirement, two million made the decision that they could comfortably leave the labor force for good.

Declines in the working-age population foretold labor shortages before there was a pandemic. So if workers are taking advantage of the pandemic to move up to more desirable jobs, who is going to fill these “undesirable” jobs going forward? Technology seeks to fill the void with a variety of robots, not just for manufacturing, but service robots.

Fortunately, some of the service industries for which robots are being developed are the same industries experiencing hiring difficulty. Among them are health care, food preparation, customer service, and hospitality. Even in the professional service industry, robots are being used for inspection, maintenance and disaster response tasks to relieve human workers of dangerous tasks.

For now workers have a favorable environment for finding more satisfying jobs, amid signals that the pandemic’s “essential workers” will benefit from rising pay. And for the future there may be fewer unpleasant jobs.

Investment in robotics has been significantly higher in countries that are undergoing more rapid aging. A report by the National Bureau of Economic Research documented a higher concentration of robots in Japan and Germany, both countries with lower proportions of population ages 26 to 55.

The Challenging Course to Reviving the Post-pandemic Economy

There is a direct line from anti-vaxxers and anti-maskers to the slow recovery of employment since the outbreak of Covid-19. In September 2021 only 194,000 jobs were added to the U.S. economy, well below the projection of 500,000 jobs; total employment remained 7.7 million jobs below the pre-pandemic peak. More troubling is the decrease in the size of the labor force; a net of 183,000 workers left the labor force in September. That net loss obscures crucial disparity between male and female workers.

Women carry more of the burden of childcare than men, and this is where the link between employment and family support emerges. There were 296,000 fewer women in the labor force in September than in August, but there were 113,000 more men. Since January 2020, the labor force has lost a net of 1,157,000 men and 1,943,000 women, for a total of 3.1 million fewer participants.

In January 2020, the civilian labor force totaled 164.5 million workers, of which 158.7 million were employed and 5.8 million were unemployed. The unemployment rate was 3.5%. By April 2020, the labor force had lost 8 million workers, and the unemployment rate reached 14.8%.

As of September 2021, the labor force had partially recovered, reaching 161.4 million, with 7.7 million unemployed, and an unemployment rate of 4.8%.

Older workers are returning to the labor force at a slower rate than those under 55 years old. The number of 18-to-54-year-olds in the labor force in September was 1.9% below the pre-pandemic peak. For those at least 65 years old, there are 3.6% fewer in the labor force.

Persistence of the Covid-19 virus is more of a threat to older workers for whom in-person work presents health concerns. As with the number of women missing from the labor force, getting past the Covid-19 threat should bring back hundreds of thousands of workers, although many of the elderly will be reluctant to start a new career and choose to retire.

Much attention has been directed to the current mismatch between job openings and unemployed workers. In August 2021 there were 8.4 million unemployed workers. At the same time the Bureau of Labor Statistics reported 10.4 million job openings, a number that had been increasing monthly through July 2021 even as the number of unemployed workers had been declining.

During the two years prior to the onset of Covid-19, job openings slightly exceeded the number of unemployed workers. In March 2020 the number of unemployed jumped far above the number of job openings. Unemployment ballooned to 23.1 million in April, and job openings sank to 4.6 million from a January high of 7.2 million. Unemployment gradually decreased to 7.7 million in September, while job openings totaled 10.4 million in August.

Education, health, leisure and hospitality are industries experiencing the most acute worker shortages. All involve high person-to-person contact and vulnerability to infection. There are 1.7 million job openings in leisure and hospitality, yet there are 1.2 million unemployed workers in that industry. This problem is especially critical for education and health services. The August survey found over 1.7 million education and health openings, and over one million unemployed with experience in education and health. Fear of Covid-19 infection is prominently represented among reasons for not accepting employment in these industries.

Over four million workers quit their jobs in August. Half of households in a recent NPR poll report a member “has experienced serious problems with depression, anxiety, stress, or serious problems sleeping in the past few months.” The greatest increase in workers quitting occurred in the South and Midwest, the two regions with the worst Covid-19 outbreaks in August.

President Joe Biden’ vaccination mandate for all employers with 100 or more employees targets up to 100 million private sector and health care workers and federal contractors. It remains to be seen whether the mandate leads to more or fewer job openings as employees choose to get their vaccinations or resign.

How European Citizens View America

The disastrous withdrawal of U.S. troops from Afghanistan gave further credibility to the perception that the country has lost the status it enjoyed as the Cold War ended. That status as the world’s only superpower was eroded by the ill-advised 2003 war in Iraq and the 2008 global financial crisis.

As Trump’s “America First” policy turned the country’s back on multilateral military and trade alliances, geopolitical friendships frayed. America was no longer seen as a reliable partner for trade or defense. Although President Biden announced that “America is back,” old friends are reluctant to restore trust.

The European Council on Foreign Relations (ECFR), a think tank formed early in the financial crisis, conducted an opinion poll following the 2020 U.S. presidential election. Fifteen thousand Europeans in eleven countries – Denmark, France, Germany, Hungary, Italy, Netherlands, Poland, Portugal, Spain, Sweden, and Great Britain – participated in an online survey in November and December 2020.The resulting document is titled The Crisis of American Power: How Europeans See Biden’s America.

Most respondents are happy with Biden’s victory and believe it will be positive for their countries. However they doubt Biden will be able to restore the U.S. position as a global leader. Because of the U.S. response to Covid-19, and domestic polarization, they don’t trust voters not to reelect Donald Trump in 2024.

Majorities in key European states believe the U.S. political system is broken to the extent the country will be unable to address climate change, promote peace in the Middle East, or ensure European security. They believe that Europe must invest in its own defense (a position held by three-quarters of British respondents).

Most respondents believe that China will become more powerful than the U.S. within the next ten years. They want their country to remain neutral in a conflict between the U.S. and China. Biden’s call for a united U.S.-Europe front against China is not consistent with Europe’s changing view of Washington. The study noted that survey results indicate Washington would find it difficult forming joint transatlantic foreign policy.

Joint action is also less likely on economic issues. Pluralities in eight countries asked about economic issues said their country should “be tougher with the U.S. on … international trade, the taxation of multinational companies, and the regulation of digital platforms.”

None of this is to say that Europe is tilting toward China. Quite the contrary, previous ECFR polling found “Europeans are not attracted by the Chinese model, and the pandemic has made clear China’s hegemonic ambitions.” Rather, Europeans seek greater reliance on each other. Europe is not enlarging its presence in international politics; Europe is applying “for early retirement from great power competition.”

Climate Migration

Climate change skepticism has always been an easy sell in the U.S. Why worry about, or even believe, something that is not an immediate threat, doesn’t seem serious if it only means summer will be two or three degrees warmer, and is so far only worrisome if scientific reporting proves accurate in 2050 or 2100?

Those arguments start to fall apart when current weather is looking more and more like those scientific projections. The year 2021 is crowded with natural disasters:

  • Winter ice storms that treated Texas to weather and power outages more normal to norther U.S. and Canada
  • California wildfires numbered over 7,000 by early September with two million acres burned
  • Hurricane Ida came ashore in New Orleans with 150 mile per hour winds and reached New York and New Jersey with flooding that destroyed towns and drowned people living in basement apartments
  • Extreme heat in western states broke many all-time records, exacerbating the drought, now referred to as a megadrought, that started in 2000
  • Record rainfall in August caused catastrophic flooding in Tennessee with a quarter of normal annual rainfall occurring in less than 12 hours

Add to this the realization that climbing temperatures are already pushing agriculture to cooler climes. Using a measurement called growing degree days (GDD) based upon temperature requirements for successful crop cultivation, scientists documented northward movement of 10 agricultural climate zones. This northward movement is responsible for loss of yield in corn crops in Indiana and Illinois, while boosting yields in North Dakota and Minnesota. Soybean productivity has declined in states in the South and East. Another study foresees parts of Iowa could be growing cotton.

Warmer weather in Canada has brought an increase in land planted with corn and soybeans. A report in The Economist describes moves by investors buying fields and leasing them to farmers. “Climate change could make a cornucopia out of land that was once frigid and unproductive.” Warmer temperatures have made Russia the world’s largest producer of wheat.

As events increase in frequency and severity, not only is crop productivity moving, people are also  moving. A recent New York Times article reports what its author calls America’s Great Climate Migration Era. The article cites Paradise, California’s buy out program for fire hazard zones, and Alaskan coastal communities planning to relocate after buildings fell into the sea.

A Conservation Coalition poll taken in October 2020 found approval of the government taking steps to reduce emissions at 94% among Democratic respondents and 76% among Republican respondents. However, despite natural disasters and crop and population migration, legislators at the national level have yet to produce a meaningful carbon reduction bill.

Inequality Tracked Through Six Decades of Graphs – Part 2 of 2

This is Part 2 of 2 posts about shifts in the U.S. economy and society. Part one reviewed distribution of income and wealth among families, household inequality, worker pay vs productivity and CEO pay, and union membership.

Changes in the Federal income tax  rates over the last 70 years have had a negative impact on income inequality. The U.S. has a progressive income tax, which means that the highest rate of taxation on income applies to the highest income earners.

Since 1950 the top rate paid by high-income families has decreased by over half, from 91% in 1950 and 1960 to 37% in 2021, enabling those earners to accumulate wealth more quickly.

An interesting take on a sector particularly advantaged by U.S. economic decisions is how the financial industry has benefitted. Divested: Inequality in the Age of Finance, a 2020 book by Ken-Hou Lin and Megan Tobias Neely, describes the immense growth in financial sector profits as a percent of all corporate profits.

Figure 8 shows the financial sector’s share of profits increasing from 8.8% in 1950 to a peak of 41.2% in 2002. The Great Recession abruptly reduced the share to 9.9%, followed by recovery to around 30%. Profits are derived from the transfer of money and monetized assets. Workers in the sector typically have at least a four-year college degree, with salaries around 70 percent above average worker pay.

Recessions occurring since 1980 have been noteworthy for their increasing length. Figure 9 displays six recessions since 1980 and the number of months before pre-recession employment levels were restored.

Employment was restored in ten months after the 1980 recession began, and jobs took longer to recover after each successive recession. (The current recession has yet to reach pre-recession employment.) Looking at data for the Great Recession of 2007, the impact on types of workers was uneven. Service worker unemployment peaked at 11.4% and sales worker unemployment peaked at 10.2%. The highest unemployment rate among management and professional workers was 5.5%.

Despite the increasing inequality documented in these nine graphs, parents hoped for better jobs and higher income for their children. Figure 10 illustrates that for the immediate post-war period that hope was realized for an increasing portion of the population.

A study by Yonatan Berman of the City University of New York tracked economic mobility by measuring the percentage of 30-year-olds who were earning more than their parents. In 1947, 77% of 30-year-olds were earning more than their parents. In 1963 that number had increased to 94.1%. Then between 1963 and 2010, the last year of the study, this measure of intergenerational inequality had decreased to 55.2%.

Together, these ten graphs present a consistent pattern of trends contributing to inequality, starting around 1970. A longer term view, described in The Upswing: How America Came Together a Century Ago and How We Can Do It Again, places inequality in a context that follows the rise and fall of social cohesion in the United States starting around 1890 and continuing until today. That book, written by Robert Putnam and Shaylyn Romney Garrett, points to the 1960s as a cultural turning point. The decade began with post-war optimism and a booming economy that promised prosperity for all. The second half of the decade was marked by Vietnam war protests, political assassinations, urban unrest, student protests, a drug epidemic and more, what the authors called “something like a national nervous breakdown.”

The authors view the progressive era leading to the 1960s representing rising interdependence and cooperation. They call the following period, covered in Figures 1 through 10 above, “a steep descent into greater independence and egoism” continuing until today. The authors fault the early 20th century progressive era for not setting its sights high enough in achieving full inclusion and addressing racial and gender inequalities. Achieving inclusion and addressing inequality sound like worthy first steps to reverse these socially destructive trends.

Inequality Tracked Through Six Decades of Graphs

Research and writing for Fifty Year Perspective is devoted to preparing for the future by understanding lessons from the past. An overriding objective in seven-plus years of writing has been sustainability: What trends, if allowed to proceed unchecked, would produce disastrous results, either physically – such as making regions of the earth uninhabitable – or socially – such as causing political upheaval or civil war?

The graphs that follow point to potentially dangerous trends. They capture shifts in the United States economy and society that explain much of the anguish building in a large share of the population.

Inequality is a central social issue today, not unlike the Gilded Age of the late 19th century. Early decades of the 20th century brought reforms, but it wasn’t until after World War II that prosperity raised living standards for a majority of the population in the U.S. The 1970s brought a reversal of the economic gains for middle and lower class families. Figure 1 displays the shares of national income received by the top 1% of households and the bottom 50%.

       

In 1969 the bottom 50% of households received 21.1% of income and the top 1% received 11.4%. By 2014 relative positions had switched: the bottom 50% received 12.5%  of income and the top 1% received 20.3%.

Household wealth is a better measure for determining ability to cover unforeseen expenses or afford amenities. Figure 2 displays the gap between the income groups in Figure 1. The bottom 50% of households owned no more than 4.1% of the nation’s household wealth over the last 32 years. The top 1% of households enjoyed an increasing share during that period, increasing from 23.5% to 32.1%, with slight dips during recessions in 2002 and 2008.

     

A standard measure of inequality in household income is the Gini coefficient. Lower Gini coefficients indicate relative income equality; higher Gini coefficients indicate relative income inequality.

Figure 3 displays the trend for U.S. households from 1967 to 2019. Household income inequality increased by 22% during that 52-year period. In a summary of inequality of 140 countries in 2017, 83 countries had less inequality than the U.S.

Figure 4 shows that while worker pay was nearly stagnant (when adjusted for inflation), productivity increased.

From 1948 to 1975, worker pay increased by nearly 100% and productivity increased over 90%. By 2019 worker pay had barely increased beyond the 1975 level. But productivity had increased by almost 260% since 1948, double the rate of increase for workers’ pay.

How did pay and productivity diverge? Figures 5 and 6 provide some answers. Generally the benefits of productivity have gone less to the workers and more to corporate executives and shareholders.

An often-raised complaint is that CEO pay has wildly outpaced worker pay. In 1965 CEO compensation was 19.9 times that of the average worker. By 2018 that ratio had increased to 278.1 times worker pay. Figure 5 shows dips occurring during the 2001 recession and the Great Recession of 2007.

Another factor in falling worker pay is the decline in the percent of workers belonging to unions, as illustrated in Figure 6.

Union membership peaked in the U.S. in the 1950s at over 30% of wage and salary workers. By 2019 it had fallen to 10.8%, denying workers representation in contract negotiations. In August 1981, President Ronald Reagan set a precedent by firing 11,359 air traffic controllers, members of the PATCO union, who had gone on strike. Use of strikes as a negotiating tool declined after President’s Regan’s intervention.

This is Part 1 of 2 posts about shifts in the U.S. economy and society. Part 2 will continue in the next post from Fifty Year Perspective.

Building Physical and Social Infrastructure

In July of 2012 President Barack Obama was campaigning for reelection. At a rally in Roanoke, Virginia, he advocated for government investment to grow the economy. Citing past investment that paved the way for new businesses to thrive, he said, “Somebody invested in roads and bridges. If you’ve got a business, you didn’t build that. Somebody else made that happen.”

His words “If you’ve got a business, you didn’t build that” were quickly taken out of context and used to imply that Obama did not give due credit to the people who applied their ideas and talent to create successful businesses. Obama’s full speech made clear that he was referring to physical infrastructure, and his speech included public education, government research, public services and a legal system in setting the stage for business creation.

Michael Sandel, a professor of political philosophy at Harvard University Law School, applies the same observation to individual success in The Tyranny of Merit: Can We Find the Common Good? Success in procuring positions in both public and private sectors is linked to the applicant’s perceived merit. What one must achieve to be considered as having merit, however, is where Sandel finds serious inequality.

Equality of opportunity is offered as the moral response to provide everyone the chance to succeed. Of course, not everyone has the same starting point. Prenatal care, quality daycare and pre-kindergarten, excellent schools and scholastic counseling, and family knowledgeable in what is needed to prepare a child for self-sufficiency are unevenly distributed. And those are only the entry prerequisites for higher education, the crowning symbol of meritorious achievement.

But higher education only proliferates and enlarges the opportunity gap. Wealthier families have advantages for getting their children into colleges such as legacy relationships and test preparation counseling. The recent college admissions scandal “is an egregious instance of the broader, pervasive unfairness that prevents higher education from living up to the meritocratic principle it professes.”

Thinking that our fate reflects our merit ignores the effects of luck, circumstance, historical precedence, and chance. The privileges accorded families with higher incomes divide people. As Sandel states, “The more we view ourselves as self-made and self-sufficient, the less likely we are to care for the fate of those less fortunate than ourselves.”

The Covid-19 pandemic revealed how dependent all citizens are on the labor of those considered essential workers. Yet these are some of our economy’s lowest paid workers. How pay levels are set, and what can be done to increase income equality, are addressed in You’re Paid What You’re Worth: And Other Myths of the Modern Economy, by Jake Rosenfeld. A professor of sociology at Washington University in St. Louis, Rosenfeld noted several factors to explain why wages have gone down even when productivity has gone up: decline of unions, reclassification of workers as independent contractors, use of temp agency workers, outsourcing, as well as automation.

Rosenfeld cites examples of corporations such as Costco, whose employees have responded to increased pay with lower turnover, higher productivity and loyalty. He asserts, “A fair economy in which work actually pays and a privileged few don’t run off with outlandish shares of organizations’ revenues requires three major changes: raising the pay floor, expanding the middle, and lowering the ceiling.”  He offers a number of recommendations.

He includes a $15 minimum wage, Earned Income Tax Credits, basic labor protections such as overtime pay, and strengthened unions to bring more workers into the middle class. He also proposes reversing the growing gap between executive and employee pay by reducing the share of organizational revenue going to executives and shareholders, raising top income tax rates, taxing capital gains as normal income, reducing stock buybacks, and ensuring worker representation on corporate boards. Rosenfeld cites numerous polls indicating strong voter support for such measures.

Rosenfeld concludes that living wages, robust benefits and safe working conditions “are what all workers deserve.”

Social Values and the Role of Government

A report from the Pew Research Center on U.S. political values stated, “As Americans head to the polls this November, their values and basic beliefs are more polarized along partisan lines than at any point in the past 25 years.” The report describes the widening gap between Republicans and Democrats in measures of 48 political values. While the conclusions may be all too familiar, the report covers the 25-year period from 1987 to 2012.

The 48 values were surveyed by asking respondents whether they agreed with statements on a wide variety of issues, including environment, social safety net, immigration, LGBTQ rights, government scope, and religiosity. For example, for the question. should Government take care of people who can’t take care of themselves, 75 % of Democrats said yes in 2012, but only 40 % of Republicans. The gap for this statement was thus 35 %. In 1987 79 % of Democrats and 62 % of Republicans agreed; the gap was 17 %.

In 1987 the average gap in responses between the two parties was 10 %; in 2012 the gap had increased to 18 %. The report found, “Nearly all of the increases have occurred during the presidencies of George W. Bush and Barack Obama.” While the gap between political parties nearly doubled, the gap between races, genders, age, income, college graduation, and church attendance changed by only one or two percent.

On issues such as social safety net, environment, immigration, and equal opportunity, Democrats were far more in favor of government support than Republicans, and the gap between them expanded significantly between 1987 and 2012. The growing gap between political party positions coincided with movement in both parties toward their respective left and right extremes.

In 2020 Pew Research Center surveyed U.S. citizens’ views on what the government’s role should be and how well the government was performing in those roles. Republicans favoring limited government coincided with Republican contentment with status quo on various policy areas. For example, when asked whether the federal government was doing a good job helping people out of poverty, 59% of Republicans said yes compared to 18% of Democrats. On the companion question of whether government should play a major role in helping people out of poverty, 74% of Democrats said yes compared to 50% of Republicans.

Similar gaps occurred for companion questions when asked about protecting the environment, maintaining infrastructure, effectively handling threats to public health, and ensuring access to health care: in each instance, Republicans were more satisfied than Democrats with the government’s job, and less in favor of a major government role.

From 1987 to 2020 the consistent trend has been toward a widening gap between the major political parties over the role of the federal government and the difference in social values conveyed by each party’s position. Those differences currently play out in debate over legislative proposals from the Biden administration.

A Different Kind of Recovery

Recessions are measured in months and relate to decreases in Gross Domestic Product (GDP). A negative growth in GDP, over a period of months, defines the length of the recession. The shortest recession of the last hundred years occurred over six months in 1980. The longest recession since the Great Depression of 1929 to 1933 was the Great Recession, which lasted 18 months starting in late 2007.

Recoveries from recession are quite another matter. The graph below tracks five recessions from 1980 to 2007, displaying how many months passed before the number of employed workers returned to the pre-recession level. In the 1980 recession, after losing over a million jobs, employment took ten months to rise above the pre-recession level. Later recessions took longer: 27 months for the 1981 recession, 32 months for the 1990 recession, and 48 months for the 2001 recession. Job losses varied from around 1.5 million to 2.5 million.

           

      (Click on graphs to enlarge) 

Then came the Great Recession, earning its title by causing a loss of 8.7 million jobs and taking 76 months to return to its pre-recession level. Note the pattern of each recession taking longer to recover jobs than the previous one.

           

The current recession was the result of  the COVID -19 pandemic rather than fiscal policy or inflation. The difference in this recession is that every job that could not be done remotely, or that was not considered “essential,” ended, at least temporarily. Employment dropped by over 22 million jobs in a period of just two months. The hoped-for V-shape recovery hesitated in November 2020, the ninth month, before resuming its upward trend. By June 2021, after 16 months, total employment was still 6.8 million jobs below the pre-recession level, and 9.5 million workers were unemployed.

Response to the pandemic has delayed the recovery. Vaccinations have fallen far short of the level necessary for people to feel secure in returning to jobs. Vaccinations are not yet available for younger children, keeping some parents at home rather than send their children to daycare. Pandemic related unemployment benefits are discouraging some workers from returning to their jobs, jobs they may not have liked because of poor benefits, long, irregular or insufficient work hours, understaffing, or low pay.

But that is only part of the story. Sitting home for several months has given workers time to reevaluate their employment and “work/life balance.” Of the 6.8 million unemployed in June, 942,000 had left their jobs voluntarily, well above figures before the start of the pandemic. With over 9 million job openings in June, workers, whether employed or not, had opportunities to leave for greener pastures. A Pew Research Center study found that two-thirds of the unemployed were considering changing their occupation or field of work.

Clout in the employer-employee relationship is shifting toward the employees. Work-from-home is gaining acceptance; flexibility in establishing hybrid work environments go a long way toward balancing work with family. Employees have recognized the importance of health and safety in their work environments. Wages are increasing generally, more so in jobs in leisure and hospitality. A minimum $15 per hour wage has been adopted by national businesses including McDonald’s, Amazon, Costco, and Target. Applications for new Federal employer identification numbers surged in the second half of 2020 at the highest pace on record, in contrast to sharp declines in new business formation during the Great Recession.

Compared to U.S. workers, Europeans work fewer hours, have longer breaks, and more paid vacations. Don’t expect to receive an out-of-office email like this anytime soon:

I’m away camping for the summer. Please e-mail back in September.

Although you are less likely to receive one like this from U.S. employees:

I have left the office for two hours to undergo kidney surgery but you can reach me on my cell phone any time.

Who Is Helped by Proposed Legislation?

Changes to capitalism and the social contract have been reviewed in two recent blog posts to Fifty Year Perspective. With its laser focus on profits, capitalism is being challenged to acknowledge the harm it has imposed on global warming, human rights violations in international trade, and inequality.  At the same time, changes due to globalization, automation, global warming, and population aging are preventing large sectors of the population from sharing in the social contract.

Legislation currently under discussion in Washington, DC is targeted to address these same changes. Beneficiaries of legislative proposals would include families below the poverty level, families with children, unemployed or low income workers, less educated, and elderly. The racial composition of these subsets of the U.S. population follows a pattern.

The percent of Whites in the population is higher than the percent of Whites in each of these population subsets. In 2019, for example, 72% of the total population was White, but only 60% of the population below the poverty level was White. At the same time, 13% of the population was Black, but 22% of the population below the poverty level was Black.

However, when considering population numbers rather than percentages, Whites outnumber Blacks. The population living below the poverty level included 23.8 million Whites and 8.6 million Blacks. Thus the benefits envisioned in anti-poverty legislation accrue to many more Whites than Blacks. The pattern is the same for other subsets of the population:

  • Families below poverty level: 4.1 million White; 1.6 million Black
  • Population 16 and over unemployed: 11.9 million White; 2.5 million Black
  • Population 25 and over with less than high school education: 16.1 million White; 3.5 million Black
  • Female headed households with own children under 18: 4.5 million White; 2.1 million Black
  • Population over age 50: 82.4 million White; 11.1 million Black

A recent Pew Research Center study reported characteristics of registered voters in 2019, the same year as the population data. Population was divided between Republican or Republican-leaning and Democrat or Democrat-leaning. Among Republican/leaning voters 35% had a high school education or less. For Democrat/leaning voters, 28% had a high school education or less. The percent of voters aged 50 or over comprised 56% of Republican/leaning voters, vs 50% for Democrat/leaning voters. Republican/leaning voters were 81% White and 5% Black; Democrat/leaning voters were 59% White and 19% Black.

At the state level, Republican-dominated states fare worse on various economic measures. Compared to how states voted in the 2020 presidential election:

  • 11 of 12 states with highest poverty rate in 2019, and 17 of the highest 25, voted Republican.
  • 10 of the worst 12 state economies in 2018, and 16 of the worst 25, voted Republican.
  • 11 of the lowest 12 median household incomes in 2017, and 18 out of the lowest 25, voted Republican.
  • 21 of the 25 states voting Republican also had Republican governors and state legislatures.
  • 15 of the 25 states voting Democrat also had Democrat governors and state legislatures.

Post-pandemic legislation improving education from pre-K through retraining displaced workers, aiding low-income households, the unemployed and elderly, eradicating poverty, and supporting economic development through infrastructure investment would disproportionately benefit White Republican/leaning voters and, in lesser numbers, Black Democrat/leaning voters. It would also disproportionately benefit states that voted Republican in the 2020 election.

Can/Must the Social Contract Change?

The previous post to this blog asked “Can/Must Capitalism Change?” The charge against current practices of capitalism is the priority of profitability over all other concerns, including inequality, human rights, and global warming. Institutions and laws facilitate the function of capitalism, and capitalists are reexamining what they owe to society in return.

Similarly, society provides benefits to individuals; what is expected of the individual in return? Responsibilities are split among individuals, businesses, civil society, and the state. The state is expected to provide a wide range of ‘public goods’ – highways and other public infrastructure, public education, intellectual property protections, legal enforcement of contracts,  economic and financial stability. The massive United States economy would not be possible without these government-provided assets; innovation would not occur. As economist Dani Rodrik wrote in Straight Talk About Trade: Ideas for a Sane World Economy, “Plant Silicon Valley’s brightest minds in Southern Sudan and they would hardly be as productive.”

Public investment is key to a country’s economic growth, enabling people to achieve their potential as successful, productive adults and contributors to the common good. The give and take comprise what is called the social contract. But changes in the economy are leaving large portions of the workforce disappointed and angry with their “bargain” from the social contract. Many blame globalization and technology. Automation threatens to intensify the division within the workforce between workers in routine types of work and those with high level skills. Artificial intelligence, climate change,  and aging workforce will bring further economic dislocation.

In a recently-published book, What We Owe Each Other: A New Social Contract for a Better Society, Minouche Shafik, an Egyptian-British economist and director of the London School of Economics and Political Science, contends the need for a new social contract is confirmed – by culture wars around race, the rise of populism, youth protests about climate change and lack of economic opportunity, and backlash against globalization, among other challenges.

In meeting these challenges, a new social contract should guarantee basics for a decent life for all. Beginning with children, Minouche argues for universal maternal and paternal leave for parents following the birth of a child. Affordable, accessible, and high-quality childcare, financed publicly, should be an “essential part of public-service infrastructure.”

Education must begin before age three for the best opportunity to equalize chances of lifelong success for all children. A combination of businesses, academic institutions and government must support training required for career transitions throughout adults’ working lives.

Government intervention in the provision of healthcare is crucial to improve the health of society and prevent spread of disease. Costs are expected to rise due to aging population and new medical technologies. A minimum of primary care and public health benefits should be guaranteed for all, but the social contract must recognize education and good quality employment are also prerequisites for a healthy life, just as a healthy population is a prerequisite for a productive workforce.

When economic dislocation occurs displaced workers require support until they can return to productive work. Unemployed workers should have enough income to provide food, shelter, and medical care. If former jobs have become obsolete, preparation for reemployment should include job placement assistance and training that meets requirements of employers.

Longer lifespans mean more working years and more years in retirement. To assure adequate funding in retirement, it will be necessary to increase retirement age, increase contributions to retirement, or reduce pension promises, or some combination thereof; fewer options exist for low wage earners.

Minouche summarizes her book’s recommendations with three principles: security for all through guaranteed minimum for a decent life; maximum investment in creating opportunities for citizens to be productive contributors to society; and efficient, fair sharing of risks such as sickness, unemployment, and old age.

Can/Must Capitalism Change?

Capitalism is “one of humanity’s greatest inventions, and the greatest source of prosperity the world has ever seen.”

Capitalism is “a menace on the verge of destroying the planet and destabilizing society.”

Economists, politicians, journalists, entrepreneurs, historians – and capitalists –  are expressing concerns over how capitalism has discounted global warming, placed profitability over all other concerns, exacerbated inequality, assumed immense political power, and overlooked violations of human rights in international trade.

The two opening quotes are from economist and Harvard Business School professor Rebecca Hendersen’s book, Reimagining Capitalism in a World on Fire. She writes that “It is going to be hard to make money if the major coastal cities are underwater, half the population is underemployed or working at jobs that pay less than a living wage, and democratic government has been replaced by populist oligarchs who run the world for their own benefit.”

Loaded with case studies, her book relates that firms most successful at mastering change are those “that had a purpose greater than simply maximizing profits;” working toward justice and sustainability “is squarely in the private sector’s interest.”

Chris Hughes is a co-founder of FaceBook and is the co-chair of the Economic Security Project. In an essay he wrote for TIME Magazine, titled “The Free Market Is Dead: What Will Replace It?” he wrote that capitalism is not the problem; “it’s the variety of capitalism that’s been practiced over the past 40 years.” His keys to managing the transition to a new capitalism lie in effective regulation, sizable public investment, and macroeconomic supervision. Enforcement of antitrust policies are essential.

Much of the shift in the thinking of corporations is attributed to public sentiment, and expectations of millennials in particular. Younger employees and consumers hold corporations responsible for focusing on social causes. A March 2021 Associated Press article highlighted $8.2 billion in corporate philanthropy earmarked for racial equity in the first eight months following the killing of George Floyd.

Larry Fink, the CEO of BlackRock, the largest financial asset manager in the world, writes an annual letter to the respective CEOs of the firms in BlackRock’s portfolio. In his 2021 letter he noted that companies that have adopted ESG profiles (environmental, social, governance) outperformed their peers in the 2020 year of pandemic. He emphasized the importance to the future of business in confronting racial injustice:

We are also at a historic crossroads on the path to racial justice – one that cannot be solved without leadership from companies. A company that does not seek to benefit from the full spectrum of human talent is weaker for it – less likely to hire the best talent, less likely to reflect the needs of its customers and the communities where it operates, and less likely to outperform.

Fink’s message to CEOs is, change is mandatory for businesses to survive, that society demands it. Companies must make positive contributions to all their stakeholders – shareholders, employees, customers, and the communities where they operate, and build a more inclusive capitalism.

2020 Census Count Confirms Social Trends

Although arriving four months later than normal, the United States finally learned its 2020 Census population count. With 331,449,281 people, population increased 7.35%. Only one decade in the country’s history, the 1930s, was the rate of growth lower – by eight-hundredths of one percent.

The data is not yet available by age, race and gender, but it is available by state. The five fastest-growing states, in order, were Utah, Idaho, Texas, North Dakota and Nevada. Three states, Illinois, Mississippi and West Virginia, lost population. Broadly, faster growing states were in the South and West, while states in the North and East grew more slowly, continuing a long-term trend.

Population increase or decrease is determined by four numbers – births, deaths, in-migration and out-migration. The first three are reliably reported. Out-migration is not reported in the United States, but many countries periodically estimate the number of U.S. citizens living in their countries.

Slowing population growth was not a surprise, as it conforms to recent trends in births, deaths and in-migration. The number of people legally entering the U.S. has been decreasing since the mid-2010s. Government restrictions during the Trump administration made an impact, followed by extreme cutbacks in the wake of the COVID-19 pandemic. The last official figure, for the 2019 fiscal year, was 1,032,000.

After reaching a peak of 4.3 million births in 2007 just before the Great Recession, by 2020 the number had decreased over 16% to 3.6 million. The average number of births per woman of child-bearing age, called the fertility rate, must be no lower than 2.1 births for the population to remain stable. The current fertility rate is 1.78.

While births are decreasing, deaths are increasing, by about 1.6% annually over the last decade.  Births still exceed deaths, but by 2019 that net gain had dropped below 900,000. That figure is called the net natural increase – births minus deaths. In-migration in 2017, 2018 and 2019 exceeded one million. Thus, without considering any out-migration, the total population would be shrinking had there been no in-migration. These patterns were discussed in an earlier blog post.

As Washington debates long-term programs supporting families and individuals, awareness of these social trends could not be more timely. In a study done for the New York Times in 2018, researchers asked why Americans are having fewer babies. More than half the respondents said they would have fewer children than their parents. “About a quarter of the respondents who had children or planned to said they had fewer or expected to have fewer than they wanted.”

The most frequent reason given was the high cost of childcare, cited by 64% of respondents, and economic concerns were four of the top five reasons. “Young people have record student debt, many graduated in a recession and many can’t afford homes.” Over a third of respondents mentioned struggling with work-life balance and inadequate family leave or no family leave at all.

Although all the details are not yet available, the 2020 Census calls attention to the current policy debates affecting migration, families and workers.

Legacy of Fantasy

“As the American dream of endless upward economic mobility came to seem increasingly like myth, all sorts of pure myths and fantasies became still more appealing and seemed more real.” Author and journalist Kurt Andersen looked through American history in his book, Fantasyland, to explain the popular acceptance of fantasy and myth.

Andersen writes:

According to psychologists, stress can trigger delusions, and engaging in fantasy can provide relief from stress and loneliness. According to sociologists, religion flourishes more in societies where people frequently feel in economic jeopardy. According to social psychologists, belief in conspiracy theories flourishes among people who feel bad about themselves; they may be powerless to improve their lives, but knowing about all the alleged secret plots gives them a compensatory jolt of what feels like power.

If this feels like a concise analysis of 21st Century America, Andersen has a story to tell. The full title of his book is Fantasyland: How America Went Haywire: a 500-Year History, and he reports some of the first European settlers came looking for gold. Published in 2017, the book was touted as indispensable for understanding America in the era of Donald Trump.

From those early settlers, Andersen draws a wavy line connecting “satanic conspiracies of witches and Indians;” wild, emotional evangelical revivals; and “panics about foreign conspiracies – despotically inclined leaders in league with European monarchs.” P.T. Barnum fed a gullible public a sensational mix of real oddities and hoaxes. Medical quackery and snake oil cures appealed widely to a 19th Century public hopeful and desperate for relief.

The 20th Century brought science into court in the Scopes trial, leaving the long-term conviction in place that “Science was untrue when it contradicted the Bible.” The Las Vegas Strip, built in the 1940s around Old West themes, evolved into adult “Get Rich Quick” Resorts in the 1950s and 1960s. For families with children, Disney introduced its fantasy-filled park, Disneyland – a mix of fairy tale castles, wild west saloons, and actors playing the real live inhabitants of small towns U.S.A. Television consumed one-third of our waking hours.

The 1960s and 1970s advances of libertarianism and counterculture gave rise to the “Left” and the “Right.” Anti-communism spawned the John Birch Society. Conspiracy theories explained Kennedy’s assassination, Watergate, UFOs, satanic cults (again!) and government coverups.

And in the 21st Century, new forms of fantasy capture growing audiences: Virtual reality. Augmented reality. Cosplay. Reenactments. Andersen attributes firing guns and driving pickup trucks to fantasizing being cowboys and commandos. He notes wryly that three-quarters of four-wheel drive vehicles never go off-road.

“Dream the impossible dream” transitioned to 1960s’ tipping point away from discipline and austerity, to magic and apocalypse and utopia and 1970s individualism; the changed economic climate and upward mobility seemed a myth.

Fantasy may be a permanent feature of the American psyche. But if, as Andersen says, “economic balminess ended for at least half of America” at the turn of this century, calls for a new economic philosophy are in order.

Creating a new economic philosophy requires confronting the mood of the disillusioned. Sources of despair are not hard to identify: A pandemic that has claimed over three million lives world-wide; the worst recession in close to a century; technological advances that defy comprehension; globalization of markets and workforce; climate change that threatens the sustainability of life on earth.

Nor are the anxieties of the disillusioned unknown: Old immigrants fear new immigrants; rural people resent urbanites; men feel threatened by the hands off, #Me Too movement; racial groups assume one must fall if the other rises; LGBTQ legislation threaten rights previously assigned solely to cisgender or married, heterosexual couples; young criticize the share of resources claimed by elderly. Disillusion, distrust and popular anger demand an economy and society that provide a greater sense of security in the midst of change.

Mandatory Vaccination

On February 18, 2021, Isaac Legaretta was notified he must be vaccinated within five days. Legaretta is an employee in the Dona Ana County, New Mexico County Detention Center. In January county first responders and detention center staff had been notified that COVID-19 vaccinations would be required as a condition of employment.

Legaretta filed a lawsuit against the county manager for violating his right to “bodily integrity,” asserting that the vaccine is experimental. Although exemptions for employee vaccinations are allowed for certain health and religious reasons, Legaretta hasn’t claimed to have any qualifying condition. The Hill newspaper called this the first case against mandatory COVID-19 vaccination.

There is precedent for government mandated vaccinations. The U.S. Supreme Court decided such a case during the smallpox epidemic in 1905. The city of Cambridge, Massachusetts ordered the vaccination of all residents. Health officials, accompanied by police officers, went door to door vaccinating as many as 100 people a day. People who refused to be vaccinated were fined $5, the equivalent of $150 today.

A Swedish-born pastor named Henning Jacobson refused to have himself and his son vaccinated. A criminal complaint was issued against Jacobson and other anti-vaccine activists to collect the $5 fine. Jacobson fought the fine in a trial, in the Massachusetts Supreme Court, and in the U.S. Supreme Court, arguing that compelling him to be vaccinated was a violation of liberty. Jacobson was supported by the Massachusetts Anti-Compulsory Vaccination Association.

In the case known as Jacobson v Massachusetts, Justice John Marshall Harlan wrote the majority opinion, noting the liberty secured by the fourteenth Amendment, but added, “in every well-ordered society . . . the rights of the individual in respect of his liberty may at times, under the pressure of great dangers, be subjected to such restraint, to be enforced by reasonable regulations, as the safety of the general public may demand.”

The U.S. Supreme Court heard another case concerning mandatory vaccination in 1922. It involved the San Antonio School District requirement that a student must have a certificate of vaccination for smallpox in order to enroll. In a unanimous decision, Justice Louis Brandeis cited Jacobson v Massachusetts as having settled that compulsory vaccination is within the power of the state. A Harvard Law Review article concluded that the case, Zucht v King, “marked the beginning of the end for the anti-vaccine movement of the day…. by the early 1930s, concerns over the safety of vaccines had waned, as the public widely accepted physicians’ recommendations about the efficacy of vaccines.”

In 2020 a case was brought before the U.S. Supreme Court in which the logic of Jacobson v Massachusetts was applied to justify action by the State of New York. The state barred all religious gatherings during the pandemic, although secular businesses were allowed to operate with limited capacity. In Roman Catholic Diocese of Brooklyn, New York v Andrew M. Cuomo, the Court ruled that barring religious gatherings but allowing secular businesses to operate violated the churches’ constitutional rights. The 5-4 opinion written by Justice Neil Gorsuch stated, the Jacobson “decision involved an entirely different mode of analysis, an entirely different right, and an entirely different kind of restriction.”

As COVID-19 variants continue to mutate into more transmissible and potentially more lethal versions, a race is on ahead of additional surges. If the prospect of achieving herd immunity appears remote, a city like Cambridge, or a county or a state could feasibly see mandatory vaccination as a necessary course.

“I’m from the Government and I’m here to help.”

In his inaugural address in January 1981, Ronald Reagan spoke of the current economy burdened by “the longest and one of the worst sustained inflations in our national history.” He cited “a tax system which penalizes successful achievement,” and decades of deficit spending that threaten “tremendous social, cultural, political, and economic upheavals.” Declaring that “Government is not the solution to our problem, government is the problem,” Reagan announced his intention “to curb the size and influence of the Federal establishment.”

The 40 years following Reagan’s inauguration set in motion a period of government action, and inaction, that brought rising inequality, tax policy that favored wealthy households, underfunded education, school re-segregation, deteriorating infrastructure, minimally enforced antitrust regulations, deregulated financial institutions, and runaway costs for healthcare and higher education.

Increasing Income Inequality

From 1980 to 2021 Gross Domestic Product (GDP) doubled, adjusted for inflation. U.S. tax revenue as a percent of  GDP is one of the lowest among countries of the Organization for Economic Cooperation and Development (OECD). Not surprisingly, U.S. spending on social benefits at 19% of GDP is well below that of France’s 31%, representative of European countries. Income taxes on higher income households have fallen drastically. In the 1970s the top rate was 70%. The Economic Recovery Tax Act of 1981 reduced the highest rate to 50%. The current top rate is 40.8%.

In 1980 the federal hourly minimum wage was $3.10. It has been raised ten times since then; six of those raises did not keep pace with the rate of inflation. The current $7.25 per hour federal minimum wage was set in 2009. If raises had kept pace with inflation since 1980, the current minimum wage would be $10.47. For a three-person family with a single wage earner, that income would be below the poverty level.

Income inequality in the U.S. has increased since 1980, as measured by the GINI Index, an internationally recognized metric. Of 20 democracies of five million population or more, the U.S. ranks twentieth in inequality. The trend supports an analysis in a study comparing hourly compensation to productivity. The study found the two increasing in lockstep until 1973. From 1973 to 2013 productivity increased 74.4%, while hourly compensation increased 9.2%.

Underfunding Government Services

U.S. student performance is at or below the average among the 37 OECD countries in mathematics, reading and science. Socio-economically disadvantaged U.S. students underperformed advantaged students in all three categories. Public schools remain largely segregated, with lifelong consequences for students of color.

The U.S. is the largest OECD member that does not have universal health care. Over the last decade health care spending across OECD countries averaged 8.7% of GDP; in the U.S. spending increased from 16.3% to 17.0% of GDP.

In 2017 the American Society of Civil Engineers (ASCE) projected total infrastructure needs over the following 10 years would require investment of over $4.5 trillion. Overall, the ASCE gives the country’s cumulative infrastructure a grade of C-. Infrastructure investment supports growth in GDP and employment.

This list of challenges bears notable resemblances to the policy agenda of President Joe Biden. The American Rescue Plan bolsters relief efforts against the dampening economic effects of COVID-19, as well as addressing adverse effects of the pandemic and recession on families, businesses and governments. Biden’s forthcoming package addresses infrastructure, education, family benefits and health care expansion.

In an August 12, 1986 news conference President Reagan quipped: “The nine most terrifying words in the English language are: I’m from the Government, and I’m here to help.” Forty years after Reagan’s inauguration, President Biden is proposing to make those words a reality. His challenge is to do so while generating economic growth sufficient to repay the debt that will be incurred.

China’s Challenges Foreign and Domestic

China’s Demographic Time Bomb described the projected change in China’s ratio of workers to retirees over the next thirty years. The country’s extremely low birth rate is producing fewer workers in relation to the population reaching retirement. In 2020 there were 5.4 people age 20 to 64 for every person age 65 or older. That number will drop to 2.1 by 2050.

While China’s President Xi Jinping is pondering how to overcome that problem, two authors have put additional problems on his plate. Kevin Rudd, the former Prime Minister of Australia, wrote an article in the March/April 2021 issue of Foreign Affairs titled “How to Keep U.S.-Chinese Confrontation From Ending in Calamity.”  And journalist Kai Strittmatter, who reported for more than a decade from China for a German newspaper, has a new book, “We Have Been Harmonized: Life in China’s Surveillance State,” about China’s tracking and reporting system.

Rudd describes Xi’s measured strategy toward reaching a position of world leadership for China. China places great significance in its prospect of surpassing the U.S. in becoming the world’s largest economy in terms of GDP by the end of the decade. “Taking the number one slot will turbocharge Beijing’s confidence, assertiveness, and leverage in its dealings with Washington.” Along with this goal, China intends to decouple its economy from the U.S. and become self-sufficient in core technologies such as semi-conductors.

China is modernizing its military to establish regional superiority over the U.S. “Xi’s strategy now is clear: To vastly increase the level of military power that China can exert in the Taiwan Strait, to the extent that the United States would become unwilling to fight a battle that Washington itself judged it would probably lose.” In the short term Xi will work to de-escalate tensions with the U.S. to prevent security crises.

Strittmatter puts China’s domestic policies under the microscope. China looks to become the world leader in Artificial Intelligence (AI) as quickly as possible. Public security plans encompass “intelligent surveillance, early-warning, control systems… The plan calls for new ‘intelligent applications’ for the ‘management of society,’ with the specific examples of ‘video image analysis and identification technologies, biometric identification technologies, intelligent security, and policing products.’”

China’s ubiquitous cameras and automated collection of transactional data constantly observe every citizen. If people know they can be observed, even if they are not being observed continuously, the possibility that they will be observed doing something that is forbidden keeps them from doing it. “Those who are naked before this eye take over surveillance of themselves.”

The data collected becomes the basis for  China’s Social Credit System. Points are given for good behavior and deducted for bad behavior: Five-point penalty for not picking up after your dog. Five points earned for helping an elderly couple move into a new house. The gradual rolling out of the system was ongoing as Strittmatter wrote in 2020.

In China’s model, “human rights are to be redefined, and political and civil rights are to be replaced by ‘economic’ and ‘social’ rights; … The sovereignty of states is the highest of all rights.”

However, Strittmatter cited survey results identifying a population longing for the “mainstream values” of freedom, democracy, equality, and individualism. “The Party is well aware that the support of citizens rests on increasing prosperity first and foremost, but also on information control, mind control, and the suppression of dissent.” Rudd does not assume that “intense political repression” can prevent what he perceives to be a latent threat to the authority of the Chinese Communist Party. China’s population may not find increasing prosperity in exchange for personal freedom to be appealing, or harmonious.

Lessons From The Great Recession

The Great Recession of the last decade is fresh in the minds of most adults, but what it teaches us about the COVID-19 recession remains arguable. The two recessions differed significantly in suddenness of onset and scale. But both occurred in the waning months of a presidential administration, leaving recovery to a new party.

When the new administration took up residence in the White House last January they came with a full agenda, leading off with a $1.9 trillion economic rescue package. President Joe Biden appealed for a revival of bipartisanship, but arriving on the heels of a fractious four years of polarized politics, the risk of leading with a large expenditure was predictable. Voting on the package split along party lines with the exception of one Democrat voting against it.

Republicans opposed the package for including too much spending for state and local governments; for increasing benefits for the unemployed that would discourage people from looking for work; for including provisions that have little to do with the pandemic; for doing little for the economy to recover; for adding too much to the federal budget deficit and possibly unleashing inflation. Democrats agreed to reduce eligibility for stimulus checks for families and individuals in some middle-income ranges and other changes were made as the bill went back and forth between the House of Representatives and the Senate.

The case for a massive stimulus is strong: it addresses the hardship faced by the millions of people who remain unemployed in the recession. Beyond that, economists welcome the historically low interest rates of a favorable current investment environment that translate into low government borrowing costs and the opportunity to re-employ millions of workers in infrastructure projects.

There is widespread belief that the stimulus package created to restore the economy following the Great Recession was too little, resulting in an unnecessarily long recovery period of six-and-one-half years before jobs reached their pre-recession level; that was two to four years longer than in the three previous recessions. The current recession has resulted in far more jobs lost than the Great Recession. Most significantly, the pandemic ushered in changes in how and where work is performed that are expected to eliminate many jobs permanently.

From the beginning of the Great Recession in late 2007, the number of employed persons decreased by 7.5 million over the following three years. Employment did not recover to its pre-recession total until June of 2014. By contrast, between February and April 2020, the first months of the COVID-19 pandemic, the number of jobs decreased by over 25 million. A year later the losses had been trimmed to 8.5 million, a great reversal but it still exceeded the total losses of the Great Recession. Gains since October 2020 have been relatively flat. Unlike the Great Recession, a large portion of those jobs will not return, and the workers who filled those lost jobs are not likely to find work without retraining.

The U.S. Bureau of Labor Statistics prepared a graph comparing recovery periods, in months, for employment following past recessions. The COVID-19 recession differs from previous recessions in the high number of jobs lost, but also in the speed of the partial recovery, as illustrated by the graph’s red line. The future course for that red line is unknown, but over the past 40 years, the ominous trend was that each recession has lasted longer than previous ones. The lesson from the Great Recession is that it was longer than it should have been, due to a lack of aggressiveness in confronting it.

New York Times and Associated Press surveys in February and March 2021 found popular support for the $1.9 trillion package was 70% positive. It was favored by three-quarters of independent voters, 40% of Republicans and nearly all Democrats. Two recent articles suggest why this may be the case: A February 19, 2021 New York Times article had the headline “Republicans Struggle to Derail Increasingly Popular Stimulus Package.” Then a March 2 Washington Post article appeared under the headline “When Democrats Govern, They Try Hardest to Help Red States.”

Maersk Line’s Role in Globalization

The Maersk Line is the world’s largest container shipping company. Maersk has been a leader in the globalization of trade and the introduction and expansion of containerized shipping for over 60 years. It is hard to imagine the path of globalization without the shipping container. Maersk has also anticipated the future of international trade in goods in plotting its own future.

The dawn of container shipping is considered to be the 1956 voyage of the Ideal-X which sailed from New Jersey to Houston, Texas with a load of 58 containers. Over time a design was settled for shipping containers. A forty-foot-long container, eight feet wide and eight feet tall, became standard for loading on a tractor-truck chassis and for transporting by train as well as on ships.

As international trade volume in goods doubled approximately every ten years through the 1980s, 1990s and 2000s, shipping companies jockeyed for market share, with Maersk leading the field. In 1975 Maersk introduced the Adrian Maersk capable of carrying the equivalent of 600 forty-foot containers. Laura Maersk followed in 1980 with a capacity of 1,050 containers, and the trend toward ever larger capacities continued into the 21st century.

Containers reduced the costs and increased the speed of loading and unloading ships, and increased efficiency in handling. Larger ships required extensive changes at ports to accommodate the large cranes used in loading and unloading and the huge parking lots necessary for the waiting fleet of trucks. Container shipping reduced transport costs low enough that importing from abroad displaced local manufacturing.

Keen to increase market share, in 2003 Maersk ordered ships capable of carrying 5,500 forty-foot containers, a 20 percent increase over the largest ships of the time, for delivery starting in 2006. According to Marc Levinson’s book Outside the Box, ship owners followed with a flurry of activity; when 2007 ended, 118 container vessels with a capacity of 5,000 or more forty-foot containers had been ordered.  Expected growth in trade did not occur; as the Great Recession impacted the whole world, container shipping in 2009 fell by twenty-five percent.

Yet the race to build larger, more efficient container ships continued, surpassing 11,500 forty-foot containers in capacity. Larger ships generated huge investments in wider and deeper channels, and bigger cranes for loading/unloading, as well as expansions of the Panama and Suez Canals in 2015.

But larger ships did not translate into higher profitability, faster speed or greater reliability. Add to that, disputes over government subsidies for their home industries, rising labor costs in outsourcing countries, and consumer demands that businesses account for fair labor practices and environmental conditions throughout their supply chains. Between 2010 and 2019, annual growth in international trade in goods increased by only twenty-eight percent, after doubling in the three previous decades. Chinese trade peaked at over 60% of GDP in 2006, falling to just over 35% in 2019.  T. Rowe Price expects China to have a more consumer-led economy after COVID-19 “as global trade continued to weaken.”

While world trade in goods slowed, trade in services increased. Levinson uses KFC as an example: a service business that is the largest restaurant chain in China. “Companies in industries whose products are intangible – software, accommodation, real estate, computer services – accounted for a greater share of the largest multinational enterprises.” As Levinson points out in a Washington Post article, “digital downloads and streaming services have made it possible to enjoy films, novels and music without possessing stereo equipment, books and records, while car-sharing and bike-sharing promise to reduce the number of personal vehicles…. Storage of data in ‘cloud’ computer banks accessible over the Internet has held down corporate spending on computer equipment.” Demographics plays a role: an aging population buys less “stuff.”

And what of Maersk Line? In May of 2018 it revealed plans to become an integrated ocean carrier, managing shipment of goods from origin to destination, eventually exiting the commoditized industry it had helped create.

China’s Demographic Time Bomb

When the United Nations published its latest population projections, the expected aging of the world’s population foreshadowed impending challenges for national and regional economies. Low birth rates and increased longevity are drastically altering the balance between numbers of young and old; the number of working adults supporting each retiree is falling precipitously.

As incomes rise and families rely less on children for support, they have fewer children. Unless a nation’s fertility rate – the number of children born per woman – is at least 2.1 children, the total population will decrease and median age of the population will rise.

The ratio of 20–64-year-olds to 65+ year-olds, called the support ratio, is falling throughout the world. The change over the last 70 years has been dramatic. The decrease on the African continent is well behind the rest of the world but will start to catch up over the next 30 years. In 1950 Africa had 14.0 people 20-64-years old for everyone 65 or over; by 2020 the ratio had fallen only to 13.0, a minor change. By 2050 the ratio is projected to fall to 9.2.

Support Ratio for Continents and Selected Countries 1950 2020 and 2050

1950   2020    2050

  • Africa                                                14.0    13.0       9.2
  • Asia                                                   12.3      6.8       3.2
  • Europe                                                7.2      3.1       1.9
  • Latin America & Caribbean           13.1      6.6       3.1
  • United States                                     7.0      3.5       2.5
  • United Kingdom                                5.6      3.1       2.1
  • China                                                 11.8      5.4       2.1

Compared to other continents, Africa will be relatively well-off in 2050. Africa’s 9.2 working-age people for everyone 65 or older, will be three or four times as many as other parts of the world. China faces the most serious decline in its support ratio, from 5.4 in 2020 to 2.1 in 2050,  decrease of 61%. More than other areas, China will struggle with this transformation.

China’s relative decline in its working-age population has been described as a ‘demographic timebomb.” The government’s one-child policy was introduced in 1979 to slow population growth. Due to the cultural preference for male children, the policy resulted in a severe gender imbalance, with males eventually outnumbering females by 30 million. Although the policy was ended in 2015, the birth rate continued to fall. China’s fertility rate is estimated to be below 1.5, which explains why its support ratio is projected to drop from 5.4 to 2.1.

In a New York Times article, Ross Douthat attributed China’s situation to “growing old without first having grown rich.” Its per capita GDP is one-third or one-fourth the size of South Korea and Japan. “China will have to pay for the care of a vast elderly population without the resources available to richer societies facing the same challenge.”

A recent article in Foreign Affairs cites the geopolitical dimension of China’s current situation. As China’s growth rate has dropped by more than half and debt increased eightfold, it faces a loss of 200 million working-age population while gaining 300 million retirees. If China is to achieve international supremacy, it must establish its position over the next five to ten years, during which “the pace of Sino-American rivalry will be torrid, and the prospect of war frighteningly real, as Beijing becomes tempted to lunge for geopolitical gain.”

China recognized its challenge in a “Green Paper” issued in January 2019, in which it alluded to a pivot from manufacturing to services: “only by further expanding the scale of higher education can we improve the skill structure of the labor market and provide sufficient demand for talent for the transformation of the ‘Made in China 2025’ and high-end service industries.” However, in risking the loss of young Hong Kong citizens fleeing to the United Kingdom, and in sterilizing its young married Uighur women, the government is exacerbating the impending “time bomb.”

Did the 2020 Pandemic Change Everything? Part 2 of 2

This is the second part of a blog posted January 17th, 2021. Part one covered changes due to COVID-19 in Science, Medical Research, Technology, Business, Work Places, World Trade and Government.

Health Care

New technologies for creating vaccines have been developed at record speed. Doctors adopted remote consultation and digital monitoring of patients. Availability of venture capital for medical innovation doubled. Telemedicine experienced a huge surge in adoption and holds promise for serving rural areas suffering from hospital closures. Fatigued health care professionals will have to deal with a backlog of postponed surgeries and patients who have allowed existing medical problems to worsen, or who have missed well-patient visits. As of mid-November, more than 2,900 health care workers had died of COVID-19, exacerbating a shortage that already existed.

Equality

Progress towards reducing inequality was reversed by the pandemic. The trend toward remote working reduced demand for the jobs of workers in low-pay positions such as urban transportation, building maintenance and restaurants. Those whom we designate “essential workers” – delivery drivers, care providers, supermarket workers – saved society from collapse, yet they are among the lowest paid workers. Remote schooling has been less effective for children in low-income families who lack the technology and other resources, and children have fallen behind in their lessons. The pandemic inflicted more suffering and death upon Hispanic and Black households. Jobs in high-paying positions are much more adaptable to working from home than those with low pay. Workers unable to work from home were forced to leave their jobs for lack of child care or elder care. Stimulus One payments did not go only to those most in need. Stimulus Two lowered the income limit for those receiving payments, but still left many middle-income households eligible.

Education

The United Nations reported the COVID-19 pandemic has affected nearly 1.6 billion learners in more than 190 countries. It exacerbated pre-existing education disparities by reducing the opportunities for many of the most vulnerable. The crisis has stimulated innovation within the education sector. The practicality of on-line learning and home schooling has been established out of necessity. For coursework at secondary level or higher education, bringing in expertise from around the world required only a few clicks. Increased funding for universal broadband will be necessary to provide access to distance learning.

Hobbies and Home-bound Activities

Stuck at home, people discovered, or rediscovered puzzles and board games, some online, and sales skyrocketed. Peloton, a maker of interactive fitness equipment, saw revenue more than double for the first nine months of the year over 2019. You Tube D-I-Y videos found new audiences. Pet adoptions surged during the pandemic, and breeders reported long waiting lists. Home businesses opened, from tutoring to candle making to sewing face masks. Breadmaking and home cooking boomed. Reading and exercising filled more hours.

Entertainment

When social distancing guidelines took effect, movie theaters went dark. The loss was quickly backfilled by the growing number of video streaming services for entertainment. In the second quarter of the year Americans had increased their time streaming by 75% as people moved away from cable TV. Netflix added 28 million subscribers in nine months and Disney+ signed 86 million subscribers in its first year. To make matters worse for theaters, Warner Brothers announced that its feature films will be available for streaming on the day they are released in cinemas. Some musicians replaced cancelled tours with tailgate concerts in huge parking lots, or with paid live stream performances and video concerts. Streaming services also offered live sports events played in empty stadiums.

 Community

Lockdowns imposed by local governments were sometimes accepted, other times opposed loudly. An appeals court in New York struck down the state’s capacity limits on houses of worship. The overlap with U.S. elections generated interest in mail-in balloting that may increase future voter participation. Pandemic reminded us of the costs of loneliness and isolation and the fragility of life. Rising statistics on violence, domestic abuse, suicide and mental health reflect the pain and hopelessness felt by many. The rise in shoplifting for food revealed the holes in the social safety net, filled to some extent by formal charities and groups dedicated to mutual aid. COVID-19 both highlighted and exacerbated long-standing homelessness, poverty and racial discrimination.

Climate Change

Reduced international shipping and personal travel resulted in significant decreases in carbon emissions and improved air quality. Global CO2 emissions in 2020 are estimated to have fallen by 8% from 2019 levels. Virtual meetings enabled participation without travel. Cities closed off streets for pedestrians and bike lanes to help residents avoid public transportation. Experience with COVID-19 has helped people realize the importance of science. The pandemic and climate change have in common the necessity for multilateral diplomacy and cooperation in dealing with global problems.

More than an inventory of 2020 events, this is a menu for how to prepare for the next pandemic. It would be a mistake to refer to COVID-19 as a once-in-a-century pandemic.

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Did the 2020 Pandemic Change Everything? Part 1 of 2

“This changes everything” is a phrase often used in marketing to describe some new product or discovery. COVID-19 truly changed life for every person on earth in a matter of months. The pandemic changed every aspect of daily life. This list suggests the enormity of the changes. It is long, and (I am sure) it is not complete. More than an inventory of 2020 events, this is a menu for how to prepare for the next pandemic. It would be a mistake to refer to COVID-19 as a once-in-a-century pandemic.

Science

The COVID-19 crisis re-established the value of expertise in matters of science. Yet, as of early December, 27% of Americans said they would not get a free COVID-19 vaccination. Refusal to accept scientific advice translated into politicization of the field of science. Scientists were challenged by groups weighing economic interests above public health concerns, and data privacy concerns above safety issues. Questioning scientific findings evolved into some of the year’s many conspiracy theories: the virus was intentionally started; the virus is part of a Chinese communist plot against the West; 5G technology rollout was to blame for the pandemic; the virus was a hoax.

Medical Research

The speed with which medical research developed vaccines for COVID-19 bodes well in terms of preparedness and resilience for future viruses. The failure of the market-based system for developing medicines and vaccines led to reassessment of a direct role for government the process. Pharmaceutical companies balk at the risk of assuming high costs of research and development, leaving it to the Department of Health and Human Services to fund and coordinate development of therapeutics and vaccines.

Technology

Consumer and business digital adoption moved five years forward in about eight weeks, according to McKinsey Company. Working from home, online learning, digital payment and online shopping were among existing trends that accelerated during the pandemic and are likely to continue. In health care, a British doctor told the New York Times, the British national health system’s switch to remote consultation comprised a decade of change accomplished in a week. Adopting digital technology and integrating it into policy and health care enabled some countries to maintain low mortality rates. Strategies included surveillance, testing, contact tracing and quarantine.

Business

Attempting to prevent business failures the government stepped in with financial support, changing the relationship between business and government. Concern for workers rather than shareholders guided government action. Businesses replaced some overseas suppliers with manufacturers of essential equipment closer to home. The long-term trend toward online shopping accelerated; locked-down bricks-and-mortar businesses turned to Amazon and Shopify for delivery service. Restaurants were particularly hard-hit by social distancing restrictions; over 100,000 closed permanently. Others turned to carry-out or outdoor dining. As the pandemic made work from home a necessity, businesses and employees alike considered the pros and cons of making the change permanent. Employees could be hired from outside the geographic area in which businesses were located.

Workplaces

Working from home was not only accepted out of necessity, but was embraced by companies, especially in technology and finance, as a way forward. The reduced demand for office space caused a glut in some markets, and housing in acceptable commuting distances was devalued in favor of suburban and rural locations. The 40% of U.S. workers who can work from home saved on average an hour a day spent commuting. The decline in daily commuters had a negative impact on those workers who support and serve office workers: transportation, food service, cleaning and maintenance, retail and personal care industries.

World Trade

World economic output is estimated to be at least 7% lower than it would have been. Disruption of international commerce and travel set back cross-border trading; in May 2020, the volume of goods traded globally was 18% below the level a year earlier. Disruption of international supply lines has also negatively impacted e-commerce for goods and services, in terms of delivery delays or outright cancellation of orders. Demand for personal protective equipment for health care workers exceeded national supplies, leading governments to offer incentives to bring production ashore. The U.S. Defense Production Act authorized the president to prioritize domestic production of critical medical supplies and equipment.

Government

Trust in government was eroded by conspiracy theories claiming the pandemic was a hoax. Yet federal government action was required in numerous areas: Health and safety, transportation, education, economy, cybersecurity, scams and fraud, broadband, commerce, immigration, international cooperation, and others. A pandemic response document prepared during the George W. Bush administration provided some guidance to the current crisis, but much of it was ignored. Stimulus spending in support of jobs and families reset expectations about the role of government. But the poor response of government to the pandemic exposed the need for new investment in health and public services management.

The next Fifty Year Perspective blog post will cover changes due to COVID-19 in Health Care, Equality, Education, Hobbies and Home-bound Activities, Entertainment, Community and Climate Change.

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Making the Case for Stimulus

As 2020 ended, the U.S. economy was far from recovering losses from the recession. But the mere mention of stimulus causes budget hawks to panic. Words like “national debt” and “handouts” are uttered, along with fearsome handwringing and anxiety for our children’s future. Yet there are good ways and bad ways to create stimulus.

First, don’t think of stimulus spending (or infrastructure spending or even pork barrel spending) as simply giving money away. Instead think of it as passing out dollars that will be spent over and over again by people who need and will spend those dollars. In economic terms, such stimulus spending takes advantage of “fiscal multiplier theory.” The theory estimates the number of times a dollar will be spent based upon the recipients’ tendency to spend. This tendency to spend is called the marginal propensity to spend (MPS). It quantifies the increase in consumer spending, as opposed to saving, when receiving an increase in income. For example, if a population has an MPS of 0.75, the fiscal multiplier would be four, meaning every dollar of stimulus spending would generate four dollars of national income. A fiscal multiplier also increases the impact of infrastructure spending.

The tendency to spend will vary within a population. If stimulus dollars are distributed, lower-income households spend a greater share than higher-income households. The millions of workers who have lost their jobs in the current recession would likely spend most if not all their stimulus dollars. Stimulus dollars would not be effective going to people who do not need them and generally save or invest them.

Researchers at the Kellogg School at Northwestern University used real-time transaction-level spending data to measure how quickly recipients spent their stimulus money after Congress passed the $2 trillion aid package in late March. Their overall conclusion found “Americans spent roughly a third of the government-issued funds within 10 days of receiving it.”

The research went beyond the overall average to determine who spent the money most quickly. They found that those with income less than $1,000 per month spent about 40% of their stimulus dollars in the first ten days, while those with incomes over $5,000 per month spent about half that much in the same period.

Personal liquidity, measured by the amount of money in individuals’ checking accounts when the money arrived, was a better predictor of who spent most quickly. “People with the highest amounts of cash on hand – $3,000 or more in their checking accounts – had no response to the appearance of their stimulus check. On the other hand, those who maintained accounts with $500 or less spent almost half of the deposits – 44.5 cents per every dollar – within 10 days.”

But that is only part of the justification for making now the time to commence stimulus spending. Paul Krugman made the economic case for stimulating the economy. “Given the current and likely future state of the U.S. economy, it’s time to (a) spend a lot of money on the future and (b) not worry about where the money is coming from.”

The current investment environment could not be more favorable. Krugman refers to the current “global savings glut – the sums individuals want to save persistently exceed the sums businesses are willing to invest. And this situation … translates into extremely low government borrowing costs.”

Krugman’s objective is helping families afford housing and food, helping local governments restore cuts in services, and replacing consumer spending that has collapsed in the pandemic-induced recession. He cites long-neglected infrastructure needs and improving health and educational outcomes for children.

His concern for children is echoed by Catherine Rampell: “It’s unconscionable that, here in the richest country on Earth, nearly 1 in 6 households with children report they either sometimes or often didn’t have enough to eat in the previous week.” She adds relief for the long-term unemployed during the pandemic to the list of needed investments and summarizes the case for immediate action by the incoming administration: “There are two main arguments for Congress to provide generous, immediate fiscal relief. One is based on humanitarian concerns; the other, economic growth. President-elect Joe Biden should use both.”

News About the News

“Trump spouts election falsehoods at Georgia rally.”

President Donald Trump was in Georgia the first weekend of December for a rally in support of the state’s two Republican senators facing a runoff election to retain their seats. The headline above was for an Associated Press article the next day, which included references to “the president’s baseless accusations of widespread voter fraud.”

“Baseless accusations” and “election falsehoods” are not words we are accustomed to hearing applied to presidents of the United States. Not that presidents throughout U.S. history have not had strained relationships with the media, or that media have not accused presidents of falsehoods. But something different is going on now, the question of whether objectivity should be the guiding principle for journalists and “alternative facts” should be challenged.

Some of the earliest United States newspapers appealed to a partisan base of readers. As distribution expanded, and pursuit of advertising dollars relegated reporting to “the facts,” the principle of objectivity was embraced. “Advertisers wanted less partisan coverage to sit alongside their messages.”

A June 2020 New York Times article noted changes in reporting beginning with the killing of Michael Brown by police in Ferguson, Missouri in August 2014. Is objectivity acceptable when the difference between right and wrong is clear? The article described newsrooms as “trying to find common ground between a tradition that aims to persuade the widest possible audience that its reporting is neutral, and journalists who believe that fairness on issues from race to Donald Trump requires clear moral calls.” As Anne Applebaum wrote in her book Twilight of Democracy regarding the UK vote on leaving the European Union, “Dominic Cummings’s Vote Leave campaign proved it was possible to lie, repeatedly, and to get away with it.”

Discontented with objectivity as a guiding principle, some journalists have argued that in clear instances of right versus wrong, “moral clarity” should be the guide. Wesley Lowery, a Black journalist who reported from Ferguson in 2014, put forward moral clarity in advising journalists to “abandon the appearance of objectivity as the aspirational journalistic standard, and for reporters instead to focus on being fair and telling the truth, as best as one can, based on the given context and available facts.” But from the perspective of the libertarian site Reason.com, “In replacing their decidedly strawman version of the ‘objectivity’ ideal with a more courageous ‘moral clarity,’ journalists are trading the unattainable for the unknowable.”

This debate is taking place as journalism itself is undergoing immense change. Instead of a limited number of nationally distributed newspapers and only  three broadcast television channels, news is distributed over dozens of channels and internet sites and social media platforms, often with highly partisan content. The fragmentation has been devastating for traditional news sources dependent on advertising dollars for support. Instead, advertising dollars go to FaceBook, Google and many others. When presented with a president unable to distinguish truth from fiction, a more diverse array of journalists had the courage to challenge “alternative facts.”

How Might This Turn Out?

As I write this, all signs point to a Joe Biden presidency beginning January 20, 2021. Popular and electoral college votes are in Biden’s favor, and challenges to the election are all but resolved. Preparation for a transition from Republican Trump to Democrat Biden has begun.

Scrutinizing of election results has also begun, not just looking at why the polls were so far off, but what can be learned from the results. The urban-rural split between Republican and Democratic voters was evident in county-level voting patterns: President Trump led Joe Biden in the country’s least urbanized counties by a margin of 33 points; Biden led Trump in the most urbanized counties by 29 points.

The split revealed much about voters’ economic environments: According to a November 10th report from the Brookings Institution, 490 counties won by Biden account for 70 percent of the U.S. economy, while 2,534 counties won by Trump account for the other 30 percent. Urban populations are racially diverse, college-educated, and work in professional and technical industries. Rural populations are more uniformly white, less likely to have gone to college, and work in traditional industries.

In his first post-election address, Biden pledged to unify, not divide the country; to be a president “who doesn’t see red and blue states, but a United States.” But the 73 million voters who voted for Trump have reason not to trust Biden and the Democrats in Congress. Post-election analysis found Trump voters perceived the Democratic Party as radically left, tied to socialism, and not supportive of law enforcement. Biden plans to reverse some of Trump’s policies regarding trade and international agreements, which were favored by Trump voters as supportive of U.S. jobs.

To be sure, there are “progressives” in the Democratic Party promoting programs somewhat left of center. The Green New Deal, Medicare for All, and defunding police were used against Democrats in the election and are cited by some party members for limiting the party’s success in increasing representation in Congress.

But there are major concerns being addressed that are shared by voters in cities, small towns and rural areas: availability of well-paying jobs, safe neighborhoods, good education and childcare, access to healthy food, and good infrastructure. Will Congressional Republicans find common ground with the new administration on issues that clearly benefit their constituencies? Or do Republicans have more to gain in 2022 by prolonging polarization?

While there is uncertainty over what will happen, we can take comfort in what has been avoided. Before the election, Author Thomas Fischgrund wrote Trump’s Second Term: What If Donald J. Trump Had Won Reelection in 2020. As Fischgrund tells it, Trump won 45% of the popular vote but the Supreme Court’s conservative majority awarded him the victory. In 2022 Trump addressed 20% unemployment by initiating deportation of eleven million illegal aliens. Social media were censored by the new National Media Review Board. Covid-19 morphed into Covid-22. The economy fell into depression, and in 2023 a general nationwide strike was called for Labor Day.

In the election year of 2024, Russian hackers flooded social media with support for a third term for Trump. He ran and lost by a large margin but claimed fraud and refused to leave. The Supreme Court, after hearing the case, decided not to rule, saying this was a political issue and not a judicial one. Only when one of Trump’s adult children came forward and urged him to accept the will of the people did the crisis end.

Things could always be worse.

“Stakeholder Capitalism Metrics”

Fifty years ago the New York Times Magazine published an essay by economist Milton Friedman, “The Social Responsibility of Business Is To Increase Its Profits.” Striving to increase profits was how businesses best served society. Businesses existed to produce profits for shareholders.

Friedman’s elevation of profits over all else has been challenged by those who charge that doing so ignores how unchecked businesses may worsen inequality, pollute the environment, discriminate in hiring and promotions, or violate human rights. Shareholders have legal right to submit proposals to corporate managers to right wrongs on these and many other allegations. The alternative term “stakeholders” is raised to assert that decisions must take into account not just shareholders but also employees, customers, suppliers and local communities.

Over the last three years the World Economic Forum’s International Business Council led more than 140 CEO’s “to align their corporate values and strategies with the UN’s Sustainable Development Goals (SDGs),” in the belief that “long-term value is most effectively created by serving the interests of all stakeholders.”

The objective is to measure corporate performance against a set of “Stakeholder Capitalism Metrics.” These metrics measure performance against environmental, social and governance indicators. The business’s performance on these metrics would be incorporated into mainstream annual reporting and indicate progress over time. The International Business Council’s objective is to make the metrics standard across industries.

The business case for including all stakeholders is “the belief that the interrelation of economic, environmental and social factors is increasingly material to long-term enterprise value creation.” That belief is validated by the list of “core” metrics, which include: stakeholder engagement; lobbying positions; anti-corruption training; land used for production; greenhouse gas emissions; water consumption; plastic consumption; re-use of nonrenewable resources; diversity and inclusion of employees; gender, minority and ethnic pay equality; worker health and well-being; employee training and development; employee hiring and turnover; ratio of CEO to median employee compensation; collective bargaining agreements; capital expenditure; research and development expenditure; and total tax paid by country.

This is a partial list of the 21 core and 34 expanded metrics and disclosures. Implemented, they would represent a giant step toward transparency. To some extent, the plan will only work if there is near-universal acceptance by businesses. Fortune magazine’s Alan Murray describes it as a big step forward in measuring companies’ efforts toward addressing social and environmental needs. Murray credits Bank of America CEO Brian Moynihan’s leadership in lending his considerable credibility to the effort.

To use the popular expression, “It’s a big ask.”

Social Cohesion Lost

Analysis of the history and current status of liberal democracy in the United States often begins with the mid-20th century, a period of growth and prosperity. The following decades saw widening disparity in the distribution of wealth and income, a decrease in intergenerational mobility, and political polarization. The trend has been described in postings to Fifty Year Perspective: a federal income tax that has become less progressive since 1950, and an inequality index steadily increasing since the 1970s.

This sixty year period has been incorporated into a broader context of the 125-year span since the Gilded Age of the late nineteenth century. In a new book by political scientist Robert Putnam and writer Shaylyn Romney Garrett, The Upswing: How America Came Together a Century Ago and How We Can Do It Again, the authors supply a wealth of statistics documenting increasing social solidarity beginning with the Progressive movement as the twentieth century began.

Graphs of union membership, cross-party collaboration, civic engagement, church membership, and marriage rate, among others, mix with measures of income and wealth. Together they produce a consistent trend of rising interdependence and cooperation until the 1960s, followed by “a steep descent into greater independence and egoism” continuing to today. The authors call their graphs’ inverted U-curve the “I-we-I” curve, to coincide with the periods of independence and interdependence.

The Progressive movement that brought the years of interdependence established an impressive array of reforms and innovations:

The secret ballot; the direct primary system; the direct election of senators; the initiative, referendum, and recall; women’s suffrage; new forms of municipal administration; the federal income tax; the Federal Reserve System; protective labor laws; the minimum wage; antitrust statutes; protected public lands and resources; food and drug regulation; sanitation infrastructure; public utilities; a vast proliferation of civic and voluntary societies; new advocacy organizations such as labor unions, the ACLU, and the NAACP; the widespread provision of free public high schools; and even the spread of public parks, libraries, and playgrounds.

However, the movement is faulted for its failure to assure full inclusion for minorities, women, and poor people, which “seriously compromised the integrity of America’s ‘we’ decades and ultimately sowed the seeds of our subsequent downturn.” Four best-selling books published in 1962 and 1963 each “helped trigger a major intellectual and social counter-movement that would reverberate well into the next century:” Michael Harrington’s The Other America on poverty; Rachel Carson’s Silent Spring on the environment; James Baldwin’s The Fire Next Time on racism; and Betty Friedan’s The Feminine Mystique on feminism.

An abundance of crises starting in the 1960s fed public anguish: Assassinations of John Kennedy, Robert Kennedy, and Martin Luther King, Jr; Vietnam War; student upheavals; civil rights revolution; urban crisis and riots; domestic terrorism; women’s movement; the pill and sexual revolution; counterculture and drug epidemic; questioning of traditional religious and family values; series of environmental crises; Watergate and Nixon’s resignation; stagflation, oil shortage and economic malaise.

The authors do not suggest “how we can do it again,” as their subtitle suggests, other than to say that the Progressive era did not set its sights high enough in achieving full inclusion and redressing racial and gender inequalities. Although Congress has more Black, Latino and women members, overall our accomplishments pale in comparison to what the Progressive movement achieved. Recent innovations such as telemedicine and artificial intelligence, and international accord on the Paris Agreement, may be setting the stage for a new age of interdependence. Exiting from the Covid-19 pandemic could be a push to solidarity as occurred after World War II

In 2010 scientist Peter Turchin predicted 2020 would be a year of social unrest, based upon research using 40 social indicators over a 200 year span. In a July 2020 article in The Globe and Mail,  he described the U.S. “getting awfully close to the point where a civil war or revolution becomes probable.” However, “in some cases wise leaders and prosocial segments of the elites … turn things back to stable waters.”

Both Turchin and Putnam/Garrett cite the importance of involvement by mass social movements. Is 2020 the beginning?

Thoughts on Morality and Freedom

What role does morality play in the life of a country? That question was raised by David Brooks in a recent New York Times opinion piece. The essay appeared three days after the first presidential debate between Donald Trump and Joe Biden. Brooks asserted that during the debate Trump’s “savagery made ordinary human conversation impossible.”

Beyond the debate, Brooks portrayed key incidents of Trump’s campaign as “moral events.” He cited references to military veterans and war dead as “suckers and losers;” downplaying the pandemic; and supporting white supremacists. Brooks’ harsh conclusion: Trump is “first and foremost an immoralist, whose very being was defined by dishonesty, cruelty, betrayal and cheating long before he put on political garb.”

The central role of moral character in society is asserted in a new book by Rabbi Jonathan Sacks titled, Morality: Restoring the Common Good in Divided Times. Rabbi Sacks, the former chief rabbi of the United Kingdom, speaks about the relation between morality and freedom. He writes, a moral society is committed to justice, compassion, concern for the welfare of others, mutual respect, trust and openness to others.

Rabbi Sacks identifies three basic institutions common to all countries. There is the state government, which establishes the country’s legal framework and the distribution of power. Without the state, “Life would be lawless, and each of us will live in constant fear of death.” There is the market economy, capable of creating great wealth and eliminating poverty. And there is the moral system with a set of shared values that citizens live by.

Moral principles “have to do with conscience, not wealth or power. But without them, freedom will not survive,” he writes. “There is no liberty without morality, no freedom without responsibility.”

Brooks sees Trump’s immorality as a threat to “the basic stability of civic life.” He warns that “moral degradation is an invisible process. It happens subtly over time.” We detect gradual loss of freedom when protestors are denied the right to march peacefully, or when domestic extremists are radicalized toward violence. The principles of a moral society are being discarded, and we are less free for it.

Another Industry Disrupted

To the list of industries disrupted by the Covid-19 pandemic, add energy. As lockdowns spread across the world, businesses shuttered, and travel and transport contracted. Airline travel in the United States dropped by 90%. Other than shipments to grocery and discount stores, most other shipping customers shut down. Instead of rising, suddenly worldwide demand for oil began to fall. The pandemic previewed a world of low demand for fossil fuels.

Reducing consumption of fossil fuels has been an objective of environmentalists for many decades. The coronavirus has prompted action on two fronts that have needed more focused attention: How will petrostates and oil energy giants adjust to the lower-demand world that the pandemic previewed; and what opportunities does the pandemic offer for addressing global warming? Up to now, the pandemic and global warming have had two things in common. Both impact every person on the planet; and both will soon go away, according to Donald Trump. Time for a new plan.

Low interest rates and rising demand encouraged oil and gas companies to invest heavily in increasing supply. When the pandemic arrived in 2020, demand for natural gas fell by five to ten percent relative to pre-pandemic projections. Demand for refined products decreased by at least twenty percent. Increases in efficiency and consolidation within the industry are expected.

Wealthier countries have committed hundreds of billions of dollars to helping businesses survive through the pandemic. Some corporate bailout packages have strings attached to encourage investment in low-carbon emission. U.S. Democratic presidential candidate Joe Biden proposes spending $2tn to reduce emissions in the process of replacing some of the millions of lost jobs. Climate change is the focus of over $250bn of the European Union’s pandemic recovery planning.

The pandemic has given these efforts a head start. Living through lockdown, people have realized that many daily auto trips are unnecessary. Business travel is increasingly being replaced by web-based conferencing. Multinational corporations that spread production across the globe are considering reducing supply chains in number and length.

Competition among countries heavily dependent upon oil production for their national budgets will be intense. Holding or increasing their market share is essential to meeting their citizens’ needs. These petrostates already were seeking ways to transform their economies for the day their wells run dry. If the pandemic accelerates the transition to less reliance on fossil fuels, the urgency to transform grows.

The long-sought vaccine for Covid-19 will eventually free people of this daily threat of illness and death, even if it doesn’t fully “go away.” But the fight for success over the pandemic may hasten reaching success in the battle against climate change.

What did you do during the lockdown?

Early in the Covid-19 pandemic, workers were kept from their workplaces in numbers never observed before. Workers not considered to be in “essential jobs,” or “essential employers” were directed to work from home or not work at all. That made for eerie scenes of  empty streets with traffic signals blinking, and restaurants and bars with big TVs blaring but no customers.

Knowing that technology is threatening to take jobs now filled by people, could we have just had a glimpse of that future world? In 1930 economist John Maynard Keynes predicted that within 100 years – by 2030 – “technological unemployment” would reduce the work week to just 15 hours. Finding new uses for human labor would not keep up with the loss of jobs due to technology. A new book by Daniel Susskind, titled A World Without Work: Technology, Automation, and How We Should Respond, continues this discussion. He agrees that what he calls “task encroachment” by machines will result in too few jobs available for the number of human workers.

Susskind accepts that less demand for work is inevitable, although not likely in the next ten years, but the trend presents problems that need to be taken very seriously. While it may sound appealing to reduce weekly hours of work to 15, or perhaps have no paid work at all, Susskind notes that paid employment plays an important role in individual self-esteem. Although a 15-hour work week is not on the horizon, total hours worked per year has decreased more than 10% over the last 50 years, on average, for countries of the Organization for Economic Co-operation and Development.

Reflect, if you will, on what you did in the early weeks of the coronavirus lockdown. Did you work from home, or did you start an exercise routine? Did you work puzzles, bake bread, start a hobby, watch Netflix, visit via Zoom, join a study group or book club? Would such activities be an appealing permanent way of life for you? Or would they come up short of providing you with a “meaningful life?”

These are issues Susskind addresses, and his solutions may not be appealing. Anyone working for pay, and the businesses they run, will be taxed to support their communities at all levels. For those people who “are not able to contribute through the work that they do,” he proposes a “conditional basic income,” income that would have requirements the recipient engage in some activity in support of the community.

Those without paid work would divide their lives “between activities that they choose and others that their community requires them to do.” Susskind suggests that community activities could include politics, artistic and cultural pursuits, or educational, household and caregiving activities.

Wide-spread technological unemployment will happen gradually. As it unfolds, an increasing number of job types will no longer be performed by humans. No doubt some people will find fulfilling paid employment and, assuming they are satisfied with the pay they receive, will choose that route over a conditional basic income. Others may find satisfaction in performing community service or decide to seek reskilling in order to fill contemporary jobs. And all groups may benefit from a shortened work week.

So, what did you do in the first weeks of the lockdown?

Pandemic: Warning and Reality

By September 2020, worldwide cases of Covid-19 total 29 million, with over 900,000 deaths. The virus has dominated news, both about the pandemic itself and the economic crisis it has caused. Expectations for the world economy range from a worse recession with a longer recovery than the one experienced a decade ago, to something akin to the depression a century ago.

Some Covid-19 reporting has referred to a report warning of a pandemic, prepared by the U.S. National Institutes of Health (NIH), but largely ignored. The report had a remarkable genesis in 2005. At the time, historian John M. Barry had just completed a book about the 1918 flu pandemic titled The Great Influenza. An estimated 500 million people were infected, and between 50 and 100 million died. While on vacation at his Texas ranch, President George W. Bush read Barry’s book, and Bush was seized by the necessity for the U.S. to prepare for a future pandemic.

Upon his return to Washington, President Bush passed the book to his Director of Homeland Security with instructions to prepare a national strategy. On November 1, 2005, he addressed the NIH, outlining his plan; its elements sound familiar to us today:

  • Bio-surveillance to detect, quantify and respond to outbreaks in humans and animals
  • Stockpiling vaccines and antiviral drugs
  • Accelerating development of new vaccine technologies
  • Stockpiling critical supplies of face masks, ventilators and personal protective gear
  • Limiting nonessential movement of people, goods and services in outbreak areas
  • Restricting public gatherings and avoiding nonessential travel
  • Providing guidance on social distancing measures and quarantines
  • Emphasizing the roles and responsibilities of individuals in preventing spread of an outbreak

The plan, estimated to cost $7.1 billion, was published in a 17-page document titled National Strategy for Pandemic Influenza. A recent ABC News report characterized the effort to implement the plan over the following three years as “intense” but “not sustained,” as “other priorities and crises took hold.” Elements of the plan have guided current response to Covid-19, but, according to Paul Biasco of Business Insider, “much of the plan has been ignored or contradicted by the Trump administration. The result has been a delayed and chaotic response to the pandemic.”

Our reality in the U.S. in September 2020 is 6.5 million cases of Covid-19 and nearly 200,000 deaths. Unemployment increased from 3.5% in February to 14.7% in April, as about 30 million workers claimed jobless benefits. Air travel dropped by 90%. U.S. travelers were prohibited from visiting Canada and European countries. Would implementation and maintenance of Bush’s plan have appreciably reduced these statistics? Will the immediacy of Covid-19 make a difference in preparation for the next pandemic?

An article in The Economist says something about human response to health warnings. In 1845 The Economist compared belief in contagion to the former beliefs in astrology and witchcraft, concluding this belief would die out too. In 1854 an editorial in The Times said, “We prefer to take our chance of cholera and the rest rather than be bullied into health.”

Vanishing Liberal Democracy

The history of Turkey’s slide from democracy to dictatorship was explored in a previous post to Fifty Year Perspective. Turkey’s Justice and Development Party, AKP, came to power in the general elections of 2002, promising to oppose the “corrupt system,” and to restore “respect” to the “real people,” against the “despised elites.” Led by Recep Tayyip Erdogan as president, AKP engineered changes to Turkey’s constitution that expanded powers of the presidency. Erdogan then instituted limitations on civil liberties, press freedom and judicial independence and responded to civil protest movements by jailing opponents, among other authoritarian measures.

Authoritarian leaders utilize a broad assortment of measures to achieve and maintain power. Creating an alternative reality that turns a real or imagined event into a conspiracy that will harm the country, effectively rallies people to a leader’s cause. A case in point is the 2010 crash in Smolensk, Russia of a plane carrying Lech Kaczynski, Poland’s president, and over 90 politicians and military personnel. While evidence indicated the crash was an accident, the president’s twin brother, who led the ruling political party, used the tragedy to destroy public confidence in the government and media.

Hungary’s leaders have created a threat to the country in the form of an invented conspiracy accusing billionaire George Soros of bringing illegal migrants into the country. In her recent book, Twilight of Democracy: The Seductive Lure of Authoritarianism, historian and The Atlantic columnist Anne Applebaum refers to Donald Trump’s entry into politics with the false premise that President Barack Obama was not born in the United States. Trump spread the “birther” theory to connect with disaffected voters. In office, Trump attacked the norms of democratic governance. As Daron Acemoglu wrote in Foreign Affairs,  U.S. institutions were vulnerable to Trump’s attack because public trust had been quietly ebbing away from them for some time.”

The measures dictators take to attain power appear in country after country. As in Poland, presidents of Venezuela, Turkey and Egypt accused opponents of conspiracy against the government. Opponents and vulnerable minorities have been attacked and jailed in Russia, Turkey, Belarus and Egypt. Expertise has been disparaged in Brazil and Hungary. News media outlets have been taken over or shut down in Poland, Egypt, Russia and Hungary, among others. Presidents of Venezuela and Poland claim the “moral” right to lead. Xenophobia, racism and homophobia are endorsed in Hungary and elsewhere. Elections in Bolivia are manipulated and voting privileges are withheld in numerous countries. Friends of dictators are protected, given government contracts or jobs or awarded with privatized public functions.

Authoritarian measures emerge increasingly in the United States, the United Kingdom, Spain and Italy, demonstrating that the appeal of authoritarianism is not limited to new democracies. Acemoglu warns, “When democratic values come under attack and the press and civil society are neutralized, the institutional safeguards lose their power. Under such conditions, the transgressions of those in power go unpunished or become normalized. The gradual erosion of checks and balances thus gives way to sudden institutional collapse.” The trend is endangering democracy in countries with long democratic traditions, as well as newly-democratized countries.

Alternative Truths and Consequences

Inauguration day, January 20, 2017, the crowd was huge, stretching down the National Mall in Washington DC. Donald Trump’s inauguration drew a larger crowd to the mall than Barak Obama’s inauguration eight years before. Or did it? Side-by-side photos taken from atop the Washington Monument clearly show a larger crowd in 2009. With this, and Trump’s claim to have won the popular vote, the country was introduced to the oxymoronic “alternative facts.”

In the following years, the count of Trump’s false or misleading statements exceeds 20,000.  His statements use the superlative, ascribing his achievements as the highest, the biggest, the best ever. He told the Davos Forum in January 2020, “I’m proud to declare that the United States is in the midst of an economic boom, the likes of which the world has never seen before.” That was clearly not the case; GDP growth during his presidency has never exceeded 3%. When Trump claimed that the noise from windmills causes cancer, he was ridiculed by the two Republican senators from Iowa.

If alternative facts started and ended with Trump, perhaps we could brush it off as harmless self-aggrandizement. But a growing array of media outlets accept and expand his pronouncements, at times corroborating their accuracy by citing theoretical conspiracies attributed to, as an example, a “left-wing cultural revolution” bent on destroying America. Fox News, Breitbart News, Alex Jones’ Infowars, Rush Limbaugh and One America News Network are among Trump’s favorite news sources and supporters: they report his positions, and he retweets their stories.

Not least of the dangers is the threat to the very heart of democracy, the free and fair process of electing leaders. Mail-in voting is alleged by Trump to cause extensive fraud, despite the lack of supporting evidence, as well as years of successful mail-in-voting in Colorado, Hawaii, Oregon, Washington and Utah.

Now add in the Covid-19 pandemic to the mix of reporting and you have a challenge to the health of U.S. residents and to best practice steps to maintain health and limit community spread of the virus. Over the pandemic’s first two months Trump claimed it was going to miraculously disappear, that “nobody would have ever thought a thing like this could have happened,” and that, on March 2, pharmaceutical companies are going “to have vaccines relatively soon.”

The daily coverage of events and trends has taken on a life-and-death dimension. It took three years and five months to go from the January 20, 2017 inauguration to the spectacle before the Palm Beach County, Florida Commission hearing on a proposed mandate for wearing face masks in public buildings. Residents at the hearing slammed the requirement as “devil’s law” because masks interfere with people’s breathing and will kill them. They claimed conspiracy theories were brain-washing people and leading to a “communist dictatorship.”

Alternative truths have consequences, including avoidable deaths.

Live Free and Die

I don’t know whether to be embarrassed or ashamed. How did my country come to equate wearing a face mask with losing freedom?

Protesters at a county health department hearing in Missouri rallied against a proposed face mask requirement being considered by the department board. A prominent poster read “Hitler required compliance too.” The protest was reminiscent of a similar hearing at the Palm Beach County, Florida Commission on a proposed mandate for wearing face masks in public buildings.

I am inclined to take advice of professionals in their areas of expertise. Some acceptance comes instinctively; the advice meets the test of logic. In this case I am not feeling the need for proof, but the ferocious controversary surrounding masks pushed me to make a life-and-death case for listening to the experts.

I collected and analyzed data my entire professional career. I knew enough to evaluate sources, knowing how easy it is to lie with statistics. So when I look at the international data coming out related to Covid-19, I do so critically, and with 45 years of professional experience. When I read that the United States has 25% of the world’s coronavirus cases but only 4% of the world’s population, I recognize that data collection and reporting is imperfect, and not all countries are equally aggressive in testing, but even with a large margin of error, the United States is unnecessarily suffering.

So I looked for counts of people dying from coronavirus. Yes, there are inconsistencies in assigning cause of death, but taking into account reporting error, death reporting is a more reliable comparison metric than reported cases.

Johns Hoskins University has established itself as the go-to resource for comprehensive, worldwide reporting on the coronavirus, incorporating data from CDC  and WHO. Looking at Johns Hopkins’ statistics on July 29, 2020, the average number of deaths worldwide is about 8.63 per 100,000 population. For the United States, the rate is 45.62 deaths per 100,000. That is a lower death rate than the United Kingdom (69.13), Spain (60.86), Italy (58.12), Peru (57.58), and Sweden (55.99), all countries that have had their problems combatting the coronavirus. France (45.12) and Brazil (42.27) are close behind the United States. These countries all have death rates well above that 8.63 world.

Death rates much lower than the United States in countries with 100,000 or more coronavirus cases include Iraq (11.8 per 100,000 people), Germany (11.01), Russia (9.33), Saudi Arabia (8.28), Turkey (6.86), Pakistan (2.76), India (2.47), Bangladesh (1.86), and Indonesia (1.83). China reported a rate of 0.33.

Discounting underreporting by developing countries, or by countries for political reasons, at face value the death rates tell us that you are about four times more likely to die of coronavirus in the United States than in Iraq or Germany, five times more likely than in Russia, over six times more likely than in Turkey, over 16 times more likely than in Pakistan, over 18 times more likely than in India, and about 25 times more likely than in Bangladesh and Indonesia. Compared to China, over 130 times more likely.

To bring the reality closer to home, compare international death rates to those of individual states. Someone in Texas or California is about twice as likely to die of coronavirus as someone in Germany. Someone in Florida is almost three times as likely to die than in Germany, Arizona four times as likely, and New York, fifteen times as likely.

New Hampshire adopted “Live Free or Die” as its state motto in 1945 toward the end of WWII. It has been co-opted by protestors choosing to defy healthcare professionals’ directives. Wearing a mask is not a relinquishment of freedom; it is an acceptance of established health care practice, based upon experience with this epidemic. If the motto is applied to coronavirus protestations, it should be modified to “Live Free and Die.”

The Rise and Rise of the Nation State, by Nigel Holloway

(Nigel Holloway is a former senior editor at The Economist and now runs The Holloway Forum for the creation of reports primarily designed for decision makers.)

It seems like an age ago, but in the early years of the 21st Century, the economic trend of globalization was so strong that many at the time wondered whether national borders would eventually disappear altogether. The Berlin Wall had fallen and we entered a unipolar world led by American ideas, military might and investment flows. Yet here we are now in the midst of a global pandemic and nationalism bestrides the world stage.

Admittedly, recent events could have pushed the needle in the opposite direction. In March 2020, at the start of widespread lockdowns in Europe and the Americas, there was a glimmer of hope that Presidents Donald Trump and Xi Jinping might base their policies on the fact that the world faced a common enemy in the form of the novel coronavirus. There was a possibility that world leaders would see it in their national interests to work together to defeat COVID-19. The pandemic might, therefore, have pushed geopolitics into an era of cooperation, not just in the search for a coronavirus vaccine and treatment but also toward tackling climate change together.

In fact, the opposite has occurred, as governments have competed for scarce medical resources. The US administration has blamed China for the outbreak and has pulled out of the World Health Organization. Russia is alleged to have hacked into the vaccine research conducted in the US, UK and Canada. China has sought to use the pandemic to advance its geopolitical agenda. Indeed, nationalism is riding high.

Another way to gauge the significance of the nation state is to compare the response to the pandemic, for it is clear that the impact of COVID on individual countries has varied to an extraordinary extent. This may seem surprising, given the fact that the disease is highly contagious, moves rapidly and does not respect national boundaries. Compare the number of deaths from the novel coronavirus per 100,000 population. Among sizeable, open economies, Belgium comes top with 85.8 deaths per 100,000 people and the UK second with 68.2. At the opposite end of the scale, Taiwan’s equivalent statistic is 0.03 and Thailand’s 0.08. For comparison, the US rate is 42.8 and Canada, right next door, is 24.0.

Granted, the rankings will change somewhat over the course of the pandemic, but what they show in the starkest terms is that national differences count tremendously when it comes to the relative success in containing the disease. The reasons for these differences include culture and the quality of governance, but the point here is to emphasize that nationality remains a paramount factor in people’s everyday lives.

Why did the nation-state not fade away in the 21st century, demolished by digital technology, global investment flows and unprecedented levels of cross-border migration? It is worth remembering that the roots of the nation-state can be traced to the Treaty of Westphalia in 1648, which ended the Thirty Years War. A new system of political order arose in Europe based on peaceful co-existence among sovereign states, replacing a system of multiethnic empires dating back to the 13th century. As a means of organizing power, nation states have outlasted the global expansion of European empires, the Industrial Revolution, two world wars, the atom bomb and not one, but two surges of economic globalization (at the end of the 19th and 20th centuries).

These convulsions and revolutions were not able to kill off the nation state, because alternatives have proven harder to sustain and organize. The Communist International (Comintern) was intended to replace capitalist nation states with a global Soviet Republic and lasted only from 1919 to 1943. The Union of Soviet Socialist Republics collapsed in 1991. The United Nations has continually struggled to reconcile the national interests of its diverse membership. The European Union has faced a series of economic and political crises in the past 10 years.

Now, at a time of resurgent nationalism, will this method of organizing power that has lasted nearly 400 years survive the pandemic, an economic crisis and, above all, climate change? All three of these require global solutions and stronger international institutions if the human race is to prosper. If nationalism becomes even stronger, we may face a poorer, sicker, more insecure future. One way forward may be to create new, international institutions that can reconcile divergent national interests to solve global problems. Faced with the triple threat from disease, mass unemployment and environmental disaster, the world may yet forge new ways to organize and move forward.

The Idea of America

A November 2017 article in The Atlantic told the story of the founding of the magazine 160 years earlier.  The founders were described as “among the leading literary elites of their day.” Their aspiration was for the magazine to “honestly endeavor to be the exponent of what its conductors believe to be the American idea.”

“The American idea” had come from a speech in 1850 by Thomas Parker, a preacher and abolitionist. He said the American idea “comprised three elements: that all people are created equal, that all possess unalienable rights, and that all should have the opportunity to develop and enjoy those rights.” Although the idea “provoked skepticism,” as the writer of The Atlantic article, Yoni Appelbaum, wrote, “as the United States grew and prospered, other peoples around the globe were attracted to its success, and the idea that produced it.”

The “idea of America,” has fallen short of its own ideals: Not all its citizens are treated equally, “unalienable rights” are not always honored, and many are denied the opportunity to develop and enjoy rights. And yet there is “a yearning to believe again in the American story.” The 240-year-old American Academy of Arts and Sciences (AAAS) convened a bipartisan Commission to examine how to “reinvent American democracy for the 21st century.”

Asserting that the nation “is suffering from a crisis of legitimacy that cannot be addressed by any single reform,” the Commission generated 31 recommendations following nearly 50 listening sessions over two years with citizens in rural towns and small and large cities. The recommendations are substantial and impactful, and are intended to proceed in coordination. Only one would require amending the Constitution, namely, overturning the Citizens United decision. The rest can be accomplished through accepted legislative action. Among the 31 recommendations in the report:

  • Expand the House of Representatives (and therefore the Electoral College) by at least fifty members.
  • Make voting in federal elections mandatory for all citizens.
  • Institute ranked choice voting in presidential, congressional and state elections.
  • Change federal election day to Veterans Day to honor veterans and ensure a day off work for many people.
  • Establish an expectation of a year of national service by all Americans.
  • Establish 18 year terms for Supreme Court justices, with appointments staggered.
  • Reduce the influence of big money in politics.

Both the Commission report and Appelbaum’s article argue that complacence presents the greatest threat to American democracy, a situation requiring robust initiatives on many fronts. As Appelbaum concludes, “Americans have been most successful when fighting over how to draw closer to the promise of their democracy; how to fulfill their threefold commitment to equality, rights, and opportunity; and how to distribute the resulting prosperity.”

The recommendations of the Commission challenge us as individuals and as a nation to participate in, and to grow the participation of others in the idea of America.

This is the 150th post on Fifty Year Perspective. This and all previous blog posts, dating back to June 2nd, 2014, may be viewed at https://fiftyyearperspective.com/blogs/.

Redistribution and Pre-Distribution

Does the process of stopping Covid-19 and restoring the economy offer opportunities to create a more peaceful and equitable society? Two recent blog posts (Here and Here) cited several such opportunities, including making headway toward reversing the continuing slide into inequality. In the WorldPost, a partnership of the Berggruen Institute and The Washington Post, Editor-In-Chief Nathan Gardels referred to President Franklin Delano Roosevelt’s accomplishments in the 1930s: “The mark of visionary leadership during a crisis is the ability to see through the fog of uncertainty and imagine the path to a better future not before considered possible.”

One particular proposal that has been discussed in recent years is a universal basic income, or UBI. The UBI would guarantee a basic income for all individuals regardless of current earnings.  Previously considered somewhat radical, the concept was reintroduced by Andrew Yang, a candidate for the Democratic nomination for U.S. president. A recent Bloomberg article indicated the Trump administration is considering UBI, according to economic advisor Larry Kudlow.

The UBI is basically a redistribution of income from taxes on higher-income individuals and corporations, distributed to lower-income households and individuals. The Berggruen Institute is exploring a concept called “pre-distribution.” Pre-distribution suggests affording those with lower incomes the skills and support to increase their earnings to make redistribution unnecessary. Pre-distribution would include raising the minimum wage, providing access to resources such as good education from pre-K and up, and universal healthcare.

The term pre-distribution was created by Yale professor Jacob Hacker in a 2011 paper. His aim was “to focus on market reforms that encourage a more equal distribution of economic power and rewards even before government collects taxes or pays out benefits.” The idea was introduced in Great Britain in 2012 by Ed Miliband as part of a Labour Party platform. In the early days of the 2020 Democratic Party primary race for the party’s presidential nomination, Elizabeth Warren raised the idea of pre-distribution. Thus, as the U.S. heads into the 2020 presidential election, both major political parties are considering major programs addressing income inequality.

“Build Back Better”

Stop the spread and eradicate Covid-19. Restore the health of the U.S. economy. That much is agreed upon, the “what.” Now for the “when and how.” Then there is “WHO.”

WHO, as in World Health Organization, and health professionals at local, regional and national levels, concur on most details: Flood labs with the resources needed to find therapies and vaccines that will treat the afflicted and prevent the spread of the virus; testing and tracing cases to reveal the extent and inform steps toward prevailing over the disease, while guarding against the spread using face masks, hand sanitizer, social distancing, crowd avoidance.

Less consensus surrounds the “when and how” of the second goal – restoring the economy. Memories of a “Great Recession” just a decade ago provide the economics profession fresh evidence for guidance. Economist Heather Boushey is Executive Director and Chief Economist at the Washington Center for Equitable Growth. She wrote a book in 2018 titled Unbound: How Inequality Constricts Our Economy and What We Can Do About It. Her book features recent research on income, wealth and demographic attributes surrounding inequality.

Post Great Recession policy targeted getting money to lower-income families with higher propensity to consume “in order to provide the biggest boost to demand, so as to get the economy back to full employment sooner.” Benefits for unemployed workers passed Congress in 2008, and this Emergency Unemployment Compensation program was amended eleven times through 2013. Extending support of demand was largely partisan. “Many now argue that it was the failure of the US economy to recover quickly that sparked the rise in populism and ongoing political polarization.”

Boushey, writing before there was a Covid-19, echoed positions taken in a previous blog post, After Covid-19: Opportunities and Threats.  “The low cost of borrowing,” she wrote, “combined with the pressing social and environmental needs and an imperative to make sure savings is well spent, point in the direction of prioritizing new public investments.” Boushey’s collection of economic research results goes beyond recovering from recession, grasping an opportunity to address the moral imperative to make access to the American Dream available to all. Getting money in the hands of people who will consume is simply a logical tactic for recovery; it is good for business. Boushey’s focus on families with higher propensity to consume recognizes research that finds the top 1% of households save 51% of their income, while the bottom 20% of households save 1%. There is ample evidence that unemployment benefits not only help families but also are effective in moving the economy toward full employment.”

Boushey cites research revealing “inequality drags down national productivity by making our workforce less capable than it could be, and our economy less innovative…. Income and wealth inequality obstructs children from having access to resources.” Prenatal care, healthy food, skilled parenting, books, after school programs and high quality teachers are too often unavailable to children of low-income families, but they all are necessary to support development of children into more productive and innovative participants in the economy. Economic research recognizes a confluence of market benefit and moral imperative.

After Covid-19: Opportunities and Threats

Although the threats of Covid-19 are widely communicated, a fair number of influencers express optimism for the future. Call the optimism a mixture of “Don’t let a good crisis go to waste” and “It’s time to reaffirm our values.” A vision of a better world does not have to be defeated by acquiescence.

The threats to “normal life” are well-known. Will air travel and all forms of mass transportation remain risky? Are malls, large entertainment venues and conventions and trade shows to be replaced by digital life? Can professional sports be played successfully behind closed doors? Are office buildings crammed with hundreds of workers per floor a thing of the past? How many years will it take to recover the millions of jobs lost?

Will masks become a standard part of wardrobes? Can restaurants survive with 50% reductions in seating? Must we end handshakes, hugs and blowing out birthday candles? (“You’re spitting on the cake!”) Is increased inequality inevitable? Must crises lead to competition among nations, or are interdependence and cooperation necessary?

With the above as a partial accounting of what the future could hold, the outpouring of calls for change for the better is not surprising. The editorial board of the Financial Times, one of the world’s most respected business newspapers, calls for a new “social contract that benefits everyone.” Governments must take more active roles in the economy. “Radical reforms – reversing the prevailing policy direction of the last four decades – will need to be put on the table… Redistribution will again be on the agenda; the privileges of the elderly and wealthy in question. Policies until recently considered eccentric, such as universal basic income and wealth taxes, will have to be in the mix.”

What the Financial Times and others are demanding is a reassessment of values. What can we learn when some of our lowest-paid workers – in grocery stores, health care, public transportation – are considered “vital professionals?” The public out-pouring of support for teachers and “healthcare heroes” who served selflessly attests to those values that we profess, even when the existing social contract does not support those values.

The new social contract demands infrastructure investment – to boost the economy, employ displaced workers and improve access to jobs for all workers. S&P Global, a provider of public financial information, recommends a 10-year, $2.1 trillion infrastructure investment which is estimated to create over two million jobs over the next four years. Investment in infrastructure for technology has the additional function of reducing inequality. Universal access to broadband is essential for every student and their families.

The underperformance of the healthcare industry in preparedness for the pandemic exposed underfunding for research, medical technology, international cooperation and supply chain, as well as the quality and coverage of medical services. Not least among shortcomings for international cooperation is addressing climate change. It is an issue from which no one will be able to self-isolate, and global unity cannot wait.

There is also an international dimension to emerging from the Covid-19 pandemic. A recent article in Forbes Magazine highlighted the inadequacy of 20th century institutions for the 21st century.  “Prior to this crisis, cracks had already appeared in every global institution.  Economic growth institutions that have been core to the modern financial system for 100 years – such as Central Banks, the IMF and the World Bank – have been criticized for growth policies that inadvertently led to greater inequality in recent decades.” As the 1944 Bretton Woods Summit defined the institutions that led the world out of war, the Forbes article suggests a summit charged with creating institutions that function more effectively in the 21st century.

Thus far government response to Covid-19 has been chaotic and disjointed. It took a crisis for us to recognize what honest and informed leadership looks like. The agenda for new leadership is headlined “Build Back Better.”

Roots of Populism

The populist and nationalist movements that seemed to coalesce following the collapse of the Soviet Union have been portrayed as continuation of long-growing discontent in response to rising inequality over the last fifty years. In Age of Anger, Indian author Pankaj Mishra describes a much longer path, from the Enlightenment and the French Revolution to current manifestations of rejection against government authority.

The Age of Enlightenment, lasting roughly from 1620 to 1780, challenged Christianity’s legitimacy as the sole source of tradition and faith in an unchanging natural order ordained by God. The Enlightenment challenged that perspective, introducing scientific thought and reason as means of understanding a world which, through human intellect, could improve the existing order.

As the Enlightenment advanced understanding of natural processes, the industrial revolution changed the way people lived. Mishra describes the period as “one of the most extraordinary events of human history: the advent of a commercial-industrial civilization in the West and then its replication elsewhere… an ethic of individual and collective empowerment spread itself over the world, as much through resentful imitation as coercion, causing severe dislocations, social maladjustment and political upheaval.” Industrialization generated great wealth and great inequality.

A period of revolutions, anarchist bombings and assassinations followed through the late 19th and early 20th centuries. Russia’s Tsar Alexander II was assassinated by revolutionaries in 1881. An anarchist attacked investors at the Paris Stock Exchange in 1886. French President Carnot was assassinated by an anarchist in 1894. Italy’s King Umberto was assassinated by an anarchist in 1900. U.S. President McKinley was assassinated by an anarchist in 1901. And Austrian Archduke Franz Ferdinand and his wife were assassinated by a Serbian nationalist, setting the stage for World War I.

The legacy of late 19th and 20th century imperialism set the stage for conflict in the developing world: “the division of the Middle East into mandates and spheres of influence, the equally arbitrary creation of unviable nation states, unequal treaties with oil-rich states.” Nationalists in Asia and Africa – Ataturk, Nehru, Mao, Sukarno, Nasser, Nkrumah – explicitly aimed to “catch-up” with the West. “Socialist as well as capitalist modernists envisaged an exponential increase in the number of people owning cars, houses, electronic goods and gadgets, and driving the tourist and luxury industry worldwide…leading their countries to convergence with the West and attainment of European and American living standards.” These countries experience some of the world’s greatest inequality to this day.

The political resurgence of nationalism “shows that resentment – in this case, of people who feel left behind by the globalized economy or contemptuously ignored – remains the default metaphysics of the modern world…. And its most menacing expression in the age of individualism may well be the violent anarchism of the disinherited and the superfluous.” The inequality that is the rallying cry of progressives worldwide today had its roots established 400 years ago.

Democracy, More or Less

The Brookings Institution report covered in the previous blog post  reviewed proposals for improving the process used by political parties in the United States to nominate candidates for president. The authors observed the sidelining of experienced party leaders in the 2016 nominating process by reforms intended to increase voter participation. That, along with changes in election financing and media reporting, resulted in a 17-candidate field for the Republican party. The 2020 Democratic party nominating process began with a similar overabundance of candidates and limited input by party leaders.

The authors say that the 2016 Republican primary illustrates how the process can result in victory for a nominee who is not representative of the majority of the party. The authors contend that restoring the involvement of party professionals in the vetting process would assure nominees are competent to govern and are representative of the parties’ voters. They also recognize that their proposal would likely be opposed by populists.

Well, if that would be opposed by populists, one can only imagine how populists would respond to the positions taken in a new book by Garett Jones, an economist. The title of the book explains why: 10% Less Democracy: Why You Should Trust Elites a Little More and the Masses a Little Less.

Jones retells the story of the downfall of ancient Athens’ “direct” democracy, in which every free male citizen would vote. Candidates for major government positions were voted on by the citizens. When Sparta defeated Athens in battle, the citizens of Athens voted to remove the generals in the war. Compare that to the current practice of “indirect” democracy, with “voters choosing between competing candidates or competing political parties, who in turn will go off and run the actual government for a few years before returning to check back with the voters.”

Jones cites evidence that elected officials vote differently when they are closer to the ends of their terms, displaying more concern with how their actions are viewed back home. His recommendation for making politicians “braver” is to have less frequent elections. The six-year term for U.S. senators is far preferable than the two-year term in the House of Representatives. And as with senators, he recommends staggering the elections for all legislative bodies.

Jones’ key to good decision-making is independence. His model is the U. S. Federal Reserve Bank. Studies of government bureaucracies found “the more ‘independent’ the nation’s central bank was from the political process, the better things typically turned out.” He recommends the same independence for the government overseers of international trade relations. Voters tend to oppose lowering trade barriers. Yet, “reducing trade barriers is good for the nation that lowers them.” Senators are more inclined to vote for trade deals in the first four years of their terms, and against in the last two years. Independent trade negotiators deliver better trade decisions.

An independent judiciary “is one of the crowning achievements of the world’s legal systems.” Ideally judges would be selected by a technocratic merit commission and serve for long terms. Jones would apply the same system for city treasurer positions and those charged with regulatory authority over utilities. He suggests: “when it’s crucial to get the technical details right and when the policy debate is less about values and more about facts and competent execution, that’s likely a good opportunity to delegate power to unelected bureaucrats.”

More controversially, Jones also argues for more weight being given to more informed groups of voters, and he would give government bondholders “an explicit advisory role in modern democracies as a check on the shortsighted, impulsive, frequently ignorant electorate.” And he agrees that party insiders should be given more influence over party politics, as advocated in the Brookings report.

Garret Jones wrote his book before the spread of the Covid19. This virus illustrates the merit of  independence for subject experts, and what is lost in the absence of it.

Democratizing Primary Elections

The 2016 Republican presidential nominating process featured 17 candidates. They included senators and governors as well as a cardiac surgeon, a tech executive and a businessman/reality TV star. In a Brookings Institution report released prior to the 2020 primary season, titled Voters need help: How party insiders can make presidential primaries safer, fairer, and more democratic, the authors contend that primaries for both the Republican and Democratic parties “cannot promise to choose nominees who are competent to govern or who represent a majority of either parties’ voters.”

The authors, Raymond J. La Raja and Jonathan Rauch, make no attempt to hide their disdain for the candidacy of Donald Trump. However, their purpose is to explain how an unqualified candidate can benefit when lack of party leadership results in a highly fragmented field, and what should be done to prevent that in future presidential primary elections.

Reforms intended to increase voter participation had the effect of sending party insiders to the sidelines, but “primaries function best when primary voters and party professionals work in partnership.” La Raja and Rauch believe that restoring and renewing the professional filter is necessary to supplement the public’s voice with “the opinion of people who have experience in politics and governing.”

Over the country’s history, presidential candidates have been nominated by members of Congress in the early years; by state and national conventions in the last three-quarters of the 19th century; by a primary system promoted by Progressives to remove influence of political “bosses;” and, after reforms of the 1970s and 1980s, there emerged the current set of “superdelegates” who were experienced as office holders to improve the vetting process, as they “would not be pledged automatically to candidates based on primary outcomes.” Only Democratic superdelegates have this freedom, whereas in the Republican Party superdelegates must vote as their state votes.

Although the superdelegates have never overturned results of primary voting, candidates have taken superdelegates’ views as representative of voters and the Democratic Party. But in the 2016 election, objections to the influence of superdelegates resulted in the Democratic Party barring superdelegates from voting on the first ballot of the nominating convention, effectively removing the influence of experienced professionals.

As the mechanics of the primaries changed in 2016, and a plethora of candidates entered the Republican race, changes were also occurring in election financing and in media reporting. “Candidates could bypass traditional moneymen by reaping donations online, tapping deep-pocketed tycoons, or funding themselves. They could bypass traditional media by using social platforms like Twitter and Facebook, and they could hijack traditional media by behaving outrageously.” When multiple candidates split the votes of the more moderate voters, “there is a non-trivial likelihood that the plurality winner will turn out to be unwanted by a majority.”

The Brookings report calls for the restoration of involvement of party professionals in the vetting process. The report documents past elections where party leaders effectively blocked candidates deemed to represent undemocratic positions: Henry Ford in 1924; George Wallace in 1976; and Lyndon LaRouche in 1996. Enhancing the role of superdelegates is recommended. Ranked choice voting, which allows voters to select their second- and third-choice preferences, could provide further information about which candidates are satisfactory to a majority of voters.

Recognizing that increasing involvement of party professionals will be opposed by populists, the authors assert that such peer review would enhance democracy. Peer review by party professionals, “the norm in American politics for all but the last decade or so,”  performed a critical function in U.S. political history.

Infrastructure Is a Priority

The sad condition of much of the United States’ rural road system was the subject of a recent New York Times article.  The article examined conditions in central-west Wisconsin’s Trempealeau County, population 29,000. Cracked, crumbling and hole-pocked surfaces, missing guard rails and eroding shoulders are typical throughout the county’s road system, which averages 74 years old; the normal life span of an asphalt road is 30 years. The county’s highway commissioner foresees the next 10 years turning the roads “back into gravel” if nothing changes.

The article came at a time when politicians are debating infrastructure in the context of national elections. There was a brief period during which the two major political parties found common ground on the subject. Many of the Democratic candidates for president have taken positions on the nation’s physical infrastructure, proposing a trillion dollars or more to address needs.

In 2017 the American Society of Civil Engineers (ASCE) estimated total infrastructure needs over the following 10 years required investment of over $4.5 trillion. The 2017 report covered surface, air, water and rail transportation, electricity, parks, schools, dams, levees and hazardous waste.  Overall, the ASCE gives the country’s cumulative infrastructure a grade of D+. The country’s rail system was rated B, the highest of any category of infrastructure; a B indicates rail is in good condition and “adequate for now.” Ports, bridges and solid waste each received a C+, meaning requiring attention. All other categories received D+, D or D-.

The ASCE estimates current surface transportation conditions require additional investment of $2 trillion over the next decade to achieve a condition grade of B. Last year Forbes magazine reported the 10-year cost to maintain the reliability of the energy sector was $2 trillion itself.  ASCE underscores the critical importance of infrastructure as “the backbone of the U.S. economy and a necessary input to every economic output.”

To demonstrate the role played by infrastructure in the U.S. economy, ASCE estimated that failure to close the funding gap would cause losses to GDP of $3.9 trillion by 2025, along with $7 trillion in lost sales and 2.5 million lost jobs. The Trempealeau County highway commissioner believes a “cultural change” must occur if infrastructure deficiencies are to be tackled. When he reminds residents and businesses requesting road improvements that they must expect an increase in their property taxes, they respond, “Oh, no, no, I don’t want that.”

Infrastructure spending is a discretionary category in the Federal budget, along with housing, education and others. All have demonstrably high-priority needs, and inadequate tax dollars to cover them. The highway commissioner is correct in assessing that infrastructure improvements will not occur without additional revenue raised through taxes.

Inflation

I took my suit to the dry cleaners to be cleaned. The cost had gone up 17% from just a couple months ago. I expect prices to go up, but 17%? In two months? Okay, so it had been awhile since prices were raised – a year, maybe two years. And the owner’s costs are going up.

Salary is probably the owner’s largest expense. Do the employees make a fair wage? Is it less than the $15 per hour that workers are looking for as a minimum? Maybe the owner decided to raise employees’ minimum wage to $15. If I go to a less expensive competitor, are the competitor’s employees earning less?

The United States government pays a lot of attention to inflation. The annual rate of inflation in the United Sates has been between one and three percent in recent years. The general consensus is that some inflation is good. If inflation is low or non-existent, people may put off making purchases – the cost next month or next year will be about the same. But less demand means fewer jobs, more unemployment, and a downward spiral over time. Deflation, that is, falling prices, is even worse. If dollars are going to buy more in the future, people stash those dollars away, and consumption drops off a cliff, except for necessities like food. And as prices fall, wages fall, for those still employed.

So a little inflation is good for economic growth. While the value of dollars goes down, more dollars are spent, more money is in circulation, wages tend to go up, and, for borrowers, their debts may be easier to repay.

After experiencing the fallout from the Great Recession, the Federal Reserve Bank in the U.S. set a target goal for inflation. At its January 2012 meeting the Federal Open Market Committee (FOMC), confirmed its commitment “to fulfilling its statutory mandate from the Congress of promoting maximum employment, stable prices, and moderate long-term interest rates.” By clearly stating its intentions, the FOMC intended to foster price stability through accountability and transparency. In its statement, the FOMC “judges that inflation at the rate of 2 percent, as measured by the annual change in the price index for personal consumption expenditures, is most consistent over the longer run with the Federal Reserve’s statutory mandate.”

So although my dry cleaner’s price increase is well north of the Federal Reserve target for inflation, and that increase will contribute marginally to the price index, I decided the owner may have valid reason for the increase. I’ll remain a customer.

A History of Sand

The late Washington University scientist and ecologist, Barry Commoner, was a leader of the modern environmental movement. His foundational law of ecology, “Everything is connected to everything else,” has been a benchmark on the home page of this blog from day one. Ecologists study the relationships between living organisms, including humans, and their physical environment. The environmental movement asks, how does human activity impact the planet?

The history of sand, a seemingly limitless resource, illustrates how a largely overlooked component of today’s economy has triggered conflict globally and fueled a violent black market. Sand is an essential element in the production of glass, silicon computer chips, insulation and concrete. Like any other natural resource, the supply of sand is finite and, although it is still being created, it is being used faster than it can be replenished. Sand comes from many locations and most forms take a long time to form.

The sand found in rivers and streams was formed over thousands or even millions of years by the erosion and weathering of rocks. Variation in color on most sand beaches depends on the type of rock, with quartz or feldspar contributing to a brown shade; basaltic rocks from volcanic activity producing black sand. Decay of shelled organisms produces pink sand. White beach sand is a byproduct of the digestion of parrotfish that feed on coral reef material. River sand, consisting of tremendously hard quartz grains eroded from mountains or other rock, is used to make concrete. Desert sand is too fine and too smooth for use in concrete.

ow, how is the story of sand documenting Professor Commoner’s law that everything is connected to everything else? Various sources say the supply of sand worldwide is being depleted at a rate that will threaten economic growth. A January 2019 headline from Business Insider warned, “A global sand shortage could cause damaging effects to our rapidly urbanizing world.”  In June 2016 a New York Times op-ed piece cited “The World’s Disappearing Sand.”  And a June 2018 headline from Canada’s Global News reported, “The world is running out of sand — there’s even a violent black market for it.”

Rapid economic growth in China and India has required vast amounts of sand. The New York Times article reported that “From 2011 to 2013, China used more cement than the United States used in the entire 20th century.” Singapore is a major importer of sand; it has been used to enlarge the island nation by 24 percent since 1960. And Dubai, a city in the desert, imports sand for construction from Australia because the type of sand found in the desert is unsuitable for construction.

The shortage of sand has been the source of violent conflict in India. A so-called “sand mafia” has developed there, stealing sand from rivers and beaches. Singapore’s stockpiles of sand are guarded by its military. No wonder that governments and the private sector are being called upon to regulate sand use and extraction, and identify sustainable alternatives for sand as a building material. Business Insider underlined the significance of the scarcity, concluding, “Nothing less than global economic prosperity is at stake.” Professor Commoner warned us about this.

Free College Tuition

Government-funded education in the United States was first made compulsory in 1852 in Massachusetts. The last state to require school attendance was Mississippi in 1917. Enforcement of these state requirements was reportedly ineffective in the beginning, until states realized the value of an educated work force. The Elementary and Secondary Education Act signed by President Lyndon B. Johnson in 1965, established federal funding for all the country’s Kindergarten through twelfth grade systems.

K-12 education is no longer sufficient for large sectors of today’s work force, and the work force of the future. Professional, technical and vocational education beyond twelfth grade are today’s and tomorrow’s necessity, as assuredly as K-12 served the economy of the 19th and 20th centuries. Is it not wise to guarantee that the country has the most extensive qualified labor force possible by making higher education available to everyone regardless of financial ability?

In fact, the Organization for Economic Cooperation and Development (OECD) reported that about one-third of countries do not charge any tuition fees for national students enrolled in public institutions in bachelor’s or equivalent programs. Examples include Denmark, Finland, Greece, Norway, Slovak Republic, Slovenia and Sweden. Another third of countries have low to moderate tuition fees, equivalent to $2,600 or less in U.S. dollars. Expenses for food, housing and books are typically the responsibility of the students, but some countries provide assistance for these costs as well.

OECD countries spend an average of 1.5% of national GDP in support of post-secondary education. (2015 data) Among the countries with higher average spending are Norway at 1.7% of GDP, and Finland, Denmark and Austria at 1.6%. The comparable figure for the U.S. is 0.9%. Generally, the countries with free or moderate tuition costs provide more extensive social safety nets than the U.S. and have higher income tax rates.

Some U.S. states have instituted financial support for state residents to attend state-funded public colleges or universities. New York State’s Excelsior Scholarship program allows students to attend a State University of New York, or City University of New York, tuition-free. It is available for residents whose family income is $125,000 per year or less. The University of Illinois at Urbana-Champaign offers free tuition to in-state students with family income of $67,100 or less. Many other states have free college tuition programs to students attending public post-secondary institutions, with varying eligibility requirements.

In the context of U.S. political campaigns, proposing free tuition for post-secondary education has been labeled radical, socialistic, unaffordable or all three. Yet for this period when technology is requiring new skills of employees, the role of preparing the work force at public expense has historical precedence and proven public benefit.

Immigration Imperative

Civil wars this century in Syria, Afghanistan, Iraq, Sudan, Venezuela and other countries generated huge refugee flows. According to an early 2016 BBC report, more than a million migrants and refugees crossed into Europe in 2015. With these refugee flows, and United States policy changes starting in 2017, migration took center stage in international policy debates.

International migration has brought an estimated 272 million people to live in a country other than where they were born. In today’s world, ninety percent of movers are deemed economic migrants by the United Nations, with most of the rest being refugees. Estimates based on census data suggest that over seven million people leave their native country for another country each year.  A periodic Gallup World Poll survey most recently conducted between 2015 and 2017 reported that 15% of the world’s adults would move to a different country given the opportunity. That represents over 750 million people.

Protecting refugees is mandated by the United Nations Convention of 1951; in practice, accommodating sudden, large flows of refugees has been negotiated among countries capable of absorbing or housing them, at least temporarily. For those migrating for economic reasons, acceptance of migrants is optional and governed by each country’s laws.

For many countries, accepting economic migrants can fill voids created by aging populations. Economic migrants are mostly of working age with many productive years in the labor force ahead of them. But even for countries not facing labor shortages, the argument for accepting migrants is overwhelmingly positive; migration works not only to the advantage of the migrants, but also for the countries accepting them, and for the communities they leave behind.

Economic benefits of migration are many. Developed countries have better technology, machinery, reliable electricity and clean water. Workers moving from lower productivity countries to developed countries mean immigrants can earn twice as much coming from Mexico, five times as much coming from India and fifteen times as much coming from Nigeria, according to estimates from a libertarian think tank.  Immigrants are more likely to start businesses than the native-born.

Migrants’ earnings benefit family members left behind in their home countries. Money sent home, referred to as remittances, total three times as much as low- and middle-income countries receive from foreign aid, according to World Bank estimates. These funds go directly to family members, rather than being filtered through government agencies. If the migrants later return to their home countries, they take with them the skills they acquired to start businesses of their own.

Despite the overall benefits migrants bring to the destination country, a local concentration of immigrants can undeniably impact people currently living in those locations. A World Bank report, recognizing the “often painful economic burdens and dislocations” suffered by those people, acknowledges the need for policies to manage transitions to the benefit of both citizens and migrants.

A recent New York Times article looked at population and migration by state from April 2010 to July 2019. Nine states would have lost population over that period had they not had immigrants arrive from foreign countries. “In Michigan … where 190,000 immigrants arrived, the population over all grew by 100,000, meaning the state would have shrunk without immigration.” The other states recording growth only because of foreign immigration were Mississippi, New York, Rhode Island, Pennsylvania, New Jersey, Ohio, Hawaii and Massachusetts. From an economic growth perspective, international migration is making the difference between growth and decline.

Inequality and Tax Policy

Two recent blog posts reviewed the impact of government action on inequality and the medical, educational and life expectancy disadvantages experienced by people falling behind economically. While government policy over four decades favored corporations and high income individuals, middle class income remained relatively stagnant, and lower incomes have correlated to lower educational attainment, poor medical conditions and lower life expectancy.

The resulting level of inequality places the United States well behind other democracies. The table below lists 22 democracies with at least five million population, a democracy index above 5.00 on a scale with 10.00 being most democratic, and a corruption index above 50 where 100 is least corrupt. The table is sorted with Czech Republic, the country with the best score for income distribution, the most common measurement of income equality, at the top. The statistical measure is called the Gini index or Gini coefficient. The lower the index, the more equal is the country’s distribution of income. (Japan met the criteria listed above but did not have Gini index data available.)

The table follows the ten year trend for the Gini index from 2005 to 2015, the most recent year for near-complete data. Czech Republic, Finland, Poland and Israel improved over the decade, recording their lowest inequality scores in the last two years of measurement. Denmark, Sweden, Austria, France and Spain recorded their lowest inequality scores in the first two years, although Denmark, Sweden and Austria still held relatively low scores in 2015. Highest levels of inequality in 2015 were in Spain, Israel, the United States and Chile.

In the far right column the table also records another measure relevant to inequality. It is the top personal income tax rate (PITR) for each country in 2019. Generally, higher top tax rates are associated with less inequality. (Czech Republic is an exception.) Finland, Belgium, Denmark, Netherlands and Sweden have top tax rates above 50% and Gini index below 30. The Gini index for the United States, 41.0 in 2013, increased to 41.5 in 2016, and the U.S. has one of the lowest top tax rates.

Economist Heather Boushey has written a new book on inequality titled Unbound: How Inequality Constricts Our Economy and What We Can Do About It. Her argument, and that of many other economists, is that inequality places limits on economic growth in a number of ways: unequal access to education and skill acquisition, and insufficient investment in public goods and services, among others.

This theme was addressed in depth in an article in the January/February 2020 issue of Foreign Affairs. In Why Capitalism’s Salvation Depends on Taxation, economist Joseph Stiglitz and others state the obvious: “It takes money to build roads and ports, to provide education for the young and health care for the sick, to finance the basic research that is the wellspring of all progress, and to staff the bureaucracies that keep societies and economies in motion.” The authors contend that a far more progressive tax code is required to provide the necessary level of revenue to avoid the distortions of inequality.

Yold

Life expectancy nearly doubled in developed countries in the 20th century.  (The age to which a given population can expect to live, on average, is called its life expectancy.) Thanks to improvements in medicine, sanitation and technology, life expectancy as of 2018 was over 80 years for almost all developed countries; the United States, at 78.7 years, was the single exception.

By 2040 Japan will be the first society in the world to have 40 percent of its population older than 65. The Japanese have a term for people aged 65 to 75 years; they are the “yold” or young old. That term may need to be expanded, because there is a real possibility that biological research will extend the trend, slowing the aging process itself.

A traditional life course has three stages – education, work and family, retirement. When life is extended, expansion occurs almost exclusively in the retirement stage. That traditional course is being questioned at the Stanford Center on Longevity.

Based on the belief that “existing norms no longer work because they evolved for lives that were half as long, the Center is creating a New Map of Life that “redefines what it means to be ‘old’ and values people at different stages of life.” Research is underway by engineers, climate scientists, pediatricians, geriatricians, behavioral scientists, financial experts, biologists, educators, health-care providers, human resource consultants and philanthropists, envisioning “How do traditional models of education, work, lifestyles, social relationships, financial planning, health care, early childhood and intergenerational compacts need to change to support long lives?”

Some planning is necessary to avoid unsustainable situations. Living on retirement income for four decades will be unattainable for most people. To expect governments to support large cohorts of retirees for four decades is not sustainable. There will be fewer workers to support each retiree. Changing technology will require that education must extend beyond the early 20s. Norms for intergenerational relationships between parents and children did not anticipate the possibility of four or five living generations.

Rethinking all stages of life, not just old age, the Center anticipates exciting possibilities:

Teens could take breaks from high school and take internships in workplaces that intrigue them. Education wouldn’t end in youth but rather be ever-present and take many forms outside of classrooms, from micro-degrees to traveling the world…. There’s every reason to expect more zigzagging in and out of the labor force — especially by employees who are caring for young children or elderly parents — and more participation by workers over 60. There is good reason to think we will work longer, but we can improve work quality with shorter workweeks, flexible scheduling and frequent ‘retirements.’

The Stanford Center on Longevity begins with the belief that confronting longevity requires rethinking all stages of the life span. Education, leisure, family commitment and work can take place at each stage. Thus, “Old age alone wouldn’t last longer; rather, youth and middle age would expand, too.”

Reunification

Following the 2016 U.S. presidential election, a Washington Post journalist observed a particular economic split between counties carried by Donald Trump and counties carried by Hillary Clinton. The 472 counties that Clinton won were mostly metropolitan, while the 2584 counties in Trump’s column were mostly non-metropolitan along with some suburban and exurban counties. Jim Tankersley cited a Brookings Institution analysis that established that “counties that Clinton won nationwide combined to generate 64 percent of America’s economic activity in 2015” and “counties that Trump won combined to generate 36 percent of the country’s economic activity.”

Since the election, other studies have discovered stark differences between Republican and Democratic strongholds along several variables. Brookings, along with the Wall Street Journal, documented an extreme pace of change in the economies of the two parties’ districts over the last decade. Median household income in 2008 had been $55,000 in Republican districts, slightly above the $54,000 in Democratic districts. By 2017 Democratic districts’ median household income had increased to $61,000 while Republican districts experienced a decrease to $53,000.

Educational attainment had also diverged between 2008 and 2017. For Democratic districts’ adults, 28.4% had at least a bachelor’s degree compared to 26.6% of Republican districts. By 2017 the gap had widened to 35.6% for Democratic districts to 27.8% for Republican districts. Productivity per worker rose from $118,000 to $139,000 for Democratic districts, and from $109,000 to $110,000 for republican districts.

The Journal of the American Medical Association (JAMA) published health data by state from 1990 to 2016. During that time frame life expectancy increased for all states. The data was produced to answer the question “How have the levels and trends of burden of diseases, injuries, and risk factors in the United States changed from 1990 to 2016 by state?” In terms of life expectancy at birth, the range by state varied in 2016 from a high of 81.3 years for Hawaii to a low of 74.7 years for Mississippi. States with the ten highest years of life expectancy, in descending order, were Hawaii, California, Connecticut, Minnesota, New York, Massachusetts, Colorado, New Jersey, Washington and Vermont. The ten states with the lowest life expectancy, in descending order, were Indiana, South Carolina, Tennessee, Arkansas, Kentucky, Oklahoma, Louisiana, Alabama, West Virginia and, at the lowest life expectancy, Mississippi.

The correlation between political orientation and life expectancy is unmistakable: all ten highest states, with the exception of Hawaii, voted Democratic in 2016. All ten lowest states voted Republican. The effect of public policy in addressing health issues may be further in evidence by each state’s decision to expand Medicaid under the affordable Care Act. All ten states with highest life expectancy have expanded Medicaid. Only half of the lowest life expectancy states (Arkansas, Indiana, Louisiana, Kentucky and West Virginia) have expanded Medicaid.

An article in the New York Times reporting on the JAMA study noted the decline in life expectancy over the most recent three years. The analysis of over a half century of data concluded that increased death rates among people in mid-life were mainly caused by so-called “deaths of despair” – suicides, drug overdoses and alcoholism. Again, state-level data in the JAMA study noted the prevalence of these causes of death in the same group of mostly southern states with low life expectancy.

Around the time of the 30th anniversary of the fall of the Berlin Wall, National Public Radio ran a series of podcasts that reviewed events since the reunification of Germany. West German taxpayers have spent more than $2 trillion in the East to improve living standards, including welfare, pensions, unemployment pay, public works projects and support for new businesses.

The podcast series went on to say that some economists compare Germany’s experience to the divisions that currently exist in the U.S. It asks, is there an opportunity for a “reunification” between areas that are thriving and areas that are falling behind? Can a U.S. version of reunification work to improve well-being for those falling behind? We don’t know. But we do know what holds people back: Lack of affordable health care for every citizen; grossly inadequate support for public education; economic development that doesn’t attack poverty directly; and poor physical and digital infrastructure. A multi-trillion-dollar program addressing these critical failures is worthy of consideration to achieve a U.S. reunification.

Confronting Consumerism

Environmental activists in France and the United Kingdom are taking a different approach to tackling waste of resources. Just as the holiday shopping season is getting underway, a movement is targeting consumerism as an attack on the earth’s finite resources. The Black Friday shopping day imported from the United States was marked in France at shopping centers and elsewhere with an action called #BlockFriday. Protesters formed a cordon around stores to prevent access by shoppers. As a member of France’s parliament, Mattieu Orphelin, commented to The Telegraph, “Black Friday celebrates a model of consumption that is anti-ecological and anti-social.”

Concurrently, the latest environmental technology news comes from “Startup Nation Israel.” A company called UBQ Materials has invented a process for turning solid waste into a new composite material that looks and acts like plastic and is recyclable for further reuse up to five times. The process uses the waste left over after recyclable materials have been taken out. The company has been perfecting the process since 2013, through research and testing aimed at making the product “bulletproof,” recognizing the inevitability that it will face doubters.

UBQ material, in pellet and powder form, is being used in commercial trials by customers in the U.S. It has been used in a variety of products such as chairs, tubing, pallets, bins and pavers. During the conversion process, the raw material is reduced to its basic natural components – cellulose, sugars, fibers, lignin – that reconstitute and bind into a new composite sustainable material. The company believes UBQ material will revolutionize waste management worldwide.

UBQ’s current production site in Israel has a capacity to produce 11 million pounds of material annually. A new site is being planned with an annual capacity of 100 million pounds. UBQ also hopes to add sites in the U.S. An Israeli company, Plasgad, produced 2,000 recycling containers to the Central Virginia Waste Management Authority made from UBQ material.

Israeli media reported that UBQ had raised $27 million in venture capital funding to expand research and operations. One investor, Battery Ventures, believes that UBQ’s technology “removes all the past assumptions about waste disposal, providing a robust, energy-efficient and upcycling solution that disrupts what was once inconceivable in a bold new way.” The technology addresses a worldwide problem, because trash is ubiquitous, hence the name UBQ.

Activists in France and scientists in Israel have a common goal: Sustainability.

Thomas Piketty on Inequality

A previous blog post described the influence of economists over U.S. fiscal policy, as reported in a book titled The Economists’ Hour by Binyamin Appelbaum. The author described how four decades of applying varying economic theories favored corporations and high income individuals, moving the country from relative equality of income and wealth to inequality, so severe that it threatens the very survival of liberal democracy.

The field of economics has welcomed a new thought leader, French economist Thomas Piketty. Remember that name, because Piketty’s research now resonates throughout the field’s practice, hailed by most economists, but not without his detractors. In 2013 Piketty published in French a book titled Capital in the Twenty-First Century; a 700 page English translation was published in 2014. As of 2017 it had sold 2.2 million copies in 30 languages.

Piketty’s research measured the rate of return on capital in developed countries, and compared it to the rate of economic growth. He concluded that return on capital consistently exceeded the rate of economic growth, and that has caused the current inequality in wealth and will continue to do so in the future. Piketty proposes a Progressive global tax on wealth to effect redistribution.

A 2017 publication, After Piketty: The Agenda for Economics and Inequality, edited by Heather Boushey, J. Bradford Delong & Marshall Steinbaum, is a collection of twenty essays, mostly by economists, two of whom are Nobel laureates, and including essays by professionals in the fields of history, geography, philosophy and sociology. As a group, the essays are a recognition of Piketty’s advancing the study of wealth and inequality.

Nobel laureate Paul Krugman wrote:

… we now know both that the United States has a much more unequal distribution of income than other countries and that much of this difference in outcomes can be attributed directly to government action. European nations … do far more redistribution through taxes and transfers than America does, leading to much less inequality in disposable incomes.

Piketty wrote that events during the first half of the twentieth century played a role in reducing inequality: “it took violent political shocks, wars, and revolutions in order to force Western elites … to accept fiscal and social reforms that they largely refused until World War I.” During the Depression the top Federal income tax rate jumped from 25% in 1931 to 63% in 1932, providing the funding that facilitated a prolonged reduction in inequality.

A history of top U.S. Federal income tax rates exhibits levels of taxation that seem astonishing today. The highest income tax rate for “Married Filing Jointly” tax returns was consistently 91% or higher for 20 years, from 1944 to 1963. The table below shows, for ten year intervals over the past 70 years, the top tax rate and the starting income level to which that tax rate was applied.

The purpose of the table is to compare tax rates in past decades for income equivalent to the 2019 top income bracket of $612,350. The fourth column adjusts each prior year’s top income bracket for inflation to equivalent 2019 dollars. The fifth column shows the prior year’s dollar equivalent to $612,350. The last column shows the tax rate in the prior year for that income. For example, a 1950 income of $58,200 was equal to a 2019 income of $612,350; that 1950 couple had a tax rate of 75%, compared to 37% for the 2019 couple.

Fifty Year Retrospective

Historian Arthur M. Schlesinger published a ranking of U.S. presidents in 1948 and again in 1962 based upon opinions of 75 historians. He used a scale of minus 2 to plus 4, then averaged the results. The Chicago Tribune published a ranking by 49 historians in 1982, and Arthur Schlesinger Jr. produced a ranking in 1996 by a process similar to his father’s. The Wall Street Journal conducted a survey in 2000 of 132 “prominent professors of history, law, and political science.” (See table below.)

C-SPAN, the nonprofit public service cable television network, conducted a survey in 2000. The survey of nearly 100 historians and biographers ranked 43 U.S. presidents on ten individual leadership characteristics: Public Persuasion; Crisis Leadership; Economic Management; Moral Authority; International Relations; Administrative Skills; Relations with Congress; Vision/ Setting an Agenda; Pursued Equal Justice For All; Performance Within Context of Times. C-SPAN conducted subsequent surveys in 2009 and 2017 using the same ten characteristics.

Methods varied among the eight rankings, and yet positions within the lists are fairly consistent. Variations over time for individual presidents could reflect methodological differences, but approval of a past president can change over time. Ronald Reagan, for example, had widely varying rankings. Was he less respected in 1996 during the Clinton administration when he was ranked 25th than in 2017 during the Trump administration when he ranked 9th?

Dwight Eisenhower’s rankings cover 55 years and a variation as wide as Reagan’s. Eisenhower left office in 1961, and in 1962 the first Schlesinger ranking placed him at 21st, tied with Chester Arthur. Eisenhower was the last of 34 presidents ranked in 1962, thus his rank as 21st placed him in the bottom half of the rankings.

Eisenhower won by a landslide in 1952, after returning as a hero of World War II. In his eight years in the presidency, he achieved an armistice in the Korean War and encouraged peaceful use of atomic energy at the U.N., while checking the spread of communism. He oversaw the creation of the interstate highway system. He set up the Civil Rights Commission and the National Aeronautics and Space Administration (NASA). In his farewell address in 1961, he warned the nation of the dangers of the “military industrial complex,” a warning that has never lost its relevance.

So why, in 1962, was Eisenhower ranked 21st best president out of 34? Eisenhower was followed by John Kennedy, a man 27 years his junior. Perhaps the youth, energy and popularity of the new resident of the White House in 1962 skewed the thinking of those 75 historians.

In subsequent rankings, Eisenhower consistently ranked no lower than 10th, and most recently, 5th in the 2017 C-SPAN survey. In 1966, Eisenhower wrote to James Hagerty, his White House press secretary, that he believed the scholars of the 1962 ranking did a poor job, rewarding past presidents for eloquence over performance.

Eisenhower died March 28th, 1969, 50 years ago. Fifty years from now how will historians rank the current president?

Blaming the Economists

A business and economics writer, Binyamin Appelbaum, was a Washington correspondent for the New York Times from 2010 to 2019, covering economic policy following the Great Recession. His book, The Economists’ Hour, refers to the four decades leading up to the crisis, during which bankers and lawyers at government institutions charged with policy-making decisions were, over time, replaced by economists of all stripes.

William McChesney Martin, Jr., was president of the Federal Reserve from 1951 until 1970. His disdain for economists was revealed in comments he made to a visitor to the Fed. He said the Fed employed 50 “econometricians” who were housed in the basement because, “they don’t know their own limitations, and they have a far greater sense of confidence in their analyses than I have found to be warranted.” Martin was replaced by President Richard Nixon’s favorite economist Arthur Burns, the first of five economists to head the Fed since 1970.

The most influential economist following World War II was John Maynard Keynes (1883-1946). His disciples believed that the way for government to increase prosperity was to enlarge its role in the economy. A quarter century after the war, economists led a counterrevolution against Keynesian economics, with Milton Friedman leading the charge. They instructed policy makers to maximize growth by “curbing taxation and public spending, deregulating large sectors of the economy, and clearing the way for globalization…” As Appelbaum observes, concerns for impacted workers and the poor were disregarded. Furthermore, “Economists persuaded the federal judiciary largely to abandon the enforcement of antitrust laws.”

As inflation entered double digits in late 1970s, the new head of the Fed in 1979, Paul Volcker, embraced monetarism, with its focus on manipulating the money supply. Interest rates climbed; “The prime rate – the rate banks charged their best customers – topped out above 20 percent. Consumers stopped buying cars and washing machines; millions of workers lost their jobs.”

President Ronald Reagan followed with tax cuts under the guidance of his economic advisor, Arthur Laffer. Appelbaum wrote “This was a direct attack on the government’s use of taxation as a powerful tool to redistribute income… benefits would trickle down… the promised supply-side benefits did not materialize. Reagan and the supply-siders succeeded in permanently reducing tax rates for those with high incomes.”

When Alan Greenspan succeeded Volcker in 1987, he set out to eliminate inflation. On the advice of the head of the National Council of Economic Advisors, Robert Rubin, President Bill Clinton pushed a tax hike through Congress to reduce federal deficits while restraining spending. “The ‘peace dividend’ from the end of the Cold War made it easier to reduce federal spending; …new technologies drove a surge in productivity and prosperity. By the early years of the twenty-first century, the victory over inflation appeared complete.”

Greenspan harbored “a profound and unshakable conviction that financial regulation was worse than doing nothing.” He succeeded in lowering the rate of inflation, but the benefits accrued to the wealthiest 10% of U.S. household. Lax lending standards of the late 1990s and early 2000s resulted in an abundance of sub-prime mortgages. Financial institutions not subject to the same standards as depository banks packaged and sold sub-prime mortgages.

When prices of mortgage-backed securities fell, the Great Recession of 2007-2008 ensued. Ben Bernanke took the reins of the Fed in 2006, just ahead of the Great Recession. He “pumped money into the financial system until the big banks stood up and started walking again.”

Appelbaum suggests that “The Economists’ Hour … ended at 3:00 p.m. on Monday, October 13, 2008, when the chief executives of America’s nine largest banks were escorted into a gilded room at the Treasury… the government decided to save the financial system by taking ownership stakes in the largest financial firms.” The Obama administration returned to Keynesianism in pushing a $787 billion stimulus plan through Congress… Federal spending on safety-net programs like unemployment benefits also grew rapidly.”

Appelbaum faults economists for lack of attention to the problem of income inequality. Promoting equality through government policy was derided as “inefficient” by some economists. Instead, government policy has effectively done the opposite, increasing inequality. Appelbaum concludes “Willful indifference to the distribution of prosperity over the last half century is an important reason the very survival of liberal democracy is now being tested by nationalist demagogues.”        

Destroying Monsters

There is a new think tank in Washington, D.C. Like so many others, it is founded and funded by individuals to promote their ideals. However, in this case the new think tank received most of its funding from two philanthropists who, one might reasonably expect, would not agree on much of anything.

The think tank is called the Quincy Institute, named for U.S. President John Quincy Adams. President Adams is remembered for an Independence Day 1821 speech in which he declared that the U.S. “should not go abroad in search of monsters to destroy.” The Institute was launched as an anti-interventionist think tank by libertarian Charles Koch, and George Soros, a supporter of liberal causes.

Koch is CEO of Koch Industries and has used his estimated $50 billion in wealth to lobby against government regulation, labor unions and entitlement programs. With his late brother David, he also funded conspiracy theories and junk science in opposition to policies to combat global warming.

Soros has used his estimated $8 billion wealth to support liberal immigration policies and other humanitarian causes, and provided $32 billion in funding to establish Open Society Foundations in support of democratic governments in eastern Europe and elsewhere.

Quincy Institute founders include staff, described by Daniel Drezner as coming from the progressive left and the realist right. Its research director and co-founder is Stephen Wertheim, a scholar at the Saltzman Institute of War and Peace Studies at Columbia University. Wertheim reported that the creation of the Institute generated a “wave of interest, curiosity and occasional vitriol.” Wertheim asserts that the U.S. is wielding power irresponsibly. “After the fall of the Soviet Union, U.S. leaders had a chance to embrace pluralism and peace in the 21st century. Instead, the United States anointed itself the ‘indispensable nation.’ It pursued military dominance across the globe.”

The Institute’s full name, the Quincy Institute for Responsible Statecraft, emphasizes its stand for maintaining peace through diplomacy. Wertheim expressed a clear international predisposition, writing, “Peaceful cooperation has become essential in the 21st century, when the principal threats to human welfare, such as climate change, affect the planet as a whole and require coordinated action.” Drezner adds that the Quincy Institute “also needs to flesh out how the United States should bolster its noncoercive capabilities, so as to put the lie to accusations of isolationism.”

Populism Wins and Losses

If you have tired of seeing the words “populist” and “populism” in your daily news, relief may be coming. In a single day in the first week of September, articles were published with the titles “Has Europe Reached Peak Populism?” and “Populism Isn’t So Popular After All.” Could the political pendulum be swinging so far so fast?

Measuring the political pulse is risky even in calm times, so drawing conclusions from day-to-day events may mislead. None-the-less, this is what two journalists observed on September 5th, 2019.

On the website Politico, Paul Taylor cited events and votes in Austria, Britain, the Czech Republic, France, Italy Slovakia and Spain, all of an anti-populist character. In The Atlantic David A. Graham wrote that many of the populist leaders may survive only with minority support. “A common denominator is that once in office, these politicians have found that charisma does not translate smoothly to power.”

In the UK, Prime Minister Boris Johnson attempted to suspend parliament before parliament could vote to oppose a no-deal Brexit, stopping, at least temporarily, what Taylor called Johnson’s “attempt to out-populist the populists.”

In France President Emmanuel Macron is “back in the saddle” as weekly demonstrations by the Yellow Jackets ended. Austria’s far-right Freedom Party was ejected from government following the exposure of its leader’s involvement in illicit activity. Spain’s socialist government gained ground on far left populists and the extreme right. A liberal democrat won election as president of Slovakia. Germany’s far-right AfD scored wins in regional elections in two eastern states but remain shut out of power nationally. And well into its third year, the U.S. administration hasn’t succeeded on some of its major campaign promises.

Then there is Italy. The far-right Northern League and anti-establishment Five Star Movement shared power in the first populist government in Western Europe. That ended when the Five Star Movement left the coalition to form a government with the center-left Democratic Party, removing the euroskeptic Northern League from power. By September 17th, that government was again shaken by the announcement that a former prime minister was leaving the Democratic Party to form a new centrist party.

Gideon Rachman, writing in the Financial Times, claimed to be a bit startled that Boris Johnson’s name can be added to the list of “strongman” leaders that includes Recep Tayyip Erdogan, Rodrigo Duterte and Viktor Orban. Observing that Johnson “used to argue that reverence for parliamentary democracy is what kept Britain safe from despotism,” Rachman now hears the Prime Minister “hinting that he is prepared to break the law, rather than obey parliament.”

Rachman calls Britain “a test case for strongman politics.” As the October 31st deadline for Brexit approaches, what will the rest of the world expect if British moderation succumbs to populism?

Using Atmospheric CO2 to Produce Protein for Food

The previous blog post reported success in removing CO2 from the atmosphere as a step toward reducing global warming. Scientists and engineers have developed a process called Direct Air Capture and are using the captured gas in a variety of applications, including products for human consumption.

What may become captured CO2’s most significant benefit is its potential as a source of food. Based upon a concept developed by NASA, an Icelandic company named Solar Foods has created a product called Solein. Solar Foods has secured two million euros in funding, and has partnered with the European Space Agency to supply food for astronauts for a future mission to Mars. Solar Foods’ pilot plant near Helsinki will work on testing with the European Food Authority, and will apply for a food license from the European Union later in 2019.

The process uses solar energy to make hydrogen from water, then combines hydrogen with CO2 and minerals and feeds the combination to microbes, producing protein. The fermentation process is similar to that used in making beer. The protein is dried to a powder that looks and tastes like wheat flour, with 50% protein content, 20-25% carbs and 5-10% fat. It can be used to make food such as yogurt, bread or pasta, or as a protein source for plant-based meat alternatives.

Whereas traditional protein production, primarily from animals, requires large quantities of land and water, Solein is resource efficient and can be produced anywhere, regardless of climate conditions. Comparisons are remarkable. To produce one kilogram requires 10 liters of water. A similar amount of protein from soy requires 2,500 liters, and from beef, 15,500 liters. In terms of yield per acre of land, Solein is ten times more efficient than soy, and over 100 times more efficient than beef.

In addition to testing and permits scheduled for 2019, a factory design capable of producing a thousand tons per year is to be completed by year end. A commercial launch globally and the first factory capable of producing 50 million meals per year, are planned by the end of 2021. By 2023 production capacity is planned to reach two billion meals a year.

Capturing and Using Atmospheric CO2

Carbon dioxide, or CO2, is one of the three most prominent greenhouse gases, along with methane and water vapor, that trap infrared radiation in the earth’s atmosphere. Concentration of greenhouse gases contribute to the rise in average temperature. Increased temperature is, in turn, responsible for the increase and intensity of destructive weather events.

Reducing atmospheric CO2 requires limiting use of fossil fuels for transportation and energy generation that release CO2. It is also possible to remove CO2 that is already in the atmosphere. Industrial processes and generation of electricity by utilities burning fossil fuels are major sources of CO2. Carbon capture and storage (CCS) is a technology currently in use to capture CO2 emissions produced by these sources. The captured gas is transported by pipeline, tanker or ship to users, or is stored well below the earth’s surface.

Another CO2 capture technology is gaining interest among scientists and engineers, as well as venture capitalists. It is called Direct Air Capture, or DAC. The process uses industrial-size fans and filters to remove carbon from air. Because the level of CO2 is evenly distributed throughout the earth’s atmosphere, DAC can be deployed anywhere, independent of sources of emission. That is an important benefit if the objective is to sell the captured gas to users.

Potential markets for captured gas are numerous and varied. A DAC project of Climeworks in Switzerland is selling captured CO2 to a greenhouse that uses it to make vegetables grow faster. The same facility is negotiating with beverage companies to add carbonization for sparkling water or soda. A company called Newlight uses CO2 and methane to form a polymer trademarked as AirCarbon, which is being used to make desk chairs and smartphone covers. Another engineering firm, Carbon Engineering, is using CO2 and hydrogen split from water to produce synthetic fuels for transportation.

Human activity annually releases billions of tons of carbon dioxide into the atmosphere. Much of that is offset by natural processes, prominently represented by the Amazon rain forest. Reducing the annual release of CO2 is the most important step in reducing atmospheric CO2.

“Climate experts tell us that, alongside other mitigation solutions, carbon removal technologies like DAC are going to be essential if we hope to decarbonize in time to avoid the worst impacts of climate change,” said Steve Oldham, CEO of Carbon Engineering. To make a significant contribution he says, “These carbon removal technologies need to be deployed widely and at large scales.”

Allies and Adversaries, and Inconsistencies

Alliances are never forever, and peace has yet to be permanently established. That has been easy to forget since the Second World War ended. Journalist and political scientist Fareed Zakaria described recent history as a world of peace and prosperity for 75 years. Steven Pinker, in his 2011 book, The Better Angels of Our Nature: Why Violence Has Declined, told us in 800 pages that the modern era is the most peaceful in history. And an organization called Our World in Data has the numbers that show deaths in war have decreased by almost half since the 1940s.

Now, some of the post-WW2 alliances are reportedly fraying. World trade has a lot to do with that, and self-preservation should not be criticized when countries are protecting their positions on the world chess board. And yet, expectations formed by the relative peace of the post-war period make current realignments and “dis-alignments” feel jarring.

Conflict in the Middle East unleashed a series of conflicts among allies. When the US left the Iran nuclear deal it lost the support of its European allies. Subsequent US sanctions against Iran left the EU pursuing workarounds to keep Iran in negotiations. When Iran threatened shipping through the Persian Gulf, the UK broke from the EU to join a US-led maritime security operation. The UK remains committed to work with the EU on a nuclear deal with Iran.

Meanwhile the Washington Post reported that the United Arab Emirates (UAE), which supported the US hardline approach to Iran, was not favorable to a naval confrontation in the Persian Gulf. The UAE “sent a coast guard delegation to Tehran to discuss maritime security, putting it at odds with Washington’s goal of isolating Iran.” The UAE also backs a warlord in Libya who is fighting against the US- and UN-backed government in Libya, and the UAE joined Saudi Arabia, Bahrain and Egypt in an economic embargo against Qatar, a US ally which supports Islamists in the Middle East even as it is home base for US air operation in the Persian Gulf.

The US questioning of its NATO commitment has had a chilling effect on European allies that have depended on the US for defense. As the UK struggles over whether to remain part of the European Union, the US has encouraged this further fracturing of European unity, assuring the UK that it would enjoy ample trade opportunities with the US. The US has also been less than supportive of EU efforts to promote democratic norms among EU members Poland and Hungary in Eastern Europe.

In an article on World Politics Review  columnist Frida Ghitis reports the feud between US allies South Korea and Japan threatens to boil over. “Traditionally, America’s global leadership responsibilities included acting as a relationship counselor, trying to help solve disputes between its friends, even if it was partly out of self-interest.”

That leadership extended through the postwar period, and under US administrations of both political parties – diffusing crises while promoting democratic principles, even though its own record was less than perfect. Mutual support was enshrined in NATO’s Article 5, which states that an attack on any member of NATO would be regarded as an attack on all its members. It is ironic that the one time Article 5 has been invoked was when NATO allies came to the aid of the US following the terrorist attacks of September 11, 2001.

Combating Authoritarianism

“The surge of authoritarian populists appears to be less inevitable than it did a year ago.”

So began the 2018 World Report by Human Rights Watch, a non-governmental organization that investigates and reports on human rights abuses happening throughout the world. Reflecting on the year’s events, the report notes “popular reaction in a broad range of countries, bolstered in some cases by political leaders with the courage to stand up for human rights, has left the fate of many of these populist agendas more uncertain.” In its 2019 World Report,  Human Rights Watch again found reason for optimism: “while the autocrats and rights abusers may capture the headlines, the defenders of human rights, democracy, and the rule of law are also gaining strength…. the excesses of autocratic rule are fueling a powerful counterattack.”

In her book, reviewed in a previous blog post, Ece Temelkuran provided activists with the warning signs of emergent authoritarianism. In that book, How to Lose a Country: The 7 Steps from Democracy to Dictatorship, she challenges opponents of populist movements to engage politically, lest movements “become more invasive, and energized with more hostility and manipulativeness.” If the Human Rights Watch assessment is correct, that would certainly ease the anxieties experienced by readers of Temelkuran’s book.

Progress in reversing the populist trend is evident in recent elections and mass demonstrations, in countries large and small. A prominent example of the former is the election of progressive reformer Zuzana Caputova as president of Slovakia on March 30, 2019. Caputova, a 46-year-old environmental lawyer and anti-corruption activist, had never held public office. She scored a 58% to 42% victory over a far-right establishment candidate.

Turkey’s autocratic President Recep Tayyip Erdogan was handed a setback when his candidate for mayor of Istanbul was defeated in a June 2019 rerun election by Ekrem Imamoglu of the secular Republican People’s Party. Imamoglu had won an earlier election which Erdogan subsequently had nullified.

In Germany’s 2019 elections for the European Parliament, the populist AfD party received 11% of the vote, down somewhat from its 12.6% capture of the vote in 2017 national parliament election.

In Africa two long-term autocratic presidents were defeated: Gambia’s President Yahya Jammeh in the December 2016 election; Zimbabwe’s President Robert Mugabe was ousted in a 2017 coup, followed by elections in July 2018. Sudan’s ruler of the last 30 years has been ousted, replaced by a military-civilian power-sharing arrangement.

The Maldives Democratic Party candidate replaced the country’s autocratic president in April 2019 elections, won by a former president who had returned from exile in 2018.

A special election in Britain in August 2019 was lost by the Conservative Party, leaving Prime Minister Boris Johnson with a one-seat majority in Parliament, compounding the uncertainty over Brexit.

Prior to these 2019 elections, United States voters issued a rebuke of President Trump’s right-wing policies in giving control of the House of Representatives to the Democratic Party in the 2018 midterm elections.

Greece’s July 2019 election was initially hailed for leading the country away from the left-wing Syriza party and back to normalcy. But in his first weeks in office, the new center-right Prime Minister Kyriakos Mitsotakis has demonstrated authoritarian tendencies rather than moderate policies.

Public protests, a second expression of rejection of populist rule, have occurred throughout the world: Budapest, Poland, Russia, the Czech Republic and Hungary among others in Europe; Turkey, Algeria, Sudan, Kazakhstan, Venezuela, Hong Kong, as well as the United States.

Certainly, populists have not been defeated in all cases, and are gaining ground in others. But what one former State Department official has called a “backlash to the backlash” is challenging the “populist surge.”

From Democracy to Dictatorship

Ece Temelkuran, a Turkish journalist, writes in How to Lose a Country: The 7 Steps from Democracy to Dictatorship, that democracy’s decline is following a similar course in several countries. Her own country’s offensive against journalists, one of the prototypical characteristics of authoritarian governments, drove her from her country. Temelkuran’s journalistic reporting has covered populist movements in Venezuela, Argentina, Egypt and Britain, as well as Turkey, in some cases actively protesting in these movements. Her writings document populist trends in Germany, Italy, Greece, France, the Netherlands, Spain, Poland, Hungary and the United States.

Temelkuran sees the neoliberalism of the 1980s as laying the groundwork for a changing moral order. Following the lead of Margaret Thatcher in Britain and Ronald Reagan in the United States, smaller government and market-friendly regulatory practices took hold in many countries. Over following decades, rising inequality created a fertile field for populism. The seven steps of the book’s subtitle comprise the book’s seven chapters: Create a movement; Disrupt rationale/terrorize language; Remove the shame; Dismantle judicial and political mechanisms; Design your own citizen; Let them laugh at the horror; Build your own country.

Turkey’s populist movement began with the new Justice and Development Party, the AKP, in 2002, and its leader Recep Tayyip Erdoğan . It was formed to oppose the “corrupt system,” and to restore “respect” to the “real people,” against the “despised elites,” promising to “bring back human dignity.” Those words were later heard from Hugo Chavez in Venezuela, the Fidesz party in Hungary, Brexiteers in Britain and Trump supporters in the US.

By using coarse language, populist leaders prove that they are in tune with the man on the street. Thus, Beppe Grillo of the Five Star movement in Italy and Geert Wilders in the Netherlands, along with Erdogan and Trump endear themselves to their followers. Logic and facts become casualties of populist movements; British Conservative Party politician Michael Gove famously supported Brexit by insisting that “people in this country have had enough of experts.” A Turkish Twitter user described trying to have a political discussion with Erdogan supporters as “making a milkshake without the lid on.”

emelkuran asserts a “serious transformation of morality” has taken place in politics. She attributes the change in part to reality TV, wherein programs such as Survivor display suffering and immorality as entertainment. Live TV coverage of war dulled empathy. Truth is disregarded. In Road to Unfreedom, Timothy Snyder described Vladimir Putin’s attitude as “I am lying to you openly, and we both know it.” Trump and British Prime Minister Boris Johnson share this attitude with Putin. Temelkuran warns that the “horrifying ethics that have risen to the upper echelons of politics will trickle down and multiply.”

Turkey holds the record for jailing more journalists than any other country. Turkey’s judiciary has lost its independence. State-owned institutions have been sold to Erdogan’s allies. Services for the poor are dispensed in return for votes for Erdogan’s party. Temelkuran writes, “As long as the state is profitable, the leader can rely on a political climate in which fewer and fewer people question the dismantling of the legal system.” Opponents are exposed to unrestricted violence, labeled as terrorists and jailed.

Temelkuran contends that women are first to experience pressure to conform to a movement’s version of an ideal citizen. Acceptable dress, acceptable role and behavior, and moral standards defining acceptable marital relationships and childbearing are all under the purview of the populist movement. The politicized legal system leaves opponents with no reprieve. The space created by new forms of communication are filled by leaders who “systematically manipulated the grudges and the anger of the neglected masses, turning them into a xenophobic and hostile political narrative.”

When people protested in Istanbul’s Gezi Park, they experienced joy, exhilaration and laughter. Temelkuran describes the spirit as carnivalesque. She wrote in the Washington Post, “we perfected our political humor skills to calm our anxieties by making fun of the leader, just as the Americans have been doing for the past two and a half years.” [Insert Link] Turkey’s opposition used humor to revive a sense of community when they were faced with defeat.

At some point people realize the country they had no longer exists; it has been transformed. The process starts “after severe damage has been wreaked to the fundamental concept of justice, and once the minimal morality you didn’t know you depended on has been destroyed.” Protestors are mocked and threatened and dismissed as traitors, who, in response, ask, “Is this still my country?” The same question is heard in Hungary, Poland, Germany, Britain and the United States.

Temelkuran writes that Turkey’s “mistake wasn’t that we didn’t do what we could have done, rather that we didn’t know that we should have done it earlier.” She wrote with the aim of showing readers “how to spot the recurring patterns of populism, so that maybe they can be better prepared for it than we were in Turkey.” Anger and fear without political action leaves space for the “real people” to “become more invasive, and energized with more hostility and manipulativeness.” Understanding, she says, requires action.

Seeking Center

When the Financial Times interviewed Vladimir Putin, president of Russia, prior to Putin leaving Moscow for the G20 summit in Osaka, Japan, Putin celebrated national populist movements in western countries. He saw opposition to migration, multiculturism and open borders as proof that liberalism was “obsolete” and had “outlived its purpose.”

Troubled by the seemingly growing signs of extremism on both right and left, one can be excused for latching onto any hopeful signs of a re-centering of political thought and action. In reporting on the European Union Parliament elections in May, The Economist  said, “Centrist liberals, not populists, gained the most power.”

While the long-dominant parties in European politics, the center-right European People’s Party (EPP) and the center-left Socialists & Democrats (S&D), lost seats, most of the losses were to liberals and greens, generally pro-European Union parties. Seats held by the grand coalition of EPP and S&D fell by 11%, from 55% to 44%; liberals and greens increased representation by 8%. The European Union’s Parliament’s three nationalist parties increased their representation from 21% to 23%. So, while the report characterized the trend as a fragmentation of the European party landscape, nationalist/populist gains were minimal. Nationalist parties in France, Austria and Denmark all lost ground relative to the last Parliament election in 2014.

Thankfully, there are groups of people of diverse backgrounds, nationalities and political persuasions who have organized to oppose extremist influences. For example, Renew Democracy Initiative (RDI) is an international organization of civil society activists dedicated to opposing the rise of authoritarian populists worldwide. RDI is chaired by Garry Kasparov, the world chess champion. A New York financier, Richard Horowitz, is president. RDI’s manifesto counts among its signatories journalist William Kristol, former president of Spain Jose Maria Aznar, Harvard professor Henry Louis Gates Jr., the German Marshall Fund’s Derek Chollet, authors Natan Sharansky, Erica Jong, Scott Turow and Beppe Severgnini and columnists Anne Applebaum and Max Boot.

The RDI manifesto clearly affirms its commitment to values supporting democratic government:

There is still a center in Western politics, and it needs to be revitalized— intellectually, culturally, and politically. The center right and center left are still joined by a broad set of common values, including respect for free speech and dissent, a belief in the benefits of international trade and immigration, respect for law and procedural legitimacy, a suspicion of cults of personality, and an understanding that free societies require protection from authoritarians promising easy fixes to complex problems.

The immediate need is to help restore political confidence and ideological balance to traditional center right and center left parties on both sides of the Atlantic. This does not require fundamentally “new” ideas. It requires fresh thinking about good ideas, a new way of arguing for sound principles of liberal democracy.

RDI does not deny the legitimacy of the problems expressed by advocates of illiberalism – income inequality, social immobility, terrorism, youth unemployment. But RDI rejects solutions that “range from the impracticable to the illusory to the immoral,” and the divisive rhetoric that rejects established facts. Along with sponsoring conferences and civic education courses, RDI provides support to governmental decision-makers from both right and left willing to cooperate on issues of national significance. It dedicates its programs and research to realizing a path to economic and political stability coveted by a broad majority across the free world.

Insurers Acknowledge Climate Change

While climate deniers are rejecting scientists’ consensus opinion, one group has no doubt that climate change has arrived. It’s a group that studies rain and heat, hailstorms, hurricanes, flooding, and wildfires, and there is no doubting climate change in their minds, because their livelihoods depend on it.

Insurance companies employ climatologists, computer scientists and statisticians to design models that incorporate the effects of climate change in assessing damage and risk. Actuaries, the people responsible for converting risks into premiums, ranked climate change the top risk in 2019, ahead of terrorism, cyber damages and financial instability. Although the insurance industry is arguably the one most affected by climate change, its decisions impact every other industry, as well as private property owners.

An industry publication reported total losses from hurricanes in 2017 were nearly five times the average of the preceding 16 years. “Losses from wildfires were four times higher, and losses from other severe storms were 60 percent higher.”  California wildfires in 2018 caused $24 billion in losses. When huge unexpected losses occur, insurance companies turn to the reinsurance industry, which in turn must raise its rates, and those costs ultimately are passed on to consumers.

A Wall Street Journal in October 2018 reported that some areas may become uninsurable due to risk probabilities, or the cost may become so high as to make insurance prohibitively expensive. “Allianz, one of the world’s largest insurers, says it sold the retail business of U.S. insurer Fireman’s Fund Insurance Co. in 2015 in part because climate change is increasing the risk of losses to coastal homes in California and Florida.”

Insurance companies are also investors, investing revenue from premiums in other businesses. Some have turned to ethical, social and governance (ESG) investment for their portfolios, taking into account ethical criteria when making investment decisions. Swiss RE, one of the world’s largest providers of reinsurance, moved its entire investment portfolio to take account of ESG criteria, reducing investments in companies that cause climate change. According to an October 2018 article in Financial Times, “insurers that have decided to stop covering coal — including Munich Re, Swiss Re, Zurich, Scor and Axa as well as Allianz — have all come from Europe.”

Some insurers have decided to apply the same ethical criteria in deciding which clients to insure. The same article reports, “A growing number have pulled back from insuring thermal coal companies, for example. If they are not investing in these companies, they argue, they should not be insuring them.” Natural disasters caused an estimated $340 billion in damage across the world in 2017. By their actions, insurance companies can lead the public, politicians, and business leaders in accepting that these costs are the result of increased climate change risk.

Immigration Policies Will Change

Could European and United States immigration policies, which close international borders to migrants from developing countries, be replaced by competition for immigrants from those developing countries? A report from the Hoover Institution foresees just such a scenario over the next 30-40 years for Europe, the U.S., Japan and China. The report is titled How Will Demographic Transformations Affect Democracy in the Coming Decades? 

The report cites drought, a fast-growing young population and popular discontent with government for triggering Syria’s civil war. A surge of over a million Syrian refugees sought asylum in Europe, fomenting the growth of nationalist and anti-immigration policies. The same combination of climate change, demographic trend and poor governance contributed to the flood of migrants making their way to the southern border of the United States. The report’s authors write this “toxic brew” is expected to impact many parts of the world. “Better governance will be needed in developing countries to help them cope with stresses from climate change and to carry out policies that will reduce migration pressures.”

But the report warns against characterizing these surges of immigrants as hostile invasions, but rather as seekers of safety and security. “Today’s European and U.S. economies need workers, particularly young workers to compensate for the rapid aging of their work forces. Immigration—if well regulated and manageable in volume—represents an opportunity to revive and increase prosperity.” Seeing an opportunity rather than a problem, the report sees “twin demographic challenges” with a common solution.

“The advanced industrial democracies are experiencing a demographic implosion—a historically unprecedented decline in fertility rates, leading to rapidly aging populations and shrinking labor forces. …more young workers will be needed not only to generate the income to support unprecedented proportions of aging retirees with extensive health care needs, but also to keep societies creative and energetic from the standpoint of culture and innovation.”

At the same time, high birth rates in sub-Saharan Africa, as well as the Middle East, South Asia and Central America, are producing “demographic explosions of children and youth” that stress ecosystems, and worsen desertification and water shortages. Over the next 40 years countries of sub-Saharan Africa are projected to add nearly a billion working age people.Governments unable to cope with the stresses add political conflict to the environmental and demographic impetus for emigration.

The report contends that government policy-making is the core solution to both the population implosion in rich countries and the population explosion in developing countries. “A more open but well-regulated and orderly immigration regime will reinvigorate the workforce of the rich countries and help them cope with the fiscal pressures produced by their aging populations and slowing economic growth. At the same time, such migration will serve as a pressure-release valve for emerging economies” Migrants also are a source of cash remittances back to family members, boosting economies in their countries of origin. Improved governance in developing countries will better position them to lower fertility and reduce population growth, manage environmental issues, and provide more economic opportunity.

“Who Will Buy Your Cars?”

An apocryphal story described in a past blog post told of the early introduction of robots in a plant manufacturing Ford cars. According to the story, Walter Reuther, president of United Auto Workers, was taken on a tour of the plant. A company official on the tour asked Reuther how the union was going to collect dues from the robots, to which Reuther responded with a question: “How are you going to get them to buy Fords?”

A retired CEO of global marketing communications firm Young & Rubicam has written a book challenging heads of U.S. corporations to recognize that an increasing segment of the population is seeing their ability to spend eroding, not by automation, but by capitalism’s obsession with increasing stock price at the expense of all other considerations. Peter Georgescu looks at the rise in productivity compared to the flat-lining in wages and concludes that “For the past four decades, capitalism has been slowly committing suicide.”

Georgescu references statistics that show half of all U.S. households have to borrow each month to pay expenses, and a great many will eventually find themselves in bankruptcy. “The reality is that just over half of American households are technically insolvent…. If wealth rises to the highest ranks of our society without circulating back into the system in the form of wages and benefits, then spending inevitably declines or collapses.”

Business managers and investors have made shareholder primacy the guiding principle of U.S. corporations, a change the author traces to early globalization in the 1970s. Foreign competitors with lower labor costs prompted U.S. manufacturers to maintain profits by cutting jobs and wages, when Georgescu said they should have been investing in new industries to grow higher-wage jobs. Equating growth in stock value with economic health and progress led to obsessive emphasis on short-term returns.

He depicts a thriving economy as an interdependent ecology of interests. “It’s an interlocking system in which each element [employees, customers, communities and shareholders] depends on the health of all the others…. It’s the way we did business in America when the country was sitting on top of the world and when CEOs were people who took all these responsibilities seriously.”

Georgescu contends that “only by abandoning short-term shareholder primacy will a company find its path to greater profits down the road, while supporting society, helping to re-create a viable middle class, and rekindling hope in the American dream.” He offers two principles for restoring balance and assuring long-term growth. First, compensate and treat employees appropriately, ensuring that education starts early for everyone and parallels the requirements of employers; and second, invest aggressively in R&D that sustains innovation.

Georgescu has called on numerous CEOs along with Ken Langone, the cofounder of Home Depot, making the case for setting aside shareholder primacy. Their diagnosis of the long-term impact was understood and accepted, but individual CEOs are unwilling to take first steps against standard practice. In the absence of such initiative, Georgescu foresees government stepping in, dictating what business must do to reverse the effects of shareholder primacy. His foresees government involvement would be accompanied by higher taxes, a judgment shared in a recent Washington Post opinion piece by economist Robert Samuelson.

Good A. I.

If innovative technologies have historically brought increased productivity for workers, while increasing demand for labor in new sectors of the economy, why is artificial intelligence (AI) regarded with suspicion? “The Wrong Kind of AI?,” a recent paper by two economists, suggests that introduction of new technologies in the 21st century reflect a shift from developments of the last 200 years.

The authors examine why productivity growth went hand-in-hand with wage growth in the 19th and 20th centuries. “The answer is that at the same time as automation technologies are being introduced, other technological advances enable us to create new tasks in which labor has a competitive advantage.” New occupations and industries led the growth in labor demand.

By contrast, the guiding principle in current technological innovation is automation, not to increase workers’ productivity, but to replace them. This emphasis on cost-saving is legitimate business decision-making, but the authors argue that technology, and AI in particular, can be employed to complement and augment the work of human laborers. Without directing research towards innovation that generates new tasks, “the implications for labor are depressing . . . with potentially disastrous consequences for income inequality and social cohesion.”

The paper presents examples of industries in which AI applications can augment the work of human labor. In education, AI can build on the learning styles of students, optimizing the learning experience for individual students and for different subjects for a single student, building upon each student’s unique abilities. Similarly, in healthcare AI can employ a broad base of health data to “significantly empower nurses, technicians and other healthcare providers to offer a wider range of services and more real-time advice, diagnosis and treatment.”

Others see opportunity for improving human decision-making through a branch of AI called natural language processing and generation to redefine how humans and computers interact. Overall, the U.S. Bureau of Labor Statistics forecasts AI-generated job growth in a wide range of occupations including forensic science, finance, technical writing and customer service.

The authors of the paper are not alone in reasoning that AI can create jobs as well as replace them. Consultancy PwC, Singularity University and the World Economic Forum, among others, have written of AI’s potential to create jobs. But they also warn of the need for government and businesses to proactively plan and implement a path for the evolving labor market.

As the Organization for Economic Cooperation and Development’s (OECD) “The Future of Work 2019” points out, advances in technology are concurrent with globalization’s reshuffling of jobs and aging of the population and work force. With so much of the work force in transition, “labor market disparities could increase … unless determined policy action is taken to ensure a more equal sharing of the costs of structural adjustment to the world of work.”

The OECD supports policies that assure workers have adequate employment protections; promote collective bargaining; strengthen adult learning; and protect disadvantaged groups. The OECD agenda challenges government and industry to fashion a future of work that generates more and better jobs for all workers.

Nuclear Energy

Massachusetts Institute of Technology researchers have released a report titled the MIT Energy Initiative (MITEI).  The authors of the study assert that unless nuclear energy is included in the mix of low-carbon energy, avoiding dangerous climate change will be more difficult and costly. But the authors note a “current global stall of nuclear energy capacity.” Nuclear power accounted for about 10% of total electricity production in 2017, down from 16-17% in the 1980s, and total electricity demand increased faster than nuclear-generated electricity.

Concern over reactor cost, safety, waste disposal and other environment considerations slowed development of new nuclear energy reactors. Replacement and upgrade of existing reactors boosted production of nuclear electricity well into the new century. That trend reversed in 2011 following the March 11th tsunami that flooded three nuclear reactors at Japan’s Fukushima Daiichi plant. Japan’s government backed away from nuclear energy due to safety concerns, but projections of energy demand required nuclear to remain in the mix. As of the beginning of 2019 Japan had brought nine nuclear reactors back on line, and 17 more were in the approval process.

 

Although Germany decided to phase out nuclear power generation by 2022 in response to Fukushima, planning and construction for new nuclear reactors continues in other countries. There are about 450 operational nuclear power reactors in 30 countries worldwide, and about 60 are under construction. The additions represent about a 15% increase in electricity generation.

Total demand for electricity worldwide is projected to double by 2050. About 65% of electricity is currently produced from burning of fossil fuels. The International Panel on Climate Change states that no more than 20% of the world’s electricity can be high-carbon-emitting by 2050 if global warming reduction goals are to be met.

Advances in nuclear technology offer hope. Alternative coolants, reduction and reuse of nuclear waste, small factory-built reactors, safer designs, and the holy grail of nuclear fusion rather than fission, look to solve the challenges of cost competitiveness, safety and safe waste disposal, and put within reach the cap on temperature that will keep the planet habitable. According to MITEI, nuclear energy must play a role.

April 1971 Earth Day Lecture by Ian McHarg

In April 1971, Ian McHarg, a famous landscape architect, gave the Earth Day lecture before the students and guests of Johnson County Community College in Overland Park, Kansas. It was a speech that he repeated in numerous venues around the country that year. McHarg had published his landmark city planning book, Design With Nature, in 1970, in which he laid out how cities should be designed with respect for the physical environment, as well as cultural considerations. In this 10,000 word lecture he describes his design approach. He precedes it with a playful introduction of how humans have come to achieve life or death power over the earth.

 

It’s a youthful audience rather than a professional one, so I’ve decided in the last five minutes to change my subject, and I’ll give a sprinkling of professionalism to those professionals who are here in the last few minutes; but I think it’s probably more appropriate to speak to you on other than ecological planning, because after all you are the generation without any future, and I think it’s probably good to talk about this prospect. You don’t have any future, no assured future at all. And unless you do something about it you face, I suppose, extinction.

It might be worthwhile trying to just simply immerse ourselves into the problem of the environment. The first thing we’ve got to do is forget about the threat of paper cups and Dixie cups and bottles and detergent. The degree of threat that we confront is a much larger one than this. I suppose I became familiar with the dimensions of the subject from a man called Loren Eiseley, a great cultural anthropologist, about a decade ago. Eiseley had an image, the prediction of that time when man would be able to go into space, and in his image he foresaw the time when man from space would be able to look and see this tiny little orb, this tiny little sphere that is the earth, and see it to be green—-green from the maritime algae in the oceans, green from the verdure on land—-and he perceived that this biosphere, this thin film of light that surrounds the earth, gives the image of a green celestial fruit, rather like a lime. And as he looked at it more closely he saw that the green of this earth—green from the maritime algae in the oceans, green from the verdure on land—-and upon this green celestial fruit he perceived blemishes—-pathological tissue, necrotic tissue, morbid tissue, brown, black, gray—-and from these blemishes extended dynamic tentacles, and he perceived that the morbid tissue, the pathological tissue on the world-like body consisted of the cities and works of man and asked, “Is man but a planetary disease?”

I think that the only proper answer is, Yes, there is a planetary disease upon the earth, and that is man. Moreover, perhaps disease is too kind a word. The real definition of an epidemic is, one creature multiplying at a super-exponential rate, destroying the environment upon which he, she or it depends. All right, if you use that definition for the plague upon the earth, you find, indeed, that there is an epidemic upon the earth, there is one creature multiplying at a super-exponential rate in a process of destroying the environment upon which we depend; the epidemic is man. But it is very important to recognize that not all men or women are coequally epidemics, and so I would say that if you are interested in your future, that it is important that you identify those people who can in fact be defined as epidemics, the people whose continued energies are a threat to the survival of men, and those who are not. Because there is a war afoot, you see, and it’s got nothing to do with this putrescent shame in Vietnam. It has to do with the survival of man, and the identification of those people whose energies are directed to cause the extinction of man. So you must engage in manacling, holding back, somehow muting the extinctionists in order that you can negotiate survival.

Now I have a list of extinctionists, and I’ll offer it to you, irrespective of race, color or creed. I do this as an immigrant Scotsman who has chosen to become an American, but nonetheless I will offer you now, today, my list of the most excoriatable in the United States. Every country should have one of such lists, and all people in the world should of course be dedicated to the survival of man and the muting or manacling of those people who are the extinctionists.

Certainly first on my list are the generals overkill, irrespective of race, color or creed— these men who are able now to kill every single man, woman and child in the world one thousand times over, but who must devote substantial parts of national treasury and, God help us, their intelligence in order now to be able to kill every single man, woman and child in the world two thousand times over. Now these men wake up in the morning and wash and shave and brush their teeth and comb their hair and, God help us, put on underarm deodorant, but they must not be mistaken as men, they are in fact incarnate puss, they are in fact man-planetary disease, man-epidemic. Their fulfillment is our extinction.

Immediately below them are the putrescencies of the Atomic Energy Commission, the men who started life pulling wings from flies, got to dissecting frogs, made their way up to cherry bombs and then finally realized that high explosives were not enough and that those crippled psyches could only be gratified with atomic explosions either illegally above ground or legally below ground. And they know the first lesson of radiation biology, that every increase in radioactivity has a concomitant increase in the number of mutations and most of these are deleterious. And so indeed every increase in radioactivity is adding entropy or disorder into the most important inheritance of life, which is to say the genetic potential. So, I offer you number two in the list of excoriatables, those people, the Dr. Strangeloves of Atomic Energy Commissions, irrespective of race, color or creed. They attack your gonads, irrespective of race, color or creed.

Number three on the list are a particularly loathsome form of man-planetary disease, those people who are engaged in bio-chemical warfare, the people who feel that the bubonic plague in the Middle Ages in Europe was an effete European failure, and that late twentieth century America can do much, much better with the bubonic plague them poor Medieval Europeans did. And so we have now delegated a substantial sum of money and a large number of scientists to be sure that we can do rather better with the bubonic plague, we can develop a more virulent form, and not only the bubonic plague, but anthrax and botulism and nerve gas which killed sheep in Utah and could have killed people on the way from Okinawa to Unatilla and across the corridor of New Jersey, and other pneumococci of excruciating virulence. These people, again, are, in my opinion, men-planetary disease. Their best energies are devoted to the threat of your survival.

Who next? The people who sell death for money. All the great chemical companies; I believe you have some of them out here, do you? Shell, Monsanto, doesn’t matter who they are, Dow Chemical—-these people who make herbicides and pesticides in the full knowledge that these are toxins, because they are sold as toxic, and they also know they are persistent. and because they are persistent, and gravity obtains it means all these pesticides or herbicides are likely to make their way from land processes to water processes and thence into these great sinks which are the great lakes and the oceans. And everybody now knows that very small quantities of herbicides and pesticides inhibit the capacity of the oceanic phytoplankton, which of course are not only the major food source for organisms of the world but constitute the major source of all atmospheric oxygen. And so, these materials are not only attacking the productive capability of the world, but they are attacking that bubble of atmospheric oxygen upon which we entirely depend. And so I offer you them the biochemical warfare and the pesticide people as expressions of man-planetary disease.

Next I suppose one has got to identify the captains of industry, not because they are really planetary disease, but because they are inflicting so many lesions upon the world-like body, they are so stressing the environment, they have got to be described as having a certain suppurating edge if not more. I had the pleasure of addressing fifty captains of industry in the Four Seasons Restaurant in New York not too long ago. This was the occasion of Fortune Magazine‘s fortieth anniversary. And what masochistic impulse caused the captains of industry to ask me to speak to them is something I cannot explain. But anybody who is a lapsed Presbyterian can at least understand. So there I was, and I went through my list of excoriatables and I got to this point and I said, “Gentlemen, how many of you would describe yourselves as captains of industry?” And forty or so put up their hands. I said, “gentlemen, I wonder if I could make a small bargain with you on behalf of the American people?” And they, having no choice but to assent, assented. So I said, “Gentlemen, it’s very clear to me having seen you at cocktails, dinner, that your personal hygiene is impeccable. There is no doubt in my mind that you wash and shave and use underarm deodorants and brush your teeth and the chances are very good that before coming to this occasion this evening you had another shower, changed your underpants, changed your shirt, changed your handkerchief. I am sure that as American people contemplate your personal hygiene, contemplate as I do your command of knives, forks, spoons, finger bowls, that they would be proud of the personal hygiene of the captains of industry. But I said I wonder if we could make a small bargain. I think the American people would allow some relaxation of your personal hygiene. If you would like to forgo that second shower, second shave, second pair of underpants and shirt, if you would like to burp in public or even fart in public, I don’t suppose the American people would feel terribly badly about it. It’s the kind of problem we can deal with, just so long as, as quid pro quo for this relaxation of your personal hygiene, we have some significant improvement in your corporate hygiene. We can no longer tolerate your voiding hundreds and thousands and millions of gallons and tons of your excrement into our environment, gentlemen. The time has come for American industry to be toilet trained. First, the discomfort of diapers, and then the prospect of continence.” I said, “Gentlemen, are there any representatives of Detroit here?“ And there seemed to be two presidents of corporations there. I said, “Gentlemen, I wonder if I could make a small bargain with you on behalf of the American people?” And they again having no alternative but to sit, sat. I said, “It’s very clear that what America wants from Detroit is modest, non-polluting locomotion. It’s as clear that what we get from Detroit is the most immoderate locomotion, which is gluttonous beyond description in terms of nonrenewable resources, the only efficiency of which is the amount of pollutants it produces per unit of transportation. It produces in fact the maximum units of pollution for the least units of transportation. But,” I said, “it’s very clear just from a cursory examination of your advertisements that you do not believe yourself to be in the locomotion business, the transportation business. You believe yourself to be in the aphrodisiac business. It’s very clear if you look at television or magazines that all the advertisements developed by Madison Avenue for Detroit are really aphrodisiac. They are addressed to men whose genitalia have been atrophied either physiologically or psychologically, and the assumption is that such a poor, atrophied person has only to spend three or four thousand dollars to acquire an automobile, as a result of which he will receive an immediate engorgement of such dimensions that one of the nymphs who is forever pictured in these advertisements will grab him from the front seat of his new car, throw him under the nearest bush and ravish him an ecstasy beyond understanding. Now of course if Detroit could do this, I suppose three thousand dollars would not be too high a price. In the absence of any ability in the direction, could we ask them simply to revert to the business of non-polluting modest locomotion?”

There are also other people we could excoriate, and I suppose I would reserve certainly an important place for Madison Avenue, because here is a place which has made intellectual whoredom a way of life. They spend all their energies to assure us that well-being, that the substance of a man or a woman is in fact only measured by commodity, that is that you are equal to the number of eye-level ovens, electric toothbrushes, electric can openers, electric meat carvers, numbers of horse power in the garage, etc., etc., etc. The substance of a man is only measured by his commodity. Now this of course is a horrifying illusion which can be made to work.   That is, if we insist that commodity is a measure of well-being, then we have to accept that three hundred million Americans will not live as well as two hundred million Americans do now live. Moreover, there is no way in which this world can support six billion people at the standard of living of the present three billion people. Absolutely no way! It is a finite world, and the resources of the world are equal to the resources of the world divided by the population. As the population increases, the stress on the environment increases, and the resources available to the population decreases. And this is a truism we better learn. Moreover, of course, it is happily not true that well-being is, in fact, measured by commodity. Well-being is measured by something else —-by one’s ability to look at one’s friends, one’s wife, one’s students in the eye, to have some sense that one’s social role has in fact some social utility. And this being so, then there is a way of dealing with finite world resources without limiting well cu The end of this being show then there is a way of dealing with finite world resources without limiting wealth: That is to change the construction of well-being from commodity into services, so there’s no limit to the fruits of compassion, of justice, of the quality of the physical and cultural environment.. So we must resist as man-planetary disease these people—-Madison Avenue—who insist on our gluttony. As a result of this gluttony we now have to engage in imperialistic wars which used to be done by British and French and Spanish and Dutch, but which are now an exclusively American occupation, the purpose of which is very clearly to rob the rest of the world in order to support the American gluttony.

Well of course the general villain in this whole thing is the western view of man to nature, and I think we might pick it up, look at it, avert our eyes in horror, before going on to something else. The fact of the matter is there is only one view. The attitude of man to nature is of course a generalized villain, and this is the only view which is absolutely shared it by capitalists, by communists, by Jew and Christian, by atheist and agnostic. This is the only view which absolutely unites the whole western world. It is in fact bipartisan. The only tragedy about it is of course it has no correspondence to reality, no survival value and is the best guarantee of extinction. And you have, as I have, absorbed it from your mother’s milk, on your mother’s knee, in kindergarten, lower school, upper school, college, university; it permeates our environment, our law, our art, our philosophy; in fact every aspect of our life, our entire ethos, has implicit within it the one view of western man to nature. Now it just so happens that it’s most succinctly expressed in Genesis, and it’s believed by everybody whether they are religious or not religious. And I am very glad to say that my excoriation of this derives not from me, because who would listen to me, but from the most distinguished theologians representing Judaism, Protestantism, Catholicism, that is to say Martin Buber, Abraham Heschel, Paul Tillich, Albert Schweitzer, Gustav Weigal.

Every single theologian has given me the information which I will recount to you in the next two or three minutes, that is, the western view of man to nature is at its most expressive form in the first chapter of Genesis in three statements. The first is, that man is exclusively divine; God made man in his own image. This means there is a moral arena. If you covet your neighbor’s wife or you commit adultery or if you commit theft or murder, God, the courts, the churches, the priests are looking at you and if they catch you at it they’ll rap you right across the knuckles or something worse. If, however, you want to kill every whale, every blame whale, every ponderosa pine, every sequoia, if you want to poison every river, stream and lake and the oceans, apparently God, the church, the priests and the courts don’t give a damn. Because the only moral arena is the acts of man to man, and God is very jealous of these. But the acts of man to nature are not sacramental. God doesn’t care, and so we may proceed to screw up all nature with all the right and the greatest possible profit, without any fear of retribution. And this of course we have done.

The second line says man is given dominion over all life and non-life. Dominion is a non-negotiating term. Dominion is a sergeant major’s view of the world. Dominion says, do it and don’t talk back. We have been given dominion over every creeping thing that creepeth, crawling thing that crawleth, walking thing that walketh, flying thing that flyeth; over every if-ing thing that if-eth hath man been given dominion. So we are given dominion over life and non-life. And the third line tells you the real purpose. The third line says, “You shall multiply and subdue the Earth,” and there are some forms of the Bible, of course, which say you shall multiply and replenish the Earth. But that is such a ringer, and has been such an obstruction to the fulfillment of western man over two thousand years that it has been very properly suppressed, and society has taken to its bosom with all delight and gratitude the injunction to assume exclusive divinity, assume the right of dominion over life and non-life, and assume the role of subjugating the Earth. And if you want to find one text which best explains all the destruction, despoliation, the infliction of lesions upon the world’s life body which has been accomplished by capitalists, communists, Jew and Christian, atheist and agnostic alike, all the people of the western world, throughout all the world–that’s the only text you need to know.

If you want to find another villain who is within this villainy of the western view, that is the conception of man apart from nature whose role is the conquest of nature. If you were a planetary doctor who is responsible for all the planets in our solar system, and you saw there was one planet where there seemed to be a spreading disease caused by one organism, multiplying at a super-exponential rate, destroying the environment upon which it depends, and you picked him up by the scruff of the neck, pulled him off, and said, “Look, Jack, who the hell do you think you are and what are you doing?” He would say, “Don’t you know me? I am Man!” You say, “What’s so great about Man?” He’d say, “Well, you don’t know?” He’d just lift up the top of his head like that and say, “Brain, you see!” Now, I think we’ve got to be a little careful about brain, because you see if there is one creature who assumes that nature exists for his delectation, nature is just a backdrop to the human play, nature is a mine to be mined forever, nature is a system which can be treated any way at all without any retribution, and in doing so he is endangering himself, and he justifies his superiority and his actions on the basis of brain, it would seem there is better evidence for brain as spinal tumor than brain, the apex of biological evolution. I think there is better evidence for brain as being a spinal tumor today, among advanced peoples, than there is for brain being the apex of biological evolution.

I have a small story about this. Once upon a time there was a white-coated, sepulchral, non-combatant warrior. And of course warriors are like that. Once upon time warriors were great big men with double-edged swords, who confronted people face to face. They might have been wrong, but it required a certain amount of knotting of the gut to be a warrior. Today, of course, one is in a basement, white-coated, an abstractionist pressing buttons, and you’re not required to engage in any kind of confrontation at all, which allows me to describe celestial warriors as a sepulchral, white-coated, lily-livered, non-combatant warriors. Anyway, in one of my fantasies, such a person had decided to assume the responsibility for the destiny of all men and all life. He wanted to resolve some temporary, irrelevant, political squabble between the great powers. And he did resolve it, atomically. He pressed some buttons, as a result of which there was a welter of warheads upon the waiting earth, and all life was extinguished in my fantasy. All life was extinguished save in one deep leaden slit, where due to radiation persisted a small colony of algae, little unicellular plants. And these algae in my fantasy perceived that all life had been extinguished save they, and the whole business of evolution, of mutation, of natural selection, of cooperation and competition must ensue—-at least two and a half billion years of this—-had to ensue in order to recover yesterday. And so the algae in my fantasy come to an immediate, spontaneous and unanimous conclusion—-next time, no brains.

That just might be the best conclusion. Nature has been through this thing before. The cockroaches are more ancient than the social insects—-the bees, the wasps, and so on. And somewhere along that line, the cockroaches have a much more highly developed nervous system, sort of a precursory brain, than do their descendants, the bees, and termites and so on. So somewhere nature was through this thing before, as if the cockroaches said, “Look, why don’t we go for this brain thing, it looks pretty smart.” And the conservative, the Republican cockroaches said, “Gee, I don’t know, it sounds a little bit innovative; you know, what was good enough for grandfather should be good enough for me.” And so the cockroaches decided to hell with brains. So they bred out the brains, and they got along with the social insects. The social insects, as we know, the termites and the bees and the wasps, are better able to live with high-density living than any other creatures. And, of course, if we go in for the megalopolis in megaphone high density living as the future of three hundred million Americans, it may very well be we will have to follow the ways of the social insects, only we will do it surgically; that is, we will create an environment which can only be occupied after you have had a frontal lobotomy. It may not be what you expected to hear, but then I have only one obsession anyway.

There has got to be some other view. This view is absolutely calamitous—-man apart from nature, man the conqueror—-because we are the conquerors. It is no accident we talk about the conquest of space, the conquest of the oceans, the conquest of Mt. Everest. Can you imagine some man’s whimpering footsteps on Mt. Everest constituting a conquest? But we talk about it. We are conquistadors. We are so long impugning in the face of an implacable nature that we have been accumulating a bile of vengeance against this nature which was so powerful. And now that we are powerful, we are deciding to wreak our vengeance. And this of course is exactly what we are doing. But we are inflicting lesions upon that life-support system upon which we ourselves depend, as a result of which we are engaging in self-mutilation, which when extended can only lead to extinction.

There has got to be another view. And of course there is another view. And I encountered this view about ten years ago. Oh, I’ve forgotten one very important point. If you think about this extinctionist, this scientist-politician who decided to take upon himself the responsibility for extinguishing all life, if you would have spoken to the man, he would have, I’m sure, assumed that he was exclusively divine, he was given dominion over life and non-life and enjoined to subdue the earth. And in the pressing of the button and bringing upon the earth this rain of warheads, he would be fulfilling his destiny, you see. He would be exercising dominion and subjugation. Now anytime you have a metaphysical view which permeates a society, the fulfillment of which is the extinction of man and of life, then obviously such a view has no survival value, no correspondence to reality, and is in fact the best guarantee of extinction. And I think we have got to recognize this, that we have within ourselves a view which absolutely permeates every facet of our society, all western society, which has no correspondence to reality, no survival value, and is the best guarantee of extinction. And we must replace it; we must find another view.

My first confrontation with this view was about a decade ago when I met a scientist working in Baltimore on an experiment to send a man off to the moon with the least possible luggage. This is a real experiment, and it was paid for by NASA, and it consisted of a plywood capsule simulating a real capsule, in the lid of which was a fluorescent tube simulating the sun, and of course electricity is only fossil sunlight, and who did give the franchises to utility companies to sell old sunlight? Anyway, in the capsule was a fluorescent tube, and inside was some of this algae, little photosynthetic plants in a sort of helical aquarium, and also some bacteria in the same water solution, there was some air and a man. And the system works as follows: the man breathes in some air, consumes oxygen, breathes out carbon dioxide which the algae breathes, which algae breathes out oxygen, which the man breathes. The man becomes thirsty, drinks some water, urinates; the urine goes in the water solution with the algae and bacteria, the algae transpires, the transpirations are condensed and collected and the man drinks it. The man is hungry and eats some algae, and with six billion people in the world most of us will be eating algae, he eats some algae, he defecates; the excrement goes into water medium with the algae and bacteria, the bacteria reconstitutes the excrement into forms utilizable by the algae, which grows, which the man eats. Now this is a beautiful simulation of the world at large. There is one input—-sunlight; the one export—-heat, there is a closed cycle of oxygen and carbon dioxide, a closed cycle of water, and a closed cycle of food. Now, THAT’S THE WAY THE WORLD WORKS! And, as you know, education is a device to produce functional cripples who don’t know the way the world works. Yet this is known to Australian aboriginals and Kalahari bushmen, to Ravidians in Barbary—-all the simple people in the world know this either empirically or they know it rationally, and they live by it. But western society and western education is a device by which this is not known, save five thousand ecologists, probably fifty thousand biologists; it doesn’t permeate our government, our art, our law, our philosophy, our religion, our education. And yet I say to you the man who understands the way the world works has been inside a capsule, knows all he has to know for survival. The man who has not been in there, no matter how sophisticated his information, is a functional ignoramus whose ignorance is in fact an obstruction to our survival. This has got to be understood, you see.

That capsule story absolutely is drastic in its importance. Because all the essential elements are expressed with in it, you see. Man is a plant parasite; only plants can eat sunlight, man cannot eat sunlight. All animals are dependent upon the chloroplasts’ miraculous ability of being able to eat sunlight, transmute it into themselves, which then transmits energy to us. In spite of the illusion of sanitary engineers, no man can in fact reduce waste. Wastes are not reduced by sanitary engineers, who don’t even know the names of the organisms which do it. Wastes are all by micro-organisms, by other creatures. And so, we have got to recognize that we are in fact fundamentally parasites. All the most important world processes upon which we depend are carried by creatures over which we have virtually no control at all, except insofar as we can inhibit them, that is, we can reduce the capability, but we cannot enhance them. As a matter of fact, all of the most important processes in the world are really beyond our control—-the sun, the earth, the orbit of the earth, the inclined axis which gives us seasons, the major physical processes, the evolution of matter, the evolution of life, the eco-systems, the symbiotic relationships between them, the cycle of matter—-all the most fundamental processes upon which we depend are beyond our control and we are entirely parasitic to them. And this of course is not our assumption; we have assumed that nature is just a backdrop to the human play, that evolution is a process only instigated to produce man, that reality consists of a pyramid erected to support man at its pinnacle. We have this infantilism, you see, of man apart from nature, man supreme over nature, man exclusively divine. We have not been in the capsule; we don’t understand the way the world works. Yet we must, because we have got to have a metaphysic, we have got to have a view which corresponds to reality. We can no longer bear this infantilism. It was appropriate when there were only a very, very few men, and where the power over nature was inconsequential. But now when there are so many and we are so powerful, the views that we carry are profoundly consequential, not to nature—-none of us have to worry about the future of nature, nature will endure; the only species we have to worry about, the only endangered species of consequence is man. And so, we have got to find another view which will ensure our survival. I think within the capsule is the beginning of this view, but it’s only a caricature. There is a closed system; there is a finite system—-the earth is a finite system. The sunlight is the only thing which is replaced, and all the matter in the system goes round and round and round and round, and the quality of life is equal to the resources of the world divided by the number of people, multiplied by a coefficient for the rate of turnover. And that’s the implacable truth, and one had better learn this and regulate the conduct of human affairs accordingly.

But of course, this is such a terrible caricature. The world is much more miraculous than this, and in fact the ecological model is so superb. As you know, our current theology is not Judaism or Christianity; our current theology is economic determinism. The only thing wrong with the economic model is it’s partial. That is, it excludes all the biophysical realities; that is, there is no place for the sun, the moon, the stars, the inclined axis of the earth, the seasons, the chloroplast, the cycle of matter or anything else. The economic model excludes every single important biophysical reality upon which we depend. Moreover, it excludes all the most important human aspirations. There is no single place in the economic model for love, compassion, justice, health, happiness, delight or anything else. And so, we have got to recognize it is a very, very imperfect model indeed. We have got to make another one.

We have got to make another one. And of course, there is one ready-made, and it is a beautiful one, much more complete than the economic model, much more elegant, and much more miraculous. This is the ecological model. The ecological model has as its special component the conception of something called creativity. I teach in a school with architects, planners, landscape architects, painters and sculptors at the University of Pennsylvania, and there it is widely believed that creativity is something that artists know about and nobody else knows about. And the way to become creative in the school is not to come to class, not to wash, not to shave, to go into school about three or four or five o’clock in the morning to scratch on yellow paper and canvas. The assumption is that if you work on this hard enough, long enough, late enough at night in a sufficiently perverse way, the god or the muse will touch you on the shoulder and abstract form will appear on the canvas or the paper just spontaneously. And this is called the creative process. Now I think anybody who can make this work should stay with it. Anybody who has got a wire to god or the muse should absolutely stay with it, but there should be another view and another method to be used by the rest of us during the long waiting periods. Well there is.

Creativity is real and true, and creativity can be defined. Creativity consists of the employment of energy and matter to raise matter and energy to higher levels of order. That’s a beautiful definition. So, the evolution of matter up the periodic scale, every proton driven into every nucleus, every electron driven around every nucleus, building up from hydrogen to helium to lithium to beryllium up the periodic scale involve fantastic quantities of energy, the explosions of suns, the explosions of galaxies, in order to drive this creative process of matter from hydrogen to helium to lithium to beryllium all the way up to the heaviest of all elements. And the evolution of compounds was equally a creative process employing energy and matter to raise matter and energy to higher levels of order. The same is true up the genetic scale. Every single step in the scale of evolution of plants and animals, algae, fungi…, every one of those over two and a half billion years of time was a creative process.   This, then allows us to say that evolution has been a creative process. Creativity permeates matter and the evolution of matter. Creativity permeates life and the evolution of life. There is no way in which you cannot to be creative, you see. The atom of hydrogen knows about creativity even though man may not. The single-celled animal that is our ancestor knows about creativity even though man may not. Creativity permeates matter and life; therefore, evolution is creative. There is a creative process that has been going on for at least four and a half to six billion years on earth, and within life for about two and a half billion years. Now man is a great destroyer, but it is impossible to believe that God it is so malevolent as to deny man any creative role. That he is a great destroyer there isn’t any doubt. That he may have a creative role there doesn’t seem to be any doubt either. But that he is creative there is profound doubt; there is no evidence that we know of at the moment to show the man is, in thermodynamic terms, creative. That is, engaging in the same kind of creativity that has permeated all matter and all life and all time. But, still, at least we have a concept now of something called creativity, and the challenge obviously is to find a creative role for man which will insure his own survival. If you wanted to use a term to decide whether any process was creative or not, that is, whether a process is a cultural one or a physical one or a biological one, makes no difference; whether we are talking at the scale of your cells or your tissues or your organs or you as an organism, or you as an organism in this room or in this college or in this county or in this metropolitan region or in this country or in this continent it makes no difference; if you wanted to use a term to be able to find out whether the process was in fact creative or not, you would use the term “fitting”. And “fitting” derives two meanings from two different sources. One from a man called Lawrence Henderson, who never made any better than an associate professor at Harvard, but wrote a great book called The Fitness of the Environment. Henderson said, “The actual world, with all its environmental variability, constitutes the fittest possible abode for life, every form of life that has, does or will exist”. On the other side, Charles Darwin said, “The surviving organism is fit for the environment.” Now because the interaction of the environment and the organism is dynamic, and every environment includes other organisms, then you have got to fit the two of them together. And you have got a conception that there is a requirement for every process, be it an idea, or a church, or a school, or a philosophy, or a religion, or an economic theory, or your cells, tissues, organs, or you as an organism—-there is an absolute, implacable, inescapable requirement for that process, every process, to find of all environments the most fit, and to adapt to that environment and/or adapt itself to accomplish a fitting, which, when done, is creative. And the absence of this is a misfit, and a misfit, according to Darwin, will end in extinction. If you want to use a statement, a criteria that is even more synoptic than this, which allows you to look at the degree to which any process, cultural or physical—-it makes no difference—-a city, a town, a house, a person, his cells or organs or an idea—-if you want to use one single term which will allow you to see for any process whether it is creative, which is to say whether it is evolutionary, which is also to say whether it is fit, which is to say that it has been able to find of all environments the most fit and/or adapt to that environment and/or adapt itself, all you have to ask the process is, “Are you healthy?” And if you find any evidence of health—-physical, social, mental—-in human communities—-cultural activities, whatever they are—-if you find any evidence of health, you have found incontestable, incontrovertible evidence that that process has been able to, for the moment at least, find of all environments the most fit and/or adapt that environment and itself. The evidence is in fact the fitness revealed in health. Anytime you find any pathology, whether it is in your cells, tissues, organs, organisms, organisms in an ecosystem, organisms in institutions or ideas, anytime you find pathology—-physical, social, mental, human societies, physiological non-human societies—-anytime you find any evidence of pathology, you have found either temporary or permanent evidence of the inability of that process being able to find of all environments the most fit and/or to adapt that environment or itself.   You have a misfit, revealed in pathology. And of course, the perpetuation of pathology will lead to death. That is either the death of a cell; the cell, the tissue; the tissue, the organ; the organ, the organisms; the organism, the ecosystem; or the organism in the community, whether it be the family, or the school, and so on and so on. So here we have it; we have an absolutely beautiful model, in which we have something called creativity, which holds, which is real and true, which is measurable. Fitness is a measure of the degree to which creativity does or does not exist. The presence of creative fitting reveals that health in the one case, the absence of creative fitting reveals a misfit and pathology in the other. Absolutely beautiful model. Now, we also see if we look back at that evolution, which we now have decided is creative, in response to this quest for fitness, has attributes; that is, it always goes from greater to lesser randomness, from simple to complex, from uniform to diverse, from instability to stability (dynamic equilibrium), from a lower to a higher number of species, a lower to a higher number of symbioses, and can in fact in some go from a tendency to disorder towards a tendency to higher levels of order. Now that’s an absolutely glorious model, and you can use that to test anything. If you find yourself with a community which is elaborate, mixed people in terms of income, ethnicity and occupation and so on, in some balanced relationship; and you see this displaced by the process called urban renewal and replaced by suitcase architecture, at the end of which the process has moved from complexity to simplicity, it is retrogressive and reductive; you see, it has produced a misfit. If you find something going from stability to instability over the long term, then you have found something which is retrogressive, you see; it is anti-creative; it is reductive.

So here we have an absolutely beautiful model, and all examinations made by all the most distinguished scientists of this model seem to only confirm it. The ecological model in fact does seem to correspond to reality. And as such, it should become our metaphysical symbol. We can’t just bear to have a model, to have a view of the world, that doesn’t correspond to reality because it will lead us into error and, finally, into extinction. We must know the way the world works. So all of us somehow have got to get into that capsule and understand the fundamental relationships to the major processes in the world, extend this into our metaphysical view, which understands creativity, understands fitness, understands the conception of health and pathology, and seize this as a working model.

I believe that I am engaged in something called creative fitting. I am a landscape architect and a planner; I employ architects and all sorts of other people. But I engage, I believe, in something called creative fitting. The job I do is to try and find, of all environments, the most fit environment for particular land uses or persons, and also to show how these environments, once discovered, have to be adapted and, moreover, how the institution which is selecting the environment has to adapt, either culturally, or by physical adaptations like buildings and places and spaces, but just as well by symbols or by ideas or governmental ideas or economic ideas, it makes no difference. Evolution apparently doesn’t care how you do it just so long as you do it; you can do it by physiological adaptation, you can do it by physical adaptation or you can do it by cultural adaptation, just so long as you do adapt, you do find the most fit environments and adapt these and yourself in order to accomplish a creative fitting, you do it anyway you want.

So, the creative adaptation I am involved in is helping agencies (or anybody who wants me to do it) to find, of all environments, the most fit environment and to adapt that environment and adapt themselves in order to accomplish a creative fitting. How does one do it?

The first thing is we begin by identifying the region itself, because we are going to decide that the region you live in has to constitute your environmental choice. So, how do we describe a region?   The first way you start describing a region is to get people who know how to describe it. Now this, of course, is a novelty which is very, very rarely done, because obviously we don’t want to be obstructed by knowledge or intelligence. We want to allow the process to proceed with the greatest amount of stupidity, ignorance and malevolence, as it has been doing in the past, so we can inhibit the largest number of people with the least possible investment of intelligence. But in this particular method we decided we were going to get the people around who actually know what the region is. And so, we get the people who can represent the region as, first of all, phenomena.

And so the people who know this, of course, are geologists, who know about bedrock geology and surficial geology; and meteorologists who know about climactic processes; and we know that we have got to put the two of them together in order to be able to explain surficial geology; that is, the events of the last ten thousand years, which are the most important ones affecting you here, can only be understood in terms of the interaction of bedrock geology and climate. And once you’ve understood surficial geology, then you understand groundwater hydrology because water is where of water is because—-and if you want to answer “because“, then you’ve got to find out the answers from the people who know about climate and bedrock and surficial geology. And once you understand about that then you understand about physiography, because the current state of the earth’s wrinkles is only comprehensible in terms of processes which can be explained from the evidence of bedrock geology, surficial geology, groundwater hydrology and climate. Once you’ve got the physiography then you can begin to understand surface water hydrology because rivers and lakes and streams and ponds are where they are because—-and if you want to answer “because” then you’ve got to find out the information from climate and bedrock geology and surficial geology and physiography and groundwater hydrology. And once you’ve understood that, then you can ask about soils, and soils, of course, are variable and plants know they’re variable; men seldom know they are variable, but they are variable, and if you want to find out why they are variable where they are, then you have to go and ask the people who know about it, which is to say the people who know about bedrock geology, surficial geology, groundwater hydrology, physiography, surface water hydrology, and there are soils because they are only a by-product of other processes. And once you get to that point you can ask about plants because plants are much more variable with respect to the environment than men, and much more discerning; but if you want to know about the variability of plants, then you’ve got to know about the variability of soils, which allows you to know about the variability of groundwater hydrology in physiography and etc., etc., etc. And once you know about bedrock geology and climate and surficial geology and groundwater hydrology and physiography and surface water hydrology and soils and plants, then you can understand about animals, because all animals are plant-related, including that peculiar bipedal animal, man; and if you want to understand about his variability, then you’ve got to find out about the universe of the place in terms of phenomena, because man has been engaged in doing just exactly the same as the others, that is he has been looking for propitious environments, inordinately deep soils, safe harbors or transportation corridors, which of course are physiographic corridors, or the presence of coal, or limestone, or uranium, or oil, or forest, or whatever it is. Whatever he is looking for, the only place where you can find these is in fact in terms of bedrock geology, climate, surficial geology, physiography, hydrology, soils, plants and animals. That’s the universe. But if you only understand it in terms of phenomena and matter or describe it in terms of phenomena, you don’t know very much, because all these phenomena can only be understood in terms of that which has been; that is, that which is now can only be comprehensible in terms of that which has been. And so, one has got to bring these scientists together and ask them to reconstitute all the stuff about phenomena into process, that is, climatological processes, geomorphological processes, fluvial processes, soil processes, and so on, so on, so on. Once you have identified them as processes, you realize that these things are still ongoing. Earthquakes are in fact still working in Los Angeles, the mountains are rising; it’s not a spot to put either an atomic reactor or a hospital. These are in fact real processes. Fluvial processes continue, you see; people will be flooded because the river in fact occupies a floodplain; and anyone who wants to occupy a floodplain in competition with a river is going to lose, the Army Engineers notwithstanding. Anyway, you reconstitute all the information by adding time and you get process; and then, the most difficult thing of all, you bring all these scientists together and you say, “Friends, we don’t care about your little spectrum, your little aperture of reality; we want to see the whole thing as one thing, because there is one thing only divided by language into by science.” And so because I pay them money to do this, and they don’t get paid if they don’t do it, they then reconstitute the whole thing into a layer cake of reality in which the whole thing is causal, that is, it evolved from bedrock geology and then surficial geology and then groundwater hydrology and then physiography and surface water hydrology into soil and plants and animals and micro-climate and meso-climate and macro-climate. There is a layer cake of reality, ten thousand little cells per square inch, and all of these things causal, that is, you cannot explain anyone without explaining any other; moreover, there is an interesting system now, you see, and if you add something at any point in the system, you affect the whole system. Add an atomic reactor at a certain point, and then ask where does the leukemia, skin cancer, bone cancer show up? Add a sewage treatment plant, where does the thermal pollution and the B.O.D. show up? Etc., etc. So you go through the exercise of making an interacting system, which then is an ecological model. You have an ecological model, which simulates reality, which should be a predictive model. Once you’ve got that done you say, “All right, let’s discuss the subject of man, because we are only interested in the environment because of man; you know, it could take care of itself, its only problem is us; and our only problem is us too.” So, we go through the business of trying to find out about man, and we identify man in terms of persons and occupations and age and sex and so on, all the orthodoxy, the dandruff of demography and city planning. Once we identify these as phenomena, we have to identify them as process, because they are only comprehensible in terms of the past; that is, nobody can understand Scotsmen except in terms of masochism and an addiction to poor, thin soils and poverty, because this is the only possible explanation for Scotsmen in Nova Scotia, Maine, northern Pennsylvania, the mountains of Georgia, the Appalachian highlands—-why was it these people always went to areas which guaranteed poverty? So, one has got to ask this sort of question, you see. So, you understand the Germans, Mennonites knew about deep, rich soils, whereas Scotsmen and Irishmen never did. So one has got to go through a business of cultural evolution to find out who the people were, where they came from, what attitude did they have to the land, to fishing, to farming, to mining, whatever else there was, what attitudes they had to law, to government, to religion and so on, what skills they had in adaptation; and then go through a study of the place in terms of the adaptation by people having specific values, but a variable values, to this biophysical field over time, so that once you go through the social process examination, which of course is conducted by cultural anthropologists and ethologists and ethnographers, at the end of this you begin to understand the place as the sum of people and institutions over time who have inherited adaptations felicitous, that is, good, and adaptations which are bad, both in terms of the physical environment and the cultural environment, which in fact allows us to understand the present. And at that point you have a human ecological model. Once you’ve got these two then you are ready to go. Now we have the possibility of a real intelligent planning process.

As you know, the planning process is a sort of tool of the economic model, and its perception really is socio-economic and no more. It wouldn’t recognize a bio-physical process with a label on it.

So given these two layer cakes, one can proceed to the next point, which is of course projection, and we’ve got to be careful about this because the only thing you can say about the people who make projections is that they are remarkably consistent, that is, almost always wrong. But nonetheless, having no alternative but to go the projection route, we go it is explicitly as we possibly can. We make explicit statements about what the conditions are going to be in the future and then project the conditions for that future and we make growth models; we say this group of people are likely to grow into that number of people, consisting of these persons and these institutions and these institutions which demand resources from the future. And so we have reconstituted the area as a biophysical process which has a social value system, and we have reconstituted the people and the institutions and so on also as a social value system, and we can project these into the future and make growth models, one of which should be called an uncontrolled growth model, that is, the face of the future assuming the same amount of stupidity, malevolence, greed and good will going into the future as exists in the present. But we have a number of growth models, and once we have these the idea is to try and accomplish a match; and the best way to do this is use a computer in linear programming. I have a digital scanner at the University of Pennsylvania which allows me to take a map like a state geology map with about seven billion words of information, and I can put these on computer tape in ten seconds, as a result of which I can very easily make this ecological model, and as a result of this I can also use linear programming for resource allocation; that is, if I have information about the region, information about the people, some idea about who the prospective consumers will be in the future, I can then begin to allocate resources according to specific hypotheses. If one hypothesis is the solution of employment, or the true exercise of fair housing, or the elimination of dilapidation or tuberculosis or infant mortality or, on the other side, if we want to ensure that people do not build in flood plains or in earthquake-prone zones or areas which are subject to hurricanes or avalanches, we can set up very explicit hypotheses which are constraints and opportunities for development, and we can allocate the resources to this. We do this by computer. We simply write a program which says the prospective growth by sectors—-low-income housing, middle-income housing, etc., low-density, intermediate, high-density, industry by type, commerce by type, recreation by type—-we can identify these claimants for these resources over time, we write a program and can allocate the resources. And then we can show this; we can show it either in maps, or we can show it in a computer display, or we can show it in a television display; we can display what the alternative forms of the future might be based upon explicit and overt social values. This is the beginning of a process which I describe as an overt, explicit, replicatable public planning process. At the moment, as you know, the planning process is not overt, it’s covert; that is, the Bureau of Public Roads and the State Highway Department hide the highway alignment until the last possible moment, have a public hearing in such a way as to make it very, very difficult for people to oppose, and then they thrust of this bloody highway down our throats – or the Army Engineers, a dam, or the urban renewal agency. Almost all planning at the moment is covert, it is hidden, it is not overt; it is certainly not explicit because it consists of a combination of fiction, good information, bad information, subjectivity and political chicanery, and it certainly isn’t public. So, one would like to replace the present planning process with one in which the information is explicit, substantial and public, that is available. All the information which I spoke about could be displayed on my screen this size—-General Electric has one, which is just a computer screen—-and it should be available to anybody who can type and go to a public library. One should be able to ask for the region to be displayed as phenomena, to have these phenomena interpreted for the utility for man, ask them to display; one should be able to solve specific problems like highway alignment, or such as for systems of open space or housing developments; or identify problems in terms of infant mortality or dilapidation or tuberculosis or anything else. One should also have canned computer programs available to anybody who wants to do them, which will call least social costs, maximum social benefit solutions and by which anybody who wishes to do so may replicate the planning process and come to his own solution. The only thing that the varies is going to be the value system, but the value system then it should be explicit.

All of things are possible now. And I have five more minutes, so I’m going to use my five more minutes to put on a slideshow, about thirty slides, which we can do in five minutes very easily, of a study for Minneapolis-St. Paul, which is only part of the planning process I described. It’s only the ecological planning. But it’s been successful, and I think it has caused there to be the strongest instrument for metropolitan planning in the United States, undertaking perhaps the only ecological planning in the United States. Lights and slides.

 

Africa’s Outlook

Japan went from rapid growth following World War II to “lost decades,” and China somewhat later displayed similar characteristics, as described in the two previous blogs. Their post-war histories had much in common. One common trend, aging population and workforce, is shared by countries throughout most of the world.

The proportion of the population age 0 to 17 in each of the five continents displayed is projected to fall through the 21st Century. Africa currently has the highest proportion of its population in this age group, 47%; Europe is the lowest at 19%. These United Nations population projections use the Population Division’s medium fertility variant.


Likewise, all five continents are projected to experience an increasing proportion of their population age 65 and over. While Africa will have a much smaller proportion of its population in this age group, it will experience the highest growth rate, from 3% of its total population in 2015, to 15% in 2100.

The population between these two age groups, those age 18 to 64, represents the working-age population. For this important age group, the similarity among the continents ends. Only Africa is projected to increase its proportion of population in this age group. The working-age population will decrease proportionately in the other continents.

In 2015 Africa contained 13% of the working-age population. By the year 2100, Africa’s share of the world’s working-age population is projected to increase to 42%. With 16% of the world’s total population in 2015, Africa will make up 40% by 2100.

The diverging trends suggest a number of possible scenarios for the future. While other continents struggle to support their aging population, Africa’s future may lie in providing the goods and services that the rest of the world desires. The more desirable ratio of working-age population to elderly and children should enable African countries to raise living standards on par with other continents. Or African migrants may augment the dwindling work forces in other continents. To cloud the crystal ball further, overlay upon the population trends the uncertain future of automation and artificial intelligence, climate change and anti-immigrant populism. Africa in particular is more likely than other continents to suffer environmental degradation.

These same overlays could alter the United Nations’ assumptions for fertility, mortality and migration. Yet in the end, while Africans have little control over the “externalities,” they will not derive full benefit from a demographic advantage unless they overcome internal issues of disunity, poor governance and corruption.

Japan and China

When Japan’s Prime Minister Shinzo Abe spoke to the World Economic Forum on January 23, 2019, he addressed Japan’s shrinking population and workforce. Promoting what he called “womenomics,” he said, has raised the female labor force participation rate to an all-time high of 67%. The number of people over 65 still actively working has increased by two million. He also reported on legislation that will encourage as many as 340,000 skilled workers to come to Japan over the next five years. And he announced Japan’s commitment to two international trade agreements: The Trans-Pacific Partnership consisting of eleven Pacific Rim countries; and the EU-Japan Economic Partnership Agreement.

The United Nations 2018 World Statistics reported Japan’s female labor force participation rate as 50.4%, rather than 67%. Abe’s source is unknown, but he must contend with promoting the elevation of women in the labor force in opposition to established cultural practices.

A recent article in the New York Times described the difficulty that Japan’s working mothers have in gaining employment in upper level positions. Japan’s rigid gender roles assign a disproportionate share of household chores and child care to women. The article notes, in an analysis of government data, that “women who work more than 49 hours a week typically do close to 25 hours of housework a week. Their husbands do an average of less than five,” fewer than in any of the world’s wealthiest nations. Men in professional positions are often expected to work late at the office or go out drinking with clients. Mr. Abe’s goal is “lessening the burden women shoulder.”

Abe also alluded to recent improvements in the child poverty rate. Approximately one in six people live below the poverty line, slightly higher than the United States. Japanese director Hirokazu Kore-eda depicts a Tokyo group of adults and children living as a family that shoplifts to survive. The movie, titled “Shoplifters,” won the Palme d’Or at the Cannes Film Festival, and has been nominated for an Oscar. Culture is a growing export for Japan.

Notwithstanding significant differences in geography and governance, China shares several similarities with post-war Japan. Like Japan in the 1960s, ‘70s and ‘80s, China in the 1980s, ‘90s and 2000s experienced:

  • Resurrection of a broken economy aided by U.S. policy
  • Close cooperation between government and industry
  • Government protection against competitive imports
  • Rapid growth in manufacturing for export
  • Rising middle class of consumers
  • Unprecedented economic growth for decades, followed by slowing
  • Expansive investments in other countries
  • Participation in international trade agreements
  • Aging population projected to decline (1.397B in 2015 to 1.364B in 2050 to 1.020B in 2100)
  • Billions of products stamped “Made in China”

More recently, in Japan’s 1990s and 2000s and China’s 2010s have in common: Fertility rate below replacement level

  • Aging population and workforce
  • Low percentage of migrant population
  • Positive trade balance
  • Rising inequality
  • Rapidly increasing level of debt

The similarities suggest the prospect of lost decades, with Chinese characteristics. A recent article in Time magazine foresees a bleak future for China. Even though China’s one-child policy from 1980 to 2016 left the country with 24 million men of marrying age without prospect of finding wives, many women prefer careers over marriage as a path to security. Young people are expected to care for aging parents, and, often, grandparents. Women carry the greater burden by tradition. The Time article describes a future of “increasingly unequal society . . .and an economy crippled by unsustainable debts.”

Made in Japan

If you were a consumer living in the United States in the 1950s and 1960s, you frequently observed the phrase “Made in Japan” stamped on your purchases. In the aftermath of massive destruction in the Second World War, rebuilding of Japan’s economy created a bulwark against expansion of communism. During the Korean War Japan became a major supplier to the U. S. military for firearms and equipment. Government-industry cooperation, led by the Ministry of International Trade and Industry (MITI), produced increased foreign trade, lower unemployment rates and increased consumer spending.

In 1950, 48.3% of Japan’s workforce labored in agriculture. By the mid-1990s that percentage had declined to 5.2%, and to 3.4% in 2018. Textile products were Japan’s main export in the 1950s. Post-war industrial planning by MITI and the Economic Planning Agency led an economic shift from agriculture to manufacturing. Japan became a major trader, with quality brands such as Nikon cameras, Sony Walkman and television sets, Seiko watches and Toyota Coronas. (Toyoda Loom Works had transformed itself into the Toyota Motor Corporation.) Regulations protected Japanese businesses from competitive imports. Economic growth of 9.3% in the late 1950s and 10% in the 1960s put Japan’s economy second to the U.S. According to the World Factbook growth decreased to 5% in the 1970s and 4% in the 1980s.

Japan’s balance of trade (more exports than imports) grew, and with it, Japanese investments overseas. To circumvent import restrictions, Japanese cars for the U.S. market were built in U.S. factories, as well as exported from Japanese factories. In the mid-1990s, capital for construction of projects in Asia were estimated to be 40% to 60% sourced from Japan. With sustained economic growth, by 1991 Japan attained the world’s highest Gross National Product per capita.

After three decades of unprecedented growth, Japan’s economy slowed in the 1990s. Rapidly rising real estate and stock prices did not respond to monetary tightening by the Bank of Japan, and in 1991 asset prices plummeted, ushering in what has been known as Japan’s “lost decades.” Some of Tokyo’s best real estate lost 90% of its value, and some banks holding bad loans were allowed to go under. The unemployment rate shot up and the long-standing tradition of life-time employment declined. Economic growth in the 1990s averaged 1.7%. The World Factbook reported “Modest economic growth continued after 2000, but the economy has fallen into recession four times since 2008.” Even so, in 2017 Japan was the world’s fourth largest exporting country, following China, the U.S. and Germany.

Japan has the world’s second highest median age and near the lowest birth and fertility rates, coupled with no net migration. Its current population of 126 million is projected by the United Nations Population Division to decrease to 109 million by 2050 and 85 million by 2100. In his speech to the World Economic Forum on January 23, 2019, Japan’s Prime Minister Shinzo Abe described how his government was responding to these trends, and to the loss of 4.5 million working-age population since he took office six years earlier.

The next blogpost will compare Japan’s experience to that of China.

Regulating Artificial Intelligence

The previous blog post describes what artificial intelligence (AI) is and how it is used in business applications. It touched on the expected disruption in employment and training that automation and artificial intelligence will bring. AI has been compared to the industrial revolution in its demand for changes in education and shifts in the nature of work.

The majority of occupations involve at least some activities that are automatable, according to a report by McKinsey Global Institute. Maid service or harvesting crops by hand are examples of occupations which have not been automated. The McKinsey report’s midrange projection suggests that about 400 million workers worldwide could be displaced by automation between 2016 and 2030. Jobs changed by automation will affect more occupations than those that are lost. In that same time period, between 555 million and 890 million jobs will be added globally. Governments, businesses and institutions, together, are in positions to prepare the workforce for these changes, smooth a transition that could lead to temporary spikes in unemployment, and avoid a rise in inequality due to increased wage polarization.

And that addresses only the employment challenges of AI. The nature of AI introduces further challenges to privacy, bias, safety and abuse. Privacy concerns are already on the agenda of regulatory bodies worldwide. The European Union has been a leader in this area, adopting the General Data Protection Regulation (GDPR) in May 2018. The GDPR sets rules for data protection and privacy.

Enormous volumes of data must be amassed to train AI systems to perform their assigned function. Biases embedded in the data being collected, for example in job recruiting, will be perpetuated by the new system. Such a bias occurred when Amazon employed AI in its recruiting. Based upon Amazon’s previous ten-year hiring history, during which time the majority of applicants were men, the system “learned” to select male applicants over female applicants. Similarly, bias will continue into AI systems for mortgage lending or prison sentencing. Recognizing that bias has occurred will be difficult if the underlying algorithm is not transparent and monitored.

When algorithms are driving cars, safety is expected to improve, but systems will not be perfect. When injuries or deaths occur, legal issues of responsibility will arise. A report from the Wharton School discusses business ethics as related to automation and robotics. The power of AI will find applications in the military, robotics, politics and social media, where misuse can be dangerous. International rivalry over military power, economic domination or form of government presents fertile ground for disruption. A hefty diet of data points fed into a system over an extended period of time is ripe for unknown manner of malicious activity.

The need for intervention at both government and private levels is obvious. K-12 education, retraining, safety net, infrastructure, data security, job growth, and, not least, social stability, are just a sample of issues requiring thoughtful attention. To date, more attention is going to the commercialization of AI than the ethics.

Artificial Intelligence: Benefits and Stresses

The term General Purpose Technology (GPT) has been applied to a technology that becomes a platform for generating productivity gains in multiple sectors of the general economy. Prominent examples of past GPTs are the steam engine and the electric motor. Semiconductors and computers are recent examples of GPT. Artificial Intelligence (AI) has been called the most important GPT of our era. And as described in a recent report by McKinsey Global Institute, AI brings both promise and challenge.

Artificial Intelligence is the process of feeding into a computer massive amounts of data of a single domain so that the computer can make decisions within that domain. The process is referred to as “deep learning.” For example, by inputting all the possible linkages between two languages, a computer can be “taught” how to translate from one language to another. A similar process could teach a computer visual perception, speech recognition or decision making, or to drive a car. Computers learn from experience.

AI can outperform humans on routine tasks, increasing productivity and creating opportunities for innovation. Adoption of AI will make some skills and some jobs obsolete. Many existing jobs will change to integrate AI functions alongside human skills. While AI may well create more jobs than it destroys, the process of adoption will be disruptive, requiring significant retraining for existing jobs, and preparation for wholly new occupations.

Application of AI depends on obtaining large and comprehensive amounts of data. Business are applying AI to increase market share and reduce costs; in operating call centers using voice recognition; in logistics; and in preventive maintenance.

The McKinsey report warns that AI comes with significant potential downsides, not least of which is capture of market share by ever-larger businesses. Efficiencies gained mean periods of at least temporary unemployment as workers make transitions. The report challenges governments and businesses to address widening economic gaps between countries and between individuals within countries. Governments must also expose and attack misuse of AI in data privacy, social media, politics, cybersecurity and military applications.

A new Brookings Institution report, “Automation and Artificial Intelligence,” draws on McKinsey in concluding that “automation will bring neither apocalypse nor utopia;” there will be benefits and stresses. The general consensus of these reports is that “rough times are ahead in the labor market that will cause very real dislocations for many workers even if the total number of jobs holds steady.”

Democracy in 2018

The notion that democracy may be on the wane as the preferred form of governance would have been inconceivable twenty years ago. Yet now, even some of the older western democracies exhibit disturbing trends that have been described in an annual survey by the Economist Intelligence Unit as “democracy recession.”

The annual survey, conducted since 2006, ranks each of 167 countries on 60 indicators, covering five categories: electoral process and pluralism; civil liberties; functioning of government; political participation; and political culture. Based upon total scores, countries fall into one of four types of regimes: full democracy; flawed democracy; hybrid regime; or authoritarian regime.

From 2006 to 2018 the number of full democracies decreased from 26 to 20, while the number of hybrid regimes increased from 33 to 39. Seven countries that were considered full democracies in 2006 had been downgraded to flawed democracies by 2018. They are Belgium, Czech Republic, France, Greece, Japan, Portugal and the United States.

The 2018 report highlights the one category to register an improvement – political participation, which is a combination of nine separate indicators. At a global level, advances were recorded in two of those indicators – the proportion of population following politics in the news, and the proportion willing to engage in lawful demonstrations.

But the most striking advance in political participation was recorded in the participation of women, which improved more than any other of the 60 indicators in the Democracy Index model. In some countries, participation has been facilitated by setting quotas for candidates, or the establishment of reserved seats for women. Most notably, the report cites the United States’ 2018 mid-term elections, in which women’s elections to Congress reached an all-time high.

The report finds the improvement in political participation more striking when compared alongside the deterioration in other categories. The functioning of government is the lowest-ranking category in the index, due to consistently low scores for transparency, accountability and corruption.

The 2018 report ties increased political participation to deterioration in the functioning of government and political culture. Voter turnout was high in big elections in Brazil and Mexico as well as the United States. The report states that “increased engagement, voter turnout and activism have in many countries around the world been in the name of anti-establishment parties and politicians who could shake up political systems and the practice of democracy in unexpected ways.” The report warns that the rise in political engagement, combined with a longer-term trend toward limitations on civil liberties, “is a potentially volatile mix, and could be a recipe for instability and social unrest in 2019.”

A Populist Agenda

The two most recent blog posts dealt with concentration of power in corporations in the early 20th century and current concerns with growing corporate concentration in numerous industries. Effects of concentration in the political sphere go beyond the limitless campaign contributions and lobbying, to rewarding politicians with jobs in retirement in return for their support, to influencing legislation meant to regulate the lobbyists’ industry or allowing lobbyists to actually write the legislation.

The latter post concluded that many social and political issues will remain unresolved until “big money” campaign financing is curtailed. Indeed, popular positions on several issues revealed by pollsters such as Pew, Gallup and news organizations, among others, are diametrically opposed to positions held by influence-seeking big donors.

For example, an April 2018 Gallup poll found 66% of Americans believe corporations pay too little taxes, and 62% believe upper income people pay too little taxes. An NBC/Wall Street Journal survey in April 2018 found only 27% approval of the 2017 tax law. In a Pew Research Center survey, 77% of adults believe there should be limits on individual and organization campaign spending. A Pew survey of voters in September 2018 found 63% believe the economic system in the U.S. is unfair, and 58% believe the government should assure health care is available to everyone.

When Pew asked adults if it is important for everyone to have equal opportunity to succeed, 95% said yes. Likewise, 93% said health care costs present a big problem, and 82% felt the same about inequality. Politicians of various stripes can give lip service in support of these broad objectives, while “big money” supports legislation that is in conflict.

Distrust of government is understandable when wealthy individuals or corporations promote legislative action that conflicts with popular objectives. The common theme evident from polling responses is the problem of extraordinary inequality in income and wealth. While polling results offer a sound base for development of a populist political agenda, change is unlikely as long as the ironically titled “Citizens United” decision prevails.

Too Big (Part Two)

The previous blog post reviewed the history of early twentieth century antitrust action. Led by President Theodore Roosevelt and Supreme Court Justice Louis Brandeis, the scope of antitrust went beyond strictly economic consideration of anticompetitive activity and monopolistic control of prices. Impacts on employment, worker pay and corporate political influence entered the deliberation.

Tim Wu, a law professor at Columbia Law School, has written a book titled The Curse of Bigness: Antitrust in the New Gilded Age.” He states, antitrust law “needs better tools to assess new forms of market power . . . and to take seriously the link between industrial concentration and political influence. . . It needs stronger remedies, including a return to breakups, that are designed with the broader goals of antitrust in mind.”

Wu links economic concentration and dictatorship in a November 2018 article in the New York Times. In that article, Wu discusses the extreme economic concentration that developed in Germany following World War I, when Hitler’s rise to power was facilitated by monopolistic companies in key industries.

That danger was recognized and addressed in the U.S. by the adoption in 1950 of stronger anti-merger legislation nicknamed the Celler-Kefauver Act. Nonetheless, later twentieth century antitrust activity returned to the consumer protection model – monopoly was okay if it didn’t raise prices – and even then, few antimonopoly antitrust cases were brought by the Justice Department. The late 1970s breakup of AT&T was a notable exception, and the Clinton administration’s pursuit of Microsoft appeared winnable, but the incoming Bush administration settled without a breakup.

In recent years the power of corporate influence in opposition to popular will was compellingly communicated in two renowned cases. In his New York Times article referenced above, Tim Wu cited the pharmaceutical industry’s lobbying during the leadup to the 2003 Medicare Prescription Drug, Improvement, and Modernization Act. He states that lobbying by the pharmaceutical industry “cost the industry more than $100 million – but it returns some $15 billion a year in higher payments for its products.”

More directly impacting the balance of power between individuals and corporations is the 2010 Supreme Court decision Citizens United vs Federal Election Commission. The Court ruled that political expenditures on political campaigns by corporations and unions are protected “free speech” under the First Amendment. Spending by outside groups soared following the decision.

Popular disgust with corporate power and greed are at an intensity reminiscent of Theodore Roosevelt’s presidency. Until the influence of corporate campaign financing, and so-called “big money” in general, is curtailed, the many grievances over inequality, gerrymandering, voter purges, minority disenfranchisement and many more issues will be all the more difficult to resolve.

Too Big (Part One)

Criticism of the growing power and influence arising from corporate consolidation is heard from across the political spectrum. The trend is evident in industries as varied as communication media, airlines, healthcare and waste disposal. A 2016 in-depth analysis of U.S. businesses  documented that market concentration has systematically increased in over 75% of U.S. industries over the last 20 years. Given the flood of merger and acquisition activity, it is not surprising that over the same period, U.S. public markets lost almost 50% of their publicly traded firms.

The concentration of power has reminded elected officials, journalists and economists of the economic situation in the so-called Gilded Age around the turn of the twentieth century. Industrialists John D. Rockefeller, J.P. Morgan and Andrew Carnegie were accumulating monopoly power over major industries. Although Congress had passed the Sherman Antitrust Act in 1890, enforcement was minimal until Theodore Roosevelt ascended to the presidency following the 1901 assassination of William McKinley.

The Sherman Act prohibits anticompetitive activity that enables a business or group of like businesses to monopolize the market for their product or service. A narrow interpretation of the act examined only the economic consequences of anticompetitive action: Does the action drive competitors out of business and/or cause costs to consumers to rise? As president, Theodore Roosevelt broadened the sphere of government intervention with respect to relations between corporations and individuals. (See “Early Twentieth Century Progressivism.”) He wrote in his autobiography that he fought “for the abolition of privilege,” and argued for equal treatment:

a simple and poor society can exist as a democracy on a basis of sheer individualism. But a rich and complex industrial society cannot so exist; for some individuals, and especially those artificial individuals called corporations, become so very big that the ordinary individual is utterly dwarfed beside them, and cannot deal with them on terms of equality. It therefore becomes necessary for these ordinary individuals to combine in their turn, first in order to act in their collective capacity through that biggest of all combinations called the Government.

Louis Brandeis, who was appointed to the Supreme Court in 1916 by President Woodrow Wilson, concurred with Roosevelt’s position on government’s role vis-à-vis concentrated power. Brandeis cited “the curse of bigness” as a threat to democracy in his book titled Other People’s Money, and How the Bankers Use It. He wrote, “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.” Thus, antitrust came to address political power as well as economic power.

Governing 1,417,332,945 People*

Mao Zedong founded the Chinese Communist Party (CCP) in 1921, and defeated Chiang Kai-shek’s Kuomintang (KMT) nationalist party in civil war. The KMT fled to Taiwan and the CCP declared the People’s Republic of China on October 1st 1949. The CCP under Mao reshaped Chinese industry and farming, instituting his Chinese version of communism. But mass movements to improve production resulted in famine and millions of deaths.

Factional conflicts following Mao’s death in 1976 eventually led to the rise of Deng Xiaoping. Deng never held positions as head of state or the CCP. He shifted China away from the one-man rule of Mao. Deng introduced collective leadership and instituted term limits and a mandatory retirement age. He opened China to the global economy, enabled farmers and industrial enterprises to make economic decisions and pursue profits, and rewarded initiative, telling his workers “to get rich is glorious.”

In the early 1980s Deng supported the rise of Hu Yaobang through the ranks to general secretary of the CCP. Hu replaced discredited Maoist ideology with a more open political system, including elections for positions on the policy-making committee and government transparency. He was popular among students who supported his political reforms, and following his death in April 1989, thousands of mourning students marched to Beijing and Tiananmen Square. The gathering at Tiananmen grew to an estimated 1.2 million people, leading to imposition of martial law.

On June 4, 1989 Chinese troops entered Tiananmen and fired on demonstrators, ending in death estimates of at least 300 and as many as 10,000. No official report of deaths was ever given. Deng approved the declaration of martial law at Tiananmen Square. He also led the economic opening of China’s economy to the outside world. His 1992 tour of south China reinvigorated the market economy, a move that introduced decades of rapid growth and provided the CCP with a base of legitimacy.

As China’s economy grew, United States administrations reasoned that increased commercial relations with China would bring liberalization to the Chinese economy. An article in Foreign Affairs  by Kurt M. Campbell and Ely Ratner stated that this position “drove U.S. decisions to grant China most-favored-nation trading status in the 1990s, to support its membership in the World Trade Organization in 2001, to establish a high-level economic dialogue in 2006, and to negotiate a bilateral investment treaty under U.S. President Barack Obama.”

China recorded GDP real growth rates of ten percent or more during most years from the early 1990s through 2010, becoming a prominent trading partner with the world’s largest economies. But economic liberalization did not bring political liberalization. The CCP offered a bargain to the Chinese people: it is okay for you to make money and enjoy some personal freedom, but you may not challenge the party’s power or form organizations other than those that are under control of the party.

Although the CCP strives for “stability” and “harmony” in balancing economic growth and popular support, citizen interaction with government officials, especially at the local level, is frequently painful. Corruption and collusion among political officials and business elites is rampant. Property rights are ignored by local officials. Reports of “public-order disturbances” are said to occur annually by the tens of thousands, with one report estimating about 180,000 incidents occurred in 2010. Protests by farmers and students are common. An October 6th, 2018 protest by military veterans was reported by The Economist.

One-man rule has virtually been restored since Xi Jinping came to power in 2012 and removed term limits on his presidency. Fighting corruption and maintaining order are top priorities. Activists, journalists and human rights lawyers routinely receive lengthy jail terms. Social media and technology such as facial recognition and ubiquitous monitoring devices such as those pictured enable the government, and the CCP, to identify threats and locate individuals quickly. China expert Orville Schell writes, “China is sliding ineluctably backward into a political climate more reminiscent of Mao Zedong in the 1970s than Deng Xiaoping in the 1980s.”

In an article in the New York Times titled “Xi Sets China on a Collision Course With History,” Max Fisher wrote, “Most Chinese, Beijing seems to hope, will accept authoritarian rule if it delivers at least some of the benefits promised by democracy: moderately good government, somewhat responsive officials and free speech within sharp bounds.”

* Population of China on November 30, 2018 according to official United Nations estimate.

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Climate Change Revisited

“Limiting global warming to 1.5 would require rapid, far-reaching and unprecedented changes in all aspects of society.” So wrote the Intergovernmental Panel on Climate Change (IPCC) in its press release announcing findings of a new report. The IPCC met in Incheon, Republic of Korea in October 2018. The report was produced at the request of the United Nations Framework Convention on Climate Change (UNFCCC) when UNFCCC adopted the Paris Agreement in 2015.

The agreement signed in Paris by 195 nations seeks to keep global temperatures within 2.0 of pre-industrial times, and ideally go beyond that to limit temperatures to within 1.5. The target is based on atmospheric temperature in the 1850s, when large-scale burning of coal began. Scientists estimate that human activity has caused temperatures to increase 1.0 since the 1850s, more than halfway to the 1.5 mark. Continued emission of greenhouse gases at the current rate would warm the atmosphere to the 1.5 level by 2040.

The IPCC report concluded that pledges to reduce greenhouse gas emissions made at the Paris climate conference in 2015 will be insufficient to avoid temperatures rising to the 2.0 level. At that temperature sea level rise will displace millions of people in Japan, the Philippines, China, India, Indonesia, Vietnam, Bangladesh, Egypt and the United States. Arctic summers will be ice-free one out of ten years. Extremely hot days will become more common and severe, causing more deaths and more forest fires. Pollination of crops and plants will suffer from the loss of insects. Most of the world’s coral will be lost. The cost of damages is projected to grow to $69 trillion.

Thus far, progress on achieving pledged reductions in emission of greenhouse gases has not occurred. Furthermore, the United States, the second-largest greenhouse gas emitter, has announced its intention to pull out of the Paris accord, and Brazil may follow, pending a decision by the newly-elected President Jair Bolsonaro. Commitments are being made to future coal-based energy production, even though the IPCC report is unequivocal in asserting that there is no way to mitigate climate change without eliminating coal as an energy source.

These trends must be reversed in order to limit warming to 1.5. According to the press release, doing so “is possible within the laws of chemistry and physics but doing so would require unprecedented changes,” in land use, energy, industry, buildings, transport and cities. Reforestation, carbon capture and electric transport systems are among the essential elements of plans to meet greenhouse gas reduction goals.

The IPCC report will be a key scientific input when signatory governments again meet in Poland in December 2018 for the Katowice Climate Change Conference.

Tourism

Discussions of international trade rarely dwell on a category that is among the most important for developing nations, namely tourism. The United Nations World Tourism Organization (UNWTO) and the World Trade Organization (WTO) issued a joint statement at an October 8, 2018 meeting in Geneva, Switzerland recognizing tourism as the third-largest sector in international trade, behind only chemicals and fuels, and ahead of automotive products. With $1.6 trillion in 2017 exports, tourism accounts for 10.4% of global domestic product, 30% of global services exports, and employs 313 million people worldwide. In many developing countries, tourism is the top export category.

The UNWTO 2018 publication Tourism Highlights reports 2017 international tourism totaled 1.3 billion tourist arrivals, a 7% increase over the previous year. Leisure accounted for 55% of visits, while business visits totaled 13%. (The remainder included religion, health, visits to friends or relatives.) 57% of tourists arrived by air, and 37% by road. For the countries receiving tourists, benefits go beyond the direct monetary receipts, contributing to economic development, fostering preservation of cultural assets and protection of natural environments.

Just over half the tourists, 672 million, had Europe as their destination. Asia and the Pacific were the destinations of 323 million, the Americas received 211 million, Africa 63 million and the Middle East 58 million. The counts for individual countries are hard to imagine in some cases, particularly in relation to their resident populations. France recorded 86.9 million tourists in 2017. France is a country of 65 million people. Spain, with 46 million people, had 81.8 million visitors. The remainder of the top five destinations were the United States with 76.9 million visitors, China with 60.7 million and Italy with 58.3 million visitors, slightly fewer than its 59 million residents. Italy and Spain each increased its 2017 visits by six million over 2016.

Several factors contribute to the size of the flow of tourists. The depreciation of the British pound, for example, made visiting there more affordable. Purchasing power relative to the tourists’ home countries impacts travel decisions. Other factors include air connectivity, weather (a major issue for Caribbean destinations) and security. The political relations between sending and receiving countries, and the ease of obtaining visas impact travel decisions. Rising levels of disposable income in Asia, Central and Eastern Europe, the Middle East, Africa and Latin America have generated increased tourism.

Those big tourist counts for Spain and Italy come with a downside. As noted in a recent article in Time magazine, “In the decade since the financial crisis began, tourism has come to be seen by European countries as an economic lifesaver. The industry generated $321 billion for the E.U. in 2016 and now employs 12 million people.” Some natives believe that tourists are destroying the environments that attract them. Every day during high tourist season, four or five cruise ships deposit their thousands of passengers in Barcelona. The city has taken measures to control tourist traffic, including limiting docking licenses and prohibiting construction of new hotels in the city center. Venice and Amsterdam, Greece, Norway and Iceland have taken similar measures.

With thousands of residents who depend on tourist dollars, tourism is a mixed blessing, as countries still growing their tourist industries can learn from established destinations.

A Plan to Address Income Inequality

“The future is not what it used to be” may be an apt response to my previous two blog posts. Big changes are in store.

In “Diverging Demographic Destinies” I reviewed the disconnect between the fast-growing population over age 65 and retired, and the relatively smaller population age 15-64 in the labor force expected to support services for persons over 65. This change is occurring in all parts of the world.

In “Technology and the Work Force” I wrote about recent studies that addressed how automation can be expected to replace many low-skilled, repetitive jobs while creating new jobs requiring advanced technical skills. Although analysts see jobs created outnumbering jobs lost, not all future jobs will require advanced technical skills. A significant share of new jobs will be in fields such as health care that involve personal interaction not replaceable by machines, and many will be low-paying.

The prospect of fewer jobs and/or lower-paying jobs has prompted discussion of a universal basic income, or UBI, about which I wrote in “Experimenting with a Universal Basic Income.” A basic income, adequate to provide essentials, would be distributed to all citizens. Canada, Finland and Oakland, California have experimented with the concept. The UBI would provide a floor that would prevent people from falling into poverty, addressing inequality to some extent.

A recent proposal for a national distribution of income to all citizens comes in the form of a social wealth fund, defined as “collectively held financial funds, fully owned by the public and used for the benefit of society as a whole.” “Sovereign wealth funds” and “citizen’s wealth funds” are similar names for the same concept. The proposal, by lawyer and policy analyst Matt Bruenig, is called the American Solidarity Fund.   He compares it to the Alaska Permanent Fund, set up in 1977 funded with oil royalties. Those funds are invested in a diversified portfolio; over 34 years it has an average return of 8.78%. The dividend paid to each citizen of the state has been as high as $2,072, or $8,288 for a family of four.

Bruenig’s American Solidarity Fund would be owned by the citizens of the United States, with each citizen receiving one share. Shares would not be transferable and would return to the fund upon the owner’s death. As Bruenig proposes, “the government will gradually accumulate assets for the fund to manage, such as stocks, bonds, and real estate. As the assets under management increase, the value of the shares held by the citizen-owners will increase.” Citizen-owners will be paid an annual dividend from the income earned by the fund.

The annual dividend would be a percentage of the five-year moving average of the fund’s market value. In his example, a 4% distribution based upon a five-year average fund value of $10 trillion would be $400 billion. Bruenig does not estimate what the market value of the fund could reach, but for comparison he reports that the current collective net worth of all U.S. households and nonprofit organizations is approximately $100 trillion. Using Bruenig’s distribution of $400 billion for calculating individual dividends, the dividend per person for the 2017 estimated U.S. population for 325 million would be $1,228, and a family of four would receive $4,912.

In addition to Alaska’s Permanent Fund, Bruenig compares his plan to existing plans in other U.S. states: the Texas Permanent School Fund, Utah’s State School Fund, and Oregon’s Common School Fund. Bruenig states that the Alaska Permanent Fund is the only social wealth fund in the world that pays an annual cash dividend. He believes the concept applied to the whole country would be a significant step toward reducing income inequality.

Technology and the Work Force

“Automation, in my view, is coming along just in time to address this coming period of labor shortages.” That is Hal Varian speaking. He is the chief economist at Google, addressing a symposium hosted by the Council on Foreign Relations.

Demographic trends foretell serious shortages of working age populations in developed countries. (See here)   People born in the United States between 1946 and 1964, the “Baby Boomers,” are retiring at the rate of four million per year. The birth rate during that boom period averaged approximately 24 births per thousand population. By 2016 the U.S. rate had fallen to 12.2 per thousand. In Europe the 2016 birth rate averaged 10.7.

How automation and the aging workforce will interplay is addressed in two recent studies. A report prepared for the World Economic Forum (WEF), The Future of Jobs 2018, predicts that more than half of today’s work will be performed by machines by 2025, compared to today’s 29%. Based upon surveys of human resource officers, the report projects numbers of jobs gained and lost due to automation. Globally, excluding agriculture, between 2018 and 2022, 1.74 million jobs will be created by automation, approximately 75% more than the number of jobs lost.

An early 2018 article in The Wall Street Journal  reported predictions from other analyses. “Analysts at Forrester Research Inc. predict that over the next five years, about 4 million jobs will be lost in the U.S. as a result of artificial intelligence and related technology, including software robots. Gartner Inc. has said that artificial intelligence will create 2.3 million jobs in 2020, while eliminating 1.8 million.”

A second study, produced by Professor Ken Goldberg of the University of California, Berkeley and Tata Communications of India, “Cognitive Diversity: AI and the Future of Work,”  sees Artificial Intelligence as able to enhance job satisfaction in many jobs, eliminating mundane tasks and enabling more creativity. The report also asserted that previous technological innovation has not necessarily had expected negative effects on employment. Rather, it has redirected employees such as bank tellers and cashiers to other tasks.

For more developed countries, automation is likely to result in reshoring of some jobs – that is, bringing jobs that can be automated back to the countries that out-sourced the jobs to countries with cheaper labor. As the demographic destinies blog post reported, there is an increasing shortage of working age population to support retirees. Reshoring automated jobs will not address that problem. As additional jobs are replaced by automation, the WEF expects major issues to arise related to “re-skilling” employees.

Based upon input from business executives of global companies, the WEF report has an optimistic outlook for rising middle classes in emerging markets: “even if factory automation and labour augmentation in advanced industrial economies might lead to some re-shoring over the 2018–2022 period, many emerging economies are increasingly shifting toward a domestic consumption driven growth model, with rising local middle classes generating increased demand for goods and services traditionally intended for export.” That is good news for countries in Africa that have younger populations.

The WEF report projects gains in healthcare, education and business services in developing economies. Demand for assembly and factory workers is projected for North Africa and Sub-Saharan Africa. Software developers and data analysts are cited as emerging job categories in those areas also, a finding consistent with a previous blog post on current tech businesses in Central Africa.

Projections for the future of automation present challenges and opportunities, capable of complementing current demographic trends, or exacerbating them. The WEF report advocates proactively managing that transition: “As technological breakthroughs rapidly shift the frontier between the work tasks performed by humans and those performed by machines and algorithms, global labour markets are undergoing major transformations. These transformations, if managed wisely, could lead to a new age of good work, good jobs and improved quality of life for all, but if managed poorly, pose the risk of widening skills gaps, greater inequality and broader polarization.”

Diverging Demographic Destinies: A Fifty Year Perspective

In one of my earliest posts to Fifty Year Perspective, I laid out the straightforward logic of forecasting population. Using historical data for births, longevity and migration, the demographer can extend past trends forward while taking account of any developments that are expected to alter those trends.

The United Nations has released World Population Prospects 2017  with estimates through 2015 and projections to 2100. In the next 50 years world population is projected to increase by 41%. The projections are based on a median fertility assumption.

There are stark differences among continents and countries in the increases of their populations and their age distributions. The African continent is expected to account for two-thirds of the world’s population growth, with its population increasing by 166% between 2015 and 2065; Middle African countries expect a 229% increase. Other continents are projected to grow at much slower rates – all under 50% with the exception of Europe, which is projected to decrease in population by 7%.

Asia has a mixture of growing and shrinking population regions. Overall the continent is projected to grow by 18%, but Western Asia, which includes the Middle East, is projected to grow 69%, and South-Central Asia (including Afghanistan, Bangladesh, India and Pakistan) projects a 34% growth rate. Eastern Asia, including China, Japan North and South Korea, projects a population loss of 11%. Similarly, Northern Europe is projected to have a 17% growth in population, and Western Europe 3% growth, while the population of the continent as a whole decreases. Worldwide, 40 countries already have declining populations.

Shrinking populations correlate with fewer persons age 15-64 in the labor force to support services for persons over 65, the so-called old-age dependency ratio.  The world average ratio of people aged 15-64 for every person 65 or over was 7.9 in 2015. That is projected to decrease to 3.4 in 2065. The ratio for Africa is projected to decrease from 16.1 to 8.1, still above the 2015 world average. The ratio is expected to fall below 2.0 in Eastern Asia and Southern and Western Europe. Those areas face decreased economic growth and reduced expenditures on public goods such as infrastructure, not to mention pensions.

The portion of population under five years of age is shrinking rapidly as birth rates fall across the world. Figures for that age group in 2015 were as high as 18% in Middle Africa and as low as 5% in parts of Europe. All are projected to decrease in the next 50 years, to around 10% on the African continent and 4-6% elsewhere. As China learned when its one-child policy reduced births precipitously, the future work force is inadequate to maintain economic expansion. To counter this trend, some countries have turned to parental leave of a year or more and subsidized child care to expand their work forces.

Increasing longevity is acutely evident in the portion of world population at the other end of the spectrum. A larger population age 85 and over can expect rising health care costs. Less than 1% of the world’s population was in that age group in 2015. By 2065 it is projected to increase fourfold to 2.9%. The European continent will have the highest proportion of population 85 and over at 6.8%, and Africa the lowest at 0.6%. At sub-continent level, Japan stands out with its projected 12.6% population 85 and over. The impact on health care expenditures for this increasing age group will be yet another challenge for populations with shrinking work forces. Who will cover these expenditures – government, corporations, children of retirees or the retirees themselves – will likely continue to vary by country.

These variances among continents and countries in demographic futures raise opportunities as well as challenges. Prominent among possible policy options is migration policy. The UN projections used a “normal” migration assumption, using past international migration estimates and consideration of the policy stance of each country, plus recent fluctuations in migration numbers, refugee flows and labor flows. Migration policy represents a country’s most direct opportunity to address a shrinking work force, and the most controversial.

United Nations Population Estimates and Projections 2015-2065
Region Old Age
Dependency Ratio
% Population
Under 5
% Population
85+
Total Population
in thousands
% Population Change
2015 2065 2015 2065 2015 2065 2015 2065 2015-2065
WORLD 7.9 3.4 9.1 6.7 0.7 2.9 7,383,009 10,409,808 41
AFRICA 16.1 8.1 16.1 9.7 0.1 0.6 1,194,370 3,181,161 166
ASIA 9.0 2.9 8.3 5.4 0.5 3.3 4,419,898 5,230,800 18
Australia/New Zealand 4.4 2.4 6.5 5.4 2 5.5 28,414 42,340 49
EUROPE 3.8 2.0 5.0 4.9 2.2 6.8 740,814 689,365 -7
South America 8.5 2.3 8.0 4.9 0.7 4.9 416,436 500,185 20
Central America 10.4 2.6 9.5 5.1 0.7 4.4 172,635 238,890 38
Eastern Africa 17.8 8.0 16.2 9.5 0.1 0.5 399,458 1,124,332 181
Middle Africa 17.7 8.0 18.0 10.5 0.1 0.3 153,743 505,458 229
Northern Africa 11.9 4.3 12.5 7.3 0.3 1.7 225,136 404,451 80
Southern Africa 13.2 4.6 10.6 6.3 0.3 1.3 63,420 90,905 43
Western Africa 19.0 11.5 17.0 10.8 0.1 0.2 352,614 1,056,015 199
Eastern Asia 6.5 1.8 5.9 4.4 0.9 6.3 1,635,150 1,454,308 -11
South-Central Asia 12.1 3.6 9.8 5.6 0.3 1.9 1,892,013 2,529,274 34
South-Eastern Asia 11.4 3.3 9.1 5.8 0.4 2.5 634,610 811,277 28
Western Asia 12.4 3.7 10.7 6.6 0.3 2.3 258,124 435,942 69
Eastern Europe 4.7 2.2 5.8 5.0 1.5 4.8 293,244 241,974 -17
Northern Europe 3.5 2.2 6.1 5.2 2.4 6.2 103,097 121,009 17
Southern Europe 3.3 1.6 4.6 4.3 2.8 10.2 152,441 129,359 -15
Western Europe 3.3 1.9 5.1 4.9 2.7 7.3 192,032 197,023 3
China 7.5 1.9 6.1 4.4 0.6 5.5 1,397,029 1,248,118 -11
India 11.7 3.6 9.0 5.5 0.3 1.8 1,309,054 1,675,744 28
Japan 2.3 1.4 4.2 4.2 3.8 12.6 127,975 99,543 -22
United Kingdom 3.5 2.1 6.2 5.2 2.4 6.4 65,397 77,590 19
Canada 4.2 2.1 5.4 4.9 2.2 6.4 35,950 47,447 32
Mexico 10.2 2.4 9.2 4.8 0.7 4.9 125,891 167,250 33
United States 4.5 2.4 6.2 5.7 1.9 5.1 319,929 412,055 29

Market Trends Impacting Inequality

A premise of this blog, Fifty Year Perspective, is that the complexity of our world obscures relationships among many issues. The Global Issues Matrix found here displays over 50 such issues and gives an example at the bottom of the page of how one issue, Governance, impacts or is impacted by 29 of the other issues in the matrix. The essence of a long-term perspective is to anticipate results from taking, or not taking, a particular action in the present.

A case in point is the current debate on inequality and how market structures impact it. Recent articles have linked inequality to government action. Writers for the New York Times, the World Post, the Economist and a study from the National Bureau of Economic Research (NBER), among others, shed light on trends in corporate concentration through mergers and acquisitions, antitrust enforcement, lobbying and competitiveness, and how those trends are impacting prices, wages and inequality.

David Leonhardt, writing online for the New York Times, used the example of smart phone service to argue that government policy enables large companies to raise prices. U.S. antitrust policy has allowed companies to grow so large that they can raise prices while holding down wages. A smart phone service which costs $100 per month in the U.S. may cost $30 less in Europe, where antitrust has been taken more seriously.

In their working paper for the NBER, German Gutierrez and Thomas Philippon asserted that U.S. markets were more competitive than European markets until the 1990s. Now they find that European markets have lower business concentration, lower excess profits and lower regulatory barriers to entry. They attribute stronger antitrust enforcement to the independence of the EU’s central bank and Directorate-General for Competition, whereas in the U.S. the Federal Trade Commission and the Department of Justice are more subject to political influence. “US firms spend substantially more on lobbying and campaign contributions, and are far more likely to succeed than European firms/lobbyists.”

A 2016 analysis by The Economist found increased concentration in two-thirds of the industries in the U.S., and the power resulting from economic concentration enabled firms to offer lower wages because workers had fewer alternative employers. Likewise, Neil Irwin, a columnist for The Upshot, wrote “Two of the most important economic facts of the last few decades are that more industries are being dominated by a handful of extraordinarily successful companies and that wages, inflation and growth have remained stubbornly low. Many of the world’s most powerful economic policymakers are now taking seriously the possibility that the first of those facts is a cause of the second.”

The theme chosen for the Federal Reserve Bank’s 2018 meeting at Jackson Hole, Wyoming, “Changing Market Structures and Implications for Monetary Policy,” directly addresses how to identify appropriate policy responses to these trends toward increased concentration and profits, slower growth and lower wages. Positions presented by economists at the meeting do not provide a single definitive direction for how the Federal Reserve should proceed.

China’s Marshall Plan

When Chinese President Xi Jinping introduced the idea in 2013 of a 21st century Silk Road, his expressed purpose was economic development along the routes. The land-and-sea route was envisioned as promoting regional economic cooperation, strengthening relationships between civilizations and promoting world peace and development.

Referred to as the Belt and Road Initiative, or BRI, the project encompasses over 70 countries in Asia, Europe and Africa which together include half the world’s population and a quarter of world GDP. It extends from several major Chinese cities to Indonesia, Kenya, the Mediterranean Sea and as far west as the Netherlands, with numerous points in between.

 

Although Chinese scholars deny that the BRI and the Marshall Plan are comparable, a February 2016 article in The Diplomat  found similarities based upon official Chinese communications. According to the article written by Simon Shen, both anticipated increasing exports, the U.S. exporting to Europe, and China exporting to Asia, Africa and Europe; both sought to increase international use of their respective currencies; both desired to achieve global influence; and both wanted to strengthen political ties.

A sampling of the projects illustrates the scope of BRI, as well as its effects. Duisburg, Germany is a former rust-belt town that BRI made its first European stop for 80% of the trains from China. According to a July 2018 article in The Guardian, approximately 30 trains arrive from China each week stocked with Chinese goods for further distribution via waiting ships on the Rhine River, and connecting from there to countries throughout Western Europe. So far, for every two full containers transiting through Duisburg from China, only one makes the return trip fully loaded

Kenya signed an agreement for China to build a railway from the port of Mombasa to Kenya’s capital, Nairobi. The 293-mile line opened in June 2017, cutting an eight-hour journey down to five hours. The line was 90% financed by China; it is run by Chinese Communications Construction Company. The line has had its critics, accusing it of not being economically viable, of taking livelihoods from Kenyan trucking businesses and of discrimination against local employees.

The Tanzanian fishing village of Bagamoyo was selected as the location of what will become the largest port in Africa. The ten-billion-dollar project will clear Bagamoyo and four other villages to make way for factories and apartment blocks to house a future population of 75,000. Other projects include a power station in Bangladesh, high-speed rail lines in Iran and Indonesia, a 715-mile six lane highway in Pakistan between Karachi and Lahore, and a 470-mile electric railway connecting Addis Ababa in Ethiopia to the port of Djibouti on the horn of Africa, site of China’s first overseas military base. This port links 400 million people living in the nineteen countries that make up the Common Market for Eastern and Southern Africa (COMESA).

BRI is expected to cost as much as 1.3 trillion dollars, thirteen times the 100 billion dollars the Marshall Plan expended in current dollars. Undoubtedly BRI is creating great enthusiasm in countries that have long-standing, unfulfilled needs for infrastructure improvements. But because practically all new projects are funded by Chinese commercial loans, countries are assuming high levels of debt. In recent years China has written off debt in exchange for territory or, in the case of Sri Lanka, assumed control of a China-financed seaport as payment. In contrast, funds under the Marshall Plan were in the form of grants. Although BRI and the Marshall Plan had similar objectives, BRI projects must prove profitable for the countries receiving them. If not, those countries will face insurmountable levels of debt that in some cases approach the size of their national GDP. In that event, it will remain to be seen how many of those new and enlarged ports around the Indian Ocean will instead host the submarines, aircraft carriers and warships that the Chinese navy is building.

 

 

Attacks in Cyberspace

Known secrets: Iran melted down computer systems at the Sands Casino in Las Vegas in response to anti-Iran comments by the Sands’ owner in 2014. China hacked U.S. computers to collect personal information on over 20 million federal employees in 2015. Russia shut down an electric utility in Ukraine on Christmas Eve in 2015. North Korea hacked Sony Pictures computers to stop release of a movie uncomplimentary of its president in 2014. Russia hacked into the computers of the Democratic National Committee to obtain presidential election-related research in 2016. North Korea infected computers worldwide in May 2016 with the WannaCry malware program, sabotaging medical, banking and transportation systems.

Before any of these occurred, the U.S. and Israel destroyed a thousand Iranian centrifuges using a “computer worm” called Stuxnet. That 2010 attack, according to David Sanger in his book The Perfect Weapon; War, Sabotage, and Fear in the Cyber Age, was “the opening salvo in modern cyber conflict.”

The book relates examples of cyber attacks using social media as well as viruses and worms and implants. “Cyberweapons,” he states, “come in many subtle shades, ranging from the highly destructive to the psychologically manipulative.” One of the most chilling stories he tells is the Russians’ use of twenty-somethings of their so-called Internet Research Agency in St. Petersburg, which took place leading up to the 2016 U.S. presidential election.

They formed an online group called “Heart of Texas” that appeared to be based in Houston. They promoted a rally called “Stop Islamization in Texas.” Then they created an opposing group called “United Muslims of America” which “scheduled a counter-rally, under the banner of ‘Save Islamic Knowledge.’ The idea was to motivate actual Americans – who had joined each of the Facebook groups – to face off against each other and prompt a lot of name-calling and, perhaps, some violence.

The Russians proved to be skilled users of Facebook in widening political and social fault lines. “Facebook’s conscious transition to becoming one of the world’s leading global news delivery systems, and tailoring that news to the tastes of each recipient, meshed beautifully with Russia’s desire to accentuate the divisions in American society.” After ISIS attacks in France in November 2015, Facebook proved useful in tracking down friends and other terrorists using the attackers’ accounts.

Nuclear powers, realizing the likelihood of mutual assured destruction following the use of nuclear weapons, refrained from their use. There are no norms of behavior among cyber powers. Sanger does not expect norms to emerge as long as the U.S. is unwilling to make known its own capabilities and live within limits. “The United States, for example, would never support rules that banned cyber espionage. But it has also resisted rules prohibiting the placement of ‘implants’ in foreign computer networks, which we also use in case the United States needs a way to bring those networks down.” Low-grade cyberweapons are used every day, according to Sanger, but their use is always kept below a threshold that would prompt retaliation. Staying “short-of-war” is the term Sanger uses.

Russia and China are deemed as advanced in cyber capabilities as the United States. North Korea and Iran will probably be equal soon. “Internal government assessments say it will be a decade – at least – before the United States can reasonably defend our most critical infrastructure from a devastating cyberattack launched by Russia or China.”

 

Universal Health Insurance

For anyone living in the United States of America in 2018 it is hard to imagine celebrating the birthday of your national health system. Yet that is exactly what occurred in the United Kingdom for the July 5, 2018, 70th birthday of the UK National Health Service (NHS). But despite being described as one of the nation’s most loved institutions, NHS is not without its critics.

With a founding principle of providing health care that is comprehensive, universal and free at point of delivery, funding during nearly a decade of austerity was inadequate to keep up with demand. As a result, metrics for timely delivery of services, such as emergency room waits, have not been met. While additional funding has been promised, outsourcing of some support services like housekeeping has been used to cut costs. The UK’s health system is socialized medicine. General taxation provides most of funding, with a smaller portion coming from a national insurance payroll tax. About 10% of the population purchase private health insurance to assure more rapid and convenient access to care.

According to the World Health Organization (WHO), the UK spent 9.9% of GDP on health care in 2015. Comparable figures were 11.1% for France, 11.2% for Germany, and 16.8% for the United States. Of 36 countries that make up the Organization for Economic Cooperation and Development (OECD), 32 have some form of universal health care following WHO criteria.

Health insurance in France is mandatory, available through non-profit funds largely financed through taxes. Public insurance covers 70-80% of costs. About 95% of the population also has voluntary health insurance which covers the remainder. Voluntary health insurance is employer-sponsored, with employees paying 50% of the cost.

Health insurance is also mandatory in Germany. About 86% of Germans get their coverage primarily through the statutory health insurance system, provided through competing, not-for-profit, non-governmental health insurance funds. Premiums for the public system are based on income and paid by employers and employees, on earnings up to about US$65,000. Federal taxes pay costs for low-income, for those with chronic illnesses and for children. Unsubsidized private insurance is available at government-regulated premiums; about 11% of the population, generally with higher incomes, choose coverage by one of 42 private companies, 24 of which are for-profit.

The closest the U.S. has to a universal system came with the 2010 passage of the Affordable Care Act, nicknamed Obamacare. Millions of people previously without health insurance became covered by Obamacare. In addition, the federal government-sponsored Medicaid and Medicare programs serve low income, disabled and elderly segments of the U.S. population; the Veterans Administration serves military veterans, including the only government-run hospitals. States have the option of participating in federally-subsidized expansion of Medicaid eligibility. Private insurance is regulated by the individual states. Over half the population receives private health insurance through their employers. Beyond the coverage provided by these four options, an estimated 24 to 28 million people are without health insurance.

 

Selected Metrics   Source: World Health Organization 2018 Health Expenditure as % of GDP – 2015 Life Expectancy at Birth – 2016 Neonatal Mortality Rate – 2016 Under 5 Mortality Rate – 2016 Maternal Mortality Rate – 2015
United Kingdom 9.9 81.4 2.6 4.3 9
France 11.1 82.9 2.4 3.9 8
Germany 11.2 81.0 2.3 3.8 6
United States 16.8 78.5 3.7 6.5 14

 

While the medical system in the U.S. is dynamic and innovative, a comparison of health metrics among OECD countries raises questions. Is its higher expenditure justified? Why are outcomes relatively poor by standards of other major economies? Is the fragmented system inherently inefficient? And finally, why are the Brits celebrating, but not the Yanks?

Confronting Political Discontent

In a blog post on June 16, 2018 titled “Considering Political Discontent,” comments on Steven Brill’s book Tailspin included Brill’s dividing the U.S. population into the “unprotected” and the “protected.” In the book he defines the two groups, respectively, as “the vast majority who count on government to provide for the common good, and the minority who don’t need government for anything and even view the government as something they often need to be protected from.”

Brill recounts success in the sixties and early seventies in reducing the portion of the population living at or below the poverty line from 21% in 1962 to 11.1% in 1973, thanks to efforts by Presidents Kennedy, Johnson and Nixon .He attributes the subsequent, widening gap between the two groupings to decades of actions by a well-educated meritocratic elite that included financial engineering, bank bailouts, corporate lobbying, gerrymandering, elections won with exorbitant funds from wealthy individuals, and court actions.

In his book Brill relates an interview with Peter Edelman. Edelman, an anti-poverty expert, campaigned with Robert Kennedy in 1968 and later served in the Department of Health and Human Services under Bill Clinton. Brill quotes Edelman in a remarkable analysis of what transpired after 1974: “The stagnation of the middle class, beginning in the late seventies, totally changed the politics of doing something for the poor …. At least the middle class that was suffering and frustrated could still see that there were poor people below them. What politician is going to risk alienating them still more by saying he’s worried about the poor or by doing anything for them?”

Brill’s brief history goes a long way toward explaining the polarization preventing legislative progress on any number of pressing national concerns. Among those, Brill discusses poverty, infrastructure repair and replacement, K-12 education, job training, healthcare, immigration reform and election reform. Brill contends that some wealthy individuals reject such legislative action, smugly satisfied with their comfortable status quo. If so, it is a short-sighted position to take, and Brill recounted research and analysis accumulated by transparent, privately funded organizations, and distributed through the media, that contribute to the weight of evidence against the status quo.

Some of these organizations were founded and/or run by former office-holders painfully aware of the short-comings of current practice. The Center for Responsive Politics (CRP) was founded by two retired senators, one a Democrat, the other a Republican, to work toward a more effective Congress. CRP publishes its findings on its website, OpenSecrets.org. Issue One is a good government non-profit formed to undo the corruption made possible by unlimited donations. Former New Jersey senator Bill Bradley co-chairs the non-profit’s board of advisors. The Bipartisan Policy Center (BPC) is a non-profit think tank founded in 2007 by former Republican Senate majority leaders Bob Dole and Howard Baker and former Democratic majority leaders George Mitchell and Tom Daschle.

Far from being discouraged, leaders of these organizations that Brill encountered believe they are, as one said, preparing the way for “when people of good faith on both sides of the aisle decide enough is enough.” Monthly Gallup polls find public disapproval of how Congress is handling its job consistently around 80%.

Are we there yet?

Who Will Lead?

Since WWII the world has been guided by formal and informal arrangements designed largely by western democracies. Institutions embodying values of democracy, free press, human rights, rule of law and free trade imparted an order on international relations that enabled relatively peaceful coexistence, economic growth and expanding world trade. Following the collapse of the Soviet Union, those western values were touted as the endpoint of humanity’s socio-cultural evolution.

Nearly 30 years later, that endpoint has proven to be elusive, if not improbable. China’s rise has demonstrated that rapid economic growth can occur under authoritarian government. Nationalists in Western countries are questioning the policies of their own governments. And the presidency of the United States, once perceived as the nominal “head of the free world,” is held by someone who is disinterested in maintaining the current world order, and would happily withdraw from a world leadership role, redefining the country’s interests in strictly nationalist terms.

So, who will lead? Or is a leader even necessary?

A June 9, 2018 article in The Economist asserted, “Though [Chinese] Communist Party officials are somewhat wary of taking on great-power responsibilities, they see tempting opportunities to portray China as the defender of world order in matters of climate change and trade.” However, The New Yorker journalist Evan Osnos, in an article titled “Making China Great Again,” perceives China asserting much more ambition,

… by increasing its investments in the types of assets that established American authority in the previous century: foreign aid, overseas security, foreign influence, and the most advanced new technologies, such as artificial intelligence. It has become one of the leading contributors to the U.N.’s budget and to its peacekeeping force, and it has joined talks to address global problems such as terrorism, piracy, and nuclear proliferation.

Furthermore, Osnos notes that China’s foreign infrastructure plan, including roads, ports, power plants and train lines in 60 countries from Southeast Asia to Europe, Africa and Latin America, could cost a trillion dollars, seven times what the U.S. Marshall Plan spent, in current dollars. China governance expert Minxin Pei noted, in an online debate on The Economist website, that China had already established two financial institutions to potentially rival the World Bank. All this is concurrent with the U.S. withdrawal from the Paris climate change accord, the Trans-Pacific Partnership and the Iran nuclear weapons agreement, and proposals to cut billions of dollars from the U.S. foreign assistance budget, reduce its UN contribution by 40%, and pressure the UN General Assembly to cut $600 million in peacekeeping expenditures.

World leadership takes many forms: military, economic, environmental, cultural, scientific/technological. Osnos wrote that “By some measures, the U.S. will remain dominant for years to come.”

… It has at least twelve aircraft carriers. China has two. The U.S. has collective defense treaties with more than fifty countries. China has one, with North Korea. Moreover, China’s economic path is complicated by heavy debts, bloated state-owned enterprises, rising inequality, and slowing growth. The workers who once powered China’s boom are graying. China’s air, water, and soil are disastrously polluted.

Martin Jacques, author of “When China Rules the World,” wrote in a June 14th online article for The Economist, “Western hegemony has left a huge imprint on the world, but it was never destined to last for ever. Hegemons are never eternal.” But contrary to the title of Jacques’ book, China, or any single world power, may not be where the world is headed. Others see a future with multiple leaders, a “multi-polar world.” Osnos quotes a Beijing professor and student of American history. “China, Russia, and the U.S. are moving in the same direction. They’re all trying to be great again.”

Considering Political Discontent

“A Strong Economy Won’t Make You Popular These Days.” That is the title of an opinion piece in the April 24, 2018 New York Times by Ruchir Sharma, who is the chief global strategist for Morgan Stanley Investment Management. Sharma observes that the leaders of Germany, France and the U.S. share one trait: “They are all unpopular at home despite the good economic times.”

Unlike most of the post-WWII era during which leaders of big democracies were rewarded for strong economies, Sharma believes the link between politics and economics has broken. He cites Donald Trump’s low approval rating even while consumer confidence in the economy is relatively high. The same holds true for Angela Merkel, chancellor of Germany, President Emmanuel Macron of France, Prime Minister Justin Trudeau of Canada and Prime Minister Shinzo Abe of Japan.

Sharma believes the explanation may be found in “the rise of angry populism, built on a rejection of the established order and a growing focus on issues of culture and national identity, rather than practical economic outcomes.” Sharma laments this trend, writing that “Democracies work best when voters hold politicians accountable for economic results.” If a good economy no longer matters, leaders “are free to push any policy that will energize their base,” and he cites Russia and Turkey as current examples of authoritarian leaders attaining high approval ratings while stirring nationalism and suppressing opposition.

It is unarguable that western democracies have done a poor job in delivering economic benefits to those sectors of their populations negatively impacted by globalization. Steven Brill wrote an article in the May 17, 2018 issue of Time magazine titled “How Baby Boomers Broke America.”  The article is adapted from his book published in late May titled Tailspin. His article presents a veritable litany of decades of U.S. actions that have divided the population, not between Democrats and Republicans, but “the protected vs. the unprotected.” Brill included:

o   Financial and legal engineering that “turned our economy from an engine of long-term growth and shared prosperity into a casino with only a few big winners”

o   The Great Recession that cost millions of families their homes, savings and jobs

o   A bailout of banks that secured their future with billions of taxpayer dollars

o   A corps of 20 registered lobbyists for every member of Congress tasked with blocking any legislation that threatens their clients’ wealth

o   Gerrymandering of congressional districts that assure easy wins for incumbents

Add to Brill’s list the Citizens United court decision that gave wealthy donors the upper hand in elections; the 2017 tax reform that favors corporations and stockholders over employees and individuals; and a May 21, 2018 Supreme Court decision allowing companies to use arbitration clauses in contracts to prohibit workers from filing class- action suits.

Sharma suggests that “the rise of angry populism” may indicate that “economic factors may no longer matter as much in a bitterly emotional political age.” The actions cited by Brill inflict severe economic consequences on the “unprotected.” Is it reasonable to think that a more equitable economy and democracy would reduce the anger? Would anti-immigrant anger and racial prejudice decrease if good jobs were plentiful? Would feelings of helplessness in confronting distrusted governments be reversed if elections were not overwhelmed by wealthy donors? Is the origin of political discontent economic or cultural? The answers could provide clues for how policymakers concerned with inequality may focus their resources.

Time for Remedial Kindergarten

You probably remember this. Thirty years ago, Robert Fulghum published a book titled All I Really Need to Know I Learned in Kindergarten. It has sold 17 million copies in 103 countries and has been translated into 31 languages. Must have struck a chord.

“How to live, what to do, how to be,” Fulghum found in a few kindergarten lessons:

  • Share everything
  • Play fair
  • Don’t hit people
  • Put things back where you found them
  • Clean up your own mess
  • Don’t take things that aren’t yours
  • Say you’re sorry when you hurt someone
  • Wash your hands before you eat
  • When you go out into the world, hold hands and stick together

Fulghum observes that schooling is mandatory in order for us to be taught “the fundamentals on which civilization rests. These are first explained in language a small child understands.” As he says, telling a child that “violence is counterproductive to the constructive interaction of persons and societies” may not be understood, but “Don’t hit people” teaches the rule for the child to live by.

Fulghum’s rules go beyond relations between individuals to apply to basic sanitation, ecology, equality, government and politics. The rules guide our verbal communication – how we speak to others. Civil discourse is an antidote to divisiveness, an antidote that is sorely needed. What kindergarten teacher, or parent for that matter, would allow the coarseness of words and thoughts expressed in public communication today.

Political correctness today receives a bad rap. So be it. Not everyone agrees on how to refer to Native Americans or how many genders there are. Just stay out of that conversation. But political correctness should not be confused with civil discourse. It is not a stretch to assert that lack of civility contributes to divisiveness and even hatred: eventually effective communication disappears completely. No progress toward addressing grievances will occur without communication. Name-calling is not going to resolve race relations. Nor is bullying going to tame an unruly neighbor, let alone eradicate nuclear weapons.

So, remember your kindergarten teacher and the simple life lessons learned there and from parents. Observe them and teach them to your children and grandchildren so they know that much of what they hear and see today is not acceptable behavior.

Early Twentieth Century Progressivism

The litany of populist grievances is familiar: Wealthy classes are in control of Congress; Wall Street financiers are acting recklessly; giant corporations are engaging in monopolistic practices; workers and consumers face stagnant wages and rising prices. In comes a man born with the proverbial silver spoon in his mouth, professing empathy for the suffering masses, and aspiring to the presidency of the United States. That man was Theodore Roosevelt, who became president upon the assassination of William McKinley in 1901 and was elected to a full term in 1904. Might what followed inform today’s challenges?

Five months after taking office, Roosevelt brought suit against the railroad company controlled by J. Pierpont Morgan, the first of many applications of the Sherman Anti-Trust Act. The welfare of common citizens, especially when threatened by the wealthy classes, guided his administration. In his autobiography, he wrote, “governmental agencies must find their justification largely in the way in which they are used for the practical betterment of living and working conditions among the mass of the people. I felt that the fight was really for the abolition of privilege; and one of the first stages in the battle was necessarily to fight for the rights of the workingman.”

Roosevelt believed that corporations were indispensable in the business world, and that government’s job was to “subordinate the big corporation to the public welfare.” This precedent led to destroying price-fixing in the beef industry; passage of the Pure Food and Drug and Meat Inspection Acts; amendment of the Interstate Commerce Act and authorization of the Interstate Commerce Commission, the first true regulatory agency; intervention in a Pennsylvania coal strike that threatened the supply of coal for the coming winter; and brought a total of 44 antitrust suits. He created the national park system and led ecological preservation. He campaigned for a Federal graduated income tax, but it wasn’t until the 1913 ratification of the 16th amendment to the Constitution that his goal was achieved. He succeeded in getting the Tillman Act passed in 1907 banning some corporate giving for federal election campaigns, a ban that was mostly ignored. He approved restrictions on child labor. Aspiring “to make the national government itself a model employer of labor,” he enacted the eight-hour workday for government employees; and he made employers liable for injuries to their employees in interstate commerce and in U.S. territories. In international affairs, he strengthened the U.S. Navy, established U.S. protective authority in the Western Hemisphere, and earned the 1905 Nobel Peace Prize for negotiating peace between Japan and Russia.

Progressive reforms continued through the presidency of Democrat Woodrow Wilson. The Federal Reserve Act of 1913 created the central banking system. That same year the 17th amendment to the Constitution was ratified mandating direct election of U.S. senators, rather than election by state legislatures. The Clayton Antitrust Act of 1914 outlawed price discrimination and gave the president more power to block corporate mergers. The 19th amendment was ratified in 1920 granting women the right to vote.

Roosevelt’s fight to abolish privilege parallels today’s focus on eradicating inequality. Many who today consider themselves among the “left-behinds” are turning to populist demagoguery, while those committed to liberal democracy have little to propose. Authors Erich Fromm and Yascha Mounk, reviewed in a previous blog post, advocated aggressive boldness, prescribing active involvement in addressing the expressed concerns of ordinary people, “focusing on a positive message rather than obsessively recounting the failings of the populists,” and above all, acknowledging the shortcomings of the status quo, wrote Mounk. And Fromm wrote that, “no one shall be allowed to starve, that society is responsible for all its members, that no one shall be frightened into submission and lose his human pride through fear of unemployment or starvation.”

African Continental Free Trade Agreement

Forty-four members of the African Union signed an agreement on March 21 to create the African Continental Free Trade Area (AfCFTA). The agreement was signed at a time of extensive activity in major international trade negotiations. The United Kingdom voted in 2016 to leave the European Union; and the United States removed itself from negotiations with transatlantic and transpacific trading partners. Currently, Mexico, Canada, Peru, Chile and seven Asian-Pacific countries have agreed in principle to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the successor to the transpacific agreement from which the U.S. withdrew.

Eleven of the African Union’s 55 members have not signed the agreement, including two of Africa’s largest economies, Nigeria and South Africa. Nigeria’s labor organizations oppose the agreement, and the country’s president said more time was needed for input from Nigerian stakeholders. South Africa stated commitment to the agreement once legal issues were resolved.

Although Africa has a wealth of natural resources, its colonial past, and mismanagement and corruption since independence, have prevented its people from sharing its wealth. It remains the poorest continent, suffering from illiteracy, malnutrition and poor health. Its leaders look forward to increasing intra-Africa trade by removing import duties and not-tariff barriers. Currently, intra-African trade is estimated to account for 18% of total trade by African countries.

AfCFTA is designed to form a single market for goods and services in Africa. Implementation of AfCFTA will create an African market of over 1.2 billion people with a Gross Domestic Product of 2.5 trillion US dollars, and the largest free trade area in terms of number of participating countries since formation of the World Trade Organization.  Strengthening intra-continent trade will also improve Africa’s position in international trade.

A UN agency estimates that removing import duties has the potential to boost intra-Africa trade by over 50% by 2022 due to eliminating import duties. With the elimination of non-tariff barriers, trade could double, but eliminating such barriers will be a challenge. Costs of moving goods within Africa will hinder free trade until roads and rail networks are improved. Furthermore, full benefits of the trade agreement won’t be realized without adoption of policies that support industrial development. Such policies include establishing a curriculum for the large under-30 population that focuses on business training and upgrading skills; facilitating access to financing and assuring property rights; and attracting direct foreign investment.

Although much remains to be done, AfCFTA represents a great step toward a more prosperous future for Africans. African Union leaders are confident that the remaining countries will sign on.

Two Authors on Authoritarianism

In 1941 Erich Fromm wrote a book titled Escape from Freedom. Fromm, who was born in Germany in 1900, was a psychologist and sociologist. He left Germany in 1933, arrived in New York in 1934, and taught in the United States and Mexico before moving to Switzerland, where he died in 1980.

Escape from Freedom was Fromm’s analysis of the societal factors that led people in Fascist countries to give up their freedom and submit to authoritarianism. Fromm traced the beginning of the modern sense of freedom to the end of the feudal system of the Middle Ages and the early Renaissance: “for the first time, the individual emerged from feudal society and broke ties which had been giving him security and narrowing him at one in the same time.” Becoming more independent also meant becoming more self-reliant, and, in Fromm’s analysis, “more isolated, alone, and afraid.”

Individuals may become what Fromm terms “automatons,” compulsively conforming, working to earn a living, “well fed, and well clothed, yet not a free man,” submitting to a capitalist, consumerist society. Alternatively, Fromm wrote that individuals may submit to an authoritarian system that promises to eliminate the sources of their anxiety and restore them to their rightful status. Both paths are escapes from freedom. Fromm concludes:

The victory of freedom is possible only if democracy develops into a society in which the individual, his growth and happiness, is the aim and purpose of culture…. Nor can we compromise the newer democratic principle that no one shall be allowed to starve, that society is responsible for all its members, that no one shall be frightened into submission and lose his human pride through fear of unemployment or starvation.

In 2018, 77 years after Fromm’s book, another German-born author wrote on loss of freedom: The People vs Democracy: Why Our Freedom Is In Danger & How To Save It. Yascha Mounk, a Harvard lecturer in government, was born two years after Fromm died. Mounk identifies today’s threat to freedom in the populist movement that emphasizes democracy over liberalism. “…voters are growing impatient with independent institutions and less and less willing to tolerate the rights of ethnic and religious minorities.” Populists resist control of the political system by powerful elites who are “less and less willing to cede to the views of the people.”

Mounk targets for blame the three trends that have been recognized in much of the current political discussion: Household income that has remained flat after its period of post-World War II growth; loss of dominant racial or ethnic identity due to migration; and the rise of the Internet and social media that have brought voices of political outsiders into competition with establishment media in the battle to influence public opinion. The resulting political/economic environment tests the very validity of the post-war system.

The kind of rapid economic progress that was standard in the post-war era was enough to buy liberal democracy a lot of legitimacy….so long as the system was working for them, most people were willing to believe that politicians were ultimately on their side…. Today, by contrast, that residual reason to give politicians the benefit of the doubt has evaporated.

Mounk does not find the opponents of populism to be effective in efforts to restore more liberal values. He notes the importance of unity in opposition: “In virtually every case in which populists have taken power or been reelected, deep divisions within the ranks of their opponents have played a large role.” Like Fromm, Mounk prescribes active involvement in addressing the expressed concerns of ordinary people. He advises “focusing on a positive message rather than obsessively recounting the failings of the populists,” and above all, acknowledging the shortcomings of the status quo.

Writing 77 years apart, two German expats addressed the same decline in liberal democracy, although emanating from quite different political/economic environments. Their conclusions similarly recognize the unfinished work of perfecting liberal democracy.

Rejection of Expertise

As the June 2016 vote on Brexit approached, UK Justice Secretary Michael Gove urged voters to oppose staying in the European Union, saying, “I think people in this country have had enough of experts,” when most economists were arguing against the UK leaving the EU.

Tom Nichols, a professor of National Security Affairs at the U.S. Naval War College, lamented this mindset in his 2017 book, The Death of Expertise: The Campaign Against Established Knowledge and Why It Matters. In Nichols’ view, “The death of expertise is not just a rejection of existing knowledge. It is fundamentally a rejection of science and dispassionate rationality, which are foundations of modern civilization.” And a 2015 study found that “when exposed to scientific research that challenged their views, both liberals and conservatives reacted by doubting the science rather than themselves.”

Nichols sees this as not simply an indifference to established knowledge, but a positive hostility to it. He cites opposition to vaccinations of small children and the preference for raw milk as examples of movements by people denying the validity of expert judgement. He also cites creation of conspiracy theories as “a way for people to give context and meaning to events that frighten them” when there is no coherent explanation. Once in place, such positions are solidified by confirmation bias, the tendency to accept only information that confirms already-held beliefs.

How did rejection of expertise come to be? Nichols finds four significant contributing causes. He finds higher education itself as contributing to the notion that expertise is no longer attained only by an elite population. The notion that every young person should go to college has created such demand for degrees that colleges are caught in “a spiral of credential inflation.” What is lost is the capability for critical thinking, accepting competing ideas without preconceptions. Eager to satisfy their “clients,” colleges and universities award grades unrepresentative of their students’ intellectual achievements.

Not surprisingly, Nichols identifies a second cause of rejection of expertise as the Internet. He writes, “Why rely on people with more education and experience that you – or, worse, have to make appointments with them – when you can just get the information yourself [by Googling]?” Information is expected instantly, and no filter separates bad information from good, leaving it to the reader to decide what is true and accurate. The operational filter is usually confirmation bias.

Nichols sees the proliferation of news sources as leading people to believe they are informed. Too often he finds news presented as entertainment, with presenters reaching celebrity status. He cites Rush Limbaugh, who “set himself up as a source of truth in opposition to the rest of the American media.” Fox News is “the ultimate expression of the partisan division in how people seek out sources of news.” Viewers choose from among this overabundance of sources and celebrities, in accordance with their biases, and believe they are informed.

Finally, Nichols faults a lack of rigor in scientific research for contributing to skepticism toward claimed expertise. He documents that “a non-negligible amount of published scientific research is shaky at best and falsified at worse.” Enough cases of fraud or misconduct in scientific research have been documented to have led laypeople to question whether studies in any field can be trusted.

In politics, it is the responsibility of the governed to be informed on issues being decided by their elected representatives and make those representatives aware of their positions when representatives vote. Nichols’ gloomily concludes that “to defeat the campaign against established knowledge or to reverse its effects on American democracy … a possible resolution will lie in a disaster as yet unforeseen.” Among such possible disasters, he lists a major war, a real depression, the emergence of an ignorant demagoguery, “or the rise to power of a technocracy that finally runs out of patience and thus dispenses with voting as anything other than a formality.”

Globalization vs Sovereignty

The European Union is a unique experiment in international cooperation among 28 European states; it delegates some decision-making powers on matters of common interest to over-arching institutions created by the Union. Relinquishing some state authority to the broader Union has made European citizens fearful of job losses and downward pressure on wages related to globalization. The primary cause behind Britain’s vote to leave the EU, and behind increasing populism in several European states, can be traced directly to the loss of sovereignty that prevents individual states from taking independent action against these effects of globalization.

Dani Rodrik, an economist at Harvard University, has written a new book, Straight Talk on Trade: Ideas for a Sane World Economy, addressing the relationships between globalization, sovereignty and democracy. In an earlier book in 2011, The Globalization Paradox, Rodrik wrote, “[W]e cannot have hyperglobalization, democracy, and national self-determination all at once. We can have at most two out of three.” The comment goes to the heart of the conflict over UK membership in the EU. Europe’s economic integration has gotten ahead of its political integration. Further political integration would entail reducing national self-determination further, the very trend that the Brexit vote rejected.

On the question of how much national sovereignty should be surrendered in exchange for global economic integration, Rodrik comes down on the side of national self-determination. “Democracies have the right to protect their social arrangements, and when this right clashes with requirements of the global economy, it is the latter that should give way.” Nation-states have the right to protect their regulations and institutions, while not imposing those institutions on others.

Among those local practices that nation-states have rights to protect, Rodrik cites labor standards for who can work, minimum wage, working conditions and how easily a worker can be fired. He goes so far as to say that an acceptable practice in a poor country, such as child labor, would be forbidden in a rich country. The incomes of children in poor countries may be necessary to support their families.

And yet, Rodrik asserts that a nation may logically delegate authority to autonomous organizations to achieve better outcomes. He compares the relationship of European countries to the EU with the relationship of U.S. states to the Federal Government, stating that U.S. states do not have an abundance of sovereignty. “[W]hen Florida’s voters are disenchanted about the economy, they do not riot outside the state capital; they put pressure on their representatives in Congress to push for changes in federal policies.” Market integration and democracy can function side-by-side if supranational political institutions are representative and accountable.

Democracy in Retreat

In the 10th edition, the 2017 Democracy Index of 167 countries records the worst decline in global democracy in years. Compared to their 2016 scores, 89 countries experienced a decline in their total scores, compared to 27 that recorded improvements, while 51 remained unchanged.

The survey is conducted by The Economist Intelligence Unit. It ranks each country on 60 indicators, such as: Is there universal suffrage for all adults? Is the process of financing political parties transparent and generally accepted? Is there freedom of expression and protest? Is the legislature the supreme political body, with a clear supremacy over other branches of government? Each indicator is worth one point. Indicators answered by Yes or No receive one point or no points. Many indicators provide for grey areas where a half point can be assigned in accordance with detailed guidelines.

Total scores are converted to a 0 to 10 scale, and each country’s score places it within one of four types of regimes: Full democracies; Flawed democracies; Hybrid regimes; Authoritarian regimes. Since the first survey 12 years ago, the first and fourth types in 2017 include fewer countries, while the middle two types have more countries:

In 2006 In 2017
Full democracies     26     19
Flawed democracies     54     57
Hybrid regimes     33     39
Authoritarian regimes     54     52

 

The trend since the first Democracy Index in 2006 is described as a “democracy recession,” affecting even some of the older western democracies. Its main manifestations are:

  • declining popular participation in elections and politics
  • weaknesses in the functioning of government
  • declining trust in institutions
  • dwindling appeal of mainstream representative parties
  • growing influence of unelected, unaccountable institutions and expert bodies
  • widening gap between political elites and electorates
  • decline in media freedoms
  • erosion of civil liberties, including curbs on free speech

Western European democracies dominate the list of the highest-ranked democracies in 2017. The top ten democracies, in order, are Norway, Iceland, Sweden, New Zealand, Denmark, Iceland, Canada, Australia, Finland and Switzerland. Of the 19 democracies considered “full democracies,” 14 are in Western Europe. The remaining five are New Zealand, Canada, Australia, Mauritius and Uruguay. The United States was the 20th full democracy until falling into the “flawed democracy” category in 2016, when the Index recorded a serious decline in public trust in U.S. institutions.

In addition to the U.S., seven other countries considered full democracies in 2006 had been downgraded to flawed democracies by 2017. They are Belgium, Costa Rica, Czech Republic, France, Greece, Japan and Portugal. Uruguay improved from flawed democracy in 2006 to full democracy in 2017.

The 2017 edition of Democracy Index includes a section devoted to media freedom and freedom of speech. In a Washington Post opinion piece Fareed Zakaria cited Turkey as “the world’s foremost jailer of journalists,” astonishing for a democratically elected government. He also notes Hungary’s turn from wholehearted adoption of democracy to taking over public broadcasting to ensure favorable coverage. Public media are also under attack in long-standing democracies in India and Israel.

The Democracy Index regards freedom of expression as essential for democracy to take root and flourish. The quality of democracy in any country may in large measure be gauged by the degree to which freedom of speech prevails. Societies that do not tolerate dissent, heresy and the questioning of conventional wisdom cannot be “full democracies”.

The Democracy Index ranked only 30 countries as having fully free media. The 97 countries rated as “unfree” or “largely unfree” represent more than half of the world’s population.

Tzfat, Israel

A recent visit to Tzfat in northern Israel provided a window into 2000 years of Middle East history, and a thriving city of culture, spirituality and life.

Tzfat (also transliterated from Hebrew as Safed, Zefat, Zfat, Safad, Safes, Safet, and Tsfat), is 2900 feet above sea level in the mountains of the Upper Galilee. It has been prized by numerous invaders because of its strategic military value. Romans, Byzantines and Muslims ruled the area from the First Century BCE through most of the Eleventh Century; Crusaders arrived in 1099, and Mamluks drove out the Crusaders in 1291. All had significant military installations in Tzfat. The Crusaders’ Citadel, at the highest point in the old city, is undergoing restoration, revealing both Crusader and Mamluk construction.

In 1492, King Ferdinand II expelled all the Moors and Jews from Spain. Many of the Jews were attracted to Tzfat because of its connection to early Kabbalist mysticism. Kabbalah teaches the deepest insights into the essence of God and God’s interaction with the world and the purpose of creation. Tzfat has ever since been considered the center of Jewish mysticism. In the 16th century Tzfat attracted Jewish scholars, among them Rabbi Isaac Luria, who expanded Kabbalah study to new heights. To this day Lurianic Kabbalah is the dominant form of Kabbalah study throughout the world.

Today’s Tzfat is still a center of learning, its many seminaries and yeshivas attracting young men and women, who can be seen walking in groups between schools, restaurants and shops. Following the 1948 war of independence, Tzfat attracted artists, who now form a colony and blend Kabbalah and art. Tzfat is also an archaeologist’s dream. Tzfat has been struck by multiple earthquakes, the most serious of which, in 1837, destroyed the city completely. After each destruction, the city was rebuilt on top of the debris of demolished structures. That practice does not result in the most stable construction, but it does enable archaeologists to expose levels of development from past times.

Tzfat’s resident population of about 27,000 includes young families pushing strollers over cobblestone walks and alleys, artists, teachers, students, and businesses serving both residents and tourists. Tourist groups are a prominent part of the ambiance, coming from all over the world. The fastest-growing country of origin of tourists in Israel is China. In fact, a film on the 1948 war in Tel Aviv’s Independence Hall has subtitles in Chinese. Israel had 3.6 million tourists in 2017, in a country with 8,650,000 people. If the U.S. attracted tourists in the same proportion to its population, it would have 136 million tourists a year.

Tourists are attracted by Tzfat’s natural beauty and charm as well as its history and religious significance. Built on a hill, a walk in almost any direction involves climbing endless steps. Buildings adhere to no grid pattern, and are either built touching each other or are separated by walkways or steps. Streets and alleys are winding, so views are usually limited to a few hundred feet, drawing you to see what lies around the bend. On a map the streets appear to be nearly on top of each other, but the steep hillside offsets adjacent streets by ten feet or more vertically.

While tourists weave their way through enchanting streets and alleyways, and visit the archaeological discoveries unearthed in many buildings, Tzfat’s families and students live normal lives in this picturesque and fascinating ancient city.

Government Policy Impacts Inequality

An organization called the World Inequality Lab recently published The World Inequality Report 2018. Based upon data for income, wealth and fiscal data from taxes on income, the report determined that since 1980, income inequality has increased rapidly in North America, China, India, and Russia. Inequality has grown moderately in Europe. The authors of the report place their findings in context:

Economic inequality is widespread and to some extent inevitable. It is our belief, however, that if rising inequality is not properly monitored and addressed, it can lead to various sorts of political, economic, and social catastrophes.

Slow economic growth since the Great Recession, on top of increasing inequality over nearly four decades, have indeed been associated with the trend in western economies toward populism. Political parties of the left and the right have been ineffective in establishing economic policies that benefit lower- and middle-income families.

The World Inequality Lab report cites government policy as impacting inequality either positively or negatively. For example, the recent U.S. changes to its tax code are expected to benefit wealthier Americans and worsen the wealth gap, while European policies which provided more support for education benefitted lower- and middle-income families.

The Captured Economy, a 2017 book by Brink Lindsey and Steven M. Teles, identifies government policies in the United States that undermine economic growth and increase inequality, but receive far less attention than tax policy. Lindsey, a libertarian, and Teles, a liberal, diagnose the economic and political impacts of four such policies.

–  Government policies that subsidize financial institutions have been under debate going on ten years. The authors find these policies encourage excessive risk-taking, reduce long-term economic growth prospects, and generate excessive financial gains for financial executives and professionals.

 

– The authors fault monopoly privileges that are granted by copyright and patent law, citing in particular the entertainment, software and pharmaceutical industries. They charge that such laws encourage industry concentration and inflate corporate profits.

 

– Occupational licensing is ideally created to protect the public from incompetent or unethical service providers. The authors find huge variation from one jurisdiction to another, suggesting that licensing requirements are highly arbitrary. With competition being limited by licensing, incumbents enjoy higher incomes.

 

– Finally, land-use regulations are cited for placing major constraints on the supply of new housing. The authors note that the most dynamic, high-growth cities in the U.S., where high paying jobs are to be found, discourage newcomers by limiting housing construction. They attribute these limitations to successful pressure placed upon local governments on behalf of current property owners.

 

The authors fault wealthy special interests with capturing the policy-making process for their own benefit. They conclude:

The rise in inequality is, to a significant extent, a function of state action rather than the invisible hand. And this state action, by suppressing and misdirecting entrepreneurship and competition, has rendered our economy less innovative and dynamic as well as less fair.

Liberalism in Retreat

More than a year has passed since elections in the United States and United Kingdom shocked the world with the thought that liberal democracy was waning. Later elections in France, Germany, Austria, Hungry, and Poland saw the rise of right-wing parties. Right-wing parties also lead in polls ahead of scheduled presidential elections in 2018 in Latin American countries.

Political observers are putting events in context to understand the lessons of the 2016 elections, and make sense of the changes that are occurring. The weight of their conclusions suggest that they should not have been shocked. Journalist Fareed Zakaria, in a review of Edward Luce’s, The Retreat of Western Liberalism published in 2017, wrote, “We all deserve criticism for missing the phenomenon of the ‘left-behinds,” a reference to people who feel excluded politically and economically by their government.

Luce recounts several decades over which working and middle classes experienced stagnant wages that result in increasing inequality, lack of social mobility for all but a “hereditary meritocracy,” and distrust of an elite class that manipulated the political process to capture benefits for themselves and their business interests. While global economic trends have enabled humanity as a whole to become less poor, “between half and two-thirds of the people in the West have been treading water at best – for a generation.”

Western countries cannot deny complicity in liberalism’s fall from grace in the international arena. Luce cites “America’s post-9/11 blunders,” responding to terrorist attacks with “dilution of constitutional liberties,” the invasion of Iraq on false pretenses, and use of torture. The West’s democratic reputation was debased again by the financial crisis of 2008. Wall Street greed and regulatory incompetence damaged liberalism’s “brand.” Concurrently, China’s rise suggests that alternatives to liberal democracy should be considered.

Following the Second World War, and through the 1990s, the growing number of democracies exceeded 100. “Since the turn of the millennium,” Luce reports, “no fewer than twenty-five democracies have failed around the world, three of them in Europe (Russia, Turkey and Hungary).” Luce believes the values that the U.S. professes are worth preserving. “Even where it is proved hypocritical, such as in the ‘war on terror’ and during much of the Cold War, the idea of America proved greater than its faults.”

Luce believes that in order to survive, a peaceful global order compatible with liberal democracy must dial back some aspects of globalization. He supports what economist Dani Rodrik calls “thin globalization.” In Rodrik’s words:

Economic integration has overshot in some areas, such as financial globalization and regulatory harmonization. It has not gone far enough in others, such as international labor mobility. The debate we should avoid is whether globalization per se is good or bad. The real question is how to rebalance it to give excluded groups greater voice, reconstruct social compacts at home, and focus our global negotiations on areas where the potential economic gains are still really big.

But Luce concludes “nothing much is likely to happen unless the West’s elites understand the enormity of what they face. If only out of self-preservation, the rich need to emerge from their postmodern Versailles.” Luce has little use for the Davos elites, who he refers to as “the world’s wealthiest recyclers of conventional wisdom.” And his critique of the new administration in Washington leaves little doubt where he places blame for accelerating the retreat of liberal democracy. “Trump was supposed to have led a revolt against the elites. In practice, he wasted little time in laying out a tax-cutting and deregulatory banquet for their delectation. In marketing they call this bait and switch.”

Endless Conflicts in South Sudan by Guest Author Nhial Tutlam

I visited my homeland, South Sudan, just 4 months after independence in 2011. During that visit, I met many relatives for the first time in my life. One of them was Chur Bakual, a brilliant young engineer who inspired me by his intellect and dedication to his work. At the time, Chur, like many young South Sudanese who had known nothing but war, was excited about finally living in a country he could call his own, a country where he was not treated as a third-class citizen. And like many idealistic young people full of hope for a brighter future, he used his knowledge and skills to help build the young nation, literally. During the brief time we spent together, we formed a bond instantly and continued to communicate after I left South Sudan. Exactly two years later, he was murdered by his own government, along with countless others, for no reason other than the fact that he hailed from a different tribe than his president. The pretext used to commit this heinous crime was a baseless claim that a man who happened to hail from the same tribe as he did had plotted a coup against the government.

During the same visit, I reconnected with my uncle, Johnson Chuol Thoat, whom I had last seen in 1986. A gifted high school teacher with brain as big and bright as the tropical sun, his ideas and potential were only stifled by the unforgiving environment that is South Sudan. We spent many hours together arguing about everything from politics to family affairs. In the summer of 2014, as my uncle lay on a makeshift bed in one of the Protection of Civilian (POC) sites in Juba, a camp set up by the United Nations Mission in South Sudan (UNMISS) to protect civilians from their own government, a deranged woman hit him on his head, killing him instantly. This woman had witnessed her entire family being killed by the very government that was supposed to protect them in December 2013. This unspeakable trauma she endured directly led to her mental instability; she even tried to commit suicide twice. She killed my uncle because she believed he was a government sympathizer. Should I hold her responsible for my uncle’s death?

In July 2016, I lost two relatives—at least that I know of—when clashes erupted between bodyguards of the president and the then First Vice President, Dr. Riek Machar, who had just returned to Juba for the implementation of the August 2015 Agreement on the Resolution of the Conflict in the Republic of South Sudan (ARCSS). One of them, Tut Lam Kierkok, was a civilian who was still living in the city only because he did not want to leave behind relatives who had decided not to leave Juba. He was shot in the back of his head from a close range. The other one, Chany Tot Bol, was a soldier, killed in the line of duty. He was one of the bodyguards who had accompanied Dr. Riek Machar to his meeting with the president at state house. Then, three months ago, I lost another cousin, Sigin Lual. He was part of a contingent of government soldiers attempting to advance to the town where our grandmother lived.

These aren’t the only deaths that have occurred, of course. There are countless other horror stories of death and destruction across the land, on multiple sides of the divide. And by many accounts, some of the atrocities committed in this senseless conflict among South Sudanese are far worse than those committed during the North-South conflict. This is the reality of the nightmare that most South Sudanese have been living for the last four years.

Beyond targeting its own citizens within the boundaries of South Sudan, the government has also resorted to kidnaping its critics in foreign capitals. In January this year, my cousin Dong Samuel Luak, a human rights lawyer and fierce critic of the government, was kidnapped by government security agents from Nairobi with the help of Kenyan security forces, along with another top opposition official. To this day we don’t know his whereabouts. We don’t even know whether he is still alive or not. All we know is that he was taken to Juba after he was kidnapped.

I highlight the death of my relatives and my cousin’s kidnaping for two reasons. First, to show the complex nature of the conflict. Although the conflict started with the government targeting one community, my community, now some of the worst offenders fighting on behalf of the government are some whose family members were killed by the same government. In fact, I have relatives and very close friends who are ardent regime supporters. What good they see in the regime is beyond my understanding. Secondly, I highlight them because they are the prism through which I view the current conflict. Therefore, in my view and that of many who share my perspective, any peace agreement that does not seriously address why those innocent people were killed, is nonsense.

Latin American Elections 2017-2018

The closely-watched elections in Europe and the United States in 2016 and 2017 teased and befuddled commentators looking for a pattern in those democracies’ politics. Now attention turns to Latin America where nine Central and South American countries hold elections through 2018. Populism may have seen its better days in Latin America, as countries move toward the center in politics.

Some issues are common to most of Latin America. Corruption has infected the highest levels of government. A Brazilian construction company, Odebrecht, bribed high officials in several Latin American countries to win government contracts, shaking faith in democratic politics. Governments have been unable to stem the epidemic of violent crime that threatens both public safety and economic advancement. Sluggish growth leaves large segments of the population suffering in poverty. The annual survey of 20,000 interviewees in 18 countries by Latinobarometro found continuing dissatisfaction with their democracies. The 2017 report called the absence of social and political leadership as the region’s greatest deficiencies.

The presidential election in Chile on November 19th resulted in need for a runoff. Sebastian Pinera, the conservative billionaire and former president, failed to receive a majority of the vote, necessitating a December 17th runoff against the center-left Senator Alejandro Guillier. Pinera won the runoff with 54.6% of the vote, moving the country solidly back to the right.

The November 26th presidential election in Honduras was contested when initial results reported the re-election of center-right President Juan Orlando Hernandez. The electoral court announced a recount. On December 17th the court declared Orlando Hernandez the winner after three weeks of protests resulting in the deaths of at least17 people.

Costa Rica’s general elections are scheduled for February 4th with a total of 13 candidates running for the presidency. Like Chile, Costa Rica has a two round election. If no candidate wins at least 40% of the vote on February 4th, a runoff between the two top vote-getters will be held in April. An on-going scandal over importing cement from China has brought many high-profile politicians and businessmen into the on-going investigation. Centrist businessman, legislator and former government minister Antonio Alvarez is expected to lead in the first round. However, dissatisfaction with his party may propel whoever is the second-place finisher into the presidency.

Colombia will hold legislative elections on March 11th and first-round presidential election on May 27th. If no candidate receives a majority in the vote for president, there will be a second round on June 17th. The historic peace deal that ended five decades of battle with the FARC guerrillas will be a factor in elections as voters line up both for and against. A new center-left coalition that supports the peace agreement and the candidate it puts forward will likely make it to the second round. The current president, Juan Manuel Santos, received the Nobel Peace Prize for his work on the FARC agreement.

Paraguay’s right-wing president announced he will not seek re-election in the April 22nd presidential election. Paraguayan Senator Mario Abdo Benitez, a lawmaker with ties to a former Paraguayan dictator, won the ruling Colorado Party’s presidential primary on December 17th, defeating the current finance minister who had the support of the President. Promises to end corruption in one of the poorest countries in Latin America have not ended the influence of powerful interests and the patronage system.

Mexico’s presidential and legislative elections are scheduled for July 1st. The candidate with the most votes wins the presidential election, even if the margin is less than 50%; the president is limited to one term. The current president, Enrique Pena Nieto of the centrist party PRI, came to power in 2012 amidst high hopes of reducing drug cartel violence, but the homicide rate reached a 20-year high. His approval fell below 20% due to failure to deliver on promises and perceived dishonor toward Mexico in his interaction with U.S. President Donald Trump. PRI will select its candidate for president in February; former finance minister Jose Antonio Meade is favored. Leftist candidate Andres Manuel Lopez Obrador, a former mayor of Mexico City, is running for president for the third time. Margarita Zavala, a former first lady, is running as an independent.

Brazil will hold legislative and presidential elections October 7th; a second-round presidential election will occur October 28th if no candidate receives 50% of the vote. Many of Brazil’s politicians and officials have been tainted by the Odebrecht scandal. President Dilma Rousseff was impeached for breaking budgetary laws. She and another former president, Luiz Inacio Lula da Silva, were subsequently charged with corruption related to the Odebrecht case. Both are from the leftist Workers’ Party. Although Lula da Silva was convicted of corruption, he remains free on appeal, and he is supported by the Workers’ Party as its presidential candidate. Brazil is home to 25 of the 50 most homicidal cities in the world. That record suggests why Jair Bolsonaro, a right-wing former army parachutist and proponent of torture and gay re-education, currently places second in polling. Geraldo Alckmin, governor of Sao Paulo, is the candidate of the center-left Social Democratic Party.

Lastly, Venezuela is due to hold presidential and legislative elections in December 2018. If an election is held, Nicolas Maduro, the current president who has continued the anti-democratic policies of his predecessor, Hugo Chavez, will do all he can to maintain power. He has driven the country to economic collapse, as inflation and crime are rampant, food and other necessities are scarce, and lack of medical care has led to preventable deaths. Thousands are fleeing the country. As described by The Economist, Maduro is “neither competent nor popular, but he will probably win anyway” as all opposition is eliminated.

Silicon Savannah

Countries of Africa are not known for their expertise in information technology, but dismissing them as IT backwaters would be a mistake. As reported in a previous Fifty Year Perspective blog post, an African company called Andela trains young people in coding for technology jobs. Graduates with 1,000 hours of coding experience have high success rates in placement in tech companies.

Kenya has risen to prominence as a center of IT innovation in Africa, earning the title of Silicon Savannah. Perhaps Kenya’s biggest success has been the M-Pesa mobile money transfer service, which has brought banking services to people in developing nations. Safaricom, Kenya’s mobile phone carrier, rolled out M-Pesa in 2007. In ten years it has grown to 30 million users in ten countries, offering opportunities for small businesses and lifting households out of extreme poverty.

Violence during Kenya’s disputed 2007-2008 presidential election gave rise to a geo-mapping software used to pinpoint locations where violence was reported. Called Ushahidi (Swahili for “testimony” or “witness”), the software is an interactive information-gathering and visualization tool that has been used in generating over 60,000 maps displaying environmental issues, elections and human rights abuses in 159 countries and over 30 languages.

From Ushahidi came BRCK, a rugged portable internet connectivity device for use in providing WIFI service to people in areas where electricity is intermittent.  Anyone within range of the signal can connect to the internet for free, or can watch shows, listen to music or read books from the stored content on the network.

In 2010 The East Africa Marine Systems (TEAMS) undersea fiber optic cable was completed, adding significant broadband in East Africa. Kenya led the project, and increasingly, tech hubs are forming to take advantage of the speed and access. The focus of these new tech hubs is building human resource capacity, development of public-private partnerships, and creation of employment opportunities for the growing young population. With government cooperation, they are creating local content.

These efforts have improved research into diseases, health care, agricultural production and marketing, delivery of education services, and information for international traders. As reported in a new book available online, Digital Kenya: An Entrepreneurial Revolution in the Making:

Governments are becoming more productive, farmers are getting value for their produce, transportation is becoming more efficient, and education is increasingly accessible and practical. External stakeholders are noticing, too. Multinational corporations are increasingly setting up research laboratories in Nairobi, and international policymakers are coming to Kenya to learn how we did it.

Digital Kenya reported: “In 1982, the Kenyan government banned the use of computers in public offices for fear that the new technology would take away secretarial jobs. Today, virtually every public office has computers—with more people than in the past engaged in their use—to enhance service delivery.”

Manufactured Beef and Other Delicacies

Here is the problem: There are now seven billion people in the world. They consume 259 million tons of meat a year. Meat production uses 70% of the world’s agricultural land, including land used for growing the grains to feed the animals. By 2050 there will be nine billion people, average consumption is expected to increase, and estimated demand for meat production will increase to 455 million tons a year. There is not enough agricultural land to accommodate that increase.

The technology that gave us stem cell science and tissue engineering has been applied to producing beef in labs. With financing from Sergey Brin, co-founder of Google, the first burger was produced in 2013 at a cost of $330,000. Work since then has reduced the price to about $11 for a burger.

Dr. Mark Post, a professor at Eindhoven Technical University in the Netherlands, was one of the leaders in the research. He has formed a company, Mosa Meat, to bring lab-produced meat to the market. Two other new companies, Memphis Meats in the U.S. and SuperMeat in Israel, are working on their own lab-produced meat products. According to an NBC News report, Tyson Foods, the largest U.S. meat company, is investing in “innovative approaches to protein products.” Memphis Meats expects it will sell pork and chicken as well as beef that taste identical to meat from animals. Others are attempting to lab-produce fish fillets and turkey.

There are environmental benefits in moving from livestock to lab-produced meat. Land required for production would be reduced by 99%, and water required by 90%. The greenhouse gases produced by livestock would be reduced. There would be no need for antibiotics for meat produced in sterile environments.

Still squeamish about eating lab-produced meat? No problem. Other delicacies already being consumed around the world are available to replace meat. Marcel Dicke, an entomologist, gave a TED Talk in which he claimed “delicacies like locusts and caterpillars compete with meat in flavor, nutrition and eco-friendliness.” He cites the figure that 80% of the world already eats insects. In fact, he notes that insects have been used in various food preparations in Western diets for years.

Oh, and by the way, when insects and lab-produced meat replace cattle and other animals, there won’t be an abundance of hides for leather for our clothes and handbags? Got that covered too. A September 2017 article in The Atlantic describes how a factory belonging to a company called Modern Meadows makes leather at least as good as that from animals.

Divisions within U.S. Political Parties

On October 24, 2017 the Pew Research Center reported results of surveys of more than 5,000 United States adults conducted over the summer of 2017. The report revealed that “even in a political landscape increasingly fractured by partisanship, the  divisions within the Republican and Democratic coalitions may be as important a factor in American politics as the  divisions between them.”  The results follow up on, and are consistent with, past blog posts on Fifty Year Perspective. (See June 18, 2017  and October 22, 2017 .)

The Pew report divides the public into eight politically oriented groups, four Republican-leaning and four Democratic- Republicans. The “Solid Liberals,” the most Democratic-leaning group, make up 48% of politically engaged Democrats. Pew identifies three other Republican-leaning groups as “Country First Conservatives,” “Market Skeptic Republicans” and “New Era Enterprisers.” In addition to “Solid Liberals,” Democratic-leaning groups in the survey include “Opportunity Democrats,” Disaffected Democrats” and “Devout and Diverse Democrats.”

Within the two parties there exist a variety of positions held by people who do not necessarily abide by the strictures of identity politics. Somewhat independent, they may share some views with the extreme members while harboring other positions that are abhorrent to those at the extremes. For example, a 94% majority of “Market Skeptic Republicans” say the economic system unfairly favors powerful interests, a view held by 99% of “Solid Liberals” but only 21% of “Core Conservatives.”  Even “Core Conservatives” do not buy in to the full Republican agenda; only 43% believe that immigrants burden the U.S. by taking jobs and housing.

Among Democrats, “Solid Liberals” strongly favored government taking responsibility for assuring all citizens have health insurance (97%), and for making changes that bring equality for blacks (98%). For “Opportunity Democrats” the comparable figures were 78% and 67%. Of “Disaffected Democrats,” 63% believe the U.S. should reduce global involvement, a view shared by 66% of “Country First Conservatives” and 72% of “Market Skeptic Republicans,” but only 10% of “Solid Liberals.”

This is the seventh time the Pew Research Center has conducted this survey; the first survey was in 1994. Pew finds that the disagreements between Democrats and Republicans on political values are higher than any previous survey. Yet, as noted above, divisions within parties may be as important as divisions between them. And as noted above, there are positions on which Republican-leaning persons may be closer to Democratic-leaning persons than to other Republicans.

Will voters still identify with their parties even though they do not support party positions? What happens to people not at the extremes, who might still be brave enough to call themselves moderates?  And most intriguingly, are there enough voters so uncomfortable with either party to form a critical mass in support of a third party?

U.S. politics has been dominated by two major parties for nearly its entire history. No third party candidate has won a presidential election, and only once has a third party presidential candidate come in second in an election. In 1912 Theodore Roosevelt, the Progressive Party candidate, beat the Republican Party candidate, William Taft, but lost to the Democratic Party candidate, Woodrow Wilson. The las third party to become mainstream was the Republican Party, formed in 1854, losing in the 1856 presidential election, then winning in 1860.

In the last 100 years only five third party candidates have received more than 5% of the votes cast. However, even when third party candidates do not win, they can change the outcome of the elections by drawing votes mostly from one of the other candidates.

In 1968 George Wallace ran as the American Independent Party candidate after being rejected by the Democratic Party. Richard Nixon, the Republican Party candidate, beat the Democratic Party candidate, Hubert Humphrey by only half a million votes, while Wallace received almost ten million votes of the 73 million votes cast. Without Wallace, Humphrey would have won the presidency. In 1992 Ross Perot captured enough potential Republican votes to cause George H.W. Bush to lose to Bill Clinton.

Every day news stories confirm the findings of escalating divisiveness within as well as between the major political parties. A recent article at Newsweek.com had one academic suggesting that a Republican-centrist third party may soon emerge. There is some common ground among those voters between Pew’s “Core Conservatives” and “Solid Liberals.” What might those middle-grounders agree to if they left their labels at the door?

The Democratic People’s Republic of Korea

North Korea’s hatred toward the West and toward the United States in particular, is not a creation out of the mind of its current dictator, Kim Jong Un. Its roots lie in the bloody war of 1950-1953. Wars dotted Korea’s history for centuries, not unlike Europe’s history. And like Europe’s wars, technology heightened wars’ deadliness.

Prior to the 20th century, Korea suffered invasions by Mongols, Chinese and Japanese. The Korean Empire was annexed by Japan in 1910, and remained under Japanese occupation until Japan’s defeat in 1945 in World War II. As the war’s victors, the United States and the Soviet Union divided the Korean peninsula between themselves. Dean Rusk, an Army colonel at the time and later Secretary of State under Presidents Kennedy and Johnson, drew a straight line along the 38th parallel. The Soviets occupied Korea north of that line, and the U.S., the south of that line.

By 1950 the peninsula had become two dictatorships. The south, headed by Syngman Rhee, with support from the U.S., became the Republic of Korea. The Soviets installed Kim Il Sung as the communist dictator in the north, which took the name Democratic People’s Republic of Korea. Soldiers of both states were involved in cross-border skirmishes. Such battles took the lives of nearly 10,000 north and south soldiers before war began.

On June 25, 1950, Kim Il Sung invaded the south in order to reunify the peninsula by force. The push south was repelled and reversed when General Douglas MacArthur landed U.S. troops to repel the invasion. China joined the battle when U.S. troops came close to Korea’s border with China. After three years, with neither side making lasting headway, the battles ended with an armistice that was never followed by a treaty of peace. North and South Korea remain in a state of war.

The number of dead left by the war has been estimated as low as two million and as high as five million. The majority of those killed were reportedly in the north. According to a recent Washington Post article, the U.S. dropped 635,000 tons of bombs and 32,557 tons of napalm in Korea, more than was dropped in the entire Pacific theater in World War II. General MacArthur intended to destroy “every installation, factory, city, and village” in North Korea.

Kim Jong Un, North Korea’s leader since 2011 and grandson of Kim Il Sung, feeds his people a steady diet of hate and reminders of what the U.S. did in the Korean War. He mixes memories of the horrors of war with blame for his country’s current economic conditions. The confrontation prompts comparison with other former U.S. enemies.

In World War II Japan’s civilian population was struck by the most destructive bombs ever used in warfare. Those bombs brought an end to military battles, surrender and a peace treaty in 1951. Japan adopted a pacifist constitution, democracy and alliance with the U.S., and Japan received massive assistance to rebuild. North Korea’s war ended without a peace treaty, it became a dictatorship and aligned itself with communist China and Russia, and its economy is devoted to military preparations. Vietnam was targeted with far more napalm than North Korea, and although it has chosen communism, it established diplomatic relations with the U.S. 20 years after the war ended. A trade agreement followed in 2000.

The comparisons make a case for diplomacy and cessation of hostility in the interests of all parties.

“Can We Agree on This?”

Political scientists and media commentators have devoted innumerable articles to analyzing popular perceptions of government as expressed through the past year’s voting and polling. An article by Harold James on June 8, 2017 in Financial Times portrayed the transformation:

“In the second half of the twentieth century, a stable pattern  emerged in most developed countries, with power alternating between centre-right and centre-left parties. The parties may have looked like bitter rivals, but they resembled each other in that they did not appeal to extremes, but fought for the political centre.”

In the 1990s the impact of globalization and fear of job losses left voters dissatisfied with responses offered by leading political parties. The perception is that Western democracies’ established parties have failed to improve lives. The ensuing vacuum was the opportunity for populist parties to present themselves as liberators from their countries’ problems.

The June 2016 Brexit vote, followed in November by the election of Donald Trump as U.S. president, looked a lot like precedents for the triumph of populism in the West. Attention focused on the subsequent series of European elections. Voters in Austria, the Netherlands, France and Germany rejected populist party leaders, but the elections did see populist candidates increase their numbers in national parliaments.

In an April 2017 article titled “Young Centrists Strike Back,” originally published in Australian Financial Review, Herve Lemahieu wrote:

“As the Dutch general elections illustrated in March, voter fatigue with old left-right party politics need not take on populist expression. Instead, an electoral shellacking of the traditional parties was achieved by younger centrist parties…. Europeans have seen how Brexit has isolated Britain and do not want the same fate. Their dislike of President Trump’s policies is turning them off anti-immigration platforms more broadly.”

Andres Velasco is a former Finance Minister of Chile, and now a fellow of the Center for International Development at Harvard University. In an article titled “Seizing the Center” appearing online at Project Syndicate, Velasco characterized the new President of France, Emmanuel Macron, as a “centrist,” but not in the sense that Macron combines ideas from the right and left. The right claims to stand for freedom, by which Velasco interprets them to mean “freedom from government coercion, excessive regulation, or punitive taxes.” Velasco’s centrist “believes that government policy should secure basic opportunities in order to render citizens truly free.” Velasco examines the claim of the left to stand for equality. But “what kind of equality” is not agreed, leading government to “expand with no limits – or to focus on means instead of ends.” His centrist advocates for government that guarantees “education that is good enough to deliver the skills that allow citizens to interact as democratic equals.”

A ten page report in the September 30, 2017 issue of The Economist expands on the centrist theme. Emmanuel Macron attributed France’s lethargy to internal disagreements within political parties “on all the pressing issues – inequality, globalization, the environment, Europe.” His idea was “to force a new alignment along a different fault line: between those sympathetic to an open society and those tempted by nationalism, Euroscepticisim and identity politics.” Identifying as neither right nor left, Macron attracted voters with varying political histories, relying on local committees and grassroots support, and a “movement” rather than a political party. In that September 30 issue, The Economist’s Charlemagne” column describes Macron’s vision “of a Europe that defangs populists by protecting its citizens from the rougher edges of globalization.”

Macron identified internal disagreement with France’s political parties. Similarly, the “Bagehot” column in the same issue of The Economist finds moderate wings of both the Conservative and Labour parties have more in common with each other than with the more extreme elements of their own parties. The current stagnation in the U.S. Congress displays some of the same characteristics, where both the Republican and Democrat parties are pulled by their extreme members.

Europe and Israel 100 Years After Balfour

Europe’s victors in The Great War set the stage for establishment of a national home for the Jewish people. The events leading to the signing of the Balfour Declaration in November 1917 are described in the previous blog post on Fifty Year Perspective [LINK]. The path to the eventual formation of the State of Israel in 1948 was tortuous and deadly. The attitude of Europe’s countries toward Israel today is a mix of admiration and disapproval, cooperation and opposition, as described in a recent article in Foreign Affairs.

Among Israel’s most steadfast supporters are Eastern European countries, whose Jewish populations were lost in the Holocaust, and Germany, which institutionalizes remembrances for its role in the Holocaust. Foreign Affairs reported that trade activity between Israel and European countries is at historic highs, with 14.8 billion dollars of Israeli goods going to Europe, and Israel importing 21 billion euros worth of goods and services from Europe. “Israel’s reputation as the so-called start-up nation is much admired on the Continent.”

Israel maintains strong security ties with many European countries. “The interest in partnering with Israel’s military spans the continent. In November, Israel will host an air force exercise involving France, Germany, Greece, Italy, and Poland…. European states especially value Israeli intelligence on the threats posed by Sunni jihadist groups.”

And yet, there is support among many European governments for recognition of a Palestinian state. “The EU’s 1980 Venice Declaration was a watershed in recognizing the Palestinian right to self-determination.” In 2014 Sweden officially recognized a Palestinian state, the first western European country to do so. Internationally, a movement called Boycott, Divestment, and Sanction (BDS) has grown as an attempt to apply economic and political pressure on Israel to withdraw from territory it has controlled since the 1967 war between Israel and neighboring Arab countries. The BDS movement targets companies that contract with businesses in the West Bank.

Conflict between Israel and Hamas in 2014 led to a rise in anti-Israel demonstrations in London, Berlin and Paris, and anti-Semitism across Europe. In June of that year, a French-born gunman of Algerian descent killed four people at the Jewish Museum in Brussels. Four Jews were murdered in a kosher supermarket in Paris in January 2015, by a gunman pledging allegiance to Islamic State. Although Muslims committed these attacks, anti-Semitism in Europe is not limited to its growing Muslim population.

A mid-2015 survey was conducted by the Anti-Defamation League (ADL) of 10,000 adults, mostly in European countries, concerning their attitudes and opinions toward Jews. The results were compared to those of a similar 2014 survey. Pronounced changes in attitudes were found in France, Germany and Belgium, with one year decreases of as much as 20 percent. Strong and sustained denunciations of anti-Semitic violence by European leaders received credit for contributing to the decreases in anti-Semitic attitudes. The ADL poll has not been repeated since 2015. The opposite trend was found in the UK; anti-Semitic incidents there increased in 2016.

Events of recent years favor enduring cooperation between Europe and Israel, as the Foreign Affairs article asserts:

Israeli and European interests are aligned in shoring up Western-aligned Sunni Arab states and containing anti-Western extremist forces…. Terror attacks in European cities, searing images of Islamic State butchery, and waves of Syrian refugees pouring into Europe have made it harder to sustain the idea that Israel is the source of Middle East instability, or the poison in relations between Islam and the West.

The Balfour Declaration’s 100th Anniversary

This November marks 100 years since the signing of the Balfour Declaration. Born in secrecy, intrigue, spying and double dealing, the negotiations among supposed allies prior to the Declaration must be one of military history’s low points.

Jews in Russian pogroms fed the beginnings of Zionism in the 1880s. Migrating to the territory of Palestine, Russian Jews were supported by philanthropists’ funds for purchase of land and equipment, trading the Russian Empire for the Ottoman. Ottomans also ruled over the dozens of Arab tribes spread throughout the Middle East and the Arabian Peninsula.

When the Great War began, the Ottoman Empire entered on the side of the Germans and the Austro-Hungarians, known as the Central Powers, against the allied British, French and Russians. The war presented an opportunity for both the Zionists and the Arab tribes to assert greater control over their own destinies.

Anticipating eventual defeat of the Ottomans, Chaim Weizmann lobbied the British government for a Jewish homeland in Palestine, where an estimated 85,000 Jews already lived. Weizmann received support from prominent Jews in France and England, from The Manchester Guardian, and from Arthur Balfour, who became foreign secretary under David Lloyd George. While the morality of this cause appealed to European supporters, the allies had in mind an additional benefit of having the backing of Jews in the United States: they hoped the U.S. would join their war effort.

The Grand Sharif Hussein of Mecca represented himself as a leader of Arabs in Ottoman lands. He negotiated with the British to lead an Arab revolt against the Ottomans, which the British envisioned would hasten the defeat of the Central Powers. Hussein presented the Damascus Protocol as the proposed boundaries of a new Arab Kingdom, which included present-day Iraq, Syria, Lebanon, Israel, Jordan and the Arabian Peninsula. Britain’s negotiator, Sir Henry McMahon, wrote Hussein accepting modified boundary changes from the Damascus Protocol. However, in translating McMahon’s letter from English to Arabic, confusion concerning terms left ambiguous whether Palestine was to be included in the Arab Kingdom.

To add to the intrigue, Britain and France considered their own territorial goals following the expected victory. Represented by Sir Mark Sykes and Francois Georges-Picot, the map of the Middle East was redrawn. They designated territories for British and French control, and for the Arab Kingdom, with French or British influence. Much of what Hussein expected to be designated as Arab lands were set aside for French- or British-administered territories. They left Palestine to be administered by an international condominium of powers. The Sykes-Picot Agreement was accepted by both Britain and France in May, 1916. Work on the agreement was not shared with the Arabs or the Zionists.

The Balfour Declaration was sent, as a paragraph in a November 2, 1917 letter, from UK Foreign Secretary Arthur James Balfour to Walter Rothschild, the unofficial leader of the British Jewish community. It read:

His Majesty’s government view with favour the establishment in Palestine of a national home for the Jewish people, and will use their best endeavours to facilitate the achievement of this object, it being clearly understood that nothing shall be done which may prejudice the civil and religious rights of existing non-Jewish communities in Palestine, or the rights and political status enjoyed by Jews in any other country.

Arabs were angered at the outcome, and Arab-Jewish hostilities ensued almost immediately. Subsequent British actions angered both sides, and violence persists to this day.

Changing the Economics of Renewable Energy

While politicians debate the benefits of using coal to generate electricity, the economics of renewable energy may soon make the debate moot. In a July 2017 research report, Morgan Stanley stated, “Numerous key markets have reached an inflection point where renewables will have become the cheapest form of new power generation by 2020, a dynamic we see spreading to nearly every country we cover.”

Large scale utilities are adopting wind and solar power to generate the electricity that they store and distribute to industrial, business and residential customers. Utilities’ adoption of renewable sources of energy is expected to enable the United States to meet its carbon-reduction targets agreed in the Paris accord, whether or not the country pulls out of the pact.

Cheaper and more efficient production has driven solar panel costs 50% below what they were two years ago. The cost of wind energy has fallen as engineers have increased the length of wind turbine blades and the height of wind towers. In some U.S. regions wind energy costs about $30 per megawatt hour, compared to $40-60 for electricity generated by natural gas, the next cheapest fuel source.

Solar power recently reached the point of becoming more affordable than coal in India, which is the world’s third largest source of carbon emissions. China remains the world’s biggest investor in clean energy, with the world’s largest installation of solar panels. Renewable sources are already widely used in many European countries. Australia reported that several thousand megawatts of wind and solar plants are seeking approval. In the U.S., the state of Texas leads the country in energy generated by wind, despite opposing the nation’s Clean Power Plan.

For utilities, this is simply a good business decision. Utilities which are deregulated and must compete to sell power will look to low-cost solutions for new facilities. Fallout is already occurring, with abandonment of plants under construction. Such was the case for two South Carolina nuclear plants plagued by cost overruns, equipment problems and the bankruptcy of lead contractor Westinghouse Electric. China has reportedly cancelled over 100 planned or under construction coal-fired power plants.

The future of U.S. utilities depends on regulation. They are closely linked to politics at the state and local level, and will work to protect their profit margins. As solar and wind energy drive prices down further, utilities that do not turn to cheaper renewable sources will risk losing industry and jobs to those that adapt.

Is Political Turmoil Bad for Business?

Conventional wisdom says that business dislikes uncertainty. That places politics in an important position. Political stability gives businesses a degree of confidence to plan and invest for their future. Political stability can come in various forms.

While most developed economies tend to be democracies, stability is not a characteristic of only democratic governments. China has shown that an authoritarian government can foster rapid economic growth. A recent article in The Economist reported on Turkey’s April 16, 2017 referendum that awarded new powers to the increasingly autocratic President Recep Tayyip Erdogan. As results came in, Turkey’s currency, government bonds and stock market all gained ground. “In Turkey investors may have feared turmoil if Mr. Erdogan’s proposals had been defeated.”

The past year’s political disruptions in developed countries could have been expected to destabilize national and regional economies. Instead, economic performance has improved for many countries, as they continued to recover from the recent recession. Some observers see this as evidence that markets are decoupling from politics.

An early 2017 Wall Street Journal online story noted events occurring in South Korea and reported “markets prosper amid political turmoil,” following the impeachment of the country’s president. The South Korean stock market, KOSPI, hit an 18-month high, attracting a billion dollars of foreign investment in the year’s first three weeks. Similarly, the lack of a real government in Spain through much of 2005 and 2006 did not hold the country back from a sharp economic recovery. The example of Turkey described above is another case of economic growth concurrent with political dissent. And in the U.S., since the beginning of 2017 the Dow-Jones Industrial Average recorded new all-time highs on dozens of days, while frequent demonstrations opposed the newly-inaugurated president.

The Great Recession beginning in 2007 severely altered the balance between economics and politics. Financial mismanagement necessitated government intervention to stabilize national economies. The U.S. Federal Reserve fundamentally changed how the economy worked. Ten years later renewed economic stability reduced the role of politics.

Then again, in August 2017, a dispute between the U.S. and tiny but belligerent North Korea riled equities markets. Threats of nuclear war between the two countries’ leaders wiped out nearly a trillion dollars from global equity markets in four days, according to an August 12th Reuters report.

These and other examples suggest that business can run normally in situations such as South Korea, where a transition in leadership occurs peacefully. But there is a limit to the extent to which political turbulence can occur before business pulls back.

Global Leadership

The chronology of 2016-2017 elections in Western countries, appearing in a Fifty Year Perspective blog post, reviewed attitudes toward globalization, immigration, and the European Union. Subsequent blog posts examined the internal challenges facing the European Union, shortcomings of existing international institutions in responding to popular anxieties, and one economist’s approach to addressing the social and ecological issues that new institutions must face.

An underlying theme through the series of blog posts is conflict of ideologies: internationalism versus nationalism, market supremacy versus social justice, fundamentalism versus progressivism, materialism versus environmentalism, tribalism versus multiculturalism.

International institutions set the rules of engagement between nations, but what guides the development of the rules? The economist’s approach outlined in the previous blog post sets out guidelines that only a strong and respected international leader could be expected to advocate.

Following World War II the mantle of world leadership was generally bestowed upon the United States. As the most powerful of the liberal democracies, the U.S. led the struggle against communism. As Josh Lederman wrote in an Associated Press article in January, 2017, “For generations, the U.S. has largely set the terms for the global economy, policed international security threats and spearheaded the response to crises like Ebola and Haiti’s earthquake.” Its soft power derives from its leadership in technology, finance, entertainment, higher education, foreign domestic investment, military power, and its history of acceptance of immigrants on a massive scale. The success of its immigrants established the U.S. image as “the land of opportunity.”

That’s not to say that the U.S. did not engage in its share of bad behavior. Targeted assassinations, violations of civil liberties, and civilian deaths from drone attacks have been committed in the name of counterterrorism. And, as Hugh White pointed out in a November, 2016 article in The Atlantic, the list of failed international security objectives is long. Among them: North Korea’s and Iran’s quests for nuclear weapons; stability in Iraq and Afghanistan; jihadi extremism; peace between Israel and the Palestinians.

Yet it was not until the election of Donald Trump as president that U.S. world leadership has been called into question. Withdrawal from the Paris climate agreement reversed the U.S. leadership role that had set an example for other nations. And withdrawal, rather than renegotiation, from the Trans-Pacific Partnership convinced Senator John McCain that doing so “abdicates U.S. leadership in Asia to China.” China has demonstrated assertiveness in Africa with loans paying for railroads, roads and ports, as well as investments in business. One study found more African students studying in China than in Britain or the U.S., many on Chinese scholarships.

But in an article in November 2016 in The Telegraph, Rupert Myers found Europe a more worthy model for world leadership:

In America’s absence, only Europe is left to stand for the values underpinning Nato, Western democratic freedom, and the rule of international law. As the originator of democracy and the values of the enlightenment, Europe is the older, wiser continent. Europe lived through the authoritarian nationalism that has captivated Trump’s supporters, and came out of the experience chastened but resolved…. it is to Europe that the world must look for a vision of a peaceful, united future in which states defend their minorities rather than persecute them.

The future will tell whether Europe fulfills this role. France’s new president, Emmanuel Macron, has captured the international spotlight in his short time in office. Perhaps Europe will accede to world leadership. For now, U.S. attractiveness as a land of economic opportunity is not in danger of being displaced by China or Russia, and quite possibly not by Europe either.

New Institutions: Where to Start

In the book by Stephen D. King, Grave New World: The End of Globalization and the Return of History, reviewed in the previous blog post on Fifty Year Perspective, the author asked, “For globalization to work, nation states need to accept reductions in sovereignty for the greater good. But who decides what is the greater good?”

Kate Raworth, an economist at Oxford University, takes on this challenge with a concept she calls Doughnut Economics in a recent book by that title. She criticizes economists’ uncompromising focus on GDP growth for giving short shrift to the more important objective of equitably improving world-wide living conditions. The goal she sets for economic theory is to “turn economies that need to grow, whether or not they make us thrive, into economies that thrive, whether or not they grow.”

Approaching the challenge from an economic perspective one cannot but conclude that mainstream economic theory is ill-equipped to address challenges to instability which can be attributed to global inequality and failure to confront long-term impacts of climate change.

Raworth’s concept derives from a diagram of concentric circles representing social and ecological limits within which humanity must live. The Social Foundation (inner ring) represents the limit beyond which humans suffer deprivations such as hunger and illiteracy. The Ecological Ceiling (outer ring) represents the limits of ecological sustainability. The “safe and just space for humanity” lies between the rings. Raworth uses this concept to set long-term goals for humanity, and then policies to achieve them. The doughnut fosters new ways of thinking… “it helped invigorate old debates and instigate new ones, while offering a positive vision of an economic future worth striving for.”

Seven “ways to think” set the stage for addressing a sustainable future. The first is to vacate GDP growth as a goal, substituting it with “meeting the human rights of every person within the means of our life-giving planet.” Second, see the big picture; place the economy in the context of society, and society in the context of the earth. Third, “nurture human nature:” cultivate characteristics accepting of interdependence, sharing, and openness to change. Fourth, adopt dynamic analysis, thinking in terms of a system. Fifth, reverse inequality, redistributing wealth as well as income. Sixth, consider the entire life cycle of materials, both natural and man-made, once products are consumed. Finally seventh, “Be agnostic about growth…. Design an economy that promotes human prosperity whether GDP is going up, down, or holding steady.”

Raworth puts forth a demanding program for achieving both equality, the doughnut’s inner ring, and sustainability, the outer ring.

Needed: Improved International Institutions

If the institutions designed to maintain peace in Europe – and the world – are transformed or dissolved, what becomes of the peace? This question ended the previous blog post on Fifty Year Perspective.

A new book by Stephen D. King, Grave New World: The End of Globalization and the Return of History, examines the 20th Century institutions that enabled globalization, the benefits and failures of globalization, issues behind the West’s retreat from international institutions, and asks what international relations might be like without these institutions.

The international institutions created at the end of the Second World War and in the years following were ultimately institutions of the Cold War. Western economies and societies became ever more closely integrated, thanks in part to the machinations of the IMF, NATO and what eventually became the European Union. A world largely free of conflict … was also likely to be a world in which entrepreneurial capitalism was likely to flourish.

But, King notes, as the global pie predictably increased in size, “little attention was paid to its distribution.” Consequent inequality pushed voters away from centrist political positions toward populist parties. “National governments have been unable to marry global market outcomes with domestic social and political goals.”

Migration and technology have played large roles in resistance to globalization and international relations. King cites developments that promise to complicate both. He sees migration, in particular from Africa to Europe, as probable and massive. “Africa may be at the dawn of a demographic surge considerably larger than anything that happened in Europe in the nineteenth century.” Decreasing fertility and infant mortality, and improvements in sanitation and healthcare, will produce a mushrooming young adult population.

Ultimately, the African migration story will be driven by population, modest gains in per capita incomes, improved transportation linkages with the rest of the world and, in some cases, the emergence of ethnic and religious violence: precisely the conditions, in fact, that led to the exodus from Southern and Eastern Europe in the late nineteenth century.

As technology replaces cheap foreign labor with machines, production will return to the countries where goods were originally produced. The need for global supply chains would be reduced to commodities and raw materials. “Those countries unable to invest in new technologies – including superfast broadband and advanced robots – might find many of their citizens still trapped in poverty.”

If this sounds like fuel for conflict, what does it say about international institutions? Without those institutions, King asks:

  • How would a weakened Europe without the EU be able to deal with Russia, especially if the U.S. isolates itself?
  • How could smaller nations resolve trade disputes with larger nations without the WTO?
  • How could NATO states protect their collective interests without a NATO alternative?

There are no answers to these questions without acceptance of moral obligations by nation states to create more equitable institutional arrangements, and some reduction in national sovereignty in exchange for less conflict.

The European Union’s Challenges

Of the ten European elections described in the previous blog post, only one specifically referenced the European Union. The United Kingdom vote in June 2016, known as Brexit, determined that the UK would leave the EU. And yet, the future of the EU was resting on the outcome of each election.

When the predecessor organizations of the EU were created in the 1950s, most of the issues facing member states today did not exist. Instead, the focus of cooperation was on ending the bloody wars between European neighbors. Lasting peace was the goal of the 1951 formation of the European Coal and Steel Community, economically and politically uniting the six founding countries, Belgium, France, Germany, Italy, Luxembourg and the Netherlands. The European Economic Community (EEC), created by the 1957 Treaty of Rome, led in the 1960s to EU countries dropping customs duties when they trade with each other.

Denmark, Ireland and the United Kingdom joined the EEC in 1973. Beginning in 1979, members of the European Parliament were elected by direct popular vote. Greece joined in 1981 and Spain and Portugal joined in 1986. What is now known as the European Union was established by the Treaty of Maastricht in 1993 with 12 members. With the addition of Croatia in 2013, EU membership reached its current 28 members.

Sovereignty of member states was inherently at issue from the formation of the EU and predecessor organizations. By joining the EU, member states agreed to relinquish authority over significant areas, such as freedom of movement for people, goods, services and money across national borders, and standards for agricultural products. However, popular election of the 751 member European Parliament has not satisfied many citizens who feel they have given up an unacceptable degree of sovereignty. That was a major issue in the Brexit vote, and is behind significant opposition from extreme political parties in several EU member states.

New challenges to EU membership arose from events unforeseen in the formative years. Recovery from the Great Recession that spread worldwide in 2008 has been long and painful, for some member states more than others, and has exposed significant economic inequality both within and among states. Globalization and technological change have contributed further to the gap between haves and have-nots. Violence in the Middle East and Africa has generated mass migrations of refugees to Europe, where acceptance of immigrants has been generous in some member states and opposed in others. Anti-Western terrorism, much of it home-grown, heightened the tension within multi-cultural societies. Finally, Russia, already irritated by the EU’s admittance to several former Soviet states, annexed the Crimean part of Ukraine and engaged in proxy war in Ukraine’s eastern region. This is seen as a not-too-subtle threat to those former Soviet states.

If the institutions designed to maintain peace in Europe – and the world – are transformed or dissolved, what becomes of the peace?

Analyzing Twelve Months of Western Elections

Over the twelve months from June 2016, a series of elections in several Western countries tested their electorates’ approval of their governments’ performance. Moderate political parties surrendered followers to extremes of the right and left. Criticism of globalization and the decline in industrial activity arose from both extremes. Opposition to the power of elites and mainstream political parties, support for the common citizen, defense of country over international cooperation and job-destroying trade policies were rallying cries. The sequence began with the decision by the United Kingdom’s Prime Minister David Cameron to submit continuing membership in the European Union to a popular vote.

June 23rd, 2016: The United Kingdom voted to leave the European Union by a vote of 52% to 48%. The so-called Brexit vote was a surprise to most observers. The result was a protest against governing by an unelected elite at the EU’s headquarters in Brussels, Belgium, in general, and migration rules in particular.

November 7th, 2016: Donald Trump was elected president of the United States. Pre-voting polls indicated that the vote would not go to Trump, and his opponent, Hillary Clinton, won the populat vote by 2.1%. However, via the Electoral College process, delegates cast their states’ votes for Trump. The combination of the Brexit vote and Trump’s victory were viewed as a harbinger of world-wide popular attitudes toward globalization, and a possible swing toward the right in elections.

December 4th, 2016: In a vote for president of Austria, Norbert Hofer of the anti-immigration Freedom Party lost by 53% to 47% to Alexander Van der Bellen, who campaigned on a pro-European stance using the Brexit decision as a warning. By the time of the Austrian election, many in the UK were questioning the wisdom of their decision. The EU breathed a sigh of relief.

March 15th, 2017: Netherlands’ general election was seen as another test of populist sentiment in Europe. The anti-immigrant candidate Geert Wilders’ party won 20 seats in the 150 member House of Representatives, while Prime Minister Mark Rutte’s Liberal party won 33 seats, another apparent defense of the existing order.

April 18th, 2017: United Kingdom Prime Minister Theresa May called for a “snap” general election, less than two years after the previous one in May 2015. A regularly scheduled election was not due until May 2020. May’s Conservative party was riding a wave of popularity in April, and she expected an early election would boost her party’s seats in Parliament and strengthen political support in negotiations leading up to the United Kingdom’s exit from the European Union. The date of the election was confirmed for June 8th, 2017.

May 7th, 2017: Emmanuel Macron was elected president of France in elections that swept aside both of the traditional parties. In the final run-off, Macron defeated the far right candidate, Marine LePen, who was compared to and supported by Donald Trump. Trump’s election had given encouragement to the French far right that victory was possible. Macron professed to be neither right nor left. He proposed an easing of stringent labour laws, reform of an unwieldy pension system, and unwavering support of the EU. His movement became La République en Marche! (LRM).

May 7th & 14th, 2017: Elections in two German states brought victory to Chancellor Angela Merkel’s Christian Democrats (CDU), building momentum prior to Federal elections scheduled for September 24th.

June 8th, 2017: The UK “snap” election blunted the Conservative party’s drive to strengthen its position in seeking a “hard exit” in the Brexit negotiations. The election resulted in the Conservatives losing 13 seats and their majority in Parliament, making it necessary to seek a partnership with a minor party, Northern Ireland’s Democratic Unionist Party, in order to achieve a majority of seats. The opposition Labor Party gained 30 seats. According to an exit poll, only 28% of voters believed Brexit to be the most important issue in the election, as national security concerns were heightened following terrorist attacks in London and Manchester preceding the election.

June 11th, 2017: The first round of France’s National Assembly elections demonstrated that the election of Emmanuel Macron as president on May 7th was not only an anti-Marine LePen vote, but also a rejection of both traditional main parties. LRM received 32% of the vote; LePen’s National Front received 13%.

June 18th, 2017: Votes in the second round of France’s National Assembly elections were being counted as this post was being written. Macron’s newly formed LRM party had been projected to win about 400 of the Assembly’s 577 seats. BBC reported that traditional parties were urging voters to back Macron’s rivals to stop a monopolization of power. After all votes were tallied, France 24 TV reported 350 seats won by LRM and its centrist ally Modem. LePen’s National Front had 8 seats. Voter participation was an historically low 42%.

 

The first two elections, Brexit and Trump, appeared to be setting a tone: Western democracy was swinging to the right. Voters were turning away from globalization and limiting international migration. Although later elections in Austria, the Netherlands, and France brought defeat for far-right candidates, those losing candidates’ parties increased their positions.

As The Economist wrote in its May 24th edition, “Don’t write off the populists just yet.” Support in Western countries is still strong for saving jobs and opposing a globalization that benefits only corporate and political elites. A political “strong man” who promises to right all wrongs has great appeal, and Trump initially looked like he would play that role. Western Europe took note. His subsequent lack of success may have served as a warning for later elections.

This play is not over. The next act features Germany’s Federal election scheduled for the 24th of September, 2017 to select members to the Federal Bundestag. The election will determine Germany’s next chancellor. Current Chancellor Angela Merkel, a strong supporter of the EU, is widely favored to win a fourth term. Germany’s far-right party, Alternative for Deutschland (AfD), has had success in local elections, but has barely double-digit polling numbers nationally.

A recent Pew Research Center poll in 10 European Union countries found public approval of EU rebounding strongly compared to a year ago. The trend comes as unemployment in Europe is falling amid a broad economic recovery. There was a caveat however. Poll respondents believe their national governments should control trade and immigration policy, two key functions assigned to the EU by treaties.

Highs and Lows of Commodity Dependence

Typically for developing countries, the export of commodities – fossil fuels, metals, chemicals, food stuffs – is the primary source of income and provides the revenue for the import of everything not produced at home. The price of their commodities is critical to those governments’ ability to provide services and to improve the lives of their populations. Historically those prices are cyclical, so how countries use their import revenue and plan for leaner periods determines their stability.

Commodity prices tripled between 2000 and 2011, even after accounting for a two year slump during the recession. Several South American countries were beneficiaries of the period of strong commodity prices. A December 2016 report by KfW Research, a German economic research firm, described seven South American countries, Argentina, Bolivia, Brazil, Chile, Colombia, Peru and Venezuela, as rich in non-renewable resources. “This applies in particular to the deposits and the extraction of metals and oil, but also to agricultural raw materials such as soya beans.”

The high commodity prices of the first decade contributed to fast-growing incomes in the developing world. As an April 2016 World Bank report noted, “the commodity boom had a real and positive impact on the lives of poor consumers, ushering in an unprecedented social transformation that cut poverty in half and swelled the ranks of the middle class.” Investments in education, health care and social assistance resulted in a decline in inequality and a better standard of living.

The report goes on to say, “the windfall from the boom produced a ‘mirage effect,’ one that led many in Latin America to spend beyond their means and save at insufficient levels.” When world economic growth slowed and commodity prices eventually fell, governments could no longer afford generous spending on social programs, and financial turmoil followed for those countries that did not save for the downturn. (See World Bank Latin America Overview )

Populist leaders, who maintained power by spending freely, found their authority challenged when they were unable to prevent social decline and inflation. The downturn exposed not only mismanagement, but also corruption. Skimming of profits in the extractive industries and exposure of millions of dollars of bribes for construction contracts have brought people into the streets against both leftist and right-wing governments around the continent. Venezuela’s protests have been the most violent, resulting in over 30 deaths, as protesters call for President Nicolas Maduro’s removal even as he fights back every challenge to his authority. Crowds have firebombed Paraguay’s parliament and crippled Argentina’s transportation system. A Brazilian construction firm that won billions of dollars in construction contracts across Latin America admitted to illegal payouts to politicians at the highest levels.

As stated in the KfW Research report, long-term economic growth requires that resources “be transformed into other forms of capital such as a well-educated population, modern machinery and equipment, and infrastructure. Only then can the resource wealth benefit future generations as well.” Thus far South America’s resource wealth has not provided sustained economic development.

Job Security and Automation

The popular new movie La La Land opens with a hundred or so Hollywood hopefuls dancing and singing their dreams of becoming the next stars of stage and screen. Ignoring the competition for limited jobs, the poor average pay, and the instability of employment – in other words, the future – their minds are worlds away from thinking about what employment opportunities will look like in the future.

A now-famous study from the University of Oxford reported that nearly half of U.S employment may be subject to computerization. Fortunately for those prospective actors, their profession scored only a 37 percent probability of being automated, considered a moderate risk. Authors of the study estimated that about 47 percent of total U.S. employment is at high risk.

The U.S. Department of Labor produces a report for nearly 1400 occupation titles, including their hourly and annual wages. The highest paid are primarily in health/medical fields, including physicians, surgeons, dentists, psychologists. Technical fields, such as petroleum engineers, physicists, and computer scientists, are also in the top pay categories. Both groups are among those least likely to be automated according to the Oxford study.

And both groups represent highly educated sectors of the work force. Educational attainment is a measure of the success of a nation’s commitment to a progressive economy and society. A survey evaluating success in educational attainment at the national level is taken on a three-year cycle by the Organization for Economic Co-operation and Development (OECD). Testing in 2015 included half a million 15-year-olds in 72 countries, and covered science, mathematics, reading, collaborative problem solving and financial literacy. Results were published in December 2016 by Business Insider.

Asian countries dominate the list of highest-ranking scores for educational attainment. Singapore, Hong Kong, Japan and Korea are among the top performers in all three test categories, math, reading and science. Finland, Canada, German, Ireland, Belgium and Netherlands are the top-ranking western countries. Estonia and Slovenia are the highest ranked Eastern European countries. All these countries rank well above the United States in all three categories, and above the United Kingdom in math and reading.

These income and education rankings recognize the high-income ($125,000+) cognitive jobs less threatened by automation. Some job categories with less than one percent likelihood of automation have average annual pay in a middle pay range of $50,000 – $60,000. Examples are lodging managers and elementary school teachers. Several job categories at the lower end of the wage range are less threatened by automation. Preschool teachers, childcare workers, hairdressers and concierges fall below twenty percent likelihood of automation, but have average annual pay between $22,000 and $32,000.

By the way, those Hollywood hopefuls at the beginning of the new movie who had a 37 percent probability of automation: their average hourly pay was reported to be $37.47. No annual pay was reported because actors do not generally work full-time year-round. Judging by the song they were singing, that is not a concern. They were joyfully singing “Another Day of Sun.”

Public Distrust of Science

On February 6, 1897, a bill was passed by the Indiana House of Representatives that would change the value of pi to 3.2. The bill died in the state senate when a senator observed that the legislative body lacked the power to redefine mathematical truth.

On April 22, 2017, science again challenged government with a March for Science, with tens of thousands of people in over 20 countries united to press for evidence-based policy making and government funding for research.

The troubled relationship between the people’s government and science is not a recent phenomenon. The value of pi may no longer be questioned, but public mistrust in science is widespread, most prominently regarding climate change, but also vaccines, pesticides, evolution and GMOs. The debate in the United Kingdom leading up to Brexit saw Justice Secretary Michael Gove respond to those who warned against Brexit, saying, “I think people in this country have had enough of experts.” United States scientists who are disturbed by U.S. legislators’ denial of the basic conclusions of climate science have formed a new political action committee called “314 Action” named after the first three digits of pi. The organization focuses on finding scientists who will run for office where they can influence policy related to science.

Science has become politicized to the extent that personal beliefs toward science-related issues can predict where an individual falls on the liberal/conservative continuum. Conservatives are more likely to question evolution and climate change caused by human activity. Liberals are more likely to distrust nuclear power. A 2015 article in the journal Social Forces by Gordon Gauchat used data from public opinion surveys conducted by the General Social Survey to peer deeper into the relationship between politics and attitudes toward science.

Gauchat found that the polarization of perceptions toward science reflect “deeper cultural belief systems that cohere on the political right.” In particular, biblical literalism, “the idea that the Bible is the literal word of God” was the characteristic most associated with negative attitudes toward science’s influence on public policy and the awarding of federal funding for scientific research. Not wanting government funding for scientific research was also linked to a general distrust of government. Conservatives who recognize the liberal perspective of the scientific community are inclined to distrust its positions for that reason alone.

No one disputes the contributions that science has made to advances in health, life expectancy, safety, agriculture, reducing losses from natural disasters or creating new materials. Yet, criticism of funding for scientific research has been severe, and examples of offbeat inquiries have brought ridicule. A recent issue of The Economist detailed a scientific analysis of why shoelaces come untied, by a group of engineers at the University of California, Berkeley. Nonetheless, curiosity should be encouraged, in the interest of discovery. As lyrics from an Academy Award-nominated song from La La Land told the importance of creativity:

 

Feast and Famine

A decade ago when droughts were severe in the United States and Russia, countries such as China, which had been a net importer of grain, began encouraging more domestic production. In stark contrast today, the U.S. is looking at its fourth straight year of record harvests, and competition from producers in Argentina, Australia, Brazil and Russia are taking advantage of export opportunities created by a strong U.S. dollar.

The U.S. Department of Agriculture reports that global harvests will be the highest since it started keeping records in 1960. Worldwide stores of total grains following the 2017 harvest are projected (as of April) to be up 8.4% from two years ago; wheat alone has a 39% projected increase, creating a huge storage dilemma, while driving down prices. Comparable figures for the U.S. are 16% for all grains and 54% for wheat. Silos are full and farmers have taken to storing grain in plastic silo bags six feet in diameter and hundreds of feet in length, or in piles covered by tarpaulins.

Concurrent with the increasing oversupply is the mounting famine in four countries. Would it not be opportune for the United Nations to collect a portion of the oversupply and distribute to populations facing starvation? Offer a fair price to the farmers who have no choice but to store indefinitely or sell at a loss? Ah, were it only so simple.

A recent article in the New York Times detailed the complexities of the current threats. “For the first time since anyone can remember, there is a very real possibility of four famines — in Somalia, South Sudan, Nigeria and Yemen — breaking out at once, endangering more than 20 million lives…. The famines are coming as a drought sweeps across Africa and several different wars seal off extremely needy areas.” Lack of clean water and sanitation has enabled the spread of deadly disease. Emergency food deliveries are being blocked or stolen, and aid workers are being targeted and killed. Farmers and villagers flock to displaced persons camps seeking relief, but camp conditions promote the spread of communicable disease.

Here is where agriculture, international trade, climate, water resources, disease, poor governance, human rights and armed conflict intersect. Heat and inadequate rainfall are starting to impact more African countries. The New York Times article reports “Burundi, Kenya, Rwanda, Uganda, Ethiopia and Tanzania parched and on the edge of a major food crisis.” Perhaps excess world grain production will yet benefit those facing famine.

The Bear in the Room

Like the proverbial elephant in the room, the Russian bear is making its presence felt throughout Europe, the Middle East, northern Africa, and the United States. Most notably, Russia’s intervention in Syria has strengthened its status as a world power. Relations have been nurtured with a host of Middle East governments as well as non-state actors Hamas and Hezbollah.

 

 

Whereas the Obama administration was seen as weak in its policy toward the war in Syria, and U.S. ties with a number of regional governments have deteriorated, Russia has acted decisively under a strategy of achieving stability even if that means supporting existing leaders with terrible human rights records. Russia abides by a long-standing policy of territorial sovereignty, not interfering in other countries’ affairs.

Russia sees its own stability under threat from international terrorism. Some 9,000 fighters from Russia and former Soviet republics are believed to have joined so-called Islamic State (IS). Russia’s large Muslim population has been a source of terrorist activity, and a 22-year-old citizen of Kyrgyzstan, another former Soviet republic, has been blamed for the April 3rd suicide bombing of a metro train in St Petersburg.

Russian President Vladimir Putin has stated that “the collapse of the Soviet Union was a major geopolitical disaster of the century.” Putin has pledged to protect the millions of ethnic Russians living in former Soviet states, thus providing himself with justification for Russia acting to “protect” its co-patriots. Belarus, Ukraine, Latvia and Estonia, with between eight and 25 percent ethnic Russian populations, are prime current or potential targets for intervention and control.

After fighting a disastrous war through the 1980s in Afghanistan, Russia is taking advantage of the lack of progress in the U.S. led effort to stabilize the Afghan government. Russia has engaged with the Taliban in Afghanistan with the intent to reconcile the fundamentalist organization with the government. Russia has improved ties with Pakistan and China as well.

Russia’s international strategy includes weakening and destabilizing NATO and the European Union, supporting extremist parties in Europe and focusing on upcoming elections. Putin encourages anti-immigration positions, even as Russian bombing in Syria is surely increasing the migration flow. The hacking of United Kingdom, French and German Internet political communications for purposes of spreading disinformation has been occurring for years and continues.

Russian hacking was also a factor in the 2016 U.S. presidential election. Destabilizing and tainting U.S. institutions is consistent with Putin’s goal of raising Russia’s international status and restoring the might of the Russian state. A profile of Putin comes from a Brookings Institution book, Mr. Putin: Operative in the Kremlin, by Fiona Hill and Clifford Gaddy. Fiona Hill is a Brookings expert on Russia and Putin. She has taken a leave from Brookings to serve on the National Security Council staff as deputy assistant to the president and senior director for European and Russian Affairs. In their book, the authors conclude, “Putin has spent a great deal of time in his professional life bending the truth, manipulating facts, and playing with fictions. He is also, we conclude, not always able to distinguish one from the other.”

A History of Inequality

“In recent decades, income and wealth have become more unevenly distributed in Europe and North America, in the former Soviet bloc, and in China, India, and elsewhere.” This introduction to a new book by Walter Scheidel, titled The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century, recalls the current anxiety over the growing share of wealth and income concentrated in the hands of the “1 percent.”

While the author recognizes the existence of a large volume of literature devoted to the question of why income has become more concentrated, alternatively he addresses the forces that have caused inequality to fall, in the twentieth century and in the distant past. Disturbingly, the four historical events to which Scheidel attributes reversals of inequality are not what one would wish for. He calls them the Four Horsemen of Leveling.

The first of the Four Horsemen of Leveling is war, at the scale of mass mobilization. The two world wars of the twentieth century rose to a level of destruction that wiped out wealth and redistributed resources. Earlier wars lacked such destruction and thus did not effect a reduction in inequality. The world wars demanded universal sacrifice. Huge increases in income and property taxes were levied, and physical damage to capital assets disproportionately impacted the wealthy. All told, the world enjoyed an extended period of rising equality following World War II.

A second Horseman is transformative revolution. In the extreme example of the communist takeover of Russia, extraordinary violence restructured society and reconfigured access to material resources. Rights of ownership to land were abolished, and rights to use the land were given to all citizens.

Complete state failure is a third Horseman. Historically, rulers lost control to non-state actors due to corruption or inability to maintain security, public services and infrastructure, and loss of legitimacy. System collapse is most detrimental to the rich and powerful as concentration of resources is upended. The recent history of Somalia was a great leveling.

The fourth Horseman is epidemics and pandemics. Plague, smallpox and measles have been more destructive of human life than human-caused violence. The loss of population made labor scarce, changing the balance of power between workers and employers.

Scheidel believes that total revolutions and long wars involving millions of fighters are unlikely going forward. Pandemics are a risk, but not plagues like the Black Death. State failure of a leveling scale is rare; recent examples have been confined to Africa and the Middle East. Scheidel examines the possibility of peaceful means for reducing inequality, such as land reform in more agrarian societies, economic development, democratization, education, and others; one by one he dismisses them as unlikely. He does not find in history any benign means of reducing inequality that has achieved results comparable to the Four Horsemen.

Even so, proposals for reversing inequality abound, focusing on policies of government. Progressive taxation is most prominent, envisioning maximum income tax rates over 50%. (The highest U.S. rate in 1944 was 94 %.) Other policy proposals address higher minimum wage rates, free universal education and health care and guaranteed basic income, among others. The political viability of such proposals is questioned even by those who propose them.

Measuring Inequality

Inequality varies significantly from country to country. Level of income inequality is measured by a statistic called the GINI Index of Income Distribution. The World Bank uses the scale with values from 0 to 100, with 0 representing perfect equality and 100 representing perfect inequality. The table below lists the 50 countries with the lowest GINI index as of each country’s latest year measured. Country names are color-coded by continent or portion of continent; note that 20 of the top 22 countries are in Eastern or Western Europe. The United States is 84th on the list. The entire list of 140 countries for which data is available can be viewed here.  Values range from 24.09 to 63.38

                 

A recent article in The Economist with a headline analyzing Warfare and Welfare is consistent with findings in Walter Scheidel’s new book.

“European welfare states began in Prussia at the end of the 19th century, when war with France required the mobilisation of a large number of civilians…. In America this relationship between warfare and health care has evolved differently…. the federal government broke the putative link between war and universal health care by treating ex-servicemen differently from everyone else. In 1930 the Veterans Administration was set up to care for those who had served in the first world war…. America did come close to introducing something like universal health care during the Vietnam war, when once again large numbers of men were being drafted. Richard Nixon proposed a comprehensive health-insurance plan to Congress in 1974. But for Watergate, he might have succeeded.”

Coincidentally (?), some of the same Western European countries that led the list as most equal also topped the latest list of the world’s happiest countries in the World Happiness Report 2017, released at the United Nations on March 20, 2017. Interviews with citizens of Norway, which led the list as most happy, cited broad social welfare support, including free education and health care, as contributing to a sense that society works for everybody.

Populism in Democracies

The course taken by populist movements that have arisen from democracies was reviewed in a December 5, 2016 article from Foreign Affairs. The article’s authors, Andrea Kendall-Taylor and Erica Frantz, note that, whereas in the latter half of the 20th century, two-thirds of the failures of democracies were due to coups, democratic failures between 2000 and 2010 followed populist movements, increasing in frequency to equal those due to coups.

The article cites post-Cold War populist movements in Venezuela, Russia and Turkey that emerged from democratically-elected leaders who slowly removed opposition and expanded their power. By voicing distrust of elites and established institutions, populist parties assure they can turn back the forces of change. In the current environment, globalization and immigration are presented as the causes of economic hardship for the beleaguered working classes. The article notes that populist parties currently dominate legislatures in Greece, Hungary, Italy, Poland, Slovakia and Switzerland.

In Venezuela, Russia and Turkey, the authors observe the populist movement has given rise to what they call “personalist dictatorships,” a form of autocracy which concentrates power in the hands of an individual. Daniel Ortega in Nicaragua, Rafael Correa in Ecuador, and Alberto Fujimori in Peru are cited as past examples of this evolution to autocracy. As the authors reveal:

A robust body of political science research shows that such systems tend to produce the worst outcomes of any type of political regime: they typically pursue the most volatile and aggressive foreign policies, espouse the most xenophobic sentiments, are the most likely to mismanage foreign aid, and are the least likely to transition to democracy when they collapse.

Although the authors mention the election of Donald Trump as U.S. president only in passing, there has been a clear link in the popular perception between current events and single-party authoritarianism. Within a week after Trump’s inauguration, George Orwell’s dystopian novel 1984 became the No. 1 best-seller on Amazon as sales surged 9,500%. Other dystopian novels recorded similar surges. Sinclair Lewis’s It Can’t Happen Here was Amazon’s 8th best-seller and Aldous Huxley’s Brave New World was in Amazon’s top ten by sales.

Similarly, searches for “Reichstag fire” peaked worldwide the month after Brexit and again in October 2016 as the U.S. election neared. The fire in the Reichstag, Germany’s parliament building, occurred the month after Adolph Hitler took office in 1933. The fire was blamed on communists and used as a pretext for instituting emergency powers suspending civil liberties in Germany. In present-day Turkey President Recep Tayyip Erdogan is using the July 2016 failed coup attempt to justify a more authoritarian system with few checks on his power.

The Foreign Affairs article’s authors conclude:

The forces fueling populism aren’t going away anytime soon. If anything, economic underperformance, disillusion with corruption, and dissatisfaction with government performance will continue to fan the flames of populism across the globe.… The damage to democracy caused by the populist surge in Europe has so far been limited to Hungary and Poland, because Europe’s long-standing norms, strength of institutions, and experience with democracy have so far buffered populism’s antidemocratic pull. The damage to democracy is likely to be more pronounced in less developed democracies.

Obit: The World’s Foremost Authority

“Professor” Irwin Corey, an actor and comedian known as “The World’s Greatest Authority,” died February 6, 2017 at the age of 102. Professor Corey’s career spanned eight decades. He was described by theater critic Kenneth Tynan as “a cultural clown, a parody of literacy, a travesty of all that our civilization holds dear and one of the funniest grotesques in America. He is Chaplin’s clown with a college education.”

Dressed in a long black coat with tails and a string tie, he appeared in television shows hosted by Steve Allen, Ed Sullivan, Johnny Carson and David Letterman, to name but a few. His performances parodied pretentious “experts” with his combination of impressive vocabulary used in nonsensical, drawn-out sentences. He satirized social institutions, even running for president on Hugh Hefner’s Playboy ticket in 1960. His career included vaudeville, stage, radio and movies.

Typical of a live performance is a 90 second talk in 2011, transcribed from a laugh-filled recording that went something like this:

But we all know that protocol takes precedence over procedure. This parliamentary point of order based on the state of inertia developing a centrifugal force which is used as a catalyst rather than a catalytic agent which hastens a chain reaction and remains the same in a condition prior to its inception. The focal point which is used as a tangent in that simile of thought in the development of ideas based on the ideology that the combination assume voices will be looking at a run [obscured by laughter] rather than accept the dullness of dreary reality and we know that the bile is secreted through the pancreas. However, we must not negate the concept that although we find in this vast area and we know that our party stand by our party negates the necessities and make it possible for us to view life and realize that salvation is its own reward.

In a world where the UK justice secretary argues for exiting from the European Union by saying that the British people “have had enough of experts,” Professor Corey is talking to us. He is remembered here on Fifty Year Perspective, not with the intent of minimizing the importance of the issues faced today, but to remind us that it is healthy to take time to laugh.

Brexit and European Migration

When voters in the United Kingdom (UK) went to the polls on June 23, 2016 and voted to leave the European Union (EU), they created two major questions to be resolved: What policies will govern migration between the UK and the remaining 27 EU states? And what policies will govern trade between the two entities? The free movement of people and goods within the EU was the major objection to EU membership by those voting to leave. That June 23rd vote is known as Brexit.

Looming large was the fate of the three million people who had migrated to the UK from other EU countries: Will they be allowed to stay? What will their status be? (See a discussion of these questions in blog post on September 25, 2016.)

Then there is the question of what happens to migrants making that move after June 23rd. The UK didn’t leave the EU on that date. The effective date of its departure from the EU will be sometime in 2019. Will people from other EU countries migrating to the UK between June 23rd and the effective date be allowed to stay? That is yet to be answered.

The UK Office for National Statistics (ONS) issued a report on migration for the third quarter of 2016, the first reporting period following Brexit. The number of workers from eight EU countries had increased significantly over the third quarter of 2015. The 46,000 additional workers had come from the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia. This surge in the number of Eastern Europeans entering the UK for work since Brexit reveals concerns by migrants that they may be barred from entering the UK after the effective date.

Although those favoring Brexit oppose the influx of foreign workers into the UK, economic analyses support the conclusion that welcoming immigrant workers benefits the receiving country. But what about the sending countries?

The eight countries noted above are experiencing serious losses of their most educated populations, according to a July 2016 International Monetary Fund (IMF) staff report. The IMF report compared the education level of emigrants from each country to the education level of the total population of the emigrants’ home country. For example, about 35% of the people leaving Hungary had tertiary education, compared to about 13% of Hungary’s total population. For Czech Republic the corresponding percentages were 28% and 10%; for Poland, 29% and 14%; for Latvia, 38% and 18%; and for Lithuania, 34% and 25%. Emigrating populations were also younger than the populations they left behind.

For the migrants themselves, the IMF report notes outcomes from their moves are positive, improving their own well-being. Their home countries, however, are left with shrinking populations and labor forces, fiscal burdens due to fewer workers supporting increasing numbers of older persons, and less competitive economies.

Brexit proponents look forward to reducing the influx of foreign workers. However, workers are likely to continue migrating to other Western European countries of the EU seeking new opportunities. Push and pull are strong: The Economist recently reported that a third of Latvia’s college students graduating between 2002 and 2009 had emigrated by 2014, and 80-90% of Bulgarian medical students plan to emigrate after graduating.

2500 Years of Globalization

In his recent book, The Silk Roads: A New History of the World, Peter Frankopan writes a history of civilization from the perspective of trade, from ancient times to the present. As the western world debates the value of international trade, this look at 2,500 years of trade along routes linking East and West shows how the quest for resources and commodities shaped global history.

Old Silk Road Map
Old Silk Road Map

Frankopan writes: “Two millennia ago, silks made by hand in China were being worn by the rich and powerful in Carthage and other cities in the Mediterranean, while pottery manufactured in northern France could be found in England and in the Persian Gulf. Spices and condiments grown in India were being used in kitchens of Xinjiang, as they were in those of Rome. Buildings in northern Afghanistan carried inscriptions in Greek, while horses from Central Asia were being ridden proudly thousands of miles to the east.”

As the cultures along the Silk Road traded goods, they also exchanged knowledge about science, technology, religion, governance, language and war. Might made right, and the riches derived from trade provided revenues to fund military expeditions that brought more resources to the victors. In that regard, trade was no more than a by-product of the quest for power and resources, at times in the name of religion. The history of Eurasian civilization was shaped along the crossroads traveled by Chinese, Persian, Arab, Indian, Turkmen, Greek, Syrian, Roman and Armenian traders, among others.

The rise of the West 500 years ago appears as a result of the replacement of the overland Silk Road by European discovery of ocean routes around Africa to India, and the accidental discovery of the western hemisphere while pursuing a western route to Asia. The latter lined the royal coffers in Europe with gold and silver. The subsequent history of colonialism under European powers extended the quest for resources at the expense of indigenous populations. The German invasion of Russia in June 1941, as depicted by Frankopan, was designed to provide agricultural land for a German population suffering from an inadequacy of domestic food production.

Perhaps the most obvious example of the quest for resources guiding politics in modern history is the requirements for energy generated by oil. Oil has meant rebirth for countries along the old Silk Road like Iran, Iraq and Saudi Arabia. Russia uses its oil and gas resources to apply political pressure on Northern Europe and Ukraine. The manufacture of mobile phones and laptops depend on availability of rare earths found in Kazakhstan.

What Frankopan calls the New Silk Road consists of railroads and oil and gas pipelines running east and west across Eurasia. He describes the 7,000-mile international railway connecting Chongqing, a city of ten million in southwest China, to a major distribution center near Duisburg, Germany. Half-mile long trains make the journey in sixteen days. Frankopan asserts “the use of energy, resources and pipelines as economic, diplomatic and political weapons is likely to be an issue in the twenty-first century.”

Experimenting with a Universal Basic Income

How should governments address the trend of jobs being eliminated by technological advancements? If close to half of current occupations are projected to be displaced by automation, as put forward in the last blog post, how will families secure the income to provide themselves with even the basics for living, let alone the “Internet of Things” that technology promises?

The concept of a universal basic income (UBI), distributed to all citizens, is gaining support, especially from the technology sector which is rapidly replacing jobs of all skill levels. Although technology is creating unimaginable new jobs, it is not too much of a stretch to foresee a growing cohort of unemployed workers.

The basic income would be adequate to provide essentials. It would satisfy the immediate needs for the unemployed, and could encourage some who are employed to reduce work hours in order to pursue unfulfilled dreams. In support of an entrepreneurial spirit, a basic income could enable the creation of small businesses, or on-line start-ups, to grow to profitability. The basic income will establish equality of opportunity for those inclined to take advantage of it, while some people will be content to get by with their minimum monthly payments. Others may split a job between two people and work part-time, or volunteer, or take courses of interest.

There have been a number of studies of UBI proposals. Findings indicate that given the choice to work or not, people will work but often choose to do a different kind of work. They can accept a lower pay for doing preferred work by having the UBI make up the difference. One famous UBI experiment began in 1973 in Canada during the administration of Pierre Trudeau, encompassing the whole town of Dauphin in Manitoba province. In addition to increased productivity, the Dauphin experiment found a decrease of 8% in the number of people hospitalized, mental health improved, and more teenagers completed high school. On January 1st Finland began a two-year trial with 2,000 unemployed citizens receiving a basic monthly income of $587 as an experiment for cutting red tape, reducing poverty, and boosting employment.

These social welfare improvements are relevant to the UBI discussion because the concept is usually accompanied by a scheme to at least partially pay the costs of the system through savings in numerous social welfare programs. One source finds that in the U.S. there are currently 79 means-tested social welfare programs, not including Medicare or Medicaid.

A pilot study in Oakland, California is to begin soon under the sponsorship of Silicon Valley’s influential incubator, Y Combinator. It will begin with 1,000 families receiving between $1,000 and $2,000 a month. The goal will be to see how people’s lives change when they have a safety net preventing them from falling into poverty. A successful pilot will be followed by a much broader study involving thousands of citizens throughout the U.S., who will receive a regular monthly paycheck for five years.

As one Silicon Valley executive pointed out, this plan is not about income equality. If anything, income inequality may increase drastically as some recipients continue working at high-paying jobs or entrepreneurial positions. What the plan does address is equality of opportunity, giving everyone a chance to receive income while pursuing a home business, or community service, or lifelong learning.

Technology Creates and Destroys Jobs

Populist themes examined in the previous two blog posts expressed opposition to immigration, globalization, and international trade in both the U.S and the U.K. Similar sentiments are heard in several European countries heading into elections in the coming months. A common denominator in these movements is loss of jobs. Globalization and international trade have resulted in well-paying jobs being moved to lower-cost production countries, while immigrants are seen as competitors for the jobs that remain.

Yet, promises to bring jobs “back home” do not ring true. Both manufacturing jobs and service jobs that have been “off-shored” have been subject to automation, as have jobs that never moved but have just disappeared. A recent George Will column reported on a study that looked at the 5.6 million manufacturing jobs lost in the U.S between 2000 and 2010. Trade accounted for 13% of jobs lost while increased productivity accounted for over 85%. This trend is far from over, as technology finds ways to reproduce processes in algorithms that can be programmed for learning by machines.

A frequently-cited study from Oxford University examined steps involved in different jobs to assess their susceptibility to automation. That 2013 study looked at 700 detailed occupations from a list compiled by the U.S. Department of Labor. The Oxford study concluded that about 47 percent of total U.S. employment is at risk of being automated.

The study assigned a probability to each of the occupations for its likelihood of automation. The breadth of the analysis is evident in the specificity of the occupations. For example, chefs and animal trainers were each assigned a probability of 10 percent. Telemarketers were determined to be 99 percent likely for automation. Construction laborers were rated 88 percent probable for automation as prefabrication enables a greater share of construction work to be performed under controlled conditions in factories. Construction supervisors, on the other hand, scored only a 17 percent probability of automation.

Although technology also promises to create myriad new occupations not currently envisioned, it is likely that work in the future will require fewer hands to produce the goods and services to satisfy people’s needs. This prospect has driven much speculation as to how to address an increasing number of unemployed persons, in particular how to assure they can obtain adequate food, shelter, and clothing. These concerns are shared by governments, which are often the last resort for meeting human needs, and by businesses, which must have buyers for the goods and services they so efficiently produce.

Some people in the information technology sector find assurance in the assumption that new technology always creates more jobs than it destroys. As Kevin Maney wrote in a recent Newsweek article, “Nobody’s grandmother was a search engine optimization specialist.” Others are examining the concept of a universal basic income. The basic income is envisioned as a minimum guaranteed government payment to all citizens regardless of their private wealth. Some history of the concept is contained in an August 2, 2015 blog post (http://fiftyyearperspective.com/a-basic-income-for-all/). An update with recent research will be posted next on Fifty Year Perspective.   

Delivering on Promises

The previous blog post, Lessons of Brexit and Trump (http://fiftyyearperspective.com/lessons-of-brexit-and-trump/), noted similarities in voter behavior in the United Kingdom vote to leave the European Union (EU) and the U.S. presidential election. Those favoring Brexit, the move to leave the EU, and those favoring Donald Trump over Hillary Clinton tended to be older, less educated, and white. Pre-election polls showed U.K. voters slightly favored remaining in the EU, and U.S. voters slightly favored Clinton.

People opposed to immigration, globalization, and international trade were vocal in both countries, and they voted. All three of these rallying points revolve around jobs. Globalization and international trade have resulted in well-paying jobs being moved to lower-cost production countries, while immigrants are seen as competitors for the jobs that remain. Jobs are a source of dignity, and only a discharge of the existing political establishment would satisfy those voters who saw the future looking more bleak not only for them but also for their children.

In both cases pre-election polling was rebutted, and in both cases there is a high probability that the winners will not be able to deliver on promises. U.K. voters wanted out from under the rule of EU bureaucrats in Brussels, who they regarded as unelected and unresponsive, but wanted to retain some of the benefits of EU membership. Following the Brexit vote, it was clear that British citizens would lose access to the EU single market for trade in goods and services if they did not accept the EU’s open borders among its members. When negotiations get fully underway, those favoring Brexit can expect to forgo some portion of what they expected to achieve.

In the U.S., Trump’s plan for infrastructure spending could employ thousands of workers. His plan to restore jobs in the coal industry, however, is less likely to succeed. The U.S. Energy Information Administration finds that natural gas is increasing its share of electricity generation while coal’s share is decreasing, and that is due to a market-driven response to lower natural gas prices. The cost of coal could be reduced if Trump removes some government regulations on mining, although adverse impacts on miner safety could result.

More importantly, imposing tariffs on goods from China and Mexico would have one of two effects: ether those imported goods’ prices will rise, or corporations may return manufacturing back to the U.S. where goods would be produced – largely by robots. The decline in manufacturing employment in the U.S. has more to do with increased productivity, largely through automation, than out-sourcing to other countries. While manufacturing employment in the U.S. peaked forty years ago, manufacturing output has increased; the U.S. produced more automobiles in 2015 than in 1990.

China has made it clear that heavy tariffs on Chinese imports would be met with a tit-for-tat response. A communist party newspaper, China’s Global Times, suggested what that response might be: “A batch of Boeing orders will be replaced by Airbus. U.S. auto and iPhone sales in China will suffer a setback, and U.S. soybean and maize imports will be halted.”

Plans have consequences which must be resolved by governments in both the U.K and the U.S. going forward.

Lessons of Brexit and Trump

Three days after the U.S. presidential election of November 8, 2016, the British Broadcasting Corporation published an article by John Curtice comparing the outcome of the election to the vote in the U.K. on remaining in the EU, the so-called Brexit vote. (http://www.bbc.com/news/election-us-2016-37943072) Curtice is a professor of politics at Strathclyde University in Glasgow, Scotland. He began the article by remarking that the dramatic victory for Donald Trump brought a strong sense of déjà vu to many in the U.K.

Curtice mentioned several similarities between Brexit and Trump’s victory. “Both majored on concerns about immigration. Both questioned whether the existing global financial order necessarily benefitted the ordinary man in the street. And both portrayed themselves as the underdogs campaigning against an allegedly complacent and out of touch political establishment.” He attributed these stances to a group referred to in the U.K. as “left behind,” who are voters who “feel they have lost out economically in recent years.” The article compares statistics from exit polls in both the U.S. and the U.K.

Older voters, age 45 plus, favored leaving the EU, while younger voters, age 18-44 preferred to remain in the EU. In the presidential election, older voters preferred Trump; younger voters favored Hillary Clinton. In both cases the older voters were favoring a change from the current policies, under which they felt “left behind.”

Educational level divided the voters in similar ways. “In the U.K., polls suggested a majority of university graduates were keen on remaining in the EU, while those without a degree voted to leave. In the U.S., exit polls indicated college graduates were more likely to vote for Hillary Clinton, whereas those who were not college graduates inclined towards Donald Trump.” In both cases non-college graduates were more likely to reject the status quo.

Variation in voter behavior by race also demonstrated preference for the status quo among non-white voters. White voters favored Trump while non-white voters favored Clinton. Whites favored leaving the EU, while black and ethnic minority voters favored remaining, “put off perhaps by the Leave campaign’s focus on the issue of immigration.”

As facts turned malleable in the run-ups to the votes, the media’s polls, though close, indicated a Brexit loss and a Clinton win. When the results proved otherwise on the morning after, there was a soft chorus of “Wait a minute. If I thought this was likely to happen, I would have voted.” A close election is not the time to sit out the vote.

Close races are playing out in several countries in Europe. Anti-globalization, nationalism, and cultural and racial homogeneity are common themes. The December 4th presidential election in Austria may go to the far-right Freedom Party. The Netherlands anti-Islam Freedom Party is in a tight race in Parliamentary elections scheduled for March. Between late August and late October Germany’s federal elections will see a challenge to Angela Merkel’s Christian Democratic Union by the far-right Alternative for Germany.

France’s presidential election will be a contest between the center-right Republican party, the Socialist party, and the far-right National Front. Marine Le Pen is the candidate of the National Front. François Fillon became the Republican party candidate on November 27th. The Socialist party will choose its candidate in a primary election on January 22nd, with a runoff January 29th if no candidate receives a majority of the votes in the primary.

France’s presidential elections, which are conducted in two stages, require the winner to receive a majority of the popular vote. Assuming no candidate receives an absolute majority in the first round on April 23rd, the top two candidates face each other in the second round on May 7th. The far-right National Front candidate for president, Marine Le Pen, is polling high enough that she is expected to make it to the final round voting against either François Fillon, the centre-right Republican candidate, or the winner of the Socialist party election

Marine Le Pen is not expected to be elected president, according to polls. Similarly, polls placed the chances of Brexit and a Trump win as close, but trailing. All of Europe’s far right parties are emboldened by Brexit and Trump’s victories.

China: Two Current Perspectives

Over the last quarter century China has raised hundreds of millions of its citizens from poverty or near-poverty to middle class status. The Communist Party of China (CPC) rewarded its citizens’ loyalty with a dramatic rise in household consumption. Increased quality and quantity of food, housing, education, health care, cars, phones, and infrastructure have moved Chinese people toward living standards enjoyed by some of the world’s most developed economies. The CPC expects China to increase its power and international role.

China’s future among world powers is the subject of books published in 2016 by Gideon Rachman, a British journalist and foreign affairs columnist for the Financial Times, and Minxin Pei, a professor of government at Claremont McKenna College and an expert on Chinese governance.

Rachman’s book, Easternisation: War and Peace in the Asian Century, observes that three of the world’s four largest economies are Asian – China, Japan, and India. He cites a CIA report saying, “By 2030 Asia will have surpassed North America and Europe combined in terms of global power, based upon GDP, population size, military spending and technological investment.” Rachman cites a long list of countries with increasing economic ties with China. In its own back yard, China has made extensive investment in its Southeast Asia neighbors – Singapore, Pakistan, Myanmar, Indonesia, Cambodia, and Thailand. China has invested in infrastructure and manufacturing in Africa.

China is now the European Union’s second largest trading partner behind the United States. Germany and Britain turn to China for trade and are less concerned about U.S.-China power confrontations. Hungary’s Prime Minister Viktor Orban praised China’s authoritarian government for its decisiveness and ability to get things done in comparison to the EU, of which Hungary is a member. Rachman attributes a perceived decline in United States supremacy and its pullback in some involvements as cause for Middle East countries’ increased trade with China. As examples, he cites Saudi Arabia’s sale of oil to China and China’s trade with Israel.

In summary, Rachman notes, “It is economic might that allows nations to generate military, diplomatic and technological resources that translate into international political power. But, over the past fifty years, the West’s dominance of the global economy has steadily eroded.”

Minxin Pei’s book, China’s Crony Capitalism: The Dynamics of Regime Decay, takes a decidedly contrary view. He estimates that by 2030 the CPC autocratic regime will have lost power because of the decay of their ideology and the corruption of the ruling elites. He believes that China’s efforts to modernize have created a kleptocracy with pervasive corruption, income inequality, and social tension. He attributes the current situation to a combination of decentralized decision-making and lack of clarity regarding property ownership. “By forming dense networks of connections with private businessmen, officials can generate lucrative profits by …turning the public authority entrusted to them into instruments to seek private gain.” So as not to endanger the political careers of local and regional officials, “Family members of these officials, but not the officials themselves, are in the private sector.”

Control of land and state-owned enterprises provide officials with abundant opportunities for profit, even while ignoring pronouncements from the CPC. Officials at all levels of government are evaluated on the revenue they generate. So while China’s President Xi Jinping may address the need to hold down soaring house prices, local governments welcome the market’s surge, as land sales represent a big source of their income. Pei’s review of a 2013 report by China’s chief prosecutor revealed over two hundred thousand individuals had been involved in cases of official corruption over the previous five years. He foresees only two options for the CPC to maintain its power – repression and nationalism, and cites a history of autocratic regimes to support his conclusion that the CPC will not survive and China will change drastically.

In fairness to Rachman, he also acknowledges the fragility of China’s domestic political system. Furthermore, he does not foresee China’s currency becoming a global currency unless the CPC relinquishes control over the economy. And he believes that, “In the absence of a politically independent police and court system, few powerful Chinese people can be confident that they are not at risk of being swept up in the wave of arrests.” Yet he expects China to play a prominent role in the future “Easternized” world.

Living With Water

When Hurricane Matthew struck Haiti in October 2016 it left a thousand people dead. Some areas suffered 80-90 percent demolished buildings as well as destruction of bridges, roads, and schools. Adding to the misery, sources of livelihood were lost as banana and cocoa plantations were flattened and fishing boats were damaged or destroyed. Damage to water supplies and sanitation systems have increased the risk of disease.

In the Baton Rouge area of Louisiana, as much as 31 inches of rain fell between August 8 and 14, 2016. Flooding killed 13 people, and damaged or destroyed 146,000 homes, displacing tens of thousands of people, at a cost estimated at $8.7 billion. Flood water covered farmland deep enough and long enough to destroy crops.

At the same time, parts of northern Georgia and Alabama were in the midst of a six month drought that killed crops, threatened livestock, and emptied lakes to their lowest levels in years. Record numbers of days without rain became a one-in-a-hundred years event. Atlanta is building a $300 million project to store 2.4 billion gallons of water to avert future water shortages.

Where there is no water, there can be no life. So basic is this necessity that space scientists use availability of water in analyzing the potential to support life on distant planets. On our own planet, water is plentiful, but not always in quantities, or flowing at velocities, that are manageable. Water, as well as the lack of it, can destroy life, and can destroy livelihood, as it did for the people of Haiti and the farmers of Georgia and Alabama.

The on-going series of “worst ever” weather events, and “hottest ever” months, is a warning of the potential for volatility in our environment. These events should remind us of the part that human activity plays in them. Construction of higher levees that result in thousand year floods being recharacterized as five hundred or one hundred year floods is an obvious concern. Man-made causes of climate change are at last receiving international recognition.

Vulnerability to damage from water, or the lack of it, spans the globe, most notably in Africa, Bangladesh, or Haiti, but also, as demonstrated by Super Storm Sandy in 2012, in Atlantic City, New Jersey and Manhattan, New York.

Urbanization in Sub-Saharan Africa

Population estimates for 2016 and projections to 2050 by the Population Division of the United Nations display the phenomenal growth expected to occur on the African continent. Of the 2.3 billion increase in world population by 2050, 55% is expected to be in Africa. Africa’s population will more than double, to 2,478,000,000, and Africa will be home to a quarter of the world’s total population. Nigeria is projected to displace the United States as the third most populous country, following India and China.

But while the African continent has 16% of the world’s population, according to the World Bank the Sub-Saharan portion of Africa is home to 43% of the world’s 700 million people living on less than US$1.90 a day. Poverty is generally concentrated in rural areas. Although Sub-Saharan Africa’s population is mostly rural, it is urbanizing rapidly. Lagos, Nigeria and Kinshasa, Democratic Republic of the Congo (DRC) each house over ten million people. Urbanization presents both opportunities and challenges, as noted in a Brookings Institution report: “Access to jobs, public goods, infrastructure, and health care are better in cities. However, if city populations continue to grow without economic transformation, a vicious and persistent cycle of high fertility, low wages, and persistent poverty could result.”

Sub-Saharan Africa’s population went from 14% urban in 1950 to the current 40%, but infrastructure and services did not keep pace. So 50% of the urban population live in slums and 60% do not have access to improved sanitation facilities. The Brookings Institution report title asks, Can Rapid Urbanization in Africa Reduce Poverty? The report discusses the process of “structural transformation,” how an economy moves from agricultural to industrial production, and brings increased incomes and improved living standards. That process results from some combination of labor push and pull factors. “Push factors refer to increased agricultural productivity or crop failures releasing rural labor to cities, while pull factors include urban industrial development attracting agricultural workers with higher wages.”

But Sub-Saharan Africa has had neither substantial improvements in agricultural productivity nor a significant industrial revolution. Employment growth has instead been in the service sector, with a majority of that employment being in the informal economy, the part of an economy that is neither taxed nor monitored by any form of government. (See African Development Bank at http://www.afdb.org/en/blogs/afdb-championing-inclusive-growth-across-africa/post/recognizing-africas-informal-sector-11645/) Urbanization in Sub-Saharan Africa has also been impacted by natural resource extraction, which tends to deter growth of other industries. A paradox known as the “natural resource curse” occurs when a country focuses its energies on a single industry, such as mining, while other industries are neglected.  The challenges to improving living conditions are also addressed in a report titled African Economic Outlook 2016: Sustainable Cities and Structural Transformation, by the African Development Bank, OECD Development Centre, and United Nations Development Program – Africa. This and the Brookings report have similar public policy recommendations. They include ensuring that safe housing and infrastructure keep up with urban growth and urban centers are linked; promoting urban planning; improving agricultural productivity; encouraging shifting from the informal sector toward higher productivity services; reducing fertility and child mortality; improving health care; assuring access to education especially for girls and women; and calls for foreign direct investment in urban areas. Many examples of local initiatives in entrepreneurship, technology, and education support optimism for success of these focused policies. (See reference to Andela technology training at http://fiftyyearperspective.com/preparing-for-industries-of-the-future)

Converging Trends in Aging and Employment

The central theme of Fifty Year Perspective is understanding the linkages between trends, decisions, and actions. Even when trends in themselves are positive, together they may paint a future that must be confronted with extreme forethought and preparation. A number of trends detailed below will play out over the coming decades so as to necessitate significant policy changes at national and international levels.

Health sciences – Medical advances have extended life expectancy over the last century, with most benefits accruing to developed countries. A baby born today in most developed countries has a life expectancy of at least 80 years. In Asia, Latin America, and the Middle East, life expectancy varies from upper 60s to mid-70s. Life expectancy in many African countries is under 60 years, with some reaching mid-60s. Comparable figures 100 years earlier varied from mid-20s to early 50s. The current world average of 70 years is projected to increase to 77 years by mid-century, all according to the Population Division of the United Nations (UN).

Demographics – Longer life spans combined with low birth rates result in increasing median age and higher percentages of older population. UN median age estimate for the 2015 world population was 29.6 years, projected to increase to 36.1 years by 2050. Europe is projected to have the highest median age in 2050, at 46.2 years, and Africa the lowest at 24.8 years. Worldwide population age 60 and over, estimated at 12.3% of the total in 2015, is projected to increase to 21.5% in 2050. As a result, there will be fewer working age people to support the increasing proportion of elderly population.

Migration – War, lack of economic opportunity, and even climate change are among the reasons that millions of people worldwide seek to leave their home countries. Countries experiencing the greatest imbalance between working and dependent populations, such as Japan and parts of Europe, have not accepted migration as a means of addressing this imbalance.

Social safety net – As long as an economy is growing and birth rates are high, taxes paid by working-age populations are sufficient to finance payments to retirees. Eventually birth rates fall in developed countries, threatening the sustainability of the support payments for pensions as well as health. Increasing the retirement age in coordination with increases in age expectancy would be an obvious response, but would be opposed by elderly voters. Keeping elderly in the labor force for more years would also limit job opportunities for young workers.

Technology – The mixed blessings of technology providing goods and services at lower costs, while reducing the need for workers, impacts both young and old. A recent article in the Los Angeles Times reported that since 2000 the big three U.S. automakers have reduced, by half, the labor hours needed to assemble a car. As reported in previous blog posts (http://fiftyyearperspective.com/preparing-for-industries-of-the-future/; http://fiftyyearperspective.com/technology-and-the-future-of-work; http://fiftyyearperspective.com/robots-are-us/), this trend is taking hold in service industries as well as manufacturing.

International trade – Trade agreements throughout the world have moved jobs from high cost labor markets to low cost ones. However, technology is now able to produce goods at even lower costs. This is having impacts in both high and low labor cost countries. Foxconn, the Taiwanese company famous for manufacturing electronics products for companies in the U.S., Japan, Finland, and Canada, has introduced a fully automated factory in China that runs 24 hours a day, with its lights off. And some U.S. companies that have produced their products overseas are finding that with the latest technology, they can bring their manufacturing back to the U.S., albeit with fewer workers.

Taken together, the trends lead to a future that is unsustainable: an aging population with an extended life expectancy yet anxious to retire; technology that has reduced demand for human labor; and a younger generation competing globally for limited job opportunities and burdened with supporting the growing cohort of retirees.

The Other European Migration Challenge

War in the Middle East has forced millions of people from their homes. Syria in particular has cities large and small devastated and practically abandoned. Refugees’ attempts to flee to Europe have led to division among potential host countries and tragedy on the seas.

There is another migration challenge in Europe, this one caused by Brexit. The British vote to leave the European Union (EU) means Britain will no longer be bound by EU agreements, including freedom of movement rules.

There are some three million people who have migrated to Britain from other EU countries, accounting for about five percent of Britain’s resident population. British government data reveals most of the 8,000 foreign-born nurses arriving in the last five years came from EU countries, especially Italy, Spain, and Portugal. More than 40,000 EU migrants work in Britain’s National Health Service. Many migrants came from Poland and Romania and other eastern European countries following the EU expansions in 2004 and 2007. Freedom of movement has worked both ways: there are 1.2 million Britons living in other EU countries.

More than 80% of British citizens believe EU migrants already living in Britain should be allowed to remain. Under current EU law, immigrants who have lived in Britain for at least five years qualify for a right to permanent residence. Theresa May, Britain’s prime minister, wants a reciprocal agreement that British citizens living elsewhere in EU countries may remain in those countries if EU migrants are allowed to remain in Britain. That seems relatively straightforward until considering the question of when Britain would no longer be bound to observe the freedom of movement rules, and implement new immigration practices.

Based upon previous attempts to tighten immigration rules, immigration would be expected to spike prior to the new rules taking effect. That date could be the date of the exit vote or it could be two or more years into the future when Britain’s exit officially takes effect. Theoretically, any migrant who has met the five year residency requirement by that date could remain. A rush of new EU immigrants trying to establish residency before these decisions are made is likely.

Britain must also decide what its policy will be for future immigration. A think tank called British Future has conducted polls to learn public opinion on immigration. Nearly 90% of respondents would like to see the number of highly skilled immigrants increase or at least stay at past levels. Almost two-thirds want to reduce the number of low-skilled immigrants, even though low-skilled workers are vital to Britain’s hospitality, food-processing, and farming industries.

Britain has a point-based immigration system that scores prospective immigrants based upon skills, education, wealth, and specific attributes. The system is widely believed to be failing, according to the British Future report, which sees Brexit as an opportunity to rebuild public trust in Britain’s immigration system.

The value of immigrants is recognized by voters who were on both sides of the Brexit vote. The person who co-chaired the Leave side in the vote has called for immigrants who arrived in Britain before the vote be allowed to stay. Over 80% of the Leave voters want the number of skilled workers immigrating to Britain to increase or remain the same.

While there are majorities in agreement on some issues regarding immigration, reaching agreement on trade between Britain and the remaining EU members will likely be far more complex. And the trade negotiations will be linked to migration decisions because the EU is expected to only allow Britain to have tariff-free trade with the EU if EU citizens have the right to live and work in Britain.

September 11, 2001 – 2016

This, the 50th posting to Fifty Year Perspective, coincides with the 15th anniversary of the attack on United States targets in New York and Washington, DC. The nineteen attackers were Islamic terrorists belonging to Osama bin Laden’s al-Qaeda organization. Fifteen of the nineteen came from Saudi Arabia, two from United Arab Emirates (UAE), and one each from Egypt and Lebanon. Four of the terrorists had lived in the United States long enough to take flying lessons at commercial flight schools. Others slipped into the country in the months leading up to September 11th. Their median age was 23.

In the years since 2011, young Arab men and women have executed attacks in several western countries – England, France, Belgium, and Germany – and in the U.S. Motives and personal backgrounds of attackers have been scrutinized. While many have been natives of western countries, their family histories go back to Gulf Coast countries and North Africa.

ASDA’A Burson-Marsteller, a public relations consultant headquartered in Dubai, has conducted annual surveys of Arab youth for the last eight years. The survey, called Inside the Hearts and Minds of Arab Youth, covered 16 countries in its 2016 survey. Face-to-face interviews were conducted with 3,500 Arab youth between the ages of 18 and 25. Sixty percent of the Arab world’s population is below age 25, nearly 200 million people.

Of particular interest is the attitude of those surveyed toward terrorism and Daesh, the name the survey used to identify the group variously referred to as ISIS or Islamic State. The 2016 survey marked the second year in a row that Arab youth viewed the rise of Daesh as the top obstacle facing the Middle East, and nearly 80% expressed concern about the terrorist group’s rise.

Most Arab youth believe Daesh will ultimately fail to establish an Islamic state, and most (4 out of 5) would not support the group even if it stopped using so much violence. A quarter of respondents believe the lack of jobs and opportunities for young people is a primary reason why some are attracted to Daesh. As The Economist reported on the survey, “These days life for young Arabs is often a miserable choice between a struggle against poverty at home, emigration or, in extreme cases, jihad. Indeed, in places such as Syria, the best-paid jobs involve picking up a gun.”

Optimism regarding the future declined precipitously in the years since the Arab Spring. In the 2012 survey three-quarters of Arab youth agreed with the statement, “Following the Arab Spring, I feel the Arab world is better off.” Agreement with this statement fell steadily until reaching 36% in the 2016 survey. Prior to the Arab Spring the survey found a powerful desire for social change. As the revolutions began in 2011, 92% said living in a democracy was their most important desire. In the 2016 survey, promoting stability ranked as more important than promoting democracy, and they are calling on their leaders to do more to improve personal freedom and human rights, especially for women.

When asked which country in the world they would like to live in, UAE was ranked first, capturing 22% of respondents. The U.S. ranked second with 15% of respondents, and Germany ranked third with 11%. They cited UAE’s safety and security and its growing economy with a wide range of work opportunities and generous salary packages.

The survey also covered attitudes toward allies of their respective countries, the declining income from oil exports, the Iranian nuclear deal and Syrian conflict, Sunni-Shia relations, and sources of daily news read by Arab youth. The full 2016 report can be accessed at http://www.arabyouthsurvey.com/en/home.

NATO’s Adaptation

The North Atlantic Treaty Organization, or NATO, is a military alliance formed in 1949 when twelve countries (Belgium, Canada, Denmark, France, Iceland, Italy, Luxembourg, Netherlands, Norway, Portugal, United Kingdom, and United States) signed the North Atlantic Treaty. Sixteen additional countries joined between 1952 and 2009. The treaty obligated members to act as a deterrent against possible invasion of western Europe by the Soviet Union and its allies. Collective defense was established by the treaty’s Article 5, which stated: “The Parties agree that an armed attack against one or more of them in Europe or North America shall be considered an attack against them all.”

During the years of the Cold War, NATO members faced an identifiable enemy. A consolidated command structure was established following the outbreak of the Korean War. Following the collapse of the Soviet Union, NATO’s attention turned to two other goals: deterring the rise of militant nationalism and providing the foundation for collective security that would encourage democracy and political integration in Europe.

In the mid and late 1990s NATO engaged in direct military action in conflicts in Yugoslavia and in peacekeeping in Bosnia and Herzegovina, at times acting in concert with the United Nations. On the day following the terrorist attacks on the U.S. on September 11, 2001, NATO invoked the Article 5 collective defense provision for the first time. The coalition of countries that joined the U.S. in the military intervention in Afghanistan against al-Qaida included many NATO allies. The U.N.-authorized multilateral force deployed to stabilize the country was handed to NATO in 2003.

Decisions taken at NATO’s July 2016 summit in Warsaw acknowledge changes in the international security environment over the last twenty years. A series of reports by the German Marshall Fund (GMF) leading up to NATO’s Warsaw summit in July admitted to a divergence of interests as impacts of recent events vary among members. Aggression by Russia in Ukraine and mass migration into Europe from the Middle East are the primary sources of dissimilar security threats.

According to one of the GMF reports, “Baltic States and Central European countries… were concerned that if Russia succeeded in coercing Ukraine into its orbit, it would next want to test the willingness of the Alliance to defend all of its members.” Yet Russia is a major trading partner of members of the European Union. And while the U.S. has become less dependent on energy imports, Russian exports of energy to European countries will likely increase. NATO members also need cooperation from Russia in battling terrorism.

Migration and refugee flows into southern Europe from the Middle East and North Africa (MENA) not only test the ability of directly-affected countries to absorb the masses, but also raise concern throughout the West over terrorism. Europe questions U.S. commitment to accept a share of the migrants, and NATO members on both sides of the Atlantic are dealing with popular backlash against migrants due to terrorism risk and threats to national identity. The flow of migrants has divided Europe between north and south, just as the threat from Russia is of more concern to countries in the east than in the west.

Looking forward, according to a GMF report, “The U.S. 2016 elections and finally the French and German general elections in 2017 will also be decisive moments for the transatlantic partnership.” If populists take power and adopt anti-immigration stances, international obligations will be at risk. Populists blame the EU for creating the migrant crisis (and potential terrorist infiltration) by abolishing internal borders, and blame NATO for tension with Russia because NATO took in new members.

The GMF report says to address root causes: “The foreign policy crisis with Russia or the threat posed by ISIS will not be adequately addressed unless transatlantic allies agree on a more sophisticated and shared comprehension of the domestic dynamics driving Moscow’s strategic decisions and of the socio-political struggles in the MENA region.”

The Warsaw Summit renewed NATO’s emphasis on deterrence and collective defense. A greater military presence has been committed in the east, and civilian and military cooperation between NATO and Russia have been suspended. However, NATO remains dedicated to a peaceful solution to the conflict in eastern Ukraine and return of Crimea to Ukraine.

In the MENA area, NATO’s commitment to defeating Islamic State includes addressing the establishment of legitimate and inclusive governments in Iraq and Syria. Beyond defending against terrorist attacks, NATO’s post-summit communique pledged to “address the conditions conducive to the spread of terrorism.”

Zero Marginal Cost

Is it possible that the slow growth in GDP since the Great Recession could be attributed to something other than economic stagnation? Jeremy Rifkin thinks so. He wrote a book titled The Zero Marginal Cost Society in which he cites trends suggesting that an economy is not accurately represented by GDP statistics.

Technology is reducing the marginal costs of goods and services. Rifkin includes books, music, electricity, 3D printing, and online education as examples. Distributed marketing, the exchange of goods and services via the Internet, is growing rapidly. He gives Etsy as an example of a website that is bringing together buyers and sellers globally at low marginal cost. He writes, “Currently 900,000 small producers of goods advertise at no cost on the Etsy website. Nearly 60 million consumers per month from around the world browse the website.”

Rifkin estimates that purchases are fewer in number as more people redistribute and recycle goods. “A growing legion of consumers are also opting for access over ownership of goods, preferring to pay only for the limited time they use a car, bicycle, toy, tool, or other item, which translates to less GDP… The point is, while economic stagnation may be occurring for many other reasons, a more crucial change is just beginning to unfold which could account for part of the sluggishness.” Rifkin cites Airbnb, Uber, and other recent enterprises as evidence of a transformation from ownership to access, with access being the end goal, achievable in a shared economy.

Rifkin refers to this emerging economy as the Collaborative Commons. He foresees “the slow demise of the capitalist system and the rise of the Collaborative Commons in which economic welfare is measured less by the accumulation of market capital and more by the aggregation of social capital,” – the term he applies to the myriad formal and informal institutions that comprise what is often referred to as civil society.

The “zero marginal cost” of the book’s title is the result of what Rifkin calls the “ultimate contradiction at the heart of capitalism,” which is driven by the enduring quest for greater productivity. “The process is unsparing as competitors race to introduce new, more productive technologies that will lower their production costs and the price of their products and services to lure in buyers. The race continues to pick up momentum until it approaches the finish line, where the optimum efficiency is reached and productivity peaks. That finish line is where the marginal cost of producing each additional unit is nearly zero.”

While this process would severely reduce profitability, Rifkin does not expect capitalism to disappear, but will shrink to serve only consumers of specialized products and services. He foresees capitalism will not be the dominant economic paradigm by 2050.

Artificial Intelligence Summarized

International trade negotiations, mass migrations, and populist politicians feed fear of unemployment among lesser-skilled workers, despite the fact that technology is a greater threat to jobs. Artificial intelligence (AI) has destroyed both blue and white collar jobs, and is developing ever more powerful computers, designed to rival the decision-making capacity of the human brain. The June 25, 2016 issue of The Economist devoted a 16-page section to a review of the current status and issues regarding artificial intelligence. This blogpost draws upon that article, as well as the several previous Fifty Year Perspective blogposts that have dealt with information technology.

Current State of the Art – AI is evolving rapidly, drawing upon our understanding of how the brain works in order to replicate the function of the brain’s neural networks with software. Layers of virtual neurons process information, and networks many layers deep are capable of higher levels of abstraction, a technique referred to as deep learning. Researchers are using various techniques to extend AI, using databases of text messages or classified images, and building on previously-acquired knowledge. A long-term goal is to build “artificial general intelligence” (AGI) capable of solving a range of tasks rather than a specific problem. AGI is a decade or more away, but short term progress will appear in improved Internet search results, better predictive ability, advanced scientific and medical research, and computers able to converse orally.

Jobs Lost, Jobs Gained – Jobs deemed at risk from automation include security guards, receptionists, cashiers, telemarketers, accountants, and taxi and delivery drivers. However, past predictions that automation will make humans redundant have proven incorrect. In the past technology has created more jobs than it has destroyed. Automatic teller machines (ATMs) are an example. ATMs reduced the number of tellers per bank branch, but the reduced cost of running a branch allowed banks to open more branches, increasing the total number of employees. Similarly, use of software to search legal documents, while reducing personnel costs in the discovery phase of legal cases, increased the demand for discovery and the number of legal clerks in the United States. E-commerce, which reduced the need for brick-and-mortar stores, has increased retail spending and, with it, retail employment. The number of jobs in fields that previously did not exist, such as video game designers, are impossible to project, but will surely increase.

Educating for New Skills – There is no question that automation requires workers to quickly acquire new skills, and that governments and companies must make it easier for workers to do so. On-line courses are being offered by founders of Udacity and Coursera in response to the new skill requirements of AI. There is general consensus that AI will require changes in the way education is delivered, and AI itself has the capacity to tailor courses to individual needs. The U.S. Bureau of Economic Research adds that “character skills” such as sociability and perseverance, skills beyond the scope of machines, must be emphasized in education, as these skills correlate to employees’ ability to adapt to new situations.

Safety Net – Even if new jobs exceed jobs lost, some form of safety net has been recommended to prepare workers for new jobs. The idea of a universal basic income, discussed in previous blogposts, has been examined. But, as the Swiss learned, concern about open borders and free movement of workers may make the basic income for all unworkable, as it would attract free riders from countries that did not implement the idea.

Existential Threat – Concern that super-intelligent machines could turn on their creators has been expressed by such prominent thinkers as physicist Stephen Hawking, entrepreneur Elon Musk, and many others in AI research. Others regard such concerns as hysteria based on stories from science fiction. Some AI researchers differentiate between the intelligence that can be taught to a machine, and consciousness, or inner experience, which is arguably not replicable on a silicon chip. The concept of creativity, the ability to connect two things that are not obviously related, has been argued as beyond the capability of machines. For security against the prospect of machines developing creative capabilities, a big, red on-off switch has been suggested for any potentially errant machine.

Geopolitical Issues – While automation may threaten jobs even for highly-skilled professionals, automation also increases the capacity of those workers. The benefits of that automation may extend to people in developing countries where there are shortages of specialists such as radiologists. Conversely, automation may reduce development opportunities in developing countries by making “off-shore” production profitable again in consumers’ countries.

Ethical and Legal Issues – Expected improvements in facial-recognition systems will heighten existing privacy concerns. Google has developed a system that exceeds human capacity to identify people in photos. AI capacity to digest massive amounts of information improves both crime-fighting and spying on citizens by authoritarian governments. There are also such questions as responsibility in the case of injury in accidents involving self-driving cars. Even more difficult is resolving ethical issues that machines without a conscience cannot resolve on their own. The Economist report offers an example: “should a self-driving car risk injuring its occupants to avoid hitting a child who steps in front of it?”

As AI proceeds to impact more people, jobs, industries, economies, and countries, it is incumbent upon regulators, academics, and corporate executives, among others, to spread AI’s benefits broadly.

Swiss Defeat Basic Income

The movement for a basic income was described in a blogpost on August 2, 2015 (http://fiftyyearperspective.com/a-basic-income-for-all/). The argument for a basic income arises from the prospect that technology will continue to eliminate jobs while replacing only a fraction of them. Consumer products and services will be produced by a shrinking workforce, leaving 50% or more of the working age population unemployed and unable to afford to meet their needs.

The prospect of millions of freeloaders is countered by the suggestion that the income would be relatively minimal; one could get by without working, but would not live particularly comfortably. One author cited in the earlier blogpost suggested that the basic income could give rise to a new era of entrepreneurship. A small businessperson may get through a difficult period, or a creative individual would have the support necessary to survive through starting a new business.

A proposal for a country-wide basic income for Switzerland was put before the voters on June 5, 2016, the first country to do so. Supporters envisioned a monthly income of 2,500 Swiss francs for each adult and one-fourth of that for each child. The total for a married couple with two children would be 6,250 Swiss francs per month, equivalent to an annual income of about $78,000 in U.S. dollars, an amount which the BBC said reflected the high cost of living in Switzerland.

The Basic Income Switzerland campaign argued that, “In Switzerland over 50% of total work that is done is unpaid. It’s care work, it’s at home, it’s in different communities, so that work would be more valued with a basic income.” Nonetheless, the measure was defeated with 77% of the voters opposing the plan. The Swiss government opposed the proposal, arguing that the cost would be prohibitive, and that fewer people would choose to work if the basic income were approved.

But there was another issue of concern. While Switzerland has a population of only 8.1 million, it is in a part of Europe that allows other Europeans to come and claim residency. One member of parliament expressed that if Switzerland were an island the basic income would be possible. “But with open borders it’s a total impossibility…. You would have billions of people who would try to move into Switzerland.”

The vote by no means spells the end of consideration of a basic income. The Dutch city of Utrecht is developing a pilot project to distribute money to residents who currently receive welfare payments starting in 2017. Finland is considering replacing welfare benefits with a basic income and will test a plan that will provide 8,000 to 10,000 Finns about 550 euros per month for two years.

Robert W. McChesney and John Nichols have come out with a book titled People Get Ready: The Fight Against a Jobless Economy and a Citizenless Democracy. They recognize that a basic income could attract support of the affluent, theoretically those who own businesses, who will understand that unemployed people will purchase goods and services that returns the money back to the wealthy. Instead of a guaranteed basic income, authors propose removing “certain functions from the marketplace altogether as the society grows wealthier. Enhance democracy, don’t cash it out. Make broadband Internet access free and ubiquitous. Make healthcare free and ubiquitous. Make extensive public transportation within cities and between them free and ubiquitous. Make all education free and ubiquitous. The list goes on and on. At some point, down the road, inequality is eliminated and humans enter an entirely new phase of their history.”

The Economist published an article on universal basic incomes the week of the Swiss vote. It reported that Silicon Valley is interested in a basic income, again as a way of assuring income in a world of robots and artificial intelligence. More surprisingly, The Economist reported that the Cato Institute, a conservative American think tank dedicated to smaller government, believes that a basic income “is the simplest, least intrusive and least condescending way to provide redistribution if redistribution there must be.”

Brexit from the Irish Perspective

Surely the ink that has already been spilled analyzing the aftermath of the June 23rd, 2016 United Kingdom vote on exiting the European Union could fill at least one of the U.S. Great Lakes. I was traveling in Ireland on the day of the vote, where conversation reflected an Irish view of the vote, so I will spill a little more (virtual) ink on the subject.

The United Kingdom is the top origin for imports to Ireland, and the second export destination for Ireland’s goods and services. So the question of trade between E.U. countries and the U.K. is of great importance. Northern Ireland, as part of the U.K., will leave the E.U. Northern Ireland has an open border with Ireland, a fact that is now subject to change. Northern Ireland voters voted their preference to stay in the E.U., as did Scotland, also part of the U.K. Consideration has been expressed in favor of both Scotland and Northern Ireland remaining part of the E.U. when Britain exits. A breakup of the U.K. has been foreseen as inevitable once the U.K. split with the E.U. comes.

Ireland is both a member of the E.U. and one of the 19 countries of the Eurozone, users of the euro currency. Ireland, the U.K., and Malta, are the only English-speaking members of the E.U. The Irish Times has said that U.K.’s exit may result in English no longer remaining a major language of the E.U. An article by Pat Leahy in The Irish Times the day following the referendum stated, “it is clear that Britain and Europe both face a period of economic and political turmoil, and that Ireland will be deeply affected by this. It is hard to see how the ultimate effects will be anything other than overwhelmingly negative…. Of all the things that could happen to an Irish government short of the outbreak of war, this is pretty much up there with the worst of them.”

Belgium, Germany, and France are also top trading partners with Ireland. The Irish Times describes the E.U. as facing a crisis of legitimacy. The rise of populist movements threatens some member states’ democracies, likely to usher in “a period of deep economic recession.”

Leahy’s Irish Times article concludes pessimistically:

Some measure of preparation for today’s outcome has been going on in Dublin for some time. Ever since David Cameron announced that he would hold a referendum back in 2012, Irish officials and latterly ministers have regarded the prospect of a British exit from the E.U. as the worst thing that could happen [to] the country.

The dust has yet to settle, and talk of reversing the decision has been heard. Can the U.K. change its mind?

The Promise of 3D Printing

3D printing will cause “the whole business dynamic that makes it a good idea for a lot of U.S. companies to manufacture overseas will go poof…. It is expected to have a mighty impact on jobs, geopolitics and the climate.”

“3D printing is not expected to have much effect on mass production and thus on how most U.S. consumer goods are produced.”

The first quote comes from a Newsweek article by Kevin Maney citing a report by the World Economic Forum and the founder of 3D Hubs, an international network of some 28,000 industrial-grade 3D printers in 156 countries.

The second quote is from a new book by Robert J. Gordon titled The Rise and Fall of American Growth.

Up for debate is whether 3D printing will eventually change the worldwide distribution of manufacturing jobs. How many jobs that have found their way to low labor cost countries could be relocated to their previous countries, or could be broadly redistributed to place manufacturing close to consumer markets?

The current status of 3D printing finds applications in prototyping of new products, as well as replacement parts for existing products or whole finished products. Prototyping is used by architects and designers. That makes up the bulk of 3D Hubs business. In the medical field, 3D printers have produced dental crowns and bridges, hearing aid shells, hip replacement joints, jawbones, and prosthetics. 3D printers are also producing smartphones and parts for cars and airplanes.

The consumer market is the target that 3D Hubs has in its sights. Co-founder Bram de Zwart looks forward to working with a company like Nike and moving manufacturing to where the demand is. The Newsweek article projects changes that could occur if any Nike shoe could be economically printed on demand. “Stores would become showrooms with no inventory. No shoe would be made until it’s ordered, and once that’s done, the design would be sent to a printer near the customer’s home …. Since 3-D designs could be altered as easily as we now change typefaces on a PowerPoint slide, customers could customize shoes before they’re made.” The article goes on the cite startups including SyncFab, Shapeways, and CloudFab that are entering the same business.

Extending the reach of the possible in 3D manufacturing, an Israeli-American company, Stratasys, has unveiled a new model that uses a process similar to inkjet printing. It uses multiple cartridges that can produce 360,000 colors for shadows, gradients and even neons, and up to six different materials to produce any combination of rigid, flexible, transparent or opaque end product.

While the debate over distribution of manufacturing jobs unfolds, China is not about to have its manufacturing sector left behind. As reported on 3Dprint.com, “Since 2011 the Chinese 3D printing market has doubled every year since and in 2016 it is expected to reach $1.5 billion. Their growth rate has been outpacing the rest of the world and it is likely to exceed the United States as the world’s largest 3D printing market by 2018 if that growth continues.”

Oil Exporters Adjust to Price Decline

Oil’s history in Arab states goes back to 1911 in Iran. Discoveries of commercial quantities occurred much later, in 1932 in Bahrain, 1938 in Saudi Arabia, and then following World War II in Oman, Kuwait, Qatar, and Abu Dhabi. Until the 1970s, exploration and exporting were under the direction of western companies, which paid fees to the local rulers. As oil-producing countries became independent, their rulers gained more control over production and, by the early 1990s, the states owned the enterprises and their profits in many cases.

For the Gulf States, oil wealth provided the majority of government revenues and a lavish lifestyle for all their citizens. The price of a barrel of oil had reached an all-time high in 2008 before the financial crisis, and then sank by 70%. Price fluctuation was relatively minimal until mid-2014, when the price again dropped by over 50% in six months. Oil export revenues of Arab oil exporting states fell by $340 billion in 2015, according to the International Monetary Fund. The decreases in export value from 2014 to 2015 for the six Gulf Cooperation Council States (GCC) appear in the table below. (Dollar figures are estimates from the CIA World Factbook, accessed online May 2016.)

 

GCC State

2014 Exports (Billions) 2015 Exports (Billions) Petroleum Sector % of Gov Revenues Petroleum Sector % of Exports
Saudi Arabia $342.3 $222.6 87 90
United Arab Emirates $370.6 $323.8 45
Kuwait $103.4 $57.1 90 94
Qatar $131.6 $77.7 56 92
Oman $53.2 $39.1 84
Bahrain $20.8 $14.1 86

 

With oil having historically provided over 80% of oil exporters’ government revenue, major changes in lifestyle are on the horizon. Public largesse has supported citizens, who may or may not have productive work. Now, subsidies for food, fuel, and utilities are being reduced. Taxes will replace some oil revenue. Some states have prepared for this future better than others. The CIA World Factbook provides insights into each country’s economy.

The United Arab Emirates has reduced its portion of Gross Domestic Product (GDP) based upon oil and gas to 25% through economic diversification. Sovereign investment funds are available for further diversification through improved education and creation of private sector employment.

Oman looks forward to tourism, industrialization, and privatization aimed at reducing oil’s portion of GDP from 46% to 9% by 2020. Stiff public resistance to cuts in spending for social entitlements has hindered the government’s ability to balance its budget, which recorded a $6.5 billion deficit in 2015, nearly 11% of GDP.

Bahrain’s 2015 budget deficit was 13% of GDP. After oil, revenues come from production of aluminum, finance, and construction. A 2006 free trade agreement with the U. S. was implemented as part of Bahrain’s diversification plans. A sovereign debt rating just above junk status constrains borrowing ability.

Kuwait holds more than 6% of world oil reserves, and plans to more than double production to 4 million barrels by 2020. Ten percent of government revenue is saved in the Fund for Future Generations. However, efforts to diversify its economy have failed to enlarge private sector employment.

Qatar was the only GCC state that did not record a budget deficit in 2015, but a deficit of 6% of GDP is projected for 2016. Manufacturing, construction, and financial services account for just over half of GDP, and economic policy is focused on increasing private and foreign investment in non-energy sectors.

Saudi Arabia’s 30-year-old deputy crown prince, Muhammad bin Salman, has promoted a high-profile plan to reduce dependence on oil revenue within four years. The plan prominently features the sale of shares in the state-owned Aramco petroleum company. The government is seeking private sector investors in healthcare, education, and tourism. Education for the large youth population in skills for private sector jobs is a particular concern.

The decline in oil prices is necessitating adjustments for countries other than those in the GCC. Some of those with high dependencies on oil exports are listed in the table below. All have a substantial dependence on exports and all are making efforts to diversify their economies. Some are also hindered by corruption, inflation, poverty, international sanctions, and political unrest.

Country 2014 Exports (Billions) 2015 Exports (Billions) Petroleum Sector % of Exports
Russia $497.8 $337.8
Nigeria $82.6 $50.7 95
Angola $60.0 $37.4 “over 90%”
Venezuela $74.9 $47.5 “almost all”
Iran $86.5 $79.0 80
Brazil $225.1 $189.1

 

The scope of the challenge to oil exporters is emphasized in a recent report by the International Monetary Fund (http://www.imf.org/external/pubs/ft/reo/2015/mcd/eng/pdf/mreo1015.pdf ): “Because the oil price drop is likely to be large and persistent, oil exporters will need to adjust their spending and revenue policies to secure fiscal sustainability, attain intergenerational equity, and gradually rebuild space for policy maneuvering.”

Liberal Democracy and Illiberal Democracy

“Democratically elected regimes, often ones that have been reelected or reaffirmed through referenda, are routinely ignoring constitutional limits on their power and depriving their citizens of basic rights and freedoms. From Peru to the Palestinian Authority, from Sierra Leone to Slovakia, from Pakistan to the Philippines, we see the rise of a disturbing phenomenon in international life — illiberal democracy.” So wrote Fareed Zakaria in a November 1997 article in Foreign Affairs magazine.

“Democracy” is usually taken to mean liberal democracy – a political system with regular competitive elections, and a set of personal rights and freedoms – free speech, freedom of religion and assembly, free media. But democracy is defined as a system of government with supreme power vested in the people and exercised by them directly or through elected representatives. Democracy is not liberal unless it guarantees those rights. When a democratically-elected government denies its citizens any of those rights and freedoms, it is an illiberal democracy.

The history of illiberal democracy was updated in an article in the April 4, 2016 issue of Berggruen Insights. In that article, Yasha Mounk, a lecturer on political theory at Harvard University, wrote, “Over the past decade, populist strongmen have subverted liberal democracies in Turkey and Hungary. To judge by recent developments, the current leaders of Poland and India are doing their best to follow their lead.” Mounk cites powerful secular leaders in Turkey that restricted religious practices in the past, which affected the majority of Turkish citizens. As Recep Erdogan gained power, he restored religious practices for that majority, and in doing so, persecuted religious minorities, suppressed freedom of the press, undermined the right to protest, and attacked political opponents. As Mounk states, “however illiberal these policies may be, they are mostly in tune with the preferences of a clear majority of Turkish citizens.” Erdogan has not made Turkey less democratic, but rather he has made it less liberal.

Considering how such a trend could transpire in North America and Western Europe, Mounk writes:

But this marriage between liberalism and democracy is looking increasingly troubled. Throughout the history of liberal democracy, average citizens have experienced a clear improvement of their living standards from one generation to the next. But over the last thirty years, this progress has stalled—or even reversed—in virtually all countries in North America and Western Europe.

As the incomes of ordinary people have stagnated, their anger at the political establishment—as well as at unpopular minorities—has reached fever pitch. And because their support for their form of government has always been highly reliant on its ability to deliver economic growth, they are also becoming more critical of liberal-democratic institutions. If liberalism and democracy have long come as a package, they are now being unbundled.

Mounk raises the prospect that far-right populists “desire to transform their countries into illiberal democracies;” into places, that is, where minority rights are superseded by the unmediated voice of the majority.

Returning to Fareed Zakaria, when asked in a Parade magazine interview published April 17, 2016, how the world views the U.S. presidential campaign, he responded: “I worry about the nature of the rhetoric because it’s stoking fires of hatred, of xenophobia, of racism, of sexism. It’s legitimizing dark feelings and fears and phobias. We all have these; we all have our dark sides in us, but the task of a politician surely is to bring out our better angels.”

Preparing for Industries of the Future

Readers of this blog are familiar with issues surrounding technology and the future of employment. Previous blogposts have dealt with loss of jobs to technology, raising standards of living, guaranteeing basic income, and “new economy” jobs.

With technology contributing to the loss of manufacturing jobs in both developed and developing economies, writers have focused on various scenarios. The June 2014 blogpost (http://fiftyyearperspective.com/robots-are-us/) reported that human input into production will increasingly give way to automation. As a result, the share of income will move away from workers and more toward business owners and managers. Without adequate income to purchase the goods and services produced with automation, some form of basic guaranteed income may become necessary to maintain demand. Blogposts of July 2015 (http://fiftyyearperspective.com/technology-and-the-future-of-work/) and August 2015 (http://fiftyyearperspective.com/a-basic-income-for-all) expanded upon job losses.

In a blogpost in October 2015 (http://fiftyyearperspective.com/new-economy-jobs), the potential for new job-producing opportunities was seen as virtually limitless. Authors Eric Brynjolfsson and Andrew McAfee wrote in Race Against the Machine that building upon previous innovations provides “more possible ways of configuring the different applications, machines, tasks, and distribution channels to create new processes and products than we could ever exhaust.”

A new book by Alec Ross, The Industries of the Future, expands on technological innovation in three areas: robotics; life sciences; and the “code-ification” of money, cybersecurity, and big data. The Internet and digitization are the driving forces behind these future industries.

Ross cites Japanese companies Toyota and Honda for leadership in inventing the next generation of robots. Japan’s aging population and shortage of caregivers have spurred research in robotics. Industrial and medical robotics research is led by Japan, the U.S., and Germany, while South Korea and China are major producers of consumer-oriented robots.

Genomics is changing life science research for diagnosing and treating cancer and mental illnesses, among other illnesses. Mobile phones can expand these services throughout the developing world. A mobile app called MedAfrica can check symptoms and alert for emergencies, and provide first aid information, doctor directories, and a hospital locator. It was developed in Kenya, where 93 percent of the population uses mobile phones.

Mobile phones also expand the possibilities for financial technology. What Alec Ross calls the code-ification of money builds on the trust established by online services such as ebay. The Square credit card reader is an example of digital technology in service to financial transactions. Mobile phones linking to PayPal and Alibaba’s Alipay expand coded markets into some of the world’s most isolated areas.

The common denominator for these “future industries” is the storage of information in digital form. Ross refers to data as the “raw material of the information age.” Big data serves as a tool for improving existing industries. He introduces the concept of “domain expertise” as a specialization that may exist in a particular geographic area. Detroit expertise in cars and Paris expertise in fashion are examples. Combining domain expertise with expertise in creating algorithms utilizing targeted data can improve upon existing tasks. Pasture Meter is a ‘precision-agriculture technology” developed in New Zealand. “Pasture Meter uses advanced sensor technology to take 200 measurements per second over vast swaths of farmland to identify how much grass is in a paddock so that dairy cows can be distributed most effectively for feeding.”

An African company called Andela was created to train young people in coding for technology jobs. With at least 1,000 hours of coding experience, “Andela Fellows” have high success rates in placement in tech companies. Ross cites successful applications in Africa utilizing domain expertise to improve management of grain storage and distribution and to improve best practices for dairy farmers. M-Pesa is a Kenyan mobile currency. Safaricom is an e-commerce loan service. These and other e-commerce services in Africa are creating jobs themselves, and creating business opportunities that are raising African living standards.

Ross advances the idea that fluency in programming language prepares people to think differently, abstracting problems into smaller parts and solving them. Free online resources such as Codeacademy and Scratch are used by millions of people worldwide to learn programming skills that prepare them for the industries of the future.

Information Technology’s Impacts on Politics

The internet has combined with other forms of information technology to alter most aspects of modern life. Smart phones, social media, and cloud computing facilitate communication and generate enormous amounts of data. A recent article in The Economist (http://www.economist.com/news/special-report/21695198-ever-easier-communications-and-ever-growing-data-mountains-are-transforming-politics) reported on how the technology is “transforming the democratic process . . . from running election campaigns and organizing protest movements to improving public policy and the delivery of services.”

Modern political campaigning was shocked into existence with the 2008 election of Barack Obama. As described after the election by the late columnist David Carr, “The Obama campaign did not invent anything completely new. Instead, by bolting together social networking applications under the banner of a movement, they created an unforeseen force to raise money, organize locally, fight smear campaigns and get out the vote that helped them topple the Clinton machine and then John McCain and the Republicans.”

Use of social networking continued into the 2012 and 2016 U.S. presidential elections. The 2015 election campaign of Canada’s Prime Minister, Justin Trudeau, was crafted with creative Twitter videos to connect the candidate to voters more convincingly than the more expensive television time. Both Labour and Conservative parties engaged social media expertise in the 2015 UK elections, wherein Jeremy Corbyn rode social media to leadership of the Labour party. Blue State Digital, which advised the Labour party in the election, was consultant to Barack Obama in 2008, Dilma Rousseff in 2010, and Francois Hollande in 2012.

Protest movements in many parts of the world gain momentum when employing social networking. Well-known examples include the Green Revolution in Iran in 2009; the Arab Spring in Egypt and Tunisia in 2011; Spain’s Indignado anti-austerity movement in 2011; Occupy Wall Street in the U.S. in 2011; Taksim Gezi Park in Istanbul in 2013; Maidan protests in Kiev in 2014; Umbrella Revolution in Hong Kong in 2014; and Black Lives Matter movement in the U.S. in 2014. Zeynep Tufekci, an assistant professor at the University of North Carolina, wrote about social networking in the Journal of International Affairs. She notes that while social media made it easy to quickly connect protestors, that very speed bypasses the long-term organizing which builds cohesiveness to a movement, and movements can fail because of that.

The massive collection of many types of data is being employed on behalf of local government to improve responsiveness. The Economist article argues that the collection, storage, and analysis of information could make cities more efficient and more democratic. As an example, it suggests that a city-wide system of sensors would have spotted the lead-contaminated water in Flint, Michigan much sooner. Sensors are placed to improve traffic flow, locate potholes, and monitor air pollution levels. Cameras mounted along roadways provide data for traffic safety and ease congestion when combined with GPS software. New applications are being developed for improving public transit, trash disposal, and sewer maintenance, among others.

Turkey: At the Crossroads of Geography and History

“Few countries occupy a geopolitical space of such sensitivity as Turkey, or have played such a range of critical and overlapping international roles.” Turkey lies at the boundary between Europe and Asia; Istanbul, Turkey’s largest city, is in both continents. The Turkish straits, the Dardanelles and Bosphorus, are the only passage from the Black Sea to the Mediterranean. As Turkey is being pressed by the European Union to stem the flow of Syrian refugees into Europe, The Economist, in a February 2016 special report, relates Turkey’s current role to its past.

       Turkish Straits

Turkey’s historical significance goes back to Constantine the Great, who became emperor of the Roman Empire early in the fourth century. Soon after, he established the new city of Constantinople as the capital of the Eastern Roman Empire also known as the Byzantine Empire. Constantine adopted Christianity, and later rulers made Christianity the official religion. Adoption of Orthodox Christianity followed in the mid-eleventh century. The city and the empire survived through attacks by followers of Muhammad in the late seventh and early eighth centuries. Catholic crusaders sacked Constantinople in 1204 and held it for six decades before it was retaken by the Byzantines.

The Turks as a people have a history going back 4000 years. They were forcibly converted to Islam over a period of three centuries up to the mid-eleventh century, about the time they entered what is now eastern Turkey. One independent Muslim ruler, Osman I, gave his name to what was to become the Ottoman Empire. The conquest of Constantinople and the killing of Constantine XI in 1453 ended the Eastern Roman Empire. At its height, the Empire stretched from the Crimea in the North to Yemen in the South, and from Iran in the East to Vienna and Spain in the West. The Ottomans made Constantinople a center of Islamic culture, but welcomed adherents to Christianity and Judaism. The Ottomans declared a caliphate in the early sixteenth century, centered in Istanbul, the name that eventually replaced Constantinople.

Although the Ottoman Empire lasted over 600 years, its decline began in the seventeenth century with loss of territory to nationalist movements and inability to compete against the rise of new technologies and political reforms in European states. A series of rebellions and wars hastened the empire’s decline, culminating in its defeat in World War I, when the empire was allied with the German and Austro-Hungarian Empires.

An Ottoman military commander, Mustafa Kemal, organized resistance to occupation by Britain, Russia, and France after the war. A war of liberation lasting from 1919 to 1922 ended in a peace treaty in 1923 that established the new Turkish state with internationally recognized borders. Mustafa Kemal was elected the first president of Turkey and imposed sweeping changes to modernize and secularize Turkey. He abolished the Caliphate, replaced traditional dress with Western dress, banned beards and women’s head scarves, replaced Arabic script with Latin script, and instituted adoption of surnames, taking Ataturk for himself. The secular nature of Turkey was supported by the country’s military.

Turkey’s control over the straits allows free passage of civilian vessels in peacetime while prohibiting warships. Allied to the West and a member of NATO, Turkey occupies a prominent international role. The five-year civil war in Syria has caused over two million refugees to flee to Turkey, where they receive free schools, health care, and food. The international community, in a not entirely selfless gesture, has offered billions of dollars in assistance for Turkey to continue to accept refugees and stem their flow into Europe.

 

Money and Politics in the 2016 U.S. Presidential Election

The 2016 U.S. presidential election will likely set a new record for campaign expenditures. Fundraisers expect up to $5 billion will be spent, more than double the amount spent in 2012. Other estimates are higher still. The Koch brothers’ network of political donors has a 2016 campaign budget of $750 million by itself. According to The Washington Post, by the end of January 2016 almost $800 million had been raised by the many White House contenders.

The spending floodgates were opened by the 2010 Citizens United Supreme Court case, which allowed unlimited independent political spending by corporations and unions. It is still illegal for corporations and labor unions to donate directly to individual candidate campaigns or coordinate their spending with those campaigns.

The decision led to political action committees, or super PACs, which can receive unlimited donations for political spending, and the source of those donations must be disclosed by the super PACs. However, this disclosure requirement does not exist for so-called “social welfare” organizations, 501(c)(4)s under the Internal Revenue Code. Unlike super PACs, 501(c)(4)s are not required to report sources of funds, but they must not have political activity as their primary activity, a requirement of questionable enforceability. These are among the so-called “dark money,” which reported spending $300 million in the 2012 presidential election.

Two sources of activism are animating the 2016 presidential season. Both have far-reaching implications for the future of governance in the United States, as well as its place in the world economy. One source is political activism. The other is dark money.

As described in the February 28, 2016 blog post on Fifty Year Perspective (http://fiftyyearperspective.com/populist-movements/), populism may arise from the political left or right. Represented in the current primary cycle by Bernie Sanders and Donald Trump, respectively, their supporters believe that government is either incompetent or rigged to favor the wealthy while denying opportunities for the middle class to reach a better future for themselves and their children. They cite international trade deals and globalization, Wall Street crony capitalism, and rising inequality as examples of the dominance enjoyed by the wealthy. The immigration that is a threat to middle-class jobs is favored by businesses seeking more entrants with advanced degrees and specific skills. Populist candidates shun super PAC money, but face the prospect of competing with billionaire-favored candidates in an election projected to cost $5 billion or more.

Causes championed by wealthy business owners are often the same as those opposed by populists: free trade, reduced entitlements including Social Security, Medicare, and Medicaid, lower taxes on the wealthy, and decreased governmental regulation. In her new book, Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right, Jane Mayer focused on Charles and David Koch and their four decade commitment to reduce the size of government. The Kochs believe that the function of government should be limited to protection of individual and property rights. David Koch was the Libertarian Party’s vice president candidate in the 1980 election. The Kochs work to maintain Republican majorities in Congress and to retake the White House, taking active roles in assessing the qualifications of prospective candidates. The Koch network has grown to a size larger than the Republican National Committee itself.

Citizens United also unleashed big money from wealthy Democrats in support of liberal causes such as climate change, corporate welfare, abortion rights, gun control, and public financing of elections. Including individuals such as George Soros, Tom Steyer, Jeffrey Katzenberg, Haim and Cheryl Sabin, and J.B. Pritzker, among others, they, in combination, are not expected to approach the sums donated by the Koch network. Pritzker, heir to the Hyatt Hotel fortune, suggests that 2016 “may be the closest thing America’s seen yet to a clash of America’s 1 percent.”

Then there is Donald Trump, who plans to finance his campaign with $100 million of his own funds. Trump was not supported by “establishment” Republicans as of late March. Should he be the Republican nominee, he will compete against a Democrat candidate funded by $2 billion or more. Unless either the establishment politicians or Trump relent, Trump may not be able to overcome the funding gap.

One Strategy for Addressing Food Insecurity

The current world population of 7.4 billion is projected by the United Nations to increase over 30% by 2050 to 9.7 billion, and to 11.2 billion by 2100, over 50 % above the current figure. The UN estimates that about 795 million people, about one out of every nine, currently suffer from chronic undernourishment. Assuring that adequate food is available to the world’s growing population will continue to be a challenge for world institutions for the foreseeable future.

Arable land, that is, land capable of being used for growing crops, is in limited supply in some densely populated parts of the world, particularly South Asia and North Africa. According to the UN Food and Agriculture Organization (FAO), 90% of the land that potentially could be used for agriculture is in Latin America and sub-Saharan Africa. Arable land is being lost to urbanization, overuse/degradation, and rising sea levels. To further complicate the situation, higher average temperatures and increasing scarcity of water are reducing the productivity of existing cropland.

Feeding more people with less land is a goal of plant scientists worldwide. One such effort, known as the C4 Rice Project (http://c4rice.irri.org/), recently entered a new stage in increasing the efficiency of rice production. The project is a collaborative effort of the International Rice Research Institute (IRRI) and eleven other institutions in eight countries, led by Professor Jane Langdale at Oxford University, who notes that over three billion people depend on rice for survival. A recent article about the project (http://c4rice.irri.org/ ) states that “a combination of population growth and land lost to urbanization means that by 2050, rice yields have to increase by over 50%.”

The project is targeting the way that photosynthesis occurs in rice. Four major crops – maize, sugar cane, sorghum, and millet – use C4 photosynthesis, while rice uses C3 photosynthesis. C4 plants are more efficient in concentrating carbon dioxide, resulting in increased efficiency in water and nitrogen use and improved adaptation to hotter and dryer climates. The goal of the project is to replicate the C4 process in a rice plant by genetically engineering rice with genes from C4 plants.

Here is where a red flag pops up. Worldwide skepticism of genetically modified organisms in food is a major challenge. How can consumers become satisfied that the process will not produce unintended consequences that threaten the environment and human health? The scientists note that C4 photosynthesis plants occur naturally, and that plants evolved C4 mechanisms over time. A focus of the current project stage is to identify possible negative effects on human consumption and the environment and to mitigate them. A February 10, 2016 article in Newsweek (http://www.newsweek.com/2016/02/19/genetically-modified-rice-climate-change-world-hunger-424773.html) also addressed patenting issues that have arisen when the large agribusiness corporations that have the capacity to distribute genetically modified organisms introduce intellectual property claims. IRRI insists that negotiations assure access for developing countries free from intellectual property laws.

Expanding on the interrelationships among hunger, population growth, environment, technology, and law, Julian Hibbard, a Cambridge University professor involved in the project states, “A stable supply of food in emerging economies would be an incredible boost to the global economy. It could also create greater societal stability worldwide.”

Populist Movements

The characterization of Donald Trump and Bernie Sanders as “populist” candidates in the U.S. presidential race mirrors the populist movements that have been growing in Europe since the Great Recession.

Populist movements arise from both the left and the right, sometimes with agreement on specific issues, e.g., government incompetence. Commonalities between European and U.S. populist movements include economic insecurity of the middle class and fear of job loss to immigrants. However, while U.S. workers see themselves as missing out on the benefits of the recovery from the recession, their European counterparts feel that recovery has yet to occur.

The European experience is compounded by the imposition of austerity measures which threaten portions of social safety nets in several countries. European populists on the left and right may oppose various government policies but are not inclined to oppose their social health systems. Quite to the contrary, the U.S. right regards any government healthcare system as socialized medicine, an unwanted government intrusion into personal healthcare relationships.

Christian fundamentalism is a core feature of the U.S. populist right, whereas religion is not prominent in European populist movements. However, opposition to large-scale immigration into Europe goes beyond economic concerns, maintaining that minorities, especially Muslims, threaten traditional European national culture.

Greece has been prominent in international news since the recession as it sought European Union (EU) support for its recovery. Imposition of austerity requirements gave rise to the left-wing political party Syriza. In France the conservative National Front political party presents a populist defense of its sovereignty against the EU and its borders against immigrants. Defense of national sovereignty is also behind the effort in Britain to exit the EU led by the right-wing populist UK Independence Party (UKIP). Right-wing populist parties are on the rise in Austria, Hungary, Netherlands, Sweden, Denmark, and Bulgaria. The left-wing Podemos party has become the second largest party in Spain in opposition to austerity measures. Italian comedian Beppe Grillo’s Five Star Movement cites political corruption and opposes austerity measures. And in the U.S. presidential primary races, the supporters of Trump and Sanders believe that “the system is rigged” to deny the middle class opportunities for a better economic future for themselves and their children, while the wealthy and the well-connected are richly rewarded.

The perception that economic and technocratic elites are incompetent or even corrupt was observed as a cause of disquiet in a Martin Wolf column in the February 2, 2016 Financial Times. As a result, those perceived as outside “the establishment” are regarded as champions of the wider public in the U.S. and many European countries. Popular trust in institutions (government, business, media, and non-governmental organizations) is declining, even while trust is increasing among the “elite,” according to an annual survey by Edelman, a global communications marketing firm that interviewed over 33,000 respondents in 28 countries.

The Financial Times article offers suggestions as to how centrist politicians can overcome the divisiveness:

  • Bring order to movement of refugees across international borders
  • Re-evaluate Europe’s austerity-oriented macroeconomic doctrines
  • End the financial sector’s activities that facilitated the immense transfer of wealth
  • Keep capitalism competitive and free from political influence of powerful business interests
  • Make taxation fairer and free of influence of owners of capital in shaping tax laws
  • Shareholder primacy should yield to those more exposed to company risks, such as long-serving employees
  • Contain the role of money in politics

The article urges that the fears of those feeling disrespected and dispossessed no longer be ignored.

Reducing Inequality Benefits Everyone

The 2016 World Economic Forum (WEF) in Davos, Switzerland declared inequality as the most significant trend of 2015, to be addressed by 2,500 of the world’s economic elite. Predictably, the skeptics have spoken, assuring us that this concern for the less fortunate will last no longer than the champagne and skiing at Davos.

But there is some logic to concern for inequality even among the wealthy. As the WEF report on trends states, “Addressing inequality is not only a responsibility but also an opportunity. Addressing inequality is good for business as it creates a new demographic of consumers, thus widening the market for profits and services and increasing profit opportunities.”

Simple as that: low or no income = no consumer purchasing. That portion of the population that receives some part of its income from ownership or management of manufacturers, retailers, or service providers, including the stockholders in those businesses, stands to gain when incomes of low-income households increase.

That is not the only plus for the economy from addressing inequality. Enabling more people to gain the skills to become productive members of society means realizing latent talent that may otherwise go untapped. Among the millions of people in the world unable to utilize their inherent talents, how can there not be great minds capable of extending the boundaries of human knowledge?

How can this talent be unleashed? Obviously everyone should have adequate shelter, food, water, healthcare, and personal security. Beyond that, access to education, employment, credit, and a fair and functioning legal system are necessities to ensure there is equal opportunity to become contributing members of society.

“If you have tens of millions of people not living up to their potential as economic beings, by definition your society is going to be less productive than it could be.” (Quoted from Inequality Matters: The Growing Economic Divide in America and its Poisonous Consequences, by Robert Kuttner.)

If solutions are this obvious, why have they not been implemented? In his 2012 book, The Price of Inequality, Joseph E. Stiglitz wrote, “Inequality is the result of political forces as much as economic ones…. Every law, every regulation, every institutional arrangement has distributive consequences.”

Wealth is becoming ever-more concentrated. Top-heavy distributions of wealth and income produce an inefficient economy. Stiglitz wrote, “Moving money from the bottom to the top lowers consumption because higher-income individuals consume a smaller proportion of their income than do lower-income individuals.” No matter how high households’ incomes soar, they can only use so many cell phones, coffee mugs, TVs, winter coats, and shampoo. The resulting reduction in demand means reduced employment.

Redistribution can be a pro-growth policy.

The Peace to End All Peace

What is generally referred to today as World War II was called the Great War in its aftermath. And for good reason. Ten million soldiers died in the war and twenty million were severely wounded. As a proportion of the 1914 population, this would be equivalent to 123 million dead and wounded of the world’s current population. The scale of the bloodbath so exceeded anything prior to it that it was deemed, “The War to End All Wars.” News stories, photographs and film from the trenches validated the characterization.

The map of Europe and the Middle East looked very different than it does today. Great empires ruled huge areas, and colonialism defined other disparate parts of the globe. The Ottoman Empire, dating back to 1299, included Turkey and many of the countries of today’s Middle East. The Russian Empire had spread to the Baltic Sea and to the German and Austria-Hungary empires.

While Germany was on a quest for expansion following its 1871 unification, the spark that set off the fight was the assassination June 28, 1914 of Archduke Franz Ferdinand of Austria-Hungary by a Serbian nationalist. Serbia had recently broken away from the Ottoman Empire and feared that Austria-Hungary would thwart Serbian attempts to remain independent. Austria planned to invade Serbia as punishment for involvement in the assassination. Serbia turned for support to Russia, and Austria sought support from Germany. The Ottoman Empire secretly allied with Germany. Austria-Hungary and Germany declared war on Serbia, then Germany declared war on Russia, and then on France. Germany’s invasion of Belgium brought Belgium’s guarantor, Britain to declare war on Germany. Then Austria-Hungary declared war on Russia, followed by Britain and France declaring war on Austria. Japan, a recent ally of Britain, went to war against Germany and Austria-Hungary. All this occurred before the end of August 1914.

Two alliances thus formed in the battle. The Central Powers included Germany, Austria-Hungary, and the Ottoman Empire. The Allied Powers included Britain, France, Russia, Serbia, Romania, Greece, and Japan. In November 1914 Russia, Britain, and France declared war on the Ottoman Empire. Australia, New Zealand, and Canada all entered the war as part of the United Kingdom, but with their own armies.

As noted above, the goal of some combatants in the war was expansion. Serbia wanted to unite with Bosnia. In May of 1915 Italy joined the Allies after being promised Austrian territory. Japan hoped to gain German-held territory in the Pacific. Germany wanted access through the Ottoman Empire to its African colonies. In an effort to enlist Mexico in its battle against the United States, Germany sent a telegram seeking alliance with Mexico in January 1917. If Mexico would invade the United States, Germany would help return to Mexico its former territory in the states of Arizona, New Mexico, and Texas. Three months later the United States declared war on Germany after repeated German attacks on United States shipping. When the Bolsheviks seized power in December 1917, Russia signed an armistice with Germany.

The collapse of the German, Ottoman, Austria-Hungary, and Russian empires led to partitioning of the empires’ territories and the establishment of arbitrary boundaries for new states. Syria, Iraq, Lebanon, Palestine, and Transjordan were carved out of the Ottoman Empire. Poland, Czechoslovakia, Estonia, Latvia, Lithuania, and Belarus became independent republics.

The war that was to end all war ended in a peace that did not last. British Field Marshal Archibald Wavell said of the Paris peace conference in 1919, “After the ‘war to end war’ they seem to have been pretty successful in Paris at making a ‘Peace to end Peace.’” The mixing of ethnicities in newly declared states led to instability, especially in the Middle East, that continues into the 21st century.

A Peace to End All Peace is the title of an excellent 1989 book on the topic by David Fromkin.

The Changing Role of Corporations

As the Paris climate summit concluded in December 2015, nearly 200 nations came together on an agreement to reduce carbon emissions and arrest global warming. Significantly, public sector partners in the agreement were joined by business corporations in support of the goal. That support was expressed in a statement by the CEO of consumer goods maker Unilever, Paul Polman: “This agreement establishes a clear path to decarbonize the global economy within the lifetimes of many people alive today.”

Previous Fifty Year Perspective blog posts have cited business interest in limiting carbon emissions. (See http://fiftyyearperspective.com/paris-2015-un-climate-change-conference/ and http://fiftyyearperspective.com/six-months-until-paris-climate-conference/) Many corporations, and the institutions that invest in them, have come to believe that climate change poses a financial risk over the long term. (See http://fiftyyearperspective.com/investors-concerned-over-climate-change/)

The early laws regarding United State corporations were at the state level, and required corporations to provide a public benefit, such as construction of bridges, roads, or canals which the governments could not finance on their own. Corporate charters defined strict limits on permitted activities of corporations, and violating those restrictions resulted in automatic dissolution. A case before the U.S. Supreme Court in 1886, Santa Clara County v. Southern Pacific Railroad, decided for the first time that a corporation was due the same equal protection as that applied to individuals by the Fourteenth Amendment to the constitution. (The 2010 Supreme Court ruling in Citizens United v. Federal Election Commission extended the First Amendment’s free speech protection, in the form of political spending, to corporations.)

Two recent movements are bringing some recognition of public responsibility back to corporations. Often confused but completely separate, they are B Corps and Benefit Corporations. (Both organizational structures differ from Social Welfare Organizations as defined by Internal Revenue Code section 501(c)(4).)

Benefit Corporations are for-profit corporations that are authorized by 30 U.S. states and the District of Columbia. There is some variance from state to state, but the common characteristic is that the corporation commits to creating social and environmental benefit in addition to the for-profit motive, hence the connotation of the “triple bottom line.” A traditional corporation exists for the sole benefit of shareholders, and pursuing a social or environmental mission would represent a deviation from its profit goal.

As described in a July 2013 article in Entrepreneur:

To qualify as a benefit corporation, the for-profit must include a statement in its certificate of incorporation that it was formed for the purpose of creating a “general public benefit,” defined as “a material positive impact on society and the environment, taken as a whole, assessed against an independent third-party standard, from the business and operations of a benefit corporation.” Existing for-profit corporations can amend their current certificates of incorporation to become a benefit corporation with a super-majority vote of their shareholders.

Benefit corporations have no tax exemptions and must have their activities reviewed using an independent, third-party standard. Around 3,000 corporations, large and small, have adopted the standard, including Patagonia Provisions and Method Products.

B Corp is a certification offered by an organization named B Lab. It works much like the voluntary process for receiving a LEED designation for green building standards. Companies seeking the designation complete an impact assessment and meet specific social and environmental criteria. About 1400 companies currently have the B Corp designation, with many, such as Patagonia and King Arthur Flour Company, also being Benefit Corporations.

Corporate interest in these designations represents both a support for efforts to reduce carbon emissions and a competitive advantage in the eyes of environmentally-conscious consumers.

Human Intervention

In terms of geologic time, we are living in the Holocene Epoch, a name which comes from Greek words meaning “entirely new.” Eras and epochs of geologic time are organized according to changes in composition of earth strata which mark major geological or paleontological events, such as mass extinctions. However, two scientists, Paul Crutzen and Eugene F. Stoermer, used the term Anthropocene to describe the current epoch wherein human activities play a dominant role in shaping the earth’s ecosystems. Jedediah Purdy, in a 2015 book titled, After Nature: A Politics for the Anthropocene, wrote, “As a driver of global change, humanity has outstripped geology.”

An accounting of human activities that alter the earth and its atmosphere bears out that claim:

  • Clear-cutting of forests for farming
  • Extracting coal, gas, and oil and burning it
  • Dumping waste from mining operations into waterways
  • Releasing manufacturing wastes into air and water
  • Altering land formations in extracting natural resources
  • Polluting groundwater with the burial of solid waste
  • Allowing agricultural chemicals to leach into soil and water
  • Upsetting ocean water balance with maritime accidents
  • Reshaping natural topography with highways
  • Damming rivers
  • Building levees that redirect flooding upstream
  • Restraining ocean flow with sea walls

The sum of human activities has shifted the balance in the earth’s ecosystem. As Purdy states, “The Anthropocene begins amid a threefold crisis – of ecology, economics, and politics…. The three crises share a starting point: recognition that a system believed … to be stable and self-correcting has turned out to be unstable and even prone to collapse.” Purdy argues that the world’s population is not organized to deal with this prospect: “All serious responses to global climate change – and to inequality in global capitalism – face the same basic problem: there is no political body that could adopt and enforce them.”

Enter COP21, the recently concluded Paris UN summit on climate change – which represents but a piece of the Anthropocene assault on the earth. While far from certain success for the conference’s agreement, the nearly 200 rich and poor nations agreed to a goal of eliminating man-made greenhouse gas output by 2100. The agreement encourages nations to reduce emissions and requires rich nations to fund a $100 billion dollar a year support to developing nations to shift to clean energy.

Following the conference, there are some signs of support for the conference’s goals.

The terrorist attacks in Paris reminded some participants of the link between global warming and conflict. Dutch climate envoy Michel Rentenaar noted, “There may be even more awareness of how important it is to address climate change, given the impact of climate change on the stability of countries.”

China, which some feared would be a holdout in acceptance of the agreement, sees it as an opportunity to draw support for reforms that will move its economy away from energy-intensive industry towards services.

And while many governments have heretofore dragged their feet in addressing climate change, insurance companies have taken the issue seriously following substantial losses from extreme weather events in the past 20 years. Climate change is recognized as having a big impact on investors’ returns, either from higher taxes on fossil fuels, regulatory controls, or damage due to extreme weather.

Human intervention may now be directed toward action prescribed by COP 21.

Tourists and Terrorists

Terrorists strike. Tourists change destinations.

That was the story that unfolded following the October 31, 2015 downing of a Russian airplane carrying 224 tourists and crew after it left Sharm el-Sheikh Egypt. At the time of the downing, about 80,000 Russian tourists were in Egypt. Russia banned future flights in and out of Egypt, effectively cutting off a flow of Russian tourists to Egypt that the Associated Press reported totaled three million in 2014, one-third of all visitors to Egypt.

Russia’s statistics bureau Rosstat says that Egypt was the destination of 20 percent of all Russians traveling abroad in the first half of 2015. A week after the downing the Euro News reported that most people due to visit Egypt in the following days had agreed instead to fly to Turkey, a country visited by 2.5 million Russians in 2014.

Then a Russian jet on bombing missions against opponents of Syrian President Bashar al-Assad was shot down by Turkish F-16s, when Turkey determined that the jet had violated its airspace and ignored warnings to retreat. Russia had sent 3.3 million tourists to Turkey from January through September, making it the most popular destination for Russian travelers. Russia effectively banned tourist travel to Turkey.

The World Bank reported Turkey’s 2013 international tourism receipts at $34.9 billion, and 2013 GDP of $823 billion. At 4.24 percent of GDP, a major hit to Turkey’s tourism industry will most assuredly be a significant setback for any prospects of GDP growth going forward.

According to Bloomberg Business, “Tourism accounted for $21 billion of income for Turkey for the nine months to September and plays a key role in keeping the sizable gap in the current-account under control.” Geopolitical tensions were impacting Turkey’s tourism industry before the bombing of the Russian jet.

Egypt’s 2013 international tourism receipts were $7.3 billion, and 2013 GDP was $272 billion. The tourism-to-GDP ratio was 2.68 percent. Forbes stated that flight embargoes are costing Egypt $280 million a month. Tourism numbers in Egypt fell after Hosni Mubarak was deposed in 2011 and had yet to rebound. The possibility that the one-third of all Egypt’s tourists represented by Russia could disappear will add to the country’s struggling economy. But due to security concerns, Egypt faces loss of tourists from other European countries as well.

Dependency on tourism worldwide, in terms of ratio of receipts to GDP, is less than either Egypt or Turkey. World total figures were $1,381 billion in international tourism receipts and GDP was $76,124 billion, for a ratio of 1.81 percent. Comparable U.S. figures were $214.8 billion in international tourism receipts and GDP was $16,788 billion in 2013, a ratio of 1.28 percent.

International Arms Trade

International trade, U.S. foreign policy, military power, technology, national security, governance, employment, and lobbying intersect at the nexus which is international arms trade.

 

A 2014 report by the U.S. Department of State valued the arms delivered world-wide in 2011 at $177.8 billion, a figure that had increased more than two-fold from $74.1 billion in 2001. (Dollar figures are in current dollars.) The U.S. was by far the largest single exporter of arms throughout the period, accounting for 72-80% of the total. The European Union accounted for about 11% of total, Russia about 5% and China about 2%.

 

Arms trade accounted for only 10% of total world trade of merchandise in 2011, but because of its impact on so many global issues, it weighs heavily on international relations. The volume of arms going to various recipients around the world reveals much about international relations and geopolitics in general. Of the world total of $177.8 billion, $82.7 billion was delivered to Asian countries. Middle East countries received $29.3 billion of the total for Asia.

 

The Stockholm International Peace Research Institute (SIPRI) reports annually on international conflicts and arms transfers between states. SIPRI has reported that “states in the Middle East are investing heavily in missiles and aircraft-launched guided bombs. The U.S. has delivered missiles to Turkey, the UAE, and Bahrain, and has negotiated to sell missiles to Saudi Arabia. While some countries have limited weapons sales to Egypt following the high number of civilian deaths in clashes there with the military, Russia continues to market weapons to Egypt, as well as to Syria.

 

The Congressional Research Service prepares an annual report on conventional arms transfers to developing countries by the U.S. and foreign countries to assist Congress in policy formulation. The 2012 report cited Saudi Arabia as the leading developing world arms purchaser, followed by India. Both are involved in military modernization efforts underway since the 1990s. The UAE, Egypt, Pakistan, Algeria, and Israel join Saudi Arabia and India among the top ten arms purchasers for the period 2004-2011.

 

Three days before he left the presidency in 1961, Dwight D. Eisenhower spoke to the country. He talked of the struggle to maintain peace, the growing military establishment, and the temptation to “invest in newer elements of our defense.” He said,

 

We have been compelled to create a permanent armaments industry of vast proportions. Added to this, three and a half million men and women are already directly engaged in the defense establishment. We annually spend on military security more than the net income of all United States corporations. This conjunction of an immense military establishment and a large arms industry is new in the American experience…. We must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military industrial complex.

 

The link between government and the military industry is frequently a revolving door. Dick Cheney, who served a Secretary of Defense under George H. W. Bush until 1992, in 1995 became CEO of Halliburton, a major U.S. military contractor. Cheney resigned as CEO of Halliburton and became vice president under George W. Bush, son of George H.W. Bush.

 

In his 2015 book From Deep State to Islamic State, Jean-Pierre Filiu wrote. “The colossal material aid that Washington was granting to Cairo … was earmarked to buy US weapons and other goods whose producers were lobbying DC on behalf of Egypt.”

 

In November 2015 Reuters reported that Boeing’s vice president for international business development, Jeff Kohler, was frustrated by delays by the U.S. government in approving sales of fighter jets to Persian Gulf countries. Kohler, who was formerly head of the Pentagon agency that oversees foreign arms sales, said he feared that timely approval by the government could cost U.S. arms makers needed revenue.

 

Eisenhower was a battle-hardened five-star general, which makes his expression of concerns all the more remarkable and relevant.

Mamluks in the Arab Spring

A French professor by the name of Jean-Pierre Filiu has written an extremely well-documented history of the rise of dictatorships in Arab countries following their independence from Western colonial powers, covering 1949 up to early 2015. His focus is on the impact these authoritarian regimes had on Islamist movements.

 

The title of the book is From Deep State to Islamic State: The Arab Counter-revolution and its Jihadist Legacy. The concept of the Deep State refers to cooperation between security forces and criminal elements in controlling state government, characterized by “absolute unaccountability” to their people. “It took half a century for the Arab countries to rid themselves of Western domination. But it took only two decades, from 1949 to 1969, for military cliques to reap the fruits of this hard-won Arab independence.”

 

Filiu, the author refers to the Arab dictators as “Mamluks.” He writes, “The modern Mamluks, like their medieval predecessors, lacked the legitimacy of century-long dynasties, but compensated for this shortcoming with their strong belief that might was right.” Arab Mamluks engaged in land seizures, industrial nationalization, and “monopolizing natural resources,” with elites accessing state assets.

 

The Syrian presidential election of 1949 set the standard for future elections in the Arab world: One candidate was running, and officially he captured 99.4% of the vote. Filiu describes Gamal Abdel Nasser’s transition to dictatorship in Egypt through staged crises that enabled him to control elections, jail or kill opponents, and build security through total military control. A former Muslim brother, Nasser opposed and jailed Muslim Brotherhood leaders.

 

In Syria, Hafez al-Assad stopped a Muslim Brotherhood terror campaign in 1979-1980. Protests in Algeria in Black October 1988 were crushed. Yemen, Tunisia, Iraq, and Libya experienced repression as any domestic opposition was cause for restricting individual liberties. Jihadi networks gained some following, but when Algeria allowed a multi-party election in a December 1991 parliamentary election, an Islamist party won 47.5% of the votes. The military ended the transition to a multi-party government and forced the president who had allowed it to resign. Recurring repression fueled radical insurgencies.

 

Following September 11, 2011, President George W. Bush declared “global war on terror,” giving a boost to Arab countries fighting their own indigenous “terrorists.” When Saddam Hussein invaded and occupied Kuwait in 1990, the U.S. formed a coalition with corrupt Arab states as a way of legitimizing its fight against Saddam. Arab intelligence officials “became regular guests at Western think tanks and meetings held by the sensitive ‘security sector;’ while their American and European counterparts competed for their cooperation. This was the high tide for the Mamluk ‘security mafias’.”

 

Al-Qaeda, which had been active in Yemen as early as 1988, became the focus of U.S. war on terror. It formed partnerships with terrorist organizations in various Arab countries. While the coalition formed between the U.S. and the Arab governments ostensibly targeted these networks of Islamist terrorists, the whole scheme provided cover for those governments to suppress any form of opposition. In this setting arose the Arab Spring, a series of popular revolutions against corrupt leadership that began with the self-immolation of a Tunisian vegetable seller in late 2010.

 

Popular protests followed in Egypt, Algeria, Yemen, Jordan, Syria, Libya, Iraq, Morocco, Saudi Arabia, Bahrain, and Iran. For many of these countries, the provision of limited civil rights, in exchange for security and increasing prosperity, has maintained relative calm. But only Tunisia, to date, has had a relatively orderly transition to democracy. The Tunisian army defended the popular revolution and crushed the counter-revolution by the presidential guard. Tunisia did have jihadist attacks to deal with, but did so with “a distinct emphasis on the due process of law.”

 

Filiu concludes: “The massive surge of the jihadi menace is therefore not to be blamed on the Arab democratic uprising, but on its worst enemies, the dictatorships that played with jihadi fire to deny any substantial power-sharing. More democracy should be the answer, not a new ‘war on terror’ that would ultimately feed more terrorism.”

Globalization’s Defects

On the home page of this blog (http://fiftyyearperspective.com/) there is a description of what is known as the butterfly effect. It portrays how a harmless event in one location can lead to disastrous effects a great distance away. Ian Goldin and Mike Mariathasan published a book in 2014 titled The Butterfly Defect, which describes how globalization creates systemic risks “such that small perturbations now have much greater effects and permeate all dimensions of society.”

Far from opposing globalization, the authors characterize globalization as “the source of the greatest progress the world has known.” Connectivity has been a blessing for most of the world’s population, and regardless of opposition from whatever sources, it cannot be reversed: “…the physical flow of goods and services may still be interrupted by borders and regulations, but virtual exchange overcomes such obstacles easily.”

The 2007-2008 financial crisis served as an example of an unforeseen breakdown resulting from opaque complexity. The authors attribute systemic risks to globalization’s deep connectivity and profound complexity.

 

 

Supply Chain

 

Often the pursuit of efficiency, speed, and profit serves the needs of individual businesses, but causes “unwanted externalities” in the aggregate supply chain. Dependence upon multiple suppliers for individual components is a common pattern. A low-cost producer of a particular component may be favored by numerous end-product manufacturers. Over-reliance on a single source can cause a shortage of end products, as happened when fire struck a New Mexico semiconductor plant in 2000. Combining single source suppliers with efficiency steps, like just-in-time delivery, leaves manufacturers without backup supplies to continue production.

 

Infrastructure

 

A critical component of supply chain robustness is physical infrastructure. Here again, concentration of traffic on key transportation nodes, such as O’Hare Airport or the Suez Canal, make movement of goods and people vulnerable to natural disasters, human error, or attack. Likewise, interconnectivity of electric power grids and networked computers are vulnerable to attacks with the potential of causing loss of control, blackouts, and significant financial damage.

 

Environment

 

Ecological risks center on greenhouse gas emissions, but include land use and agricultural practices supporting a growing world population. “Accelerated emissions of greenhouse gases are part and parcel of the process of globalization and are bound up in the economic growth of emerging markets and the associated rapid rise in incomes and energy consumption.” Negative impacts of development on the natural ecosystem will result in “an increase in disasters, a growing vulnerability to hazards, and the depletion of resources and biodiversity placing systems and people at risk.”

 

Health

 

As in past centuries, movement of people is associated with widespread threats to health. The 2003 SARS epidemic that began in China quickly spread to all continents after a doctor who had treated SARS patients came into contact with travelers at an elite Hong Kong hotel. “The hallmarks of globalization – connectivity and integration – create the potential for negative externalities in the field of health, just as they do in other sectors.” Pandemics are unpredictable and unavoidable, but world health initiatives have done more to contain epidemics than have efforts to address other risks discussed in The Butterfly Defect.

 

Inequality

 

Inequality represents the final risk addressed in the book. “A cohesive society is as crucial to sustainable globalization as functioning physical and virtual infrastructure.” For many, the rise of inequality and the inability to control what may be seen as an opaque and complex governance leads to nationalism and a reversion away from globalization. To maintain popular support for globalization going forward, the authors state “…sustainable globalization requires careful management, ensuring transparency, inclusivity, and resilience as guiding principles. Global institutions need to be more accountable and transparent, but they also need to be given mandates and resources that are relatively immune to constant buffering in political tides.”

 

Isolationism is not an option. Globalization is on an unsustainable course. Sound advice is sorely needed. The Butterfly Defect is Ian Goldin’s 4th book written to “provide insights into how better to manage globalization.”

Competition for Multinational Corporations

McKinsey & Company, a multinational management consulting firm, issued a report in September titled Playing to Win: The New Global Competition for Corporate Profits. The report reveals fascinating statistics and trends that globalization has brought for the world’s multinational corporations, not least the fact that multinational firms account for more than 80 percent of global trade.

 

The share of global trade originating in emerging economies has made impressive gains. According to the report,

 

Emerging economies have launched more than 17,000 large companies since 1990, with China driving the bulk of that growth. The makeup of the Fortune Global 500 illustrates this shift in corporate geography. Between 1980 and 2000, emerging-market companies accounted for roughly 5 percent of the Fortune 500; by 2013, their share had risen to 26 percent.

 

That share is projected to increase to over 45 percent by 2025. In 1980 US and Western European companies accounted for 76 percent of Fortune Global 500 companies; that share dropped to 54 percent in 2013.

 

The report also noted significant differences in ownership structures between multinationals headquartered in emerging market countries and those in North American, Japan, and Korea. Three-quarters of the world’s largest state-owned firms are in emerging markets countries. These countries are also home to large family-owned companies, and these two types of companies exhibit different growth strategies and operating styles from the world’s widely held public companies.

A firm with a controlling shareholder – whether family, founder, or state – is more likely to focus on building a leading position and is able to take a longer-term view about the growth and investment needed to accomplish that goal. In contrast, widely held public firms must answer to shareholders every quarter and are more focused on maximizing earnings in the immediate term.

 

The emerging market firms’ strategy has resulted in rapid growth. In the past decade, Chinese firms have grown four to five times faster than Western firms. For capital-intensive firms in industries such as automobiles, machinery, and construction, competition has squeezed profit margins. The McKinsey report gives the example of Chinese companies’ success in aluminum production. Chinese producers went from a four percent market share in 1990 to 52 percent in 2014, and more than half of Western producers went out of business.

 

The trend for what the report calls “asset-light, idea-intensive sectors” such as pharmaceuticals, finance, and information technology is far more positive for Western firms. These are sectors in which firms spend more on research and development and have higher profit margins than capital-intensive industries. However, information technology can pose a different kind of threat to large Western corporations from that posed by emerging economies.

 

Global information technology firms have experienced some of the most rapid growth. The large digital platforms built by firms such as Amazon and Alibaba enable them to expand their customer bases at negligible additional cost. Their platforms serve hundreds of thousands of small enterprises with logistical support and world-wide exposure. As a group, these small enterprises pose what McKinsey foresees as an “existential threat” to firms in some sectors, just as Netflix and Redbox grew to sizes that threatened Blockbuster’s business model. An extensive description of the growth of such small enterprises can be found in a previous post on this blog (http://fiftyyearperspective.com/new-economy-jobs).

 

The McKinsey report concludes that the world economy will witness the entrance of another 1.8 billion consumers over the next decade. To benefit from this growth, large multinational firms “need to be willing to disrupt themselves before others do it to them.”

New Economy Jobs

In their 2009 book, Race Against the Machine: How the Digital Revolution Is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy, Eric Brynjolfsson and Andrew McAfee wrote that great job-producing opportunities exist in potential combinations and re-combinations of previous innovations, providing “more possible ways of configuring the different applications, machines, tasks, and distribution channels to create new processes and products than we could ever exhaust.”

 

Six years later, is there evidence that technology is producing a wealth of new jobs? If we are looking for the modern-day equivalents of disruptive technologies like steam engines or electricity and the jobs they made possible, the authors direct us to increasingly high speed computing and massive storage of digitized information. They offer the example of equipping a car “with a fast computer and a bunch of sensors . . . and a huge amount of map and street information . . . it becomes an autopiloted vehicle.”

 

The new economy version of disruptive technology is ICT – information and communication technology. ICT connects people to people, and people to information they can use to create economic opportunity. A story about Pierre Omidyar, who founded EBay in 1995, demonstrates the power of communication technology. One of the first items Omidyar placed on his auction site was a broken laser pointer for $14.83. When he contacted the winning bidder to be sure he knew he was bidding on a broken pointer, the buyer responded that he collected broken laser pointers. Where else could this buyer and seller have come together? That’s the beauty of the Internet: In a medium accessed daily by a significant proportion of the world’s population, the chance of finding like-minded individuals increases exponentially.

 

Twenty years later, EBay has hundreds of millions of buyers and sellers, with facilities in 30 countries and revenue approaching $20 billion. It has spawned numerous successful businesses, including Nasty Gal, a women’s clothing seller. Founded in 2006 by a 22-year-old college dropout to sell clothing on-line, it moved to its own site in 2008 and grew to annual sales over $130 million with 250,000 customers in 60 countries.

 

Ten years after EBay’s founding, Etsy made its on-line appearance to offer a sales platform for arts and crafts “makers,” whose goods traditionally traded at flea markets. Within two years the site had nearly 450,000 registered sellers and $26 million in annual sales. Etsy directly employs 750 people and its sales channel serves roughly a million independent sellers around the world; 18% of the sellers report Etsy sales as their full-time job.

 

In 2008 Apple set up its App Store where independent programmers could distribute applications for use on mobile devices. The App Store has grown to offer over 1.4 million apps for everything from games to calendars to flashlights to whatever can be imagined. Apps are sold or offered for free. Popular apps earn money for their developers by selling advertising space to companies wanting to expose their products and services to the millions of apps users. A single game called Flappy Bird is said to have earned its developer $50,000 per day in ad revenue. All told, developers have earned over $15 billion.

 

Dozens, if not hundreds, of on-line services are now available. Independent workers can earn money by offering free-lance design, writing, or web development through services such as Elance, Fiverr, and Upwork. Airbnb has 1.5 million listings in individual homes where travelers can sign up for a night’s stay in any of 30,000 cities in 190 countries. Uber connects private auto owners with people seeking local transportation. Mechanical Turk connects businesses with on-demand workers. Amazon serves writers and artists who self-publish and market their work world-wide. Most of these services have been launched since Brynjolfsson and McAfee wrote their book.

 

This is the new economy, sometimes called the “gig” economy, the “sharing” economy, the “on-demand” economy. By one study, one-third of American workers do some free-lance work, and the proportion is higher for younger people. As the idea of life-time employment continues to fade, more people are likely to be self-employed. And while people have been freelancing or selling arts and crafts for a long time, the distribution system is what is encouraging so many to participate and reach world-wide audiences. One can only wonder how many more combinations and re-combinations of technology and services are yet to come.

Singapore at 50 Years

As former colonies achieved independence following World War II, Singapore became part of Malaysia. That was in 1963, but just two years later, Singapore was expelled from the Malaysian federation over ideological differences. With few natural resources and less than 1% land arable in its 265 square miles, this inauspicious beginning and turbulence in its early years gave way to success that places Singapore among the world’s top ten countries in GDP per capita.

 

Singapore is a mixture of Chinese, Malay, and Indian ethnicities, and Buddhist, Muslim, Taoist, Christian, and Hindu religions. But rather than being sources of divisiveness, multiculturalism and secularism are core principles of this cosmopolitan population of 5.5 million people. Most important to its success is Singapore’s commitment to meritocracy. Its parliamentary form of government is noted for its pragmatism and lack of corruption. Voting is open to everyone 21 of age and over, and is mandatory; failure to vote, without a valid excuse, is cause for a small fine and removal from voter rolls.

 

The People’s Action Party, led by Prime Minister Lee Kuan Yew, has controlled Parliament from the beginning. Lee achieved rapid economic growth and supported business entrepreneurship, but enforced limitations on internal democracy. So while Singapore is rated as one of the freest economies and least corrupt countries in the world, it is not considered a proper electoral democracy by Freedom House, an independent organization dedicated to the expansion of freedom and democracy around the world.

 

Not surprisingly, critics accuse Singapore of achieving economic prosperity at the expense of individual freedoms. Yet Prime Minister Lee, who held the position for 30 years, was so beloved of his people that tens of thousands gathered to pay their respects when he died at the age of 91 in March 2015. As one Singaporean told the New York Times, “As long as you are economically well off, with housing and food, who cares about the politics? I would much rather live in a country like this than a place where you have every freedom in the world but you are hungry.” Furthermore, Singapore attracts some of the most highly educated people in science and medicine in the world.

 

Does Singapore’s example provide a competitive form of government compared to a democracy with more freedom? Could other newly-free countries have achieved more success had they adopted similar policies? More to the point, can any other examples combining meritocracy, pragmatism, and honesty be cited? China, in defense of its own authoritarian style of government, compares itself to Singapore. The Chinese Communist Party boasts of three decades of unprecedented economic success to attest to the success of its meritocracy. Unlike China, however, Singapore’s elections give voters the opportunity to remove officials from office. Indeed, Singapore and its success are unique.

Visualizing Policy Decisions

There are 51 topics on the “Global Issues” matrix in a format that has a box connecting every issue to every other issue. An interesting exercise is taking one of the global issues and placing Xs in each box where that issue overlaps the other issues. The example below does this for the issue of Governance. The yellow shading highlights all boxes where Governance may overlap with any other issues. The twenty-nine Xs specify those global issues that could be said to have a first-degree relationship with Governance.

 

Global Issues Matrix Governance example

 

The specter of unexpected consequences necessitates thinking about more than simply addressing the problem at hand. Just as Governance had potential interactions, good or bad, with 29 other issues, any issue in the matrix will have multiple relationships, both direct and sequential.

 

The matrix below illustrates a series of impacts that could start with the link between climate variability and agricultural productivity. Consider the on-going international debate concerning climate change. Among other impacts, global warming is causing some locations to become less hospitable to farming. People involved in subsistence farming are being displaced. (See the Number “1” on the matrix at the intersection of climate variability and agricultural productivity.) People displaced from marginally productive land become “climate migrants” (Number 2 on the matrix) and, without land, find themselves unemployed in urban areas and at the lowest rung of their new locality’s social structure (Number 3). Dozens of non-governmental organizations (NGOs) exist to address the needs of these migrants (Number 4). In some countries the work of NGOs is viewed as a violation of state sovereignty and they are commanded to leave (Number 5). Ultimately the need for occupational education is recognized (Number 6), and the displaced migrants are prepared to find employment (Number 7). Concurrent with these events is the technological revolution in productivity and human worker displacement (Number 8). But technology itself must adhere to standards of energy use that do not exacerbate global warming (Number 9). While limitations may be placed upon emissions from agricultural machinery, use of the machinery will still replace manual labor, displace workers, and repeat the whole cycle.

 

Global Issues Matrix Linkages

 

This is just one example – how policy-making currently underway addressing climate change will have cascading impacts on migration, education, employment, technology, and more, and on distinct localities and international relations. The matrix is a visualization tool that enables decision-makers and stakeholders to consider and debate potential repercussion, both positive and negative.

Of Popes and Politics: “Everything Is Connected”

This Fifty Year Perspective blog site identified 51 “global issues” that are profoundly inter-related and challenging to policy-makers, both public and private. Prominent among the issues are climate change and the many topics related to it.

 

Pope Francis made climate change a center-piece of his 40,000-word Encyclical Letter on Care for Our Common Home. In paragraph 188, Pope Francis clearly states the church’s position on science and politics:

There are certain environmental issues where it is not easy to achieve a broad consensus. Here I would state once more that the Church does not presume to settle scientific questions or to replace politics. But I am concerned to encourage an honest and open debate so that particular interests or ideologies will not prejudice the common good.

 

But the Pope is quite comfortable in describing impacts upon populations for whom he assumes pastoral responsibility. He also quotes three of his predecessor popes in relating the countless interrelationships between human activity and environmental degradation. The sections that follow link the numbered paragraphs of Pope Francis’ encyclical to many of the global issues addressed in Fifty Year Perspective. The links to the environment may be direct, or may proceed through multiple degrees of connectivity. Technology, for example, impacts the environment through energy consumption, manufacturing waste, agriculture practices, military activity, and consumerism, among others.

 

Pope Francis addresses “all people of good will,” but his comments are particularly vital for leaders in business and public life, for whom paragraph 198, at the end of this post, was written. As the Pope states multiple times throughout the encyclical, “Everything is connected.”

 

Sustainability

Now, faced as we are with global environmental deterioration, I wish to address every person living on this planet. (3)

It is no longer enough simply to state that we should be concerned for future generations. Leaving an inhabitable planet to future generations is, first and foremost, up to us. (160)

 

Natural Resources

Blessed Pope Paul VI: “Due to an ill-considered exploitation of nature, humanity runs the risk of destroying it and becoming in turn a victim of this degradation”. (4)

Patriarch Bartholomew has spoken in particular of the need for each of us to repent of the ways we have harmed the planet, for “inasmuch as we all generate small ecological damage” we are called to acknowledge “our contribution, smaller or greater, to the disfigurement and destruction of creation”. (8)

A true “ecological debt” exists, particularly between the global north and south, connected to commercial imbalances with effects on the environment, and the disproportionate use of natural resources by certain countries over long periods of time. (51)

Human beings and material objects no longer extend a friendly hand to one another; the relationship has become confrontational. This has made it easy to accept the idea of infinite or unlimited growth, which proves so attractive to economists, financiers and experts in technology. (160)

 

Consumerism

Saint John Paul II warned that human beings frequently seem “to see no other meaning in their natural environment than what serves for immediate use and consumption”. Every effort to protect and improve our world entails profound changes in “lifestyles, models of production and consumption, and the established structures of power which today govern societies”. (5)

Benedict urged us to realize that creation is harmed “where we ourselves have the final word, where everything is simply our property and we use it for ourselves alone. (6)

[Bartholomew] asks us to replace consumption with sacrifice, greed with generosity, wastefulness with a spirit of sharing, an asceticism which “entails learning to give, and not simply to give up.” (9)

Obsession with a consumerist lifestyle, above all when few people are capable of maintaining it, can only lead to violence and mutual destruction. (204)

 

Poverty

Saint Francis shows us just how inseparable the bond is between concern for nature, justice for the poor, commitment to society, and interior peace. (10)

The urgent challenge to protect our common home includes a concern to bring the whole human family together to seek a sustainable and integral development, for we know that things can change. Particular appreciation is owed to those who tirelessly seek to resolve the tragic effects of environmental degradation on the lives of the world’s poorest. (13)

The deterioration of the environment and of society affects the most vulnerable people on the planet: “Both everyday experience and scientific research show that the gravest effects of all attacks on the environment are suffered by the poorest”. [Bolivian Bishops Conference] (48)

Every ecological approach needs to incorporate a social perspective which takes into account the fundamental rights of the poor and the underprivileged. (93)

 

Economic Development

My predecessor Benedict XVI likewise proposed “eliminating the structural causes of the dysfunctions of the world economy and correcting models of growth which have proved incapable of ensuring respect for the environment”. (6)

Authentic development includes efforts to bring about an integral improvement in the quality of human life. (147)

Once more, we need to reject a magical conception of the market, which would suggest that problems can be solved simply by an increase in the profits of companies or individuals. Is it realistic to hope that those who are obsessed with maximizing profits will stop to reflect on the environmental damage which they will leave behind for future generations? (190)

Frequently people’s quality of life actually diminishes – by the deterioration of the environment, the low quality of food or the depletion of resources – in the midst of economic growth. (194)

 

Religion

Saint Francis, faithful to Scripture, invites us to see nature as a magnificent book in which God speaks to us and grants us a glimpse of his infinite beauty and goodness. (12)

 

Lobbying

Regrettably, many efforts to seek concrete solutions to the environmental crisis have proved ineffective, not only because of powerful opposition but also because of a more general lack of interest. (14)

The failure of global summits on the environment make it plain that our politics are subject to technology and finance. There are too many special interests, and economic interests easily end up trumping the common good and manipulating information so that their own plans will not be affected. (54)

 

Technology

There is also pollution that affects everyone, caused by transport, industrial fumes, substances which contribute to the acidification of soil and water, fertilizers, insecticides, fungicides, herbicides and agrotoxins in general. Technology, which, linked to business interests, is presented as the only way of solving these problems, in fact proves incapable of seeing the mysterious network of relations between things and so sometimes solves one problem only to create others. (20)

The social dimensions of global change include the effects of technological innovations on employment, social exclusion, an inequitable distribution and consumption of energy and other services, social breakdown, increased violence and a rise in new forms of social aggression, drug trafficking, growing drug use by young people, and the loss of identity. (46)

To seek only a technical remedy to each environmental problem which comes up is to separate what is in reality interconnected and to mask the true and deepest problems of the global system. (111)

We have the freedom needed to limit and direct technology; we can put it at the service of another type of progress, one which is healthier, more human, more social, more integral. (112)

 

Climate Change

Climate change is a global problem with grave implications: environmental, social, economic, political and for the distribution of goods. It represents one of the principal challenges facing humanity in our day. Its worst impact will probably be felt by developing countries in coming decades. Many of the poor live in areas particularly affected by phenomena related to warming, and their means of subsistence are largely dependent on natural reserves and ecosystemic services such as agriculture, fishing and forestry. (25)

 

Energy

A very solid scientific consensus indicates that we are presently witnessing a disturbing warming of the climatic system. In recent decades this warming has been accompanied by a constant rise in the sea level and, it would appear, by an increase of extreme weather events, even if a scientifically determinable cause cannot be assigned to each particular phenomenon. Humanity is called to recognize the need for changes of lifestyle, production and consumption, in order to combat this warming or at least the human causes which produce or aggravate it. (23)

 

Migration

There has been a tragic rise in the number of migrants seeking to flee from the growing poverty caused by environmental degradation. They are not recognized by international conventions as refugees; they bear the loss of the lives they have left behind, without enjoying any legal protection whatsoever. (25)

 

Water Supply

Water poverty especially affects Africa where large sectors of the population have no access to safe drinking water or experience droughts which impede agricultural production. Some countries have areas rich in water while others endure drastic scarcity. (28)

Water pollution particularly affects the poor who cannot buy bottled water. (48)

 

Disease

Every day, unsafe water results in many deaths and the spread of water-related diseases. including those caused by microorganisms and chemical substances. (29)

 

Human Rights

Access to safe drinkable water is a basic and universal human right, since it is essential to human survival and, as such, is a condition for the exercise of other human rights. Our world has a grave social debt towards the poor who lack access to drinking water, because they are denied the right to a life consistent with their inalienable dignity. (30)

 

Military Power

It is foreseeable that, once certain resources have been depleted, the scene will be set for new wars, albeit under the guise of noble claims. War always does grave harm to the environment and to the cultural riches of peoples, risks which are magnified when one considers nuclear arms and biological weapons. (57)

 

Religious Beliefs

I am well aware that in the areas of politics and philosophy there are those who firmly reject the idea of a Creator, or consider it irrelevant, and consequently dismiss as irrational the rich contribution which religions can make towards an integral ecology and the full development of humanity. Others view religions simply as a subculture to be tolerated. Nonetheless, science and religion, with their distinctive approaches to understanding reality, can enter into an intense dialogue fruitful for both. (62)

Although it is true that we Christians have at times incorrectly interpreted the Scriptures, nowadays we must forcefully reject the notion that our being created in God’s image and given dominion over the earth justifies absolute domination over other creatures. (67)

This responsibility for God’s earth means that human beings, endowed with intelligence, must respect the laws of nature and the delicate equilibria existing between the creatures of this world. (68)

 

Politics

It is essential to seek comprehensive solutions which consider the interactions within natural systems themselves and with social systems. We are faced not with two separate crises, one environmental and the other social, but rather with one complex crisis which is both social and environmental. (139)

If everything is related, then the health of a society’s institutions has consequences for the environment and the quality of human life. Social ecology is necessarily institutional, and gradually extends to the whole of society, from the primary social group, the family, to the wider local, national and international communities. Within each social stratum, and between them, institutions develop to regulate human relationships (142).

 

History

Ecology also involves protecting the cultural treasures of humanity in the broadest sense. More specifically, it calls for greater attention to local cultures when studying environmental problems. (143)

 

Social Structure

Many intensive forms of environmental exploitation and degradation not only exhaust the resources which provide local communities with their livelihood, but also undo the social structures which, for a long time, shaped cultural identity and their sense of the meaning of life and community. (145)

 

Governance

Politics and the economy tend to blame each other when it comes to poverty and environmental degradation. It is to be hoped that they can acknowledge their own mistakes and find forms of interaction directed to the common good. (198)

 

Reclaiming U.S. Leadership

A March 2011 cover story for Time magazine by Fareed Zakaria asked the question “Are America’s Best Days Behind Us?” In the article, Zakaria asserted, “What we see today is an American economy that has boomed because of policies and developments of the 1950s and ‘60s: the interstate-highway system, massive funding for science and technology, a public-education system that was the envy of the world and generous immigration policies.” On a number of measures, the United States has relinquished its leadership position.

 

The New York Times Magazine published an article in its June 6, 2015 edition describing South Korea’s digital infrastructure. South Korea has the reputation of being the most connected country in the world, and Seoul has free Wi-Fi in over 10,000 locations, including the subway. Speed is the fastest in the world, twice as fast as the average American city. Upgrades over the next five years are predicted to make Seoul’s speed 1,000 times faster. In that same time frame, the Federal Communications Commission hopes to wire most U.S. homes to a speed that will be one-six-hundredth of South Korea’s goal.

 

In medical research, Singapore made a commitment starting in 2000 to put a major national focus on biomedical sciences. That commitment included a combination of government funded R&D, development of state-of-the-art research facilities that successfully attracted world class scientists, a favorable business environment for businesses and investors, and a supportive regulatory environment. When the Bush administration enacted policies to restrict federal money for stem cell research, Singapore’s liberal laws and government financing attracted a number of top scientists to its research facilities.

 

The government of Denmark sponsored energy research leading to its prominence in wind technology. The government then required power generating companies to pay 85% of the retail price of electricity to owners of private wind turbines. With more than 5,000 wind turbines, Denmark produces about 40% of its electricity through wind power, and is the world’s largest supplier of wind turbines.

 

Prominent on any list of necessary areas of improvement for the U.S. is education. Primary and secondary education are widely recognized as needing greatly increased investment. Finland provides a model of success in educating its students, and it does so through rigorous standards for its teachers. All teachers must have a master’s degree; for primary school teachers, the major is education. Upper grade teachers earn their master’s degrees in the subjects they will teach, for example, mathematics. Success is evident in the scores achieved in international education assessments. Guaranteeing high salaries for new teachers graduating with advanced degrees in science, math, engineering, and technology could produce the same results for U.S. students.

 

International competition for talent, both bright students going to college and degreed professionals in STEM fields, is causing the U.S. to be less effective in attracting these people. Post 9/11 immigration policies, and the lack of investment in education are exacerbating the problem. Investor and corporate advisor John Kao wrote in his book Innovation Nation, “While other nations around the world are aggressively recruiting foreign talent for their universities, we are scaring it away.” The number of H-1B visas issued annually is widely regarded as inadequate.

 

The common denominator in all the shortcomings described above is lack of government leadership. In his 1981 inaugural address, President Ronald Reagan made his often repeated quote, “Government is not the solution to our problem. Government is the problem.” Has U.S. leadership been diminished by lack of government leadership equal to that asserted in other governments?

A Basic Income for All

Facing the possibility that technology could replace so many jobs that a majority of the work force would remain unemployed, the concept of a basic income has been discussed in various books and periodicals. The basic income is envisioned as a minimum guaranteed government payment to all citizens regardless of their private wealth. A popular initiative by Swiss voters will trigger a vote in 2016 on a universal basic income for all legal residents, whether they work or not. The proposed amount of the monthly payment is 2,500 Swiss francs, the current equivalent to about $2,650.

 

Needless to say, this is a highly-charged, controversial idea, but it has been around at least since an early scheme was recommended in a 1797 pamphlet titled Agrarian Justice written by Thomas Paine, one of the United States’ founding fathers. (See http://www.ssa.gov/history/tpaine3.html.) The concept has appealed at times to both liberals who see it as a fairer means of tackling income inequality, and conservatives who believe it would replace complicated welfare payment systems, like minimum wage, welfare, and housing assistance.

 

The Economist came out strongly against the basic income as impractical in that it would be enormously expensive. In a May 23, 2015 article, it cited a 1970 study by economist James Tobin in which he estimated that a tax rate approaching 85% would be required to bring all incomes up to 60% of the median, eradicating relative poverty. An earlier article in The Economist (October 4, 2014), however, suggested, “The modest earnings of the generation that technology leaves behind will need to be topped off with tax credits or wage subsidies. That need not mean imposing higher tax rates on the affluent, but it does mean closing the loopholes and cutting the giveaways from which they benefit.”

 

A May 26, 2015 article submitted to The Huffington Post by writer Scott Santens argues that over 100 current programs that could be eliminated by the basic income. Elimination of Temporary Assistance for Needy Families, food stamps, earned income tax credit, subsidies, and deductions, including the mortgage interest rate deduction, among many others, could amount to a net gain of $1.5 trillion in the federal budget.

 

According to a new book by Martin Ford, Rise of the Robots: Technology and the Threat of a Jobless Future, a basic income would provide positive economic benefits if designed with the right incentives. Ford wrote, “The income provided should be relatively minimal: enough to get by, but not enough to be especially comfortable.” Ford adds details such as incentives for high school graduation, means-testing for passive income, and incentives for community service. He summarizes economic benefits as follows:

 

A guaranteed income would offer an economic cushion for all types of entrepreneurial activity, from the person starting an online business, to the ‘mom and pop’ retailer or restaurateur, to the small farmer or rancher facing drought. In many cases, it might be enough to get small businesses through the difficult periods that would otherwise bring about their failure. The bottom line is that, rather than resulting in a nation of slackers, a well-designed guaranteed income has the potential to make the economy more dynamic and entrepreneurial.

 

Ford adds, however, “The establishment of a guaranteed income will probably remain politically unfeasible for the foreseeable future.”

 

In recent months, several major retailers including Walmart, Target, T.J. Maxx have raised the hourly wage to $9 per hour for their lowest-paid employees. Aetna, the health insurance company, announced a raise to a minimum of $16 per hour. While there is good economic justification, as Henry Ford realized, for paying workers enough that they can afford the products and services they produce, the trend can be seen as a redistribution of wealth from stockholders/investors to the providers of labor.

“Robots Are Us”

If smart machines replace humans, will “putting people out of work, or at least good work, also put the economy out of business?” That is a question posed by a paper published in February 2015 by the National Bureau of Economic Research (NBER), titled “Robots Are Us: Some Economics of Human Replacement.” The paper deals with the future of employment and income, topics addressed in past posts to this blog. If the few jobs remaining available are low-paying, “Will our self-induced redundancy leave us earning too little to purchase the products our smart machines make?” The model which the authors constructed firmly predicts “a long-run decline in labor share of income (which appears underway in OECD members.)” OECD is the Organization for Economic Cooperation and Development, a group of 34 countries with the mission to promote policies that will improve the economic and social well-being of people around the world.

 

Confirmation of this conclusion comes from the Economic Policy Institute’s analysis of data from the Bureau of Labor Statistics and the Bureau of Economic Analysis. The disconnect between productivity and compensation is jarringly represented by the graph below. Between 1948 and 1973, productivity and compensation rose in near lock-step. After 1973 productivity continued its rapid increase while compensation was nearly flat.

 

Productivity vs Pay 1948-2013

 

Martin Ford, in his recent book Rise of the Robots: Technology and the Threat of a Jobless Future, commenting on the graph, wrote, “the widening gap between the two lines is a graphic illustration of the extent to which the fruits of innovation throughout the economy are now accruing almost entirely to business owners and investors rather than workers.” While this graph displays trends for U.S. workers, NBER reports that for the 10-year period ending 2013, labor’s share of national income was more precipitous in Japan, Canada, France, Italy, Germany, and China. International Monetary Fund economists studying advanced and emerging economies concluded that “income inequality is a vital factor affecting the sustainability of economic growth.”

 

The issue goes beyond the question of inequality, a topic discussed in a previous post to this blog (http://fiftyyearperspective.com/examining-inequality/). Economic stability is at risk. As Henry Ford understood when he doubled his workers’ pay in 1915 to $5 per day, without adequate income workers could not buy his products. Getting income into the hands of consumers who have low-paying jobs or no jobs at all has been a function of government-provided “safety nets” for decades, but not on the scale that is envisioned by the above-mentioned studies and others. The next blog post will review the debate over whether a “basic income” for all people is feasible or even desirable.

Inequality: Getting Better, Getting Worse

Income inequality is on the minds of everyone from Pope Francis and Ban Ki-moon, to Janet Yellen, Economist Thomas Picketty, the World Economic Forum, and alumni of the Harvard Business School, to name just a few. A slow-moving recovery from the 2008-2009 recession has brought into focus the uneven distribution of the benefits of the global economy.

 

Changes in equality are not all in a negative direction: As a new study prepared for the Peterson Institute for International Economics reports, on a global perspective income equality is improving, even as inequality within many countries is increasing. The study notes that the reason this is possible “is that rapid income growth among substantial segments of the population in places like China, India, and even in sub-Saharan Africa will tend to reduce global inequality, at the same time that it increases inequality within these countries.” (See “The Future of Worldwide Income Distribution”)

 

The causes of rising inequality are many and varied, but are interrelated. A list, compiled from a recent book by Joseph E. Stiglitz titled The Great Divide, and a current on-line course by Professor Mauro Guillen of the Wharton School titled Analyzing Global Trends for Business and Society, includes the following:

 

  • Technological change – many middle-class jobs have been replaced by advancing technology, while demand for highly educated workers has increased
  • Growth of the service sector – high-paid manufacturing jobs replaced by jobs of varied skill levels and pay rates
  • Globalization – less-skilled jobs moved from expensive workers in developed countries to cheaper workers in developing countries, increasing inequality in the former and decreasing inequality in the latter
  • Decline of unions which at one time represented a third of American workers
  • Austerity measures have cut programs that protect the unemployed, as well as children and elderly
  • Tax policy eliminated the highest tax rates and provided lower tax rates for unearned income
  •  Lower tax rates for higher incomes translates into higher savings and greater wealth over time

 

An article in the September 2011 issue of Finance & Development by Branko Milanovic, lead economist of the World Bank research group, suggests that income inequality can become self-perpetuating. In the article, titled More or Less, Milanovic states “failure to redistribute income may also reflect a political reality – that the rich wield a disproportional influence over policy because they are more politically active and contribute more to politicians than their less affluent counterparts.” He concludes, “Political decisions would then coincide much more with the preferences of the rich,” moving political systems closer to “’one dollar, one vote,’ from the more traditional ‘one person, one vote’ model.”

 

Stiglitz offers that this trend is not in the best interests of the rich. “Widely unequal societies,” he writes, do not function efficiently and their economies are neither stable nor sustainable. The evidence from history and from around the modern world is unequivocal: there comes a point when inequality spirals into economic dysfunction for the whole of society.”

 

Stiglitz believes that “insufficient aggregate demand is the major source of global weakness today.” His solution is creating jobs in education, technology, and infrastructure, which in turn create demand for goods and services and thus more jobs. Writing in a 2011 article in Politico, he wrote that “remarkably low long-term interest rates” provide the opportunity for these public investments.

Six Months until Paris Climate Conference

With six months to go until the climate change conference in Paris in December, how optimistic are the prospects for scoring real progress toward controlling global warming? (See blog posted October 28, 2014 at http://fiftyyearperspective.com/paris-2015-un-climate-change-conference/.) The expectations are largely on the shoulders of the countries charged with setting limits on CO2 emissions. However the general consensus has been that political considerations will constrain the ability of governments to approve meaningful commitments, especially when decisions are framed in a context of a trade-off between controlling emissions and adding jobs.

 

A hopeful sign is detectable in a series of articles by Pilita Clark published in Financial Times over a two-week period starting May 27th. That first article, titled “Climate Campaign Wins Over More Senior Executives,” reported comments by Gerard Mestrallet, chief executive of French energy giant Engie, referring to carbon dioxide as “the enemy.” He told Financial Times, “Business is today leading the way in fighting against climate change. It is not just governments pushing the issue any more.”

 

Insurer Axa announced it is exiting €500 million worth of coal investments and committing to €3 billion in green investments. Bank of America has three times as much credit extended to renewables as it has in coal mining. The article also cites over 1,000 companies and investors that have called for a price on carbon, including the world’s largest asset manager as well as energy companies.

 

A second article in the May 31st Financial Times reported that Europe’s largest oil and gas companies have asked the UN to involve them in planning to stop global warning. “We owe it to future generations to seek realistic, workable solutions to the challenge of providing more energy while tackling climate change,” executives of Royal Dutch Shell, BP, Total, Statoil and others wrote in a letter to Financial Times.

 

A June 3rd article reported on the announcement by Ikea that over the next five years it would spend €500 million on wind power and about €100 million on solar energy. Another €400 million will go to helping people in countries most impacted by global warming. This latter commitment has been a stumbling block for wealthy countries. As a privately-held business, Ikea is less constrained in making such commitments than public companies. But as the previous articles noted, large investors are inclined to agree.

 

Finally, as the G7 countries were meeting in Germany for discussions on the global economy, Financial Times reported on June 8th that G7 leaders agreed that the world should phase out fossil fuel emissions in this century. They backed a target of reducing greenhouse gases by 40 to 70 percent of 2010 levels by 2050. They also addressed helping poorer countries adjust with $100 billion a year from public and private sources.

 

While these words need to be turned into actions, the flurry of activity is a hopeful sign that business and industry see benefit in aligning their interests with climate change activists leading up to the negotiations in Paris.

 

 

 

 

 

Money and Influence

In an April issue of Christian Science Monitor, Robert Reich, a former secretary of the Department of Labor, wrote about his experiences when invited to speak to various groups. In one example he was asked to speak to a religious congregation about widening inequality. Prior to his speaking he was asked not to advocate for raising taxes on the wealthy because this could “antagonize certain wealthy congregants on whose generosity the congregation depended.”

 

While little harm may be done by limiting the message to be delivered to a defined group, Reich’s other examples present cause for alarm. “It’s bad enough,” he writes, “big money is buying off politicians. It’s also buying off nonprofits that used to be sources of investigation, information, and social change, from criticizing big money.” He cites a nonprofit, dedicated to ensuring voting rights, deciding not to launch a campaign against big donations to politicians so as not to alienate its wealthy donors.

 

Perhaps most distressing is the influence money can buy in institutions of higher education. Rather than facilitating unbiased discussion of topics of social, economic, and environmental importance, big money gains a seat at the decision-making body that determines what gets investigated and discussed. Reich states that a Koch Foundation pledge of $1.5 million to Florida State University’s economics department “stipulates that a Koch-appointed advisory committee will select professors and undertake annual evaluations.” He reports that the Koch brothers fund programs at over 250 American colleges and universities.

 

Reich also notes that the influence can be exerted by wealthy progressives as well as wealthy conservatives. Could universities come to be acknowledged as offering biased curricula just as some news sources report from only a single position on the political spectrum? As Reich concludes, “Our democracy is directly threatened when the rich buy off politicians. But no less dangerous is the quieter and more insidious buy-off of institutions democracy depends on to research, investigate, expose, and mobilize action against what is occurring.”

Disappearing Youth: The World Population in 2050

Could the aging of the world’s population lead to the disappearance of some cultures? One author believes so and he cites the fall of Greek and Roman cultures to support his contention. David P. Goldman analyzed United Nations’ population projections to 2050 in his 2011 book, How Civilizations Die (and Why Islam is Dying Too).

 

U.N. projections (http://esa.un.org/wpp/Documentation/pdf/WPP2012_Volume-I_Comprehensive-Tables.pdf) indicate population decreases of 10-25% for many European countries and Japan. Furthermore, a high percentage of the population remaining in those countries in 2050 will be over 60 years of age. While the world’s population age 60 and over is projected to increase from 11.7% in 2013 to 21.2% in 2050, most European countries will have 30-40% of their populations in that age bracket. In Spain, Portugal, Japan, and Korea the figures will be over 40%. (These projections reflect the U.N.’s medium variant series.)

 

As his sub-title reveals, Goldman finds the trend particularly acute in Muslim countries. He notes that the current population in Iran includes nine people of working age for every elderly dependent. By 2050 that ratio will fall to less than 1.5 working age people per elderly dependent. (Comparable U.S. figures are 5.3 to 2.8.)

 

This “dependency ratio” is one of two key demographic measures that describe a population’s present and predict its future. The other measure is “total fertility,” which is the average number of children ever born to the population’s females. A fertility rate of 2.1 is required to maintain a constant level of population. Average world fertility is currently 2.5, and is projected (in the medium variant series) to fall to 2.24 by 2050. Interestingly, the U.N. report found a relationship between fertility and religious participation. In the U.S. and Europe, the higher the frequency of attendance at religious services, the higher the fertility.

This is where Goldman finds his most startling demographic change. “The fastest demographic decline ever registered in recorded history is taking place in Muslim countries,” he states. The U.N. figures include the following Muslim countries’ decreasing fertility rates from 2015 to 2050: Afghanistan, from 5.00 to 1.97; Iraq, from 4.06 to 2.69; Mali, from 6.86 to 4.21; Senegal, from 4.98 to 3.17; Sudan, from 4.46 to 2.81; and Yemen, from 4.15 to 2.03. According to Goldman, “The vast majority of educated young Muslims are alienated from the traditional Islamic culture of previous generations and rebel quietly against the Islamists’ attempt to reimpose it on them by force. They have voted with their wombs. Like Europe, the Muslim world is engaged in the slow-motion suicide of failing to create the next generation.”

 

The Pew Research Center recently released its own projections of population to 2050, but rather than by country, the projections are by religion (http://www.pewforum.org/2015/04/02/religious-projections-2010-2050/). Pew projects the world-wide Muslim fertility rate to drop from 3.1 to 2.3. Muslim population will continue to increase, but at a slower rate, challenging Goldman’s contention that Muslims are not replacing themselves. In fact, the Pew study projects a 74% increase in world Muslim population, from 1.6 billion to nearly 2.8 billion. Christian fertility is projected to decrease from 2.7 to 2.3, still above replacement level. As a result, Christian world population will increase by 35%, from 2.2 billion to 2.9 billion. Thus by 2050 Christian and Muslim populations will be about equal, and together will total over 60% of the world’s population. Africa will be the focus of both Muslim and Christian population increases. Of the approximately 2.4 billion increase in world population from 2013 to 2050, 1.3 billion will be in Africa.

Money and Morals

Harvard political philosopher Michael J. Sandel published a book in 2012 titled What Money Can’t Buy: The Moral Limits of Markets. Perhaps counterintuitively, Sandel’s pages describe the expanding range of goods and services that money can buy. And he clearly laments how much is degraded by having a price.

 

Human blood, body parts, and surrogate motherhood can all be bought and sold. A lower-numbered place in line at the airport or amusement park, a place in the car pool lane, or the baseball announcer’s commentary, “This call to the Bull Pen is brought to you by AT&T,” have all been added to the list.

 

Then there is the practice of selling naming rights for public spaces. Prodded no doubt by limited government finances, sports stadiums were early adopters of the practice. Schools and other public buildings have been named for donors. Donors can also “sponsor” public facilities, such as fire hydrants. In London a police patrol car was painted with the words, “This car sponsored by Harrods.”

 

Line standing has also become a business. In Washington, D.C. the company LineStanding.com advertises as “a leader in the Congressional line standing business.” Lobbyists pay line standers as much as $60 per hour to reserve places in line for the limited seats at a Congressional hearing, potentially leaving less room for interested citizens. Line standing has also been employed in New York for “free” tickets to public Shakespeare performances. Line standers were able to charge as much as $125 to people wanting “free” tickets to see a performance of The Merchant of Venice starring Al Pacino.

Ad space isn’t only on billboards anymore. Buses make effective mobile billboards. Movies have been advertised on apples and bananas for sale in grocery stores. School books carry ads, and ads can also be found for captive audiences in restrooms and elevators. Owners of private cars can be paid to have their cars wrapped in printed vinyl advertisements. Bail bonds and lawyers advertise prominently in some jail intakes.

 

Sandel’s examples reach into the realms of politics and international affairs. “At the Kyoto conference on global warming (1997), the United States insisted that any mandatory worldwide emissions standards would have to include a trading scheme, allowing countries to buy and sell the right to pollute.” Sandel argues that allowing polluters to buy their way out of responsibility weakens the moral stigma against polluting. Similarly he objects to the policy of some African countries to sell permits to hunt and kill endangered species such as the black rhino. Placing a value on the animals, the argument goes, gives ranchers an incentive to breed and care for the animals. Thus the tension between the power of markets and commitment to acceptable moral practices moves in favor of money solutions to social, environmental, and ethical questions.

 

Finally, Sandel comments on unequal distribution of wealth. “The more things money can buy, the fewer occasions when people from different walks of life encounter one another. We see this when we go to a baseball game and gaze up to the skyboxes, or down from them, as the case may be.”

Examining Inequality

Increasing disparity in household wealth has brought the controversial topic of inequality to the forefront. In its Global Wealth Report 2014 (https://publications.credit-suisse.com/tasks/render/file/?fileID=60931FDE-A2D2-F568-B041B58C5EA591A4), Credit Suisse Research records that the ratio of wealth to income has risen to a level not seen since the Great Depression. “This is a worrying signal given that abnormally high wealth income ratios have always signaled recession in the past,” the report noted.

 

Joseph E. Stiglitz in The Price of Inequality wrote that “inequality is the result of political forces as much as economic ones…. Every law, every regulation, every institutional arrangement has distributive consequences – and the way we have been shaping America’s market economy works to the advantage of those at the top and to the disadvantage of the rest.” Both economic and political stability are at risk.

 

In a Thought Economics blogpost on equality (http://thoughteconomics.blogspot.com/2014/01/equality.html), Richard Wilkinson, co-founder of the Equality Trust in the UK, wrote, “we are not stating that all things should literally be equal – as that would be a fallacy, as by any measure we are all – by our diversity- unequal. Equality in a human context is more of a moral concern; it is a statement of what differences we do or do not decide are morally permissible in society…. it cannot be morally permissible for a society to exist where each individual who is born does not have equality of consideration and opportunity. If people are at least given that benchmark, they can then as holders of individual agency, decide how they flourish from there.”

 

In Wilkinson’s book The Spirit Level: Why Equality is Better for Everyone, co-authored with Kate Pickett, the authors reported on the results of thirty years of research in the United Kingdom and the United States. In addition to economic and political benefits of equality, their findings showed that many social problems – short life expectancy, poor health, mental illness, teenage pregnancy, drug problems, violence, and poor education – are more likely to occur in unequal societies.

 

Beyond Professor Wilkinson’s discussion of equality and diversity, inequality clearly carries one set of connotations in western Africa and another in western Europe. Nonetheless, the moral standard for providing all individuals with opportunities enabling them to flourish applies.

Global Conflicts: Connecting the Dots

Consider the countries featured in daily news in 2015: Nigeria, Ukraine, Venezuela, Iran, Syria, France, Libya, Afghanistan. Stories of poverty, disease, hunger, despotism, hatred, and injustice abound. Conflicts attributable to these global issues and others persist regardless of international efforts to eliminate them.

 

Globalization and the rapid increase in world population have created new pathways to conflict. A 2009 essay on global conflict by Vikas Shah (http://thoughteconomics.blogspot.com/2009/07/global-conflict-causes-and-solutions_16.html) summarized contributing factors to current global conflict:

 

Economics: From early colonialism to modern capitalism, our western economic growth has often been at the detriment of other nations where, for example, we have aggressively acquired assets, created trade routes, or leveraged economic scale to source products, assets, and services artificially cheaply. These processes, while creating great wealth and development in Europe and the USA, have exacerbated poverty and economic inequality in many nations, creating a great deal of tension and potential for conflict.

Agriculture and Energy: Our world is hugely dependent on agriculture and energy. Both of these asset classes are in huge demand, with their protection and development becoming serious debate. Population and economic growth also puts huge strains on these assets, as our world comes close to consuming greater than is sustainable.

Technology: While technology has been a huge enabler for global development, it has also made our injustices and inequalities more visible to external and internal participants in any situation.

Climate Change: This is now becoming a real and significant issue with millions worldwide becoming displaced by climatic effects.

Religion, Governance, and Politics: These issues, and their allied topics of human rights, justice, and so forth have historically caused many of the world’s most significant conflicts, and continue to do so as often these issues are the most fundamental in the structure of a society.

 

In a later blogpost from Vikas Shah, he relates thoughts on war and peace from three Nobel Peace Prize recipients (http://thoughteconomics.blogspot.com/2013/10/three-nobel-peace-prize-winners.html). From Martti Ahtisaari, former president of Finland: “If you have enormous inequality, it easily creates conditions where violence is the only way out.” From Jody Williams, founder of the International Campaign to Ban Landmines: “…to dis-incentivise people from going to war…Make sure their stomachs are full! Make sure they have a decent education! Make sure they have a decent job that gives them some sense of dignity, and which allows them to provide for their families! Make sure people have hope for a better future!”

 

The complexity of the interrelationships necessitates addressing multiple issues simultaneously. Close coordination among the United Nations, national and local governments, and non-governmental organizations (NGOs) is the only formula for success, and leadership does not have a particularly good track record in this regard. The need for a big-picture, long-term agenda has not been a priority of decision-makers.

Redefining State Sovereignty

Globalization is but one facet of how the geopolitical landscape is continuing to change. The Global Issues Matrix page of this Fifty Year Perspective Blog (http://fiftyyearperspective.com/global-issues-matrix/) is a view of the breadth of concerns facing the contemporary world. Globalization itself has brought to the forefront issues that were scarcely regarded in the past.

 

Arguably, none of the myriad global issues is as significant as the bedrock question of how nation-states relate to one another. The modern concept of state sovereignty is generally attributed to the 1648 Peace of Westphalia, which ended the Thirty Years’ War in Europe. The Peace established state boundaries, with all states being free and equal and having total authority over people and property within their borders.

 

War did not cease to exist, and in 1863 a group of citizens in Geneva, Switzerland, formed what became the International Committee of the Red Cross to care for the sick and wounded in battle. This led the following year to a treaty among twelve European states that became the Geneva Convention. The idea that humanitarian concerns should be superimposed over the sovereignty of states was thus established.

 

 

The position of basic humanitarian values superseding state sovereignty was firmly established when the International Tribunals at Nuremberg and Tokyo brought to trial German and Japanese soldiers responsible for the deaths of millions of civilians during World War Two. The creation of the United Nations in 1945 and its subsequent treaties permanently altered the concept of state sovereignty. UN action on human rights was followed by conventions on the status of refugees, the rights of women, the elimination of racial discrimination, torture, the rights of children, and regulations regarding nuclear, chemical/biological, and conventional weapons.

 

Expanding on universal concerns, the UN established an on-going series of conferences and treaties addressing environmental problems. Agreements on climate change and sustainability are to culminate in the 21st conference of parties to the convention on climate change to take place in Paris in December 2015 (see http://fiftyyearperspective.com/paris-2015-un-climate-change-conference/\). Not least of the international treaties and organizations establishing standards by which nations are to function are the World Trade Organization and the International Monetary Fund.

 

While such international agreements are numerous, there is no police authority to enforce every agreement. North Korea’s nuclear weapons, Russia’s annexation of Crimea, or the United States’ refusal to ratify the Kyoto agreement on greenhouse gas emissions, to name a few, do not negate the doctrine that state sovereignty has limits imposed by international order, humanitarian values, and environmental preservation.

Technology Is Solving Some Energy Problems in Developing Countries

Sometimes there are benefits to being late to the modern world. Whereas developed countries have had telecommunications lines strung to serve nearly every inhabited location, Africa’s land mass was too large and its population too dispersed for that to have happened. Now technology has progressed to the point that Africa will never need that network. With nearly a billion people, Africa has almost 500 million mobile phone lines, but only 12 million land lines which typically provide service only in dense cities.

 

The story is the same for energy production and distribution. Africa’s major river systems could potentially provide enough hydroelectric power to meet the whole continent’s needs. Distributing the power to end users is a hurdle yet to be resolved. So locally generated electricity is the best option for scattered populations. Fortunately Africa is well-situated for other forms of renewable energy, notably solar energy. And distributed energy is key to development for Africa, improving education, medical care, communication, and on a larger scale, production.

 

A single solar panel can provide an LED light and replace a less-desirable and dangerous kerosene lantern. Two panels can charge a mobile phone, greatly reducing the cost below that currently paid for commercial charging services. Innovative ways of generating electricity go beyond solar panels. A group of Harvard students invented a soccer ball with power generation built into it. Thirty minutes of kicking the ball in soccer play generates enough electricity to power an LED light for three hours. The students have followed up with a jump rope with similar capabilities. The company is called Uncharted Play (http://unchartedplay.com/).

 

A French company manufactures a refrigerator, Freecold (http://www.freecold.eu/froid_solaire/2IDEA_english.html) that operates with a photovoltaic panel. A U.S. company, BioLite, has developed a stove that uses wood but requires half the amount of an open fire and reduces smoke by 95% while generating electricity (http://biolitestove.com/homestove). Along with waterless composting toilets, solar water heaters, portable, inexpensive medical devices, these are a tiny sampling of the innovation taking place to improve life for the poorest populations. For a long list of innovators and their products and services for addressing energy and sustainability, have a look at The Unreasonable Institute’s fellows at http://unreasonableinstitute.org/all-fellows/.

Progress in Use of Renewable Energy Sources

As over 190 countries debate alternatives for reaching the goal of replacing fossil fuels with renewable energy sources, success to date is noteworthy in some countries, even as the overall goal is distant. Local geography and climate weigh heavily on any country’s needs and capacity. Very cold climates require more energy for warmth, for example, while very hot climates present opportunities for solar energy. Countries with particular configurations of water and topography have developed extensive hydroelectric power generation. Political considerations enter into the equation as well, such as popular opposition to nuclear energy and resistance to change by established utilities, as well as a myriad of environmental organizations promoting preservation and sustainability.

 

Replacing non-renewable sources of electricity with renewable sources has enjoyed varying levels of success around the world. Hydroelectric power generates over 95% of electricity in several countries. Norway is the largest generator of electricity from hydropower plants. Its 263 plants generate 95.8% of Norway’s electricity, made possible by its topography. Several smaller African countries generate 99-100% of their electricity using hydropower. Wind produces 29% of Denmark’s electricity, and Portugal and Ireland each generate more than 16% of their electricity from wind. Denmark and Finland each generate about 15% of their electricity from biomass. Geothermal sources produce at least 15% of electricity in the Philippines, Costa Rica, Kenya, and El Salvador. Solar energy currently accounts for the smallest share of renewable electricity. Italy, Germany, and Spain, which lead in percentage of electricity demand met by solar power; each produce just over 3% of their electricity from solar.

 

Plug-in electric vehicle sales have a long way to go before they come close to sales of vehicles powered by petroleum. Norway again is a leader in this regard. Plug-in electric vehicles (PEVs) accounted for 14.5% of new car sales in Norway in the first half of 2014; sales were up over 300% from 2013. Sales of PEVs in the Netherlands were 4.6% of new car sales. U.S. sales of PEVs had less than a one percent market share as of late 2014.

Replacing Jobs Lost in Recession

The United States economy added 321,000 jobs in November 2014, pushing employment over 140 million for the first time. Since U.S. employment sank to its recession low in February 2010, a total of 10,390,000 jobs have been added. While these are impressive-sounding numbers, Bureau of Labor Statistics data show that recover from the recennt recession was the slowest since World War II. Each recession in that period is recorded on the graph below, which indicates the number of months that passed from the start of the recession to the time when the number of U.S. jobs recoverd to the pre-recession level.

Percent Job Losses in Post WWII Recessions - May 2014

 

 

The graph indicates that the recession that began in 2007 resulted in a loss of over 6% of the country’s jobs, and job recovery to the pre-recession peak did not occur until 76 months later. The three recessions that took the longest time to replenish jobs all occurred since 1990, each one taking longer than the previous one. The 2007 recession was by far the most severe, as measured by percent of jobs lost, as well as other metrics.

The table below breaks down the changes from the 2007 recession job peak in January 2008 to recovery in May 2014. Five industry groups recorded changes of a million jobs or more, plus or minus. Construction employment in May was almost 1.5 million jobs below its pre-recession peak – not surprising, as uncertainty about the future of the economy discouraged new development. Manufacturing jobs in May were over 1.6 million below the peak. The loss of manufacturing jobs to overseas locations since the 1970s has been a persistent characteristic of globalization, as well as an attribute of technology replacing jobs. BLS recorded increases in both construction and manufacturing jobs beginning in 2010, but both remained well below their pre-recession levels.

 

US Employment by Industry Jan 2008 - May 2014 revised

 

On the positive side, three service-oriented industry groups each exceeded their pre-recession employment levels by at least a million jobs while overall employment managed only to recover recessionary losses. According to the BLS, Education and Health Services reported over 2.5 million more jobs than the sector had prior to the recession. Of these, 2.1 million were health-related jobs, and education services accounted for 400,000 jobs. In the Professional and Business Services sector, professional and technical services accounted for half a million increase in jobs, and computer services accounted for 335,000 jobs. Professional and Business Services jobs began recovering as early as the end of 2009. Education and Health Services jobs turned around in the first quarter of 2009. Leisure and Hospitality jobs began increasing by late 2010.

An argument could be made for globalization as at least a partial explanation for the extended length of the recovery. Globalization of financial activity made the recession nearly a world-wide phenomenon. Industries that suffered the most were linked closely to global issues – manufacturing, for reasons cited above; and construction, because of the general impact on the business climate and particularly the financial woes of the housing industry. The recovery for many trading partners of the U.S. remains tentative at this writing.

Climate Change, Natural Resources, and Geopolitics in the Arctic

In August of 2007, a Russian mini-submarine dived through the ice to the ocean floor beneath the North Pole and planted a Russian flag, in support of its claim that the ocean off its northern coast was part of its territorial waters. Denmark and Canada have since made similar claims.

 

Under international law, the five countries surrounding the North Pole (Russia, Canada, Norway, the United States, and Denmark through its dependent territory Greenland), are limited to exclusive economic zones (EEZ) of 200 nautical miles (230 miles) adjacent to their coasts. Russia and Canada are lodging applications to extend the limit further based upon claims that parts of the Arctic are extensions of their own continents. Interests in the Arctic have also been expressed by Finland, Iceland, and Sweden within the Arctic Circle, plus some other European states, as well as China, India, and South Korea.

 

The motive behind this maneuvering is to secure positions of access to the Arctic’s resources and new sea lanes. The Arctic has warmed roughly twice as fast as the global average, as light and heat reflecting snow and ice are replaced by darker-colored, heat-absorbing land and water. Sea ice has been shrinking, and projections indicate that Arctic summers will be ice-free in the 2030s.

 

Due to this warming, resources including diamonds, zinc, gold, nickel, and iron are drawing countries to the Arctic. Fish will also be sought there as traditional fishing waters are depleted. And climate change will make parts of the Arctic suitable for agriculture. Oil and gas figure most prominently among sought-after resources as demand for energy increases while current sources are depleting. The U.S. Geological Survey estimates that 13 percent of the world’s undiscovered oil and 30 percent of its untapped natural gas lies in the Arctic. The vast majority of the Arctic’s oil and gas is within the EEZs of surrounding countries, and 70 percent of the natural gas is attributed to Russia; smaller amounts are expected to be found in unclaimed areas.

 

However, costs of extraction and transportation of oil and gas will remain high, and environmental risks are considerable. Ice-free times of year will be limited, and recovery from accidental spills will be extremely difficult and costly. Furthermore, the current boom in unconventional oil and gas production in warmer climates makes Arctic oil and gas less competitive. Nonetheless, exploration has already begun.

 

The quest for new navigation routes is competitive as well. The long-sought Northwest Passage to connect the Atlantic and Pacific Oceans through the Canadian Arctic Archipelago is claimed by Canada as its internal waters. It, and the Northeast Passage along the northern coast of Russia, would reduce the distance from Europe to Asia by about a third. These faster routes have not gone unnoticed by the militaries of Russia and the U.S. in particular. Russia, Canada, and the U.S. have existing military bases in the Arctic.

 

Some four million people live in the Arctic. Many belong to indigenous tribes that have lived there for millennia. While this expected activity may be an economic boon for them, drilling and mining present risks of environmental degradation, as well as altering their traditional ways of life.

 

Climate change negotiations will resume in Paris in December 2015, (see  previous blogpost “Paris 2015 UN Climate Change Conference,” October 24, 2014) with a goal of completing a universal agreement. The future of the Arctic region, like all parts and peoples of the planet, will be impacted by that agreement.

 

arctic_topographic_map_full

Paris 2015 UN Climate Change Conference

For over two decades, United Nations members have held regular meetings to discuss the effects of pollution on the earth’s climate. Starting in Berlin in 1995, an international environmental treaty known as the United Nations Framework Convention on Climate Change (UNFCCC) began its series of annual conferences, referred to as Conferences of the Parties, or COP. The scheduled COP 21 will be held in Paris in December 2015. In preparation for that conference, COP 20 will be held in Lima 1-12 December 2014. The Executive Secretary of UNFCCC, Christiana Figueres, has said the goal of the Lima conference is “a clear draft of the universal agreement, a shared determination by all to deliver significant national contributions to build a low carbon resilient future . . . turning potential into reality on the ground without delay.” Although there is a “do-or-die” tenor to the current debate regarding the imminence of global warming, past history does not bode well for an international consensus.

 

UN environmental conferences did not begin in 1995. In 1972 Stockholm was the site of a UN Conference on the Human Environment. The conference issued a declaration concerning the environment and development. A UN Conference on Environment and Development held in Rio de Janeiro in 1992, which came to be known as the Earth Summit, resulted in a treaty with the objective to “stabilize greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.” The treaty, which also aimed to enable economic development to proceed in a sustainable manner, was signed by 154 nations but contained no binding commitments for limiting greenhouse gases.

 

Starting with COP 1 in Berlin in 1995, COPs have met to discuss how to achieve the treaty’s aims. Prominent among them was COP 3 held in Kyoto in 1997. The Kyoto Protocol set emission targets for developed countries which are binding under international law. Although President Bill Clinton signed the treaty, Congress did not ratify it. In 2001 the administration of President George Bush explicitly rejected the protocol. All other developed countries signed the treaty, although Canada withdrew in 2012.

 

Implementation agreements eluded the conferees in subsequent COPs. Because of a complex ratification process, the Kyoto Protocol did not take force until COP 11 in Montreal in 2005, at which time the life of the Protocol was extended beyond its 2012 expiration date and agreement was reached to negotiate deeper cuts in greenhouse emissions. Annual negotiations continued, but an impasse was reached at COP 15 in Copenhagen in 2009. President Barack Obama and other world leaders decided to put off the more difficult issues for the future, instead focusing on a “politically binding accord” negotiated by approximately 25 countries, including the US and China, and signed by 114 countries. The Accord set a global warming limit of 2.0º C above a baseline pre-industrial level. The Accord was formalized at Cancun the following year at COP 16. In 2011 at COP 17 in Durban, South Africa, discussion took place on a Green Climate Fund in the amount of $100 billion per year to help poor countries adapt to climate change.

 

At COP 18 in Doha, Qatar in 2012, the Kyoto Protocol was amended, with a second commitment period running from 2012 to 2020, and limiting the scope to 15% of global carbon dioxide emissions due to several countries not being subject to emissions reductions, including some of the largest emitters – the United States, Russia, China, India, and Japan. Following COP 19 in Warsaw in 2013, countries were sent home with expectations that each would produce their emission reduction pledges by the first quarter of 2015. That will be preceded by COP 20 in Lima, where all countries are to sign for a global climate change treaty. The hope of COP 21 in Paris in December 2015 is that countries’ contributions will close the gap to meet the 2.0º limit.

 

After decades of conferences, how likely is a final, international agreement on reducing greenhouse gas emissions? The “Intergovernmental Panel on Climate Change 2013” report  presents widely accepted physical science confirming the impact of human activity on climate change. The U.S. Federal Government’s “2014 Climate Action Report” cites executive action taken by the Obama administration with “existing legal authorities,” but adds: “Because the legislative process requires the support of both chambers of Congress and also involves the executive branch, a strong base of support is necessary to enact new legislation. As climate legislation is developed, this high threshold will remain very relevant.” Many countries are watching the U.S. position.

 

Advocacy from businesses could play a role in influencing U.S. support for UNFCCC action. The World Bank reports finding support for placing a price on carbon among 73 countries and over 1,000 companies. Corporations, insurance companies, and pension funds have called for controls on pollution, worrying that global warming threatens investment value. (See previous blogpost: “Investors Concerned Over Climate Change” )

 

Other on-going UN programs link poverty elimination, improved health, and global security to tackling climate change. The many interrelations among these goals lend logic to coordination aimed at improving not only the physical environment, but also economic and social conditions world-wide. As the cartoon says, creating a better world.

 

Cartoon - What if it's a big hoax

Labor Force Participation Trends

Writing in the 1930s, John Maynard Keynes referred to “technological unemployment . . . unemployment due to our discovery of means of economizing the use of labour outrunning the pace at which we can find new uses of labour.” Whereas in Keynes’ time technology was displacing primarily blue collar jobs, information technology is increasingly replacing white collar jobs and even some professional jobs. Computers now can analyze x-rays as well as trained radiologists, or conduct research in case law more efficiently than an attorney. As long as a task consists of a set of instructions that can be expressed in an algorithm, it can be performed by a computer.

 

A previous blogpost, “Technology and the Future of Work,” (June 2, 2014), raised the question of whether the trend identified by Keynes, of technology replacing more jobs in the U.S. than it was creating, was contributing to a decrease in the labor force participation rate. In mid-September 2014 the Brookings Institution released a study examining factors responsible for the declining participation rate.

 

The study found that reduced participation rates among the baby boom generation and teenagers and young adults were primary contributors to the overall decline. Among youths, the decline may be due to extending years of education or to competition from older workers for the middle- and low-skill jobs teenagers and young adults have traditionally held. The study cites the role that technological changes play by increasing demand for better-educated workers while displacing less-educated workers in middle-skill jobs, thereby reducing the participation rate of less-educated adults. Although improvements in labor market conditions may slow or reverse the trend in participation rate, the downward trend will dominate in the longer term. Indeed, a Harvard Business School survey of alumni released in September 2014, “An Economy Doing Half Its Job,” reported that 46% of respondents “strongly or somewhat agreed that their firms’ U.S. operations prefer to invest in technology to perform work rather than hire or retain employees.”

 

Two hundred years ago the typical workday in the U.S. was 14 hours. President Martin Van Buren issued an order in 1840 to limit laborers to a 10 hour workday for employees on federal public works projects. By 1919 the standard had become eight hour days and six day work weeks. During the Great Depression many employers shortened work weeks further, first laying off many workers, then protecting the workers that remained by sharing work among them. The momentum toward a 30-hour work was such that the U.S. Senate passed a bill in 1932 to make it policy, but the bill made it no further and the momentum dissipated. Passage of the Fair Labor Standards Act in 1938 established the five-day 40-hour work week still in effect.

 

If technology continues to replace more jobs than it creates, and if people still desire those goods and services that can be produced with fewer workers, how will people be able to afford those goods and services? A 2012 book by Robert and Edward Sidelsky titled How Much Is Enough? Money and the Good Life addressed achieving the good life. They wrote:

 

What would an economic organization geared to realizing the basic goods look like? It would have to produce enough goods and services to satisfy everyone’s basic needs and reasonable standards of comfort. It would furthermore have to do so with a big reduction in the amount of necessary work, so as to free up time for leisure, understood as self-directed activity.

A study by OECD, reported in a September 24, 2013 article in The Economist, found that the vast majority of people in developed countries worked fewer hours than they did in 1990. Furthermore, the data showed that the more productive the OECD countries’ workers were, the fewer hours per year they worked. Adam Smith had noted a similar relationship between hours worked and productivity in the 18th century. So increasing productivity while spreading hours worked among a larger workforce could theoretically reverse the decline in the labor force participation rate. One direction to consider is reducing the length of the work week to provide jobs to more people. The question that must be addressed is whether a worker can earn enough in a much shorter work week to afford the desired standard of living.

 

Coincidentally, published in September 2014  at the same time as the Harvard study, “State of Global Well-Being” was produced jointly by the Gallup polling organization and Healthways, a healthcare management company. This study developed a well-being index for each country surveyed based upon individuals’ perceptions of their own well-being as expressed by responses to ten questions. The five top-scoring countries in order were Panama, Costa Rica, Denmark, Austria, and Brazil. The United States ranked twelfth. The five top countries were ranked by the World Bank by 2013 GDP per capita as follows: Panama 51st, Costa Rica 55th, Denmark 6th, Austria 11th, and Brazil 50th. The U.S. ranked 9th. The lack of correlation between GDP and well-being provides food for thought.

A Role for Business

Here is an agenda for an organization committed to achieving several sustainability goals.

 

  • Reduce water use to level of 2008 or below
  • Use only sustainably-sourced agricultural raw materials
  • Improve livelihoods of small-scale producers and retailers
  • Expand opportunities for women in management and communities
  • Advance human rights wherever we operate or source material
  • Improve the health and hygiene for more than a billion people by 2020
  • Improve nutrition for hundreds of millions of people
  • Reduce greenhouse gas emissions to level of 2008 or below

 

This would be a tall order for even the largest non-governmental organization. It is comparable to the United Nation’s Millennium Development Goals in its breadth and boldness. And in fact, this boldness goes beyond anything that would originate from even a large NGO. This is a plan put forth by one of the world’s largest multi-national corporations. This is Unilever’s Sustainable Living Plan 2013.

 

Unilever’s plan is to make business part of the solution to the problems of water scarcity, rising food and energy costs, climate change, and the increasing gap between rich and poor. Not without a view to the bottom line, the plan states: “Our first priority is to our consumers – then customers, employees, suppliers and communities. When we fulfill our responsibilities to them, we believe that our shareholders will be rewarded.”

 

Call it enlightened self-interest, but what is better than a win-win plan? Similarly Dow Chemical collaborates with The Nature Conservancy (TNC) in an effort to assign costs to environmental impacts as part of its profit and loss statements. While Dow has been associated with a number of products that were ultimately banned or restricted, Dow’s association with TNC on a five year project indicates a commitment to sustainable business practices and to sharing findings publicly in the hope of influencing other businesses, governments, and NGOs.

 

Pierre Omidyar, founder and chairman of eBay, gave up his executive role at eBay to focus on philanthropy. He formed Omidyar Network to invest in entrepreneurs and their visions for improving people’s lives and communities. Investments have included providing high-quality, affordable schooling where such opportunities are scarce; using technology to extend financial services to people in developing countries as well as American families underserved by financial institutions; and encouraging the exchange of ideas and providing access to information by promoting accessibility and affordability of mobile technologies.

 

Corporate social responsibility (CSR) is a term that has been applied to activities such as those described above. The term is loosely-defined and subject to manipulation. The Wall Street Journal’s on-line financial site, Market Watch, releases a Corporate Social Responsibility Weekly Recap, aggregating press releases that detail individual businesses’ contributions to social, environmental, and humanitarian improvement. A sampling of recent releases included the following:

 

  • Dell’s reuse of plastics from recycled electronics
  • Motorola Solution’s support for conflict-free mining in Democratic Republic of Congo
  • Walmart’s commitment to hiring veterans
  • Anheuser-Busch InBev’s commitment to reduce logistics carbon emissions
  • IBM and Dow’s developing employee leadership skills in Ethiopia

 

From this sample it is clear that the range of issues being addressed is very broad, geographically, environmentally, and socially. CSR is supported by corporate executives who see the need to improve the communities where they do business, and by the investors who believe that social responsibility will increasingly become a metric for evaluating investment worthiness of corporations.

 

Most importantly, the potential for social and environment improvements that can be achieved by the private sector is multiples of what can be accomplished by government aid. The Center for Global Prosperity (CGP), a part of the Hudson Institute, analyzes flows of capital between countries. Its 2013 report states, “Of all capital moving from developed to developing countries, 80% is private and 20% is government aid.” Non-government aid to developing countries includes philanthropy, remittances (that is, money returned to the home country by migrant workers), and private capital flows. CGP’s findings for the U.S. reveal that each of the three sources of private capital exceeds the total of U.S. official development assistance.

 

U.S. aid graphic

Source: The Index of Global Philanthropy and Remittances 2013, by the Hudson Institute Center for Global Prosperity

 

Investors Concerned Over Climate Change

Environmental activists and energy industry companies are usually not on the same page when it comes to climate change. Energy industry giants like Royal Dutch Shell or Exxon Mobil owe their allegiance to their shareholders, and that is who they must satisfy. When those shareholders question energy company planning with respect to climate change, there is likely to be a quick and thorough response. And that is what happened.

In April 2013 an organization called Carbon Tracker issued a report titled Unburnable Carbon. Carbon Tracker receives funding from an array of philanthropic funds concerned about sustainability, including such well-known names as the Rockefeller Brothers Fund. The report found that in 2012 alone, the 200 largest publicly traded fossil fuel companies collectively spent an estimated $674 billion on finding and developing new reserves, some of which may never be utilized. Some of the terms used in the report need to be defined. “Unburnable carbon” is fossil fuel energy sources which cannot be burnt if the world is to adhere to a carbon budget that seeks to keep global warming from exceeding a specific temperature increase, in this case called the “2 degree Celsius (2ºC) scenario.” These fossil fuels could be used for purposes that do not require burning such as in petrochemicals. Energy company assets that are devalued or become liabilities because they cannot be used are termed “stranded assets.”

In response to the report by Carbon Tracker, a group of 70 global investors managing more than $3 trillion in assets established a relationship with CERES, a nonprofit organization coordinating business and investor leadership on climate change and other environmental issues. With coordination by CERES, in September 2013 the investors sent letters to the world’s 45 largest oil, gas, coal, and electric power companies, asking them to assess their financial risks that might accrue should changes in demand or price occur. As the CEO of the California Public Employees Retirement System, Anne Stausboll, wrote: “We have a fiduciary duty to ensure that companies we invest in are fully addressing the risks that climate change poses.” Thomas P. DiNapoli, trustee of the $160.7 billion New York State Common Retirement Fund added: “Institutional investors must think over the long-term, which means that we must take environmental risks into account when we make investments.”

On May 16, 2014 Royal Dutch Shell responded to the inquiries from shareholders. Shell wrote, “We do not believe that any of our proven reserves will become ‘stranded’.” Exxon and Shell both projected that demand for fossil fuels will remain high, and they believe that governments will not “tackle and resolve” the climate issue before 2100. In other words, the energy companies are planning on business as usual. Carbon Tracker took issue with many of Shell’s conclusions. Carbon Tracker estimates that the minimum time from discovery of a new source to production of oil is 10 years and 15-20 years for complex projects such as deep water or oil sands, by which time the level of demand could be drastically reduced. Carbon Tracker reported that Shell’s strategy views gas as a long-term energy alternative, as Shell believes that any energy transition away from oil will take enough time that it should not impact investment decisions for the foreseeable future.

Admittedly many nations that have committed to the 2ºC target have yet to enact policies aimed at achieving that goal. Carbon Tracker concludes that, “Rather than simply note how the status quo on global climate policy falls short of ultimate goal, prudent companies will note these steps [taken by the U.S. and China] toward a low-carbon world and consider the consequences for their business models in a scenario where such steps accelerate in the future.”

Whether the Carbon Tracker report and its follow-up by institutional investors ultimately impacts investment decisions by these investors remains to be seen. As of this writing no response from investors was reported.

Why are they growing tomatoes in Qatar?

 

Dr. Ali El Kharbotly, a Ph.D. in Agricultural and Environmental Sciences, is a consultant to the Biotechnology Center in Qatar. In June 2013 he spoke on food security and safety to the Ecosystem for Sustainable Growth Services Workshop in Dublin, Ireland. His experience in Qatar may prove to be relevant to both rich and poor countries working to feed their people in the face of changing environmental conditions. He said:

Although Qatar is one of the richest countries in the world, its food security is in critical condition. Qatar relies on other countries for its food supplies, even for the basic food requirements. This places the food security situation beyond the control of the country. The productivity of the agricultural sector is limited due to harsh environmental conditions, water scarcity, limited amounts of arable land, low acreage productivity and institutional constraints.

 Qatar is situated on a peninsula on the east of Saudi Arabia. Like its neighbor, it is hot and dry. Sand storms add to the inhospitable environment. In an article in the March 2012 issue of on-line magazine Qatar Today, journalist Peter Larson recounts the steps Qatar researchers are taking to develop tomato plants resistant to Qatar’s heat and drought, and the impetus behind their efforts.

Qatar imports 90% of its food. When global food prices skyrocketed in 2008, Qatar officials realized that the time may come when this oil-rich nation cannot afford to pay the price for imported food. Regional instability also played a role in the decision to pursue self-sufficiency. As Nelson quotes Dr. Kharbotly, “We don’t want to say today we are happy, and the next generation can solve its own problems. It can’t be like that.”

Dr. Kharbotly studies genetic characteristics, looking for those which make tomato varieties that can grow in Qatar’s climate. Success not only secures Qatar’s future. As similar climatic conditions spread to other parts of the world, Qatar’s expertise becomes exportable for applications elsewhere. Applying biotechnology to food production effectively makes Qatar’s hostile environment into an opportunity for development of a private sector agricultural business.

The government’s efforts to achieve food security go beyond genetic research. Like other sovereign countries, Qatar has formed a government entity using sovereign wealth funds to invest in agriculture overseas. Hassad Food Company has invested $500 million to buy a majority stake in India’s Bush Foods Overseas Ltd. Bush produces rice, coffee, cardamom, and ready-made foods. Hassad has also invested in agricultural land in recognition of the limitations of Qatar’s amount of arable land.

So what is the answer to the question, “Why are they growing tomatoes in Qatar?” In a very forward-looking move, Qatar is addressing several issues. It is working toward food security and sustainability for its own population, as well as climate change affecting many countries. Fears of political instability also influence Qatar’s interest in being self-sufficient. Expanding its expertise in biotechnology provides an economic engine for growth that can provide income well into the future.

Demography As Destiny

There are few predictions that can be made with as much certainty as this: People born in 1950 will be 65 years old in 2015. Combined with life expectancy trends, the implications are enormous for housing, education, medical care, employment, and more. Thus, demography is a powerful planning tool for both businesses and governments.

Population age pyramids graphically represent the age structure of a population at a single point in time. The first example below depicts the population of Europe in 1960. The pyramid is broken into 5 year age cohorts. The population ages 0-4 in 1960 is the bottom bar, ages 5-9 in the second bar, and so on. The left sides of each bar represent the number of females in each age group, and the right sides represent males.

Europe 1960 New

Important periods in Europe’s history are revealed by the varying sizes of its 1960 age cohorts. Population ages 40-44, who were born between 1915 and 1919, comprise a much small cohort than those above and below it. Those years involved the child-bearing population in the First World War. Births again increased in the 1920s, then decreased during the early 1930s years of the Depression. Births again decreased during the Second World War. The pyramid’s bottom three cohorts represent Europe’s post-war baby boom, beginning with births in 1945-49, 1950-54, and 1955-59.

Fast forward 50 years to the population pyramid for Europe in 2010. One’s first reaction is that this looks decidedly un-pyramid like. The three population cohorts that formed the base of the 1960 pyramid were, in 2010, ages 50-54, 55-59, and 60-64. People born in 1960-64 and ages 45-49 made up a larger cohort than the previous three cohorts. But following them, cohort sizes were fairly stable for 25 years, before decreasing again in the 1990s. Meanwhile, the oldest age cohorts in 2010 were much larger than they were in 1960. In 2010 there were more than twice as many people ages 65 and over than there were in 1960. As a percentage of the total population, people ages 65 and over went from 8.8% of the population in 1960 to 16.3% in 2010. Over the same time span, the population ages 0-19 decreased by 23%, so fewer young workers will be entering the labor force as the retired population continues to grow.

Europe 2010 Large

The third population pyramid depicts the population of Eastern Africa in 2010. It looks more like Europe in 1960, with age cohorts increasing in size for each younger cohort. The pyramid reveals a population with a much shorter life expectancy than Europe in either 1960 or 2010. And while the annual number of births has been relatively constant, the decreasing cohort sizes indicate a high child mortality rate, in fact, one that is over ten times that of Europe, according to UN statistics.

Eastern Africa 2010 New

The issues facing these two regions couldn’t be more different. Eastern Africa needs improvements in health care, education, and environment; Europe needs services for elderly. Europe faces a shrinking labor force and needs workers; Eastern Africa needs employment opportunities for a large working age population. Eastern Africa needs infrastructure investment – roads, water, energy, sanitation, and good governance. But both need foreign direct investment, increased international trade, adoption of new technologies, and economic growth that benefits all their populations.

 

Technology and the Future of Work

While globalization is often blamed for loss of jobs in the developed world, much of the blame must go to technological advances. Reaction against new technologies has occurred for over two hundred years, since the early stages of industrialization. The process of “creative destruction,” whereby new technology brings about the demise of existing practices, typically results in the loss of jobs.

Over time this process has replaced not only routine manual jobs, but also more technical jobs. Complex computer programs can scan legal casework or interpret radiological images. How this continuing trend may play out is the subject of many books. Four recent books present widely varying views of what is possible. One says we can invent our way to a high, sustainable standard of living for everyone on our planet. A second says there is no way out of our current condition; we have reached the limits of the earth’s resources. A third says there is a path to a high, sustainable standard of living, but it has some serious consequences that need to be addressed. Let’s review the first three in order.

Abundance was published in February 2012, written by Peter H. Diamandis and Steven Kotler. The authors leave no doubt as to what can be accomplished. In their words,

Humanity is now entering a period of radical transformation in which technology has the potential to significantly raise basic standards of living for every man, woman, and child on the planet. Within a generation, we will be able to provide goods and services, once reserved for the wealthy few, to any and all who need them.

The exponential growth of technologies, such as biotechnology, networks and sensors, robotics, and nanotechnology will make this dream possible. Medical diagnostic labs-on-a-chip, point-of-use water purification, and self-contained toilets that produce no waste and generate excess electricity, are among the technologies waiting to serve. Steering and speeding innovation can be facilitated by offering incentive prizes. Diamandis is in a position to know; he is the chairman and CEO of the X Prize.

In The End of Growth, published in 2011, author Richard Heinberg states up-front, “The central assertion of this book is both simple and startling: Economic growth as we have known it is over and done with.” (Italics by author.) Heinberg writes that depletion of natural resources including fossil fuels and minerals, and damage to the environment lead to snowballing costs. The recent economic crisis signals that on-going economic expansion is beyond the ability of our broken monetary, banking, and investment systems to service government and private debt.

The third book, The Lights in the Tunnel by Martin Ford and published in 2009, also finds technology capable of not only providing for mankind’s needs, but doing so with little or no work on the part of human laborers for many tasks. Computers capable of performing increasingly complex jobs will impact even highly educated workers, leaving recent graduates and older college-educated workers unemployed. However, as greater portions of the workforce become unnecessary, the number of potential consumers also decreases, and business owners are left with falling demand. With automation reducing the cost of production, Ford proposes that a portion of the increased profits be taxed. While business owners will undoubtedly resist the idea, the prospect of falling demand will convince them otherwise. The tax would be distributed to the unemployed, who would be incentivized to perform services that benefit society. As Ford sees it, “Consumption, rather than production, will eventually have to become the primary economic contribution made by the bulk of average people.”

A fourth book published in 2014 was written by Erik Brynjolfsson and Andrew McAfee. Its title, The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies, reveals that the authors’ conclusions are similar to those in Abundance. They cite three forces to support their conclusions:

1. Sustained exponential improvement in most aspects of computing
2. Extraordinarily large of amounts of digitized information
3. Combination and recombination of existing technologies to provide nearly limitless possibilities for new pairings of data and computational powers

But, like the author of The Lights in the Tunnel, Brynjolfsson and McAfee recognize that technology can also create unemployment. They state, “For now the best way to tackle our labor challenges is to grow the economy.” Their advice: Improve education, support startups, support scientists, upgrade infrastructure, and tax wisely.”

Also like The Lights in the Tunnel, the authors discuss solutions to fill the gap for the unemployed and the underemployed: Basic Income – a base amount guaranteed for workers, regardless of whether there are jobs for all or not; Negative Income Tax – government income provided to workers whose income is below what is taxed; and Peer Economy – matching people to work opportunities on an ad hoc basis through Internet-based service businesses.

Is the unusually low U.S. labor force participation rate a precursor of a decreasing requirement for workers? If so, will owners of the means of production see fit to address the trend?

There is a story told about Walter Reuther, president of United Auto Workers, taking a tour of a new Ford engine plant that was largely automated. A company official on the tour asked Reuther how he thought the union was going to collect dues from the robots. Reuther responded with a question, asking: “How are you going to get them to buy Fords?”