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Globalists and Patriots

Fri, 2018-04-20 18:01

By Carl Bindenagel

Globalists are patriots who have a worldview that is not limited to the political boundaries of one state.

In the United States, there has been much discussion recently about “patriotism.”

What makes a patriot? Love of country? Does that translate to love of government “of the people, by the people, and for the people,” as Abraham Lincoln proclaimed in his Gettysburg Address; and government of laws and not men, of institutions?

Or is love of country focused on blood and soil, ethnic and linguistic purity, the identity of a singular culture that is exclusive of any “other” diversity, as some seem to say lately?

The issue has been bubbling up ever since Donald Trump’s candidacy for President of the United States started to shape up in earnest. To create a sharp contrast, the – now departed – Steve Bannon fashioned a strong contrast between “Americans” (=good) and “globalists” (=bad).

The underlying suggestion being that such a person can never be a “true” American. Worse, he may be a traitor, whether to the cause of the United States or that of any other nation.

The more benign view is that “globalists” in America or other countries have an allegiance not simply to the United States, or only to their native countries, but to the world. Any such internationalist must by definition betray the nation, the argument goes.

Brett Stephens, writing in The New York Times, attempted to advance the debate — by defining “globalists” by what they are not. As he put it, to be an anti-globalist requires “economic illiteracy married to a conspiracy mind-set.”

Serving a higher cause

Perhaps the most surprising answer is to see globalists as not simply self-interested and self-serving, but as serving a higher cause.

That seems to fly in the face of the common view that holds that globalists are business elites and hence insiders.

But that definition is a deliberate political construct. In his short book “After Europe,” Ivan Krastev suggests that the customary political divisions within Western democratic countries — left of center and right of center — have become very shop-worn.

Those old-line conflicts are being “replaced by a conflict between internationalists and nativists (p. 73). Furthermore, “Populists claim that they and they alone represent the people….The claim to exclusive representation is not an empirical one; it is always distinctly moral.”

What then is a “globalist”? Perhaps it is best to view globalists as “double” patriots. They care about their native countries, but are also mindful of the concerns of other countries’ governments and peoples.

Many globalists, people who may live and work abroad, are neither traitors to their homelands, nor unpatriotic.

They are patriots who have a worldview that is not limited to the political boundaries of one state.

The post Globalists and Patriots appeared first on The Globalist.

Macron Vs. the Germans?

Thu, 2018-04-19 08:21

By Holger Schmieding

What is the middle ground that both Germany and France can agree on to move economic and financial reforms in the EU forward?

French president Emmanuel Macron travelled to Berlin for serious negotiations about the future shape of Europe. Will he achieve much?

Almost everybody would like to support him, partly to strengthen his hand against his anti-European adversaries at home. But hardly anybody in Berlin seems ready to breach “red lines“ drawn in the past.

Macron probably knows by now that he will have to settle for some modest changes for the time being, with only baby steps to be agreed by the time of the next EU summit on June 28-29, 2018.

Money isn’t the key issue. Germany is ready to spend more and put more of it at risk. But it would come with three key strings attached.

1. Berlin will insist that commitments involving serious amounts of money will remain subject to approval by the German parliament, as is currently the case for support programs of the European Stability Mechanism (ESM). For those who love unwieldy German words, get used to “Parlamentsvorbehalt.“

2. Upon gradually completing the banking union, Germany will insist that each step to share risks comes after a step to reduce risks.

3. Partly because the Eurozone economy is doing fine at the moment and Germany is reluctant to endorse a major change in the governance of the Eurozone, Germany puts significant emphasis on changes for the EU rather than just the Eurozone level. For instance, this means improving controls of external borders (including significantly increasing the funding for FRONTEX), controlling migration and beefing up joint defense projects.

What is possible – and what is not? Fiscal union?

Forget about a genuine big Eurozone budget worth its name controlled by a Eurozone finance minister who answers solely to a Eurozone committee of the European Parliament.

That would go well beyond what Berlin may concede, or what Germany’s constitutional court would allow short of a major change in the German constitution.

Any “fiscal capacity” controlled largely by the European Commission would remain small. Instead of strengthening the role of the European Commission very much, Germany is mulling the idea of creating a new council of economics and finance ministers to shift the emphasis more strongly on issues of competitiveness beyond the policing of fiscal rules.

European Monetary Fund (EMF)?

Berlin would like to turn the ESM into a fully-fledged EMF — so that neither the International Monetary Fund (IMF) nor the European Central Bank (ECB) would need to be involved in the design and supervision of future support programs for struggling Eurozone member states.

But Berlin will understandably also see to it that the EMF maintains the ESM’s intergovernmental governance structure. This gives big member states (with 15% or more of the weighted votes) — and hence the German parliament (as well as France, Italy and Spain) — a veto.

Shock absorber?

Berlin might hesitantly accept the idea of a new facility to offer conditional credits to member states that are hit by an asymmetric shock. This mechanism would come into play even if the shock does not seem to pose the kind of systemic risk that would get the current ESM involved.

But such a new facility would either have to be part of the ESM/EMF or be subject to a similar governance structure. A pot of money to reward countries for independently verified reform progress would be more to Germany’s liking than a big “fiscal capacity” controlled by the European Commission.

Banking union?

Ahead of the June 2018 EU summit, where Germany and France would like to discuss joint reform proposals and possibly take some first decisions, Berlin is emphasizing small practical moves towards banking union.

With suitable safeguards, the ESM/EMF could become the ultimate backstop for national bank resolution funds.

Berlin may also agree to small steps towards a joint deposit insurance such as a roadmap that shows in a step-by-step fashion which reduction of risks would need to come before a certain step towards sharing risks can be taken.

Falling short of what is needed?

The modest changes Berlin may be ready to endorse over time will likely fall far short of what some observers deem necessary.

On that count, I disagree. With the ECB‘s “whatever it takes“ OMT program, the Eurozone has filled the one crucial gap in the institutional architecture of the Eurozone long ago, the lack of a lender of last resort.

Completing the banking and capital markets union as well as steps to streamline decision-making and fiscal facility to smoothen the cycle or cushion weaker members are highly desirable. But unlike the OMT program, they are not essential.

In the end, it is important to note that the economic future of Europe will be decided in Paris much more than in Brussels or Berlin. It is actually a matter of French choice.

If Macron succeeds in transforming the French economy like Margaret Thatcher did in the 1980s or like the “Agenda 2010“ reforms in Germany around 2004, the Eurozone and the EU will benefit mightily.

If a reformed, much more dynamic France joins a still reasonably strong Germany, core Europe will be a much more attractive place for other countries to join or stay close to.

Compared to that fundamental effect, i.e., the direct benefits which France‘s neighbors would derive from having a strong rather than struggling big partner to trade with, the details of, say, banking union or the governance structure of an EMF will play only a minor role.

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From Russia, With No Love Whatsoever

Wed, 2018-04-18 18:01

By Stephan Richter

The poisoning of Sergei Skripal could well be the event that broke the camel’s back in terms of Western disgust with Russia’s dirty campaigns.

In mid-March, people all over central Europe found themselves in the grips of unseasonably frosty temperatures streaming in from Russia’s landmass. That cold front was a helpful reminder of the “NBF” doctrine that Russia’s leadership stands for – bringing “nothing but frostiness.”

According to the old adage, “You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time,” Russia may be running out of luck.

The incident in Salisbury when Sergei Skripal, a former Russian intelligence officer and double agent, and his daughter were poisoned with a nerve agent called Novichok, could well turn into the event that broke the camel’s back.

As always, and to this very day, Russian officials and Kremlin-powered propaganda clowns displayed nothing but arrogance and extreme cynicism. As they did, in case anyone has forgotten, previously on the MH 17 incident, Olympic doping, cyber warfare and so many other occasions.

The front man to fend off many of the accusations is Sergei Lavrov, Russia’s Foreign Minister. People who know well from many close professional encounters say that he is given to lying without any restraint and at any moment. And indeed, Lavrov is of such intense personal charm that one can literally still see the SS-20s glimmer in the back of his eye balls.

The Soviet era revisited

In a sad replay of the agitprop and disinformation campaigns of the darkest days of the Soviet era, Lavrov and everybody in the private and public-sector arms of the Kremlin machinery claim that everything is just another devious Western maneuver to discredit Mother Russia.

This state of affairs only shows that Russia is still stuck deep in the Soviet morass.

Thankfully, the people living in the Western world can occupy their minds with other matters than cynicism-shrouded campaigns that Russian political operatives excel in. Frankly put, what else do they have to show for?

Russia’s young generation is painfully aware of the games being played, in which they are but pawns on the chessboard of the oligarchs’ self-enrichment schemes. While they are often well educated, the Putin machinery still treats them as modern serfs, killing all their creative impulses as much as they can.

With the benefit of hindsight, the earlier Putin/Medvedev effort to modernize the Russian economy and move it off its over-dependence on oil and gas reveals itself as just another attempt to throw sand into Western eyes.

Nothing of the kind has materialized. Worse, it was probably never intended to. Putin and the oligarchs were just using that rhetoric to deflect from their rapacious schemes to extract whatever they can out of Russia’s resource base and move it into their personal bank accounts.

Russian living standards

Woe be the person who measures Putin by his own words. Nearly 20 years ago, Vladimir Putin expressed the hope that, with steady economic growth, Russian living standards might match those of Portugal within 15 years.

It was also a bold confession of how low Russian living standards actually were. After all, Portugal is Western Europe’s poorest country.

Of course, Putin’s goal was not achieved. According to World Bank figures at the end of 2017, Russia’s per capita incomes were $6,500, compared to $21,000 in Portugal.

The post From Russia, With No Love Whatsoever appeared first on The Globalist.

US: There Is Always Hope

Tue, 2018-04-17 18:01

By Uwe Bott

An alternative view on the inevitability of a politically impotent America.

America’s political, economic and social reality dramatically changed with the election of Donald Trump as President. So did the image of the American nation, both at home and abroad.

This change had been in the making for some decades. The immense moral decay of the Republican Party and the all too often passive bystandership of the Democratic Party prepared the ground for the arrival of Trump as a political tipping point.

But the election of Donald Trump, his policy actions as well as a series of mass shootings, which recently peaked in the high school mass murder in Parkland, Florida, have changed this country profoundly.

As we learn from Newton’s laws, any action draws its counter-action. And maybe, just maybe, the ruthlessness and inconsiderateness of Trump has awakened the very forces that will possibly change the United States for the better.

Fifteen months into Trump’s presidency, there are some signs that suggest that there is a positive transformation toward a more participatory democracy – and that it might have some legs.

Marching for gun control

I marched with 200,000 people in New York City last month demanding strict gun control. I had not demonstrated in 40 years.

What I found astonishing was that there were not only many young people marching for this cause, many too young to vote, but that, in addition to people like myself, there were also a lot of old people. People with walkers or in wheel chairs, many accompanied by their nurses.

Americans do not tend to hit the streets in protest, it’s not in their DNA. But the marches have continued, covering a wide range of issues from immigration to science to gun control.

There also is depth to this new-found activism. The speakers did not just focus on the issue at hand. Often, the plan is to vote and to run for office, to participate in democracy.

Liberal solutions favored

The off-year elections in 2017 already showed how powerful this type of activism is. In poll after poll on issues, the majority of Americans, sometimes the vast majority of Americans, favors “liberal” solutions to society’s challenges. Also, according to the Pew Research Center, 48% of registered voters in the United States identified as Democrats in 2016 vis-à-vis 44% who identified as Republican.

At the same time, caution is well-advised. After all, Democrats are generally far less likely to show up to vote than Republicans. The Dems’ voters are fairly passive in general elections. And they are no-shows in off-year or midterm elections. This applies especially to the young among them.

November 2017 was different. I have never had much interest in local issues from zoning laws to traffic lights. I really never voted for mayor of my small town or the composition of my county council.

As the people in the county I live in just outside New York City are quite rich, Republicans held quite a few mayoral posts and seats on the county legislature in this otherwise liberal state.

This changed this past November. As Democrat-leaning voters went to vote, Republicans were expelled from nearly every position they held in my county.

Part of a wider trend

My county was hardly unique. In Virginia, a state that narrowly voted for Hillary Clinton, but where Republicans held a 15-seat majority over Democrats in the 100-member House of Delegates, Virginia’s legislative chamber, the 2017 elections were a watershed moment.

Democrats overturned 14 of those seats with a brand-new slate of candidates. Not only did Democrats turn out as voters, they also contested races as candidates which in the past they had simply surrendered to Republicans.

The only reason, why Virginia’s House of Delegates is not tied at 50-50 is that in one race the Republican and Democratic candidate won the same exact number of votes — and the Republican got his seat via lottery.

There are Democratic candidates popping up in races small and large all across the country. Many of these candidates are women. Races are being contested by Democrats for the first time in very conservative districts in red states that were uncontested in the past.

Even more shockingly, residents in traditionally red (read: Republican) states seem to find the courage on taking a stand. Last month, teachers in West Virginia, Oklahoma and Kentucky have gone on strike demanding better pay. This led the Republican Governor of Kentucky bizarrely to claim that students were raped and took drugs while his state’s teachers were on strike.

Activists campaign on issues and for candidates not only in their home districts, but across the country. In a country where politics is all about money, many of these grassroots movements have proven to be formidable fundraisers.

Establishment Democratic Party candidates are also increasingly being asked about the sources of their campaign funding. “Have you ever taken money from the National Rifle Association (NRA)?” is probably the question most frequently asked.

There seems no letting up of the pressure that this new activism has created and the latest high school shooting has drawn many very young people into this pool.

Generation Z

There is some hope that an enraged Generation Z might turn out to be the accelerant that saves America. Young Americans are overwhelmingly committed to protect the environment and favor greater income equality.

There should be no doubt, though. The United States will never be Denmark. Not because there is anything wrong with Denmark, but the base for a social-democratic governance model is small. Maybe some 30% of Americans support such an approach.

The ideas of self-reliance and individualism, however misguided, are deeply ingrained in the thinking of Americans.

But then, again, who knows? As economic pressure on the middle class rises, the American people may no longer fall so longingly for the notion of rugged individualism.

This fall, the city of Stockton, California will start trying out universal basic income for 18 months. Led by its 27-year old mayor, Michael Tubbs, it will start this controlled experiment by disbursing $500 a month to 100 residents, no strings attached.

The election of Donald Trump has been a wakeup call. Democracy and prosperity only last if all of us tirelessly contribute to them – and if we make sure this nation doesn’t allow Republicans to turn the country into a one-armed bandit that robs the poor to allow the rich to live even loftier lives. There is hope.

The post US: There Is Always Hope appeared first on The Globalist.

The Decline of the West, 1918-2018

Mon, 2018-04-16 18:01

By Andrés Ortega

This summer will mark the centenary of the appearance of the first volume of Oswald Spengler’s influential The Decline of the West.

This summer will mark the centennial of the appearance of the first volume of Oswald Spengler’s influential “The Decline of the West” (Der Untergang des Abendlandes). The book was first published in 1918, when the First World War was in its last throes.

A hundred years onward, there is again a widespread sense that we are witnessing the decline of the West – and even more so than that of the relatively liberal world order that it erected.

The German thinker rejected the Eurocentric division of history into ancient, mediaeval and modern. He emphasized the transition of what he called the “high cultures” through four essential phases: Youth, growth, flowering and decline.

Spengler was wrong, of course. The First World War led to the rise of the United States to global pre-eminence and later to its superpower status after the Second World War.

It also doesn’t fit the Spenglerian world view that China, with its Communist party regime and mixed economy, is carving out a place in the modern world that is even more important than it had prior to 1870. This comeback from the moribund is all the more perplexing as China, in its rise, has been able to take advantage of the liberal order and Western-led globalization.

Forfeiting its dominance

The West has currently outlived Spengler’s book by 100 years. But it is forfeiting, or is going to forfeit, its dominance, particularly in the context of the rise of China.

Even within the West, there are tensions between the United States and some of its partners and allies. The latter are reluctant to recognize that the United States has changed and hope that Trump will prove a passing phenomenon.

But clearly, even if it is not for the reasons divined by Spengler, the West appears to accelerate its decline.

The Iranian-Canadian philosopher Ramin Jahanbegloo, in his recent “The Decline of Civilization,” published 100 years after Spengler, goes further.

He argues that we are witnessing a process of the “de-civilization” of society. To him, that does not mean the absence of civilization, but rather “a senseless and unreflecting state of civilization.” The resulting “empathy deficit” captures not only the West, but the world in general.

Editor’s Note: Adapted from Andres Ortega’s Global Spectator column, which he writes for the Elcano Royal Institute.

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Trump’s (Premature) Attack on Syria

Sun, 2018-04-15 18:01

By Jeff Faux

Who is left to defend the rule of law?

In addition to the three Syrian chemical facilities they attacked on Friday, Donald Trump’s missiles hit a target they didn’t aim at –– the veneer of hypocrisy that allows the American governing class to justify itself as the global champion of the rule of law.

The missile attack was clearly a violation of international law, the Constitution of the United States and the fundamental precepts of justice.

The UN Charter

The UN Charter prohibits the unprovoked attack of any nation against another, except in the cases of self-defense or a UN authorized military operation. Neither applies in this case. The Assad regime in Syria is in no way a threat to either the United States, or its accomplice governments in the United Kingdom and France. Nor was the attack authorized by the UN.

The Trump Administration is fully aware that this attack was illegal. According to the Washington Post, Secretary of Defense Mattis suggested to a Congressional committee the day before the missiles were launched that a legal basis “could be framed as a self-defense strike” since Assad might, conceivably, attack the 2000 U.S. troops already occupying his country at some unspecified time in the future!

The missile assault was also a violation of the U.S. Constitution, which in no uncertain terms gives the Congress the sole right to declare war. Again, the only common-sense exception is a response to an imminent attack on the United States, which certainly was not present.

Finally, the missiles were launched before there was independent verification that the chemicals were dropped by the Assad government. President Emmanuel Macron’s government in France said he had proof. But Macron, eager to ingratiate himself with Trump, is a tainted witness. So, on the other side, is Russia’s Vladimir Putin, who claims that his investigators turned up no evidence of Assad’s guilt.

The OPCW

An independent group — the Organization for the Prohibition of Chemical Weapons — was on its way to investigate the site when the U.S. missiles struck. There was no apparent reason for Trump to launch them in such haste other than 1) his personal itch to show that he is tougher than Barack Obama and/or 2) a fear that an independent analysis would not justify the attack.

As Trump, Macron, and British Prime Minister Theresa May flout their contempt for the rule of law, the very institutions charged with protecting it are their accomplices. The UN Security Council refused to rebuke their violation of its own charter. And members of the U.S. Congress generally applauded the strikes – with most of the critics complaining that Trump had no plan to destroy Assad.

And while the mainstream media in the United States, Britain and France have been bemoaning the drift toward authoritarianism in other countries Europe and Asia, they seem oblivious to their own role as cheerleaders for the foreign adventurism that undercuts democracy in their own countries.

The excuse of course is that Assad is a “bad guy.” But so are dozens of leaders around the world, from Saudi Arabia to Central America to Southeast Asia who are protected by the U.S. military. Punishment that is inflicted only on one’s enemies and not on one’s cronies does not qualify as justice. It is a cynical cover for the arbitrary use of power that discredits efforts to build a peaceful world order.

So, who now is left to defend the international rule of law?

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Xi and Kim: The Transcript

Sat, 2018-04-14 18:01

By David Apgar

How Donald Trump and the U.S.-North Korea summit is getting framed. President Xi

Mr. Chairman, you will have a long reign. But will it be glorious?

Chairman Kim

We have a saying, red turnips taste like green peas in winter. And you, too, now face a long reign.

President Xi

Yes, but will it be glorious?

Chairman Kim

Korea will never diminish China’s splendor.

President Xi

Nor China Korea’s. But it helps that America…

Chairman Kim

… grows senile…

President Xi

… deteriorates.

Chairman Kim

Thanks in no small part to its President Dotard.

President Xi

Which brings me back to our own glory. We can take it in hand.

Chairman Kim

We can help one another.

President Xi

We can help the American president.

Chairman Kim

You mean?

President Xi

Better to have seven more years to ensure our glory than just three.

Chairman Kim

You think I should give him…

President Xi

A small victory, a moratorium of little consequence — except to us, in the long run.

Chairman Kim

To the long run!

The post Xi and Kim: The Transcript appeared first on The Globalist.

Apartheid’s Worst Nightmare: A Flawed and Very Human Hero

Sat, 2018-04-14 18:01

By Ayesha Kajee

Winnie Mandela’s contradictory personas are a reflection of the history of South Africa and of the society that it is today.

My first sight of Winnie Mandela was during the mid-1980s, as a high school teenager. Learners at our voluntary literacy project in Umlazi, a township south of Durban, would not be attending that week, as Mrs. Mandela was coming.

My impression was of a regal, militant, impassioned and compassionate woman who got things done and delivered on her promises. In that particular instance she promised a particular section of the township would get “standpipes” (communal taps with running water) and within a few weeks, they were installed!

As so many others did, I began to idolize her, though I’d had no personal interaction with her then. News reports of Mam Winnie were undoubtedly biased, but stories among comrades abounded, detailing her courage and defiance even during the worst of her incarceration.

Inside South Africa, she became the figurehead for the banned liberation movements, and remained so despite repeated incarceration, torture and house arrest.

A powerful icon for black power and black feminism locally and globally; her outstanding intellect, unflagging commitment and extraordinary beauty effortlessly gave the lie to a regime that tried to equate Blackness with stupidity, laziness and ugliness.

Even more, her charismatic oratory inspired millions to defy and resist. She was apartheid’s worst nightmare, and its intelligence apparatus used every brutal and dirty trick in its extensive arsenal to humiliate and discredit her.

The murder of Stompie Seipei

When allegations surfaced that she and her football club had been involved in Stompie Seipei’s murder, I didn’t know what to think, especially because I knew people who’d been smeared by the regime.

Wrangling with what was being said, trying to reconcile it with my hero worship, I read voraciously and questioned politically active friends and family. A phrase I heard repeated in this context was that she, and the football club, were “out of control” in Soweto.

It scarcely occurred to me then, that, in addition to all she endured at the hands of apartheid’s goons, she encountered patriarchy within her community, and within the African National Congress itself.

Several of those I spoke with postulated that she was suffering post-traumatic stress following her ordeals at the hands of the notorious Security Branch. Having more recently read her account of those horrors in her book, 491 days, I’m convinced that post-traumatic stress did and continued to affect her for the rest of her life.

In the early nineties, though, while some were genuinely concerned by the how Winnie’s alleged crimes were impacting the ANC, the age-old “hysteria” trope was being used by others seeking to sideline a powerful woman with massive popular support.

Throughout the conviction of Jerry Richardson for Stompie’s murder and Winnie Mandela’s own trial and conviction for kidnapping, South Africa was still governed by the National Party, and I remained conflicted and uncertain.

The Truth and Reconciliation Commission

With the first democratic elections came the promise of the Truth and Reconciliation Commission which, we hoped, would facilitate truth to emerge in so many instances. I followed the TRC proceedings avidly, and also attended some sessions.

Listening to Archbishop Tutu’s voice break as he pleaded with Mam Winnie to say sorry for her part in the “things that went wrong”, I, and I’m certain many others, cried too. Though a recent documentary appears to ignore this, she did apologise to the family of slain activist Dr. Asvat, and to others.

Prof Njabulo Ndebele’s novel, The Cry of Winnie Mandela, details several imaginary conversations between “ordinary” women and this “most unmarried married woman.” It moved me tremendously, as I embarked on a new life in a new city, the same city in which Mam Winnie had been incarcerated together with Fatima Meer and other members of the Black Women’s Federation.

At a chance meeting prior to a college graduation at a New York penitentiary, I discussed his novel and its subject with Professor Ndebele, and on his return to South Africa he delivered a public lecture as part of the human rights programme I directed at Wits University.

One of the things that I’ve always wondered about is the silence, perhaps a telling one, from fellow comrades and friends like Albertina Sisulu and Fatima Meer. The former introduced Winnie to Nelson Mandela, the latter was her first visitor during her banishment to the isolated town of Brandfort.

Both were strong female stalwarts of the ANC, and in some measure mentors as well as friends to Winnie, yet both refused to publicly comment on the allegations around her football club. Was this purely due to their unwavering loyalty to the ANC party line, or some other reason?

Upon relocating to Johannesburg 15 years ago, I was introduced to the journalist who had written the book Katiza’s Journey, about the ordeal endured by a witness to Stompie’s murder — including abduction, torture and incarceration in a Zambian prison before finally arriving in Britain.

After wide-ranging discussions with Fred, I felt I could no longer close my eyes to Mam Winnie’s culpability in several acts of violence perpetrated by the football club, including the assault on Stompie.

While her trauma-induced stress undoubtedly contributed, I couldn’t swallow it as a blanket excuse for her actions. To do so would be an insult to the many others who suffered similar stresses yet did not compromise their integrity.

Meeting Mam Winnie

I eventually met Mam Winnie, twice. After a talk at Wits University, I was again captivated by her commitment to social justice, by her fearless criticism of the ANC’s leaders, by her deep laugh that belied the equally deep sorrow haunting her darkly incisive eyes.

Even then, I was impressed yet conflicted, wanting to applaud so much about her, yet unable to do so totally uncritically.

Following her death, I have been distressed by racist hate speech on some social media platforms and equally disturbed by the tendencies towards hagiography and blind reverence that have characterised so many tributes.

It is my hope that we can find compassion enough as a nation to view her as a complex black feminist hero; a fabulous yet flawed and contradictory soul whose formative years were spent under a brutal racist and sexist system.

Her commitment to dismantling that system meant she had to grapple with a different yet similar patriarchy inside the liberation struggle and in traditional communities. And perhaps she did at some point betray the principles of the struggle to which she had dedicated her life, by participating in acts of violence and inhumanity, whether by actual commission or through other means.

In many ways her contradictory, seemingly perverse personas are a reflection of the society that we are today, and of the history that has brought us here — its perversities, its brutalities, its compromises, its paradoxes and its passions.

I’m really glad that the Cry of Winnie Mandela is a set work for many schools in South Africa. I hope that many of our young people will continue to learn about her and through her struggles, about our history. Because the struggle for social justice is not yet over.

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China Vs. the US: Who Has More Land?

Fri, 2018-04-13 18:01

By The Globalist

The two countries have very similar land areas for now, but China has extensive additional claims.

1. Land area is one factor neither the United States nor China can easily grow further to compete with each other.

2. This is one of the few areas in which China has the edge in size over the United States – but just barely.

3. China has a land area of 9.3 million square kilometers (3.6 million square miles), which is 2.2% larger than the U.S. land area of 9.1 million square kilometers (3.5 million square miles).

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4. That Chinese land area does not include several large disputed territories that China still claims.

5. The island of Taiwan, for example, remains the territory of the “Republic of China” that lost the Chinese Civil War in 1950.

6. The ROC government fled to Taiwan, leaving the rival “People’s Republic of China” in control of the mainland and several other islands.

7. If Taiwan were re-integrated with the rest of China, it would add 32,260 sq km of land area.

8. China also disputes two large territories with India. These are Aksai Chin, near Kashmir, with an area of 37,244 sq km, as well as Arunachal Pradesh (“South Tibet”), with 90,000 sq km.

9. All together, if these were fully re-united with China, the country would have a land area nearly 4% larger than that of the United States.

10. Beyond land, the United States does, however, have a larger total area than China due to extensive coastal waters off of U.S. states and island territories.

11. China has also undertaken a controversial project of building out uninhabited islands that it claims in the South China Sea.

12. This could help China catch up a bit to the United States in maritime area – but at the risk of ecological and political destabilization in the region.

Sources: UN Statistics Division, Institute for International Political Studies (Italy), The Globalist Research Center

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China Vs. Europe: Living Standards and Costs

Fri, 2018-04-13 18:01

By The Globalist

While much of China remains poor, some cities are now on par with EU levels.

1. At less than 27%, Chinese per capita GDP (adjusted for local purchasing power) remains at a rather low level when compared to U.S. per capita GDP.

2. The United States itself currently ranks ninth in the world among high-income countries, with a per capita GDP of $57,467 per year.

3. China’s GDP per person is $15,535 per year, according to the World Bank’s estimates for 2016.

China and the US Compared: A “Just The Facts” Series

China Vs. the US: The GDP Race

China Vs. the US: Lifespan Gains

China Vs. Europe: Living Standards and Costs

China Vs. the US: Who Has More Land?

4. GDP per capita is simply an equal distribution of the total economy’s value over the size of the population of the entire country. It does not necessarily reflect the real median income.

5. China’s GDP per capita per month would be about $1,300. In Shanghai, the city with the highest wage level, the median monthly wage is $1,135 – slightly below what the GDP per capita would suggest.

6. The typical wage in Shanghai is about equal to that of Hungary and is catching up to other Central European countries like Poland or Czech Republic.

7. However, median wages even in Chinese cities like Beijing or Shenzhen remain below the level of the European Union’s Baltic states and are more comparable to wages in EU Balkan countries like Croatia.

8. Much of rural China remains a great deal poorer than some of the wealthy cities.

Sources: World Bank, Forbes, The Globalist Research Center

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China Vs. the US: Lifespan Gains

Thu, 2018-04-12 18:01

By The Globalist

A child born in China today can expect to live decades longer than someone born in China in 1950.

1. Life expectancy at birth in the United States in 2015 was 79.24 years, according to the UN Population Division. In China, it was 76.09 years.

2. Thus, U.S. lifespan projections currently remain about 4% longer than Chinese lifespan projections for babies born the same year.

3. Impressively for China, that is a much smaller life expectancy gap than 65 years earlier.

China and the US Compared: A “Just The Facts” Series

China Vs. the US: The GDP Race

China Vs. the US: Lifespan Gains

China Vs. Europe: Living Standards and Costs

China Vs. the US: Who Has More Land?

4. Back in 1950, the same life expectancy for a baby born in China was just 42.97 years.

5. The corresponding number in the United States was 68.21 years – 25% greater.

6. Americans as a national population gained more than 10 years in life expectancy between 1950 and 2015.

7. During the same span, the Chinese population gained about 33 years in projected lifespan at birth.

8. The world average for life expectancy at birth in 2015 was 71.43 years, which remains below China’s level, as it has been since 1968.

Sources: The Globalist Research Center, UN Population Division

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Toothless American Internet Giants?

Wed, 2018-04-11 18:01

By Martin Hutchinson

In the past decade, America’s internet giants have grown to an enormous size. But the next few years are likely to be much less friendly to them.

For several years, the stocks of America’s Internet giants — Facebook, Apple, Amazon, Google — have been the way to make money. And yet, for all their past prowess, these four companies all have major weaknesses in their business models that are becoming increasingly apparent.

They could thus be destined for a replay of the 1999 dot-coms, the 1972 Nifty Fifty, the 1929 Investment Trusts or the 1720 South Sea Company.

Facebook

To begin with Facebook, we learned that Facebook intends to set up its own “Supreme Court” to police “hate speech” on its service. This may suit Mark Zuckerberg’s dreams of world domination, but it in no way represents what a private corporation ought to be doing.

At the core of the problem is Facebook’s ability to scoop up private information on people and sell it to third parties, or indeed use it itself in pursuit of some nefarious non-economic goal.

When Facebook started, it appeared to be largely a means for teenagers to communicate, which could be monetized through advertising, but as it has grown its sinister potential has more clearly appeared.

There simply is no solution to Facebook’s censorship problem. In a traditional media environment, a wide variety of media outlets use the skilled judgement of journalists with decades of experience to decide what to print. If they got it wrong, their publication lost subscribers and money.

Not so with Facebook. It is effectively a monopoly. There is no way it can censor the news without becoming Pravda. Unfortunately, for all of Zuckerberg’s soothsaying, under his leadership, becoming Pravda appears to be Facebook’s ambition rather than its fear.

The only solution would be to break up Facebook into half a dozen competing outlets, each with a different political outlook, thereby reproducing a healthy newspaper environment, like in the UK several decades ago.

Alternatively, de-globalization may result in entities like the EU imposing revenue-based taxes on Facebook. Over time, this could lead to “clean/er” national equivalents and a dissipation of Facebook’s power by this means.

Either way, Facebook’s monopoly power will not last, and its revenue generating capacity will be correspondingly diminished. Its business model is broken.

Amazon

Amazon is really two businesses. One of them, Amazon Web Services, is the leader in providing cloud services to businesses and consumers. It is a sensible business and has a good market position.

However, in 2017 it had only $17.5 billion in revenues and an operating profit of $4.3 billion. That’s a nice business, worth about $150 billion if you give it a generous multiple of 35 times earnings, appropriate given its growth.

The problem is the rest of Amazon’s business. In 2017, after 23 years in business, it still made an operating loss of about $1.3 billion, even though it had revenues of around $160 billion.

Even though Amazon has in the past benefited from huge subsidies in not charging state and local taxes (and still has a huge cash flow benefit from paying its state taxes later and not charging local taxes), a most astonishing fact remains: Its entire retailing operation, is still not profitable.

Yet, given that the web services business is worth around $150 billion, one has to wonder why its retail business is valued at $500 billion. For what? It’s no good saying it is valued for its growth potential. Retailing is a notoriously low-margin business. Moreover, Amazon already represents over 40% of on-line sales. In other words, there is not much for it to expand.

With President Trump threatening the company’s sweetheart crony deal with the Post Office, which gives it postal rate some 40% below market, according to a Citigroup report and comes to an end in October, the company’s margins are unlikely to grow, even if gets another point or two of market share in the retail market.

Given that hard reality, its share price is hopelessly over-inflated. In addition, the pains of its deflation may make it difficult for Amazon to sustain its expansion program and its heavy long-term debt. Amazon’s business plan was initially brilliant, but it has failed to mature into a profitable, sustainable economic entity.

Apple

Apple is the oldest of the giants. In its early years, it had an excellent business with Steve Jobs for design and Steve Wozniak pushing the technological envelope, first developing one of the first usable personal computers, then adapting Xerox PARC technology to produce a PC, the Macintosh, that was far easier for non-technical types to master.

Then, after a lost decade, in which products like the Newton hand-held device failed because of poor design, Jobs returned to Apple and proceeded to produce a series of superbly designed products that in some cases, notably the smartphone, were truly paradigm-altering.

Sadly, Steve Jobs died in 2011. After his death, Apple has shown itself incapable of more than incremental product improvement. At the same time, his successor as CEO, Tim Cook, has concentrated on “non-entrepreneurial” maneuvers, such as tax-optimizing Apple’s operations, growing its political influence and maintaining or increasing margins on each new “generation” of Apple products.

Apple’s politicization has already run into trouble; Apple was one of the chief targets of Trump’s tax reform, intended to prevent companies piling up hundreds of billions of dollars in offshore tax havens.

With product innovation slowed (partly by technological factors such as the senescence of Moore’s Law) and Cook’s creative use of tax havens and intellectual property increasingly under attack, Apple’s rating is far below that of the other giants. Its future must be in serious question, although with all that cash its survival is assured at least for the medium term.

Google

Finally, Google, which is now controlled by a holding company, Alphabet Inc. Google shares Facebook’s strategic problems.

First, it is heavily dependent on the digital advertising business, in which Facebook and it hold a duopoly with around a 60% market share. The advertising business is highly cyclical, and it’s unlikely that digital’s share of the total business will grow significantly further.

Second, like Facebook, Google relies for much of its profits on scooping up endless information on its consumers, which comprise more or less the entire population, and using that information for legitimate or nefarious purposes.

As consumers become more aware of the uses to which their personal information is being put, they will erect more sophisticated defenses against its improper use, devastating Google’s profit potential. Like the other three giants, Google has a fundamentally flawed business model.

In the past decade, because of artificial ultra-low interest rates worldwide, the Schumpeteran process of creative destruction has not operated properly. This has allowed the giants to grow to an enormous size, without correcting the flaws in their respective business models and practices. The next few years are likely to be very much less friendly to them.

Disclosure: The author owns a modest put option positions in Amazon and Alphabet/Google.

Editor’s Note: This article was originally published in the author’s “True Blue Will Never Stain” blog.

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Global Trade War? The European Angle

Tue, 2018-04-10 18:01

By Holger Schmieding

The more the U.S. abstains from imposing new barriers to imports from the EU, the more may the EU support U.S. efforts to change Chinese trade and investment practices.

Following up on his 2016 campaign threats, U.S. President Donald Trump has now stoked the worst trade tensions in decades. Understandably, markets are nervous.

In a highly interdependent world, economic logic is likely to largely prevail in the end. If China agrees to stronger protection of intellectual property rights and also grants somewhat better access to its vast market in exchange for the U.S. government not implementing punitive tariffs, global trade may even benefit once the dust has settled after a messy interlude.

Of course, the risk remains that the U.S. and China do not find a negotiated solution and implement tit-for-tat tariffs that go even beyond those that have been muted so far. If so, the impact on the global economy could be substantial.

But even in such a case, the damage should still not derail the global economic recovery for good as long as the disruptions remain largely confined to U.S.-Chinese trade.

The role of Europe

Europe will play a key role in that equation. When it comes to trade, the EU is a top global power that is able to act. External trade policies for the EU are largely a prerogative of the EU authorities in Brussels.

Of the three major global players, the United States, the EU and China, the EU is the one with the least pronounced political agenda and hence the highest probability of acting roughly in line with economic logic.

Where it gets really interesting is to look at the EU inside this triad from a Washington perspective. One insight is inescapable: The more the United States abstains from imposing new barriers to imports from the EU, the more may the EU support United States efforts to change Chinese practices regarding both intellectual property and market access.

At the same time, the U.S. government correctly points out that EU import tariffs are — on average — slightly higher than those of the United States, according to most calculations. However, the EU for its part can argue that it was Donald Trump who stopped the transatlantic free trade negotiations (TTIP). Under TTIP, the EU and the United States would have abolished almost all tariffs and many other trade impediments between each other.

The EU may well be ready to negotiate a mini-TTIP with the United States. That would allow President Trump to claim that he secured better U.S. access to the EU market, while the EU would benefit from some other U.S. trade concessions.

The EU is no pushover

That the EU is most likely to act roughly in line with economic logic does not mean that the EU would be a pushover for Trump in a serious trade dispute. In the most trade-dependent countries of core Europe such as Germany, the Netherlands and Belgium, labour markets are in robust shape. German GDP growth, for example, is constrained by a scarcity of suitable labour, not by a lack of export orders.

As a result, the EU would be ready to take on the U.S. government, if provoked – and even if that would incur some economic costs. But again, the EU responses would be designed to de-escalate rather than to exacerbate the situation.

The risk that U.S.-EU trade tensions spiral so much out of control that they could cause serious economic damage remains even much smaller than the risk that this may happen between the United States and China.

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The Orwellian Danger of Facebook

Tue, 2018-04-10 08:13

By Steven Hill

Is Mark Zuckerberg really in control of Facebook? Or is he a sorcerer’s apprentice that cannot handle the invention?

Virtually every month now, new controversies emerge swirling around Facebook. With its two billion users worldwide, Facebook has grown from a pet project started in Zuckerberg’s Harvard dorm to become far more than a social networking platform.

It has morphed into a huge news, entertainment and advertising platform with two billion users that is viewed by more people than any U.S. or European television network, any newspaper or magazine and any online news outlet.

In view of all the scandals and the company’s very slow responses, we are left with a daunting question: Do Mr. Zuckerberg and his computer geniuses really understand their own creation?

Facebook’s AI has been built (or more accurately, cobbled together) over several years by hundreds of different developers and programmers. Professor Zeynep Tufekci from Harvard University describes the Facebook algorithm as “giant matrices, maybe millions of rows and columns, and not even the programmers understand anymore how exactly it is operating.”

There are so many variables that go into its complex and proprietary sorting that Facebook cannot say with authority why something will or will not appear in a user’s news feed.

Nevertheless, a number of experts have been closely observing this company and have figured out a few of its behavioural patterns. Combined with recent revelations from a whistleblower, here’s what we have learned about how Facebook and its algorithms actually work. It is even more alarming than anyone thought.

Facebook’s “engagement algorithms” use technological surveillance of our online behavior to capture our personal data in a way that would have made East Germany’s Stasi drool with envy. The goal is to generate increasingly accurate, automated predictions of what advertisements we are most influenced by.

Feeding frenzy

The platform is specifically designed to keep users clicking, tapping, and scrolling down a bottomless feed, and in the process deliver us to various advertisers. Sean Parker, the company’s first president, recently called this “a social-validation feedback loop.”

But that’s not all. Based on our individual profiles, the Facebook engagement algorithms are also designed to feed us sensationalist news (both fake and real) selected to provoke powerful emotions of anger and fear.

By reacting to, clicking on and sharing these stories, users are herded by the Facebook “persuasion architecture” into hyper-partisan information ghettos of opinion and alternative facts, referred to as “cognitive bubbles.”

In other words, we the public are the guinea pigs for Facebook’s algorithmic experiments.

One outrageous example was the false conspiracy theory blasted around Facebook during the presidential campaign that Hillary Clinton and her former campaign chair ran a child sex ring in the basement of a pizzeria in Washington, D.C.

Besides the fact that the restaurant, Comet Ping Pong, doesn’t even have a basement, the restaurant’s staff and its owner were hit with a fusillade of abuse and death threats on social media.

Matters went from alarming to dangerous when a man walked into Comet Ping Pong with an assault rifle and began shooting (fortunately no one was injured). That was just one of dozens of fake news stories, all of them with absurd storylines.

A BuzzFeed News analysis found that 17 of the 20 top-performing false election stories were overtly pro-Donald Trump or anti-Hillary Clinton. In the last three months of the campaign, top fake election news stories generated nearly nine million Facebook engagements, which was 20% greater than the number received by election stories from 19 major news outlets combined.

Beyond social networks

Europe has long operated by the “precautionary principle,” which is like the Hippocratic oath in medicine that says, “First, do no harm.” The products and services being created by Facebook and the other Silicon Valley companies have enjoyed widespread access to European markets and consumers.

Europeans have great faith in an open Internet, but the pitfalls of this over-optimism are becoming more and more apparent. Now that Facebook has grown into a large global monopoly, a major media platform for the entire planet, it has become less benign and is raising more alarm bells.

A European model platform?

Many people have long lamented “Where is the European Facebook and Google?” One answer is that the Silicon Valley platform companies are busy buying up everything that emerges as an alternative, killing off competition.

Now is the time for some European start-ups to come together, with seed money from the EU and/or individual governments. Europeans need to create a new version of Facebook (and Google, and Amazon) that incorporates European values. Call it Facebook 2.0. China has accomplished this – why can’t Europe?

At this point, a kind of renationalization of the Internet seems natural and almost inevitable. Not least because Europeans cannot seriously rely on U.S. authorities to rein in Facebook and Silicon Valley. Concepts of privacy and corporate accountability are just too different. This is a showdown between Europe’s social capitalism and America’s Wall Street-Silicon Valley capitalism.

Nations and regional blocs like the EU and China must each re-configure the Net in ways that work for their populations, their values and their future needs.

Currently, these platform companies seem to exist everywhere and want to be held accountable nowhere. One idea that has been discussed is that of turning these kinds of services into public utilities. Another is that of breaking them up as overly big monopolies.

Yet another option is that of requiring digital licenses that map out the rules and regulations of operation for Internet-based platforms, much in the way that traditional brick-and-mortar companies must be granted business permits and licenses.

The evolution of the Digital Age is proceeding rapidly, and just as in bygone eras when oil, phone and Microsoft monopolies eventually needed to be yoked, it is time to figure out the right digital harness for these platform companies.

The alternative is to leave the standards and norms that will rule the future to be defined by these Frankenstein companies from Silicon Valley.

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Toward a Trump Trade Round: Time to Negotiate!

Mon, 2018-04-09 18:01

By Michael Gadbaw

The world has recoiled from Trump’s unilateralism. But history tells us that good things can come from false starts.

Donald Trump takes pride in breaking all international precedents, especially on trade. The Chinese have decided to respond in kind and only successful negotiations can stop the cycle of retaliation from causing global pain and conflict.

Is there an alternative scenario? If one goes back to the decade of the 1970s, there is precedent for the Trump tariff campaign of 2018. The Nixon/Connally import surcharge was followed by Jimmy Carter’s trigger price mechanism on steel that lasted from 1978 to 1981.

There were lawsuits challenging executive authority and national security was invoked. Federal courts sided with the executive.

This historical precedent is reassuring in some ways. As now, the domestic and international reactions to U.S. trade restrictions in the ‘70s were intense and highly critical. But then the ultimate outcome was very positive. Why?

Successful negotiations

Nixon’s move triggered a series of negotiations, starting in 1973, which resulted in the Smithsonian accord (which reset exchange rate relationships) and by 1978 an amended IMF accord. In 1973, the Tokyo Round of trade negotiations was started and concluded by 1979. This provided the foundation for decades of successful globalization.

Is it conceivable that Donald Trump could pull off a similar wholesale rewrite of the rules of the game for international economic relations? At least his new top economic advisor, Larry Kudlow, suggested as much when he said we are just starting negotiations. The markets took note and settled down.

The real question, of course, is: Can Donald Trump pull off such a feat? Presidential temperament aside, unilateralism has a bad name and perhaps deservedly so. The world order has been built around a multilateral trade regime and the rule of law.

But it is important to note that the rule of law does not apply evenly across all issues of trade, money and finance. Nor has history provided a smooth path for the evolution of rule of law in international economic relations.

The GATT/WTO – from humble beginnings

When the new world order was redesigned at Bretton Woods in the 1940s, the founding parents of globalization envisaged a triumvirate of institutions based in treaties to govern money, finance and trade in the IMF, the World Bank and the International Trade Organization.

As any student of economic history knows, the IMF and World Bank emerged as major international institutions, with budgets and bureaucracies to match their important mandates.

On trade, however, the U.S. Senate never ratified the ITO. The GATT, called upon to take its place, started as a stepchild of the global order. It is worth remembering that the GATT was intended to be transitional and apply only provisionally — “to the fullest extent not inconsistent with existing legislation.” Hardly a promising start.

Over the decades, the rule of law evolved quite differently across trade and money: Through a series of negotiations, trade became more rule oriented, with less policy space, while money set aside the treaty rules on exchange rates under the gold standard in favor of a regime based on cooperation and consultations.

Meanwhile, the World Bank never really tried to set up rules on international finance, instead preferring to evolve its role as a development banker.

Exchange rate reset then, trade reset now?

In 1970, Nixon upended the international trade and financial system in a distinctly unilateral act when the United States abandoned the gold standard and imposed an import surcharge of 10% across the board, but tailored mainly to hit Japanese imports.

The move was intended to reset the global exchange rate order that Nixon saw as disadvantaging the United States and contributing to unsustainable trade deficits. Sound familiar?

To make a long history of international economic negotiations short, unilateralism is never a good thing when cooperation and convergence are available. But history is also replete with examples of good things coming from false starts.

As we now know with the benefit of hindsight, in the 1970s, extraordinary unilateral interventions in finance and trade helped bring about new agreements that provided a more effective basis for international integration.

There is hope for a similar outcome on the trade issue now but all stakeholder countries must step up and play a constructive role.

Trumpian protectionism

Trump said this in his inaugural address: “We must protect our borders from the ravages of other countries making our products, stealing our companies and destroying our jobs. Protection will lead to great prosperity and strength.”

Behind the rhetorical excess lies a choice: A U.S. retreat from globalization — or global, especially Chinese, willingness to rewrite the rules of trade to create a more level playing field for everyone.

There is no denying that the Chinese have successfully gamed the global trading system and betrayed their promises to evolve away from state control.

One can fault the excessive optimism of the Clinton years or the Chinese reaction to the financial crisis but the pervasive role of state owned enterprises and state mandated technology restrictions mean the WTO rules are in need of a fix.

Of course, China can try to stick to the legalistic position and try to defend the language of its accession clauses. But the leaders in Beijing must realize that they actually have the most at stake in the trading regime remaining open.

That suggests a (still unadmitted) readiness to accept major changes. Otherwise, the country’s economic growth – a barometer as politically important in China (and for the CCP) as anywhere else – will suffer.

As things stand, most Americans feel the proper role for the President is on offense. America’s traditional role has been to step up, sometimes breaking the crockery, but always with an outcome in mind that serves both United States and global interests.

Most Americans believe they can compete anywhere in the world if given an opportunity. China’s future may well depend on that optimism not reversing.

If Larry Kudlow is right, there are tough-minded negotiations ahead. President Trump would have to call on the best and the brightest we have to get a win-win solution for both the United States and our global partners. That may be a challenge for him, but past Presidents have always found the people to do the job.

A Trump Round

One thing is for sure: There will certainly be a Trump Round, either on Trump’s watch (in which case it could bear his name) — or de facto, in his wake, as his successor picks up the pieces and repairs the damage from the U.S. global withdrawal and retreat.

The President needs to decide if he wants to control his own legacy. The world will support him if he makes the right choice.

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Britain Prepares for a Norwegian Brexit

Sun, 2018-04-08 18:01

By Denis MacShane

Mrs. May and Mr. Corbyn can live with Britain becoming a big Norway, a country everyone in England likes and admires.

After two years of non-stop sound and fury over Brexit, a weary truce is emerging in Britain. As the UK prepares to leave the European Union, it will be a Norway future that seems the most likely destiny.

True, the Remain campaigners have not quite given up hope that some major crisis – like an announcement from foreign firms they are pulling out of Britain – will produce a giant reversal of public opinion and lead to a new referendum that could reverse the decision of June 2016.

The Leave enthusiasts, for their part, are plain exhausted. They have been worn down by the sheer complexity and potential economic damage caused by their “vision” of a total British amputation from the EU after March 2019.

There is not a single agreement in place between London and Brussels on what the future economic relationship with the EU should be.

For the Leavers, the supreme prize is to be out of the EU Treaty and thus proudly restore the sovereignty of the House of Commons. For the Remainers, the goal is now to limit the damage and maintain as close a relationship as possible to Europe. They hope that, once the passions of the Brexit plebiscite become history, the UK can quietly rejoin the EU.

A political Ebola virus

Brexit has been like a political Ebola virus. It has drained British politics, government and state administration of their life juices as the only question remains, Brexit, Brexit, Brexit.

Both the Prime Minister Theresa May and the Labour leader, Jeremy Corbyn, look exhausted. They are unable to say anything interesting when questioned about Brexit on television.

Mrs. May cannot bring herself to say that Brexit will be good for Britain. Mr. Corbyn cannot bring himself to support an open market EU with rules enforcing competition. Both leaders are in their sixties and look as if they have aged ten years since the Brexit vote in 2016.

For the time after Brexit, Mrs. May originally laid down a number of red lines that should not be crossed in the negotiations with Brussels that began a year ago. However, she has surrendered her position on most key points.

Britain out-negotiated

Make no mistake about it: The EU’s Franco-German negotiating team of Michel Barnier and Sabine Weyand have comprehensively out-negotiated the British ministers and officials.

The EU27 and Brussels have been united in insisting that the UK could not be given special privileges or a unique status. Either the UK was in or it was fully out. That, to them, is Britain’s sovereign choice.

British ministers blustered and insulted Barnier, but the French former minister and commissioner remained cool, unflappable, polite but firm. Those are the very qualities once associated with British diplomacy – and they won the day.

Barnier has met Mrs. May and Jeremy Corbyn (and even Nigel Farage) and gave them all the same message: The UK cannot have its cake and eat it. Finally, that message appears to have got through.

The place where Mrs. May and Mr. Corbyn can meet in the middle is this: First, accept that the UK will cease to be an EU member state. Second, seek to hold out for an arrangement based on obeying all single market rules.

The European Economic Area

The main House of Commons Committee on Brexit has just produced a report agreed by both Conservative and Labour MPs laying out 15 tests that have to be met for any UK Brexit deal to be acceptable to a majority of MPs. The Committee says that the UK joining the European Economic Area (EEA) would meet these tests.

This is where Norway is after the Norwegians rejected joining the EU in a referendum in 1994, but stayed on as an EEA member. Norway is the Single Market and obeys all EU rules as well as paying substantially into the EU budget.

Britain is bigger than Norway and its economy is very different. However, the underlying principle of political separation, but economic and regulatory integration on the basis of EU norms and laws remains the same.

Mrs. May and Mr. Corbyn can live with Britain becoming a big Norway, a country everyone in England likes and admires. The questions: Can their followers?

Following EU rules and paying contributions as if in the EU will outrage the Tory Europhobe right. But most Leavers and especially business can accept they have won the big prize – taking back control of UK sovereignty from Brussels.

There may be explosions but a divided fractious Tory Party helps propel their hated, despised foe, Jeremy Corbyn, to power.

For Labour, Corbyn can say he has helped defeat UKIP and the fanatical Brexit ideologues especially in the off-shore owned press which torments his every waking moment. He can claim he has helped save jobs and wages threatened if a total Brexit happens.

Brexiternity

It is not a final settlement and the prospect of Brexiternity – Brexit remaining the dominant issue in Britain for years to come – lies ahead.

But the Norwegian compromise will allow an outbreak of peace over Brexit though no-one can rule out sudden surprises that can yet produce a “No Deal” car crash version of Brexit or in the dreams of Remainers a sudden awakening that it is all a disaster and should be abandoned.

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No Impunity! When Presidents Go to Jail

Sat, 2018-04-07 18:02

By Frank Vogl

South Korea's and Brazil's former Presidents are being jailed for corruption. South Africa's ex-leader appears to be next.

For years, anti-corruption campaigners have shouted “No Impunity” with scant success. It appears things are changing.

Former South Korean president Park Geunhye has just been sentenced to 24 years behind bars, with free board at the government’s expense. Her plentiful corruption caught up with her.

A similar destiny awaits Brazil’s former president Luiz Inacio Lula da Silva quite imminently. He had been sentenced to 12 years for illicitly pocketing government cash.

On the same day as these two former national leaders faced their fate, so did a third, Jacob Zuma. He appeared in court in South Africa for a preliminary hearing on corruption charges and his trial is now set for June.

Will they stay in jail?

It is astonishing to see that a series of ex-presidents are going to jail, although a skeptic might question whether they will remain there.

Bribes were paid to former president Park by the head of Samsung, Lee Jaeyong, one of the country’s most powerful businessmen, who received a long sentence — but was released after just six months.

Lula’s supporters are not going to give up easily and want him to be free to run for president in Brazil’s upcoming elections in October. His imprisonment robs the Workers Party of a leading candidate and, despite the clear record of corruption, Lula remains arguably the most popular politician in Brazil.

The case against Zuma is likely to be substantial and based on a multi-million dollar arms deal more than 20 years ago. Zuma still has many friends and will spare no effort to get all charges against him dismissed.

The good news is that there has been mounting evidence that South Africans are increasingly vexed by the corruption that abounds. Rising public pressures, says David Lewis, head of Corruption Watch South Africa, has been important in forcing “the resignation of Zuma and the subsequent axing of 10 ministers central in the state capture allegations and staunch allies of Zuma.”

More needs to be done

Three ex-presidents learning that they do not have impunity is encouraging for anti-corruption activists. However, there are still many presidents around that see to it that they get rich each and every day. For now, they still enjoy total impunity.

Two of them – Putin in Russia and Sisi in Egypt – for example, just won re-election by vast majorities in rigged polls.

Another, Najib Razak in Malaysia, is increasing media censorship. He is also hitting hard at potential opponents, making life tough for pro-democracy civil society groups and seems all set for reelection.

Despite charges that he personally took hundreds of millions of dollars of public funds, he feels so confident that he has just announced that general elections will take place in the next two months.

Recent developments underscore that in countries where there is a largely free press, active civil society and a judicial system that is relatively independent of elected politicians, there is indeed a chance of bringing corrupt politicians, even presidents, to justice. Where these conditions do not exist, then impunity prevails.

Can this be changed?

But far more needs to be done. The corrupt leaders launder their ill-gotten wealth and their crimes of corruption inevitably have consequences beyond their national borders.

Little has happened in recent years to foster support for the brainchild of Boston judge Mark Wolf, who has proposed the creation of an International Anti-Corruption Court.

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China Vs. The US: The GDP Race

Sat, 2018-04-07 18:01

By The Globalist

Who leads depends on how it’s measured.

1. At market prices, China’s GDP (the size of its economy) is still only about 61.7% the size of the U.S. economy, according to International Monetary Fund estimates in 2017.

2. China is the second-largest economy in the world in nominal terms (i.e., without adjustment for local purchasing power).

3. China’s GDP is nearly two-and-a-half times larger than that of third-ranked Japan.

4. China’s economy is also more than three times greater than that of Germany, and four and a half times larger than the economies of France or the United Kingdom.

5. Only by measuring China’s GDP in international dollars that adjust for local purchasing power does it surpass the United States’ economic size.

6. By this indicator, the U.S. economy is 84% the size of China’s.

7. China certainly seems destined for economic pre-eminence, if current trends continue.

8. This would be a return to China’s previous path and position in the global economy.

9. Back in 1820, two centuries ago, the largest productive economies in the world were China and India.

10. Together they accounted for half of the aggregate value of the global economy at the time.

Sources: IMF, Maddison Project Historical Statistics, The Globalist Research Center

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The War That Never Ended

Fri, 2018-04-06 18:01

By Uwe Bott

The American Civil War – then and now: A reflection 50 years after Martin Luther King's death.

It is easy to date the “official” American Civil War. It occurred between 1861 and 1865. It is far more complex to answer the question whether the Battle of Appomattox truly resolved what so deeply divided the United States of America back then.

At the crux of the matter was the so-called 3/5ths Compromise at the U.S. Constitutional Convention of 1787. The position of the states in the country’s South, where most slaves lived, was that slaves should count as much as “free men” but only when determining the number of each state’s seats in the U.S. House of Representatives.

According to the South, slaves should not be accounted for at all when it came to establishing every state’s tax obligations towards the federal government. These were determined at the time by the size of a state’s population. The South viewed slaves solely as the property of their owners. The North took the opposite view.

The outcome of this dispute was an agreement that slaves should be accounted for as 3/5 of a free person for both purposes — representation and taxation. As the years went by, and as the nation grew from 13 founding states to 34 states in 1860, this unholy compromise caused deep political imbalances.

As a result of that expansion, the South had a near-stranglehold on the House of Representatives and the presidency (with all its military and foreign policy powers) through the Electoral College.

The policy implications were far-reaching. First, the Supreme Court was stacked with Southerners. Second, Southern states were “undertaxed” and Northern states were “overtaxed.” Third, a succession of U.S. presidents from the South lowered tariffs, because cheap slave labor made the South’s plantation exports very competitive and low tariffs were adding to that competitive edge.

The North, on the other hand, had urbanized, industrialized and modernized. It wanted more protectionism and higher tariffs in order to become competitive with rapidly developing Europe.

Enter Lincoln

All of this came to a head when a Republican, Abraham Lincoln, was elected President in 1860. At the time, Republicans were a force in the North, while Democrats were dominant in the South — the opposite of what is the case today.

Lincoln’s election was in part the result of divisions among Democrats. Lincoln’s opposition to slavery was laudable. However, to him it was far less a humanitarian concern than a smart position in the political power struggle between the North and the South over representation and taxation.

Even before Lincoln’s inauguration, seven Southern states declared their secession from the United States. Others followed in joining the Southern Confederacy afterwards. Military hostilities soon commenced and eventually ended in the defeat of the secessionist South in 1865. Four million slaves were freed, slavery was abolished and the 3/5ths Compromise was trashed.

Fast forward

Fast forward to the 20th century. Equal rights under the Constitution still weren’t either legally nor factually translated into equality between whites and blacks. Voter suppression and exclusion was widespread in the South. Racial segregation was dominant there and existent even in the North. Equal opportunity was not even a term of reference yet.

Almost two-thirds of the way through the 20th century, the Civil Rights Movement changed all of that, at least on paper. The Civil Rights Act of 1964 ended segregation in public places and banned employment discrimination on the basis of race, color, religion, sex or national origin.

And yet, the political struggle underlying race relations, the struggle between the highly advanced and industrialized Northeastern and Western coastal states of the United States and the largely rural, poor and underdeveloped South, continued.

Under the leadership of Richard Nixon, the Republican Party developed what was referred to as the Southern Strategy. Traditionally, because of the role Abraham Lincoln played as the first Republican president, Republicans were seen at the avantgarde of more equal race relations – and anathema in the South.

White anger

The Democrats of the South, on the other hand, were deeply aligned with segregationists. The Democratic governor of Alabama, George Wallace, who ran a third-party presidential campaign in 1968, was a posterchild of white anger.

Kevin Philipps, Richard Nixon’s chief political strategist, put it this way in an interview in 1970: “From now on, the Republicans are never going to get more than 10 to 20 percent of the Negro vote and they don’t need any more than that… but Republicans would be shortsighted if they weakened enforcement of the Voting Rights Act.”

“The more Negroes who register as Democrats in the South, the sooner the Negrophobe whites will quit the Democrats and become Republicans. That’s where the votes are. Without that prodding from the blacks, the whites will backslide into their old comfortable arrangement with the local Democrats.”

Hence, Republicans began to focus on white anger in the South. As Phillips predicted, white voters abandoned the Democratic Party in droves in local, state and national elections.

Most politicians are no fools when it comes to preservation of power. Southern Democratic leaders quickly switched party affiliations. Hence, the political makeup of Lincoln’s America was turned on its head. The Northeast and the Western coast became the domain of the Democratic Party, while the South became firmly entrenched as a Republican playground.

And yet, despite the abolishment of the 3/5ths Compromise after the Civil War, the political consequences of this evolution remain the same. The industrial and industrious Northeast and Western coastal states are politically underrepresented and fiscally exploited by a conservative, backwards and economically weak South.

Political underrepresentation

How so? Let’s start with political underrepresentation. The Founding Fathers designed a system that was possibly well-constructed for the nation of 13 states of the then-Union. However, as the nation grew, the democratic design flaws became inescapable.

In the U.S. Senate, each state is given 2 seats irrespective of population. This was to protect small states from undue dominance by larger states. However, most states that joined the Union subsequently are in the smallish category, by population.

As a result, the Senate is even more dysfunctional today as it was back then because many more small states were added after 1861.

As a result, large states (and the vast majority of Americans) are effectively tyrannized by the increasingly extremist majority of Republican senators representing small states.

Two senators serve the population of 574,000 souls in the state of Wyoming, while the same number of senators serve 40 million people in California.

In fact, if you look at senatorial races in 2016, 2014, and 2012 combined – a period during which all 100 seats of the U.S. Senate were up for election – Democrats received more than 10 million more votes in all senatorial races than Republicans. In a proportionate voting system, this would lead to a current Democratic majority of 54-46, rather than the Republican majority of 51-49.

The South rules

But even in the House of Representatives, which was designed to be proportionate to each state’s population, the South rules.

After every census the number of House seats for each state are recalculated to ensure such proportionality. Yet, so-called gerrymandering, i.e., the “art” of manipulating district borders to get one’s party’s candidates disproportionately elected, has made the House anything but “representative.”

Because Republicans dominate two-thirds of state governments, they have also greatly benefited from this unsavory practice following the last census in 2010.

In 2016, Republicans won 49.1% of the popular vote in all 435 races for the U.S. House of Representatives, compared to 48.0% won by Democrats. If the House were truly representative as conceived (and mind you, congressional districts were not part of the design and are not embodied in the U.S. Constitution), this should have resulted in a Republican majority of just 220-215 in the House, rather than the 241-194 tallied on election night.

The outdated Electoral College

The outdated and non-democratic Electoral College which effectively elects the U.S. President is made up of 535 members. That number represents the total number of Senators and Representatives combined. Since it is largely a winner-takes-all system, the margin of victory in each state is meaningless, which left us with a President in 2016 who received 2.9 million fewer votes than his opponent.

This systemic political disenfranchisement of the Northeast and West Coast has real policy implications for the North. As if that weren’t bad enough, the grievances of the North are just the same as they were at the time of the Civil War. The wealthy and populous North is politically underrepresented and fiscally overtaxed compared to the economically stagnant and deeply conservative South.

This bears out in the numbers: Consider that every country or region that shares a common currency must have a system of fiscal stabilization. This results in richer member-states paying more in federal taxes than they receive back in federal programs.

The purpose of this resource sharing mechanism is threefold: First, to synchronize levels of economic development across the U.S. over time; second, to even out business cycles across the U.S. dollar currency area; and third, to avoid asymmetric economic shocks that can affect poorer U.S. states far more than others.

America’s Empty Quarter

The Rockefeller Institute of Government reported in 2017 that the 15 U.S. states which received the most in federal programs for each $1 their residents paid in federal tax dollars are by and large poorer states predominantly in America’s South and in what one might refer to as “America’s Empty Quarter.” Eleven of them are governed by Republicans. Fiscally speaking, that is very much contrary to their own political rhetoric.

New Mexico tops the list of net recipients with $2.21 for every federal tax dollar collected there, followed by Mississippi ($2.13), West Virginia ($2.07) and Alabama ($1.93).

Only 13 U.S. states out of 50 in total are donor states. Seven of them are governed by Democrats, but among the six Republican governed donors, four have a combined population of just 4.6 million.

Also, four among the five donor states receiving the least bang for their buck are Democratic Northeastern states: New Jersey receives just $0.74 for every dollar in federal tax dollars collected, New York ($0.81), Connecticut ($0.82) and Massachusetts ($0.83).

It is also perversely “logical” in the American frame of things that, among the ten most low “tax-friendly” states according to Kiplinger (measured by levies such as state and local income taxes, local property taxes and state and local sales taxes), only one is also a “donor” state (Wyoming).

Trump’s tax bill

The Trump tax bill will make this much worse. Until 2018, all state and local taxes (such as property taxes) were deductible on the federal level. In other words, income spent on such state and local taxes was not taxed by the federal government.

That deduction is now limited to $10,000 per household. In high-tax states such as New Jersey, Connecticut, Massachusetts or California such limited deduction will hit the middle and upper-middle class a lot. No surprise that New York Governor, Andrew Cuomo, called the new tax bill a “declaration of economic civil war.”

Trump’s move will make these states even greater donors to net-recipient states. The federal tax take from these states will rise because of the inability of many individuals in those states to fully deduct their state and local taxes before paying their federal tax. It will leave many households in these donor states poorer, yet the distribution of federal programs to net recipient states is likely to remain unchanged.

By and large, the U.S. government did not collect federal income taxes until the 16th Amendment was adopted in 1913. Ever since, state and local taxes (other than sales and excise taxes) had been fully deductible in part to avoid double taxation and in part to compensate donor states.

These donor states are also at the core of American prosperity. California and New York alone account for 25% of U.S. GDP. Add to that the underrepresentation of the Northeastern and Western coastal states in the federal political system and it becomes clear: The Battle of Appomattox never settled anything.

Contrary to American folklore, the North never won the Civil War. And even without the 3/5ths Compromise, the formation of “a more perfect Union” promised by the preamble of the U.S. Constitution is nothing but a pipedream.

Also contrary to the American Dream, those states who do better by working harder and smarter, do not get rewarded but instead get punished. Some dream! More like a nightmare.

The post The War That Never Ended appeared first on The Globalist.

US Census 2020: A Political Boomerang for Republicans?

Thu, 2018-04-05 18:01

By Robert J. Shapiro

Asking about citizenship status in the 2020 Census is dangerous and politically inept.

U.S. Commerce Secretary Wilbur Ross’s recent decision to “reinstate” a question in the 2020 Census (it was last asked in 1950) that asks about one’s citizenship status will almost certainly vastly increase the number of people who either ignore or evade the 2020 U.S. Census.

The policy move will certainly discourage most of an estimated 11 million undocumented immigrants from filling out a Census form, with their names and addresses, and thus lower the official population count of nearly every U.S. state.

Ross defended his move by citing a request from Attorney General Jeff Sessions for help in enforcing the Voting Rights Act, tying the Census to law enforcement. As a result, a much larger number of people — some 24.3 million people — would have good reason to skip the 2020 Census if they believe their names and addresses could be shared with law enforcement.

A surprising effect

Moreover, because most of those additional people are not concentrated in the big blue states, and most of the federal funding tied to the Census involves programs for low-income people, like Medicaid, Section 8 housing assistance, and support for school lunches, the new Ross-Sessions policy would have a surprising effect.

It would target the cuts in federal funding to the 23 mainly solid Republican states with poverty rates above the national average.

U.S. federal law protects the confidentiality of the personal information collected in the U.S. Census in no uncertain terms. But most people are not familiar with those provisions, and millions of people will be very sensitive to any intimation that filling out their Census forms might help law enforcement officials locate them.

This includes many U.S. citizens, such as students in default on their federal loans, parents who owe back child support, anyone with an outstanding warrant and more.

Specifically, 43% of the 22 million Americans with federal student loans are in default or very behind in their payments. That covers about 9,460,000 young Americans.

If we assume, conservatively, that one-third of those in such payment arrears will opt for discretion and skip the 2020 Census, it comes to 3,120,000 people.

Student loans and child support arrears

One also has to realize that most of those in default or way behind in payments on their federal student loans live in households with people not in such arrears. If one assumes that half simply leave out the household member in arrears, that is another 1,560,000 for the undercount.

The Census Bureau also reports that in 2015, 48.4% — or almost half — of the 6,807,000 parents who had custody of their children did not receive their lawfully-awarded child support. Thus, 3,292,000 people were in arrears on their child support.

Local governments now routinely suspend the driver’s licenses of deadbeat dads (and moms), and sometimes jail those with long records of withholding child support payments.

It seems reasonable that two-thirds of those in such arrears (2,195,764 people) would forgo affixing their names and addresses to forms that they believe might be shared with law enforcement.

In this case, we would expect that most of their households would opt out with them, adding 5,577,241 people to the undercount.

Why care?

But why should we worry about counting people who entered America illegally, welched on their federal loans or are fugitives from justice? For starters, Article I, Section 2 of the Constitution mandates a decennial census of “the whole number of free persons,” not just citizens or commendable people.

A very substantive reason is that failing to count any person or household harms everyone in that person’s or household’s community, since the community’s representation and access to federal funds are tied to its population – not citizenship — numbers.

The Policy Could Boomerang on 14 Deep Red States

The damage from such an unprecedented undercount will not be distributed evenly or randomly across the states. Twelve states with disproportionately large undocumented populations will bear the greatest burden when it comes to losing seats in Congress.

They are led by Nevada, Texas, California, New Jersey, Arizona and Florida – three of those states voted for Donald Trump in 2016 and three voted for Hillary Clinton.

Most of $800 billion per-year in public funds redistributed among U.S. states based in part on Census numbers involve programs for low-income Americans, such as Medicaid, school lunches, and the S-CHIP program.

The distribution of those funds across the states is based on their shares of all poor households, so the states with the most at stake are those with above-average shares of poor people. Sixteen states and the District of Columbia had poverty rates above the national average of 13.7 percent over the years 2014 to 2016.

Ironically, only two of them (California and New Mexico) plus D.C. are Democratic states. The other 14 states facing serious cuts in federal funding are solidly Republican states, led by Mississippi, Louisiana, Kentucky, West Virginia, Georgia, Alabama and Arkansas.

So the Ross-Sessions Census policy could be a political boomerang for Donald Trump and the GOP.

Never 100% accurate or complete

To be sure, no U.S. Census, conducted every ten years, is ever 100% accurate or 100% complete. Certain groups are routinely undercounted for various reasons – mainly native Americans and poor minorities.

And the fact that undocumented immigrants or people with outstanding warrants are wary about participating is not new. But the Ross-Sessions Census policy is virtually guaranteed to greatly exacerbate those issues and lead to unprecedented undercounting across large parts of the country.

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