Trump Was Right 1.

            “[I]n critical areas, the Biden administration has not made big breaks [from the Trump administration], showing how difficult it is in Washington to chart new courses on foreign policy.”[1]  Nonsense.  It isn’t hard to change course.  Trump broke with the long-established policies without breaking an orange-tinged sweat.  It enraged many people, but their opposition didn’t matter to the president or the people in put in charge of things.  So, if President Biden is following many of President Trump’s policies abroad, it is because people have come to see that Trump was right about many things.  It is hard for most people to come right out and say. 

            Take Europe.  The North Atlantic Treaty Organization (NATO) and the European Union (EU) had grown up in the aftermath of the Second World War and in the specific context of the European front of the Cold War.  NATO had been created to “Keep the Americans in, the Russians out, and the Germans down.”  Twenty years after Western victory in the Cold War, none of these elements appeared to make much sense.  Germany had become the dominant economic power in the EU, but it was deeply committed to de-militarization.  Russia seemed to have become little more than a major petro-state.  The Americans had “interests” all over the world, but their chief interest seemed to be in Asia.  NATO no longer served a purpose. 

As for the EU, it had become the very model of the modern administrative state (of Republican nightmares).  Unable to compete on cutting-edge technologies, the EU has taken to trying to regulate big American tech companies.  If Russia is a petro-state, it is Germany’s petro-state.  All the pipelines from Russia, but especially the most recent one, have been built in defiance of American recommendations.  The shift of power away from elected national governments toward a (German-dominated) bureaucracy has given pause to many newer member states.  The British have already bolted, and the migrant crisis of several years ago has put Poland and Hungary on a collision course with the EU.  Neither France nor Germany wanted Ukraine admitted to either the EU or NATO.  It would anger Russia while increasing the “Eastern” orientation of the EU.[2] 

            There is a difference between allies and free-riders.  Most of NATO, but especially Germany, had become free-riders.  All of this is to say that Trump wasn’t off target in giving Angela Merkel the cold shoulder.  Biden would likely be doing the same if Russia had not invaded Ukraine.[3]  That got the attention of the NATO members, even of Germany.  No free riders in this situation.  However, it appears that it is the EU dissidents Britain and Poland who are making most of the European effort.  France and Germany, not as much as you might have expected.  Will NATO stay revived—and worth an American commitment—after the war ends?    

[1] Edward Wong, “Biden Is Charting a Similar Course to Trump on U.S. Foreign Policy,” NYT, 25 July 2022.  Both the Biden administration and the New York Times are embarrassed by the similarities.  One can read Wong’s article as part of a campaign to rationalize the liberal collapse before Reality. 

[2] This is reminiscent of Bismarck not wanting the German-speakers of the Austro-Hungarian Empire included in a united Germany in 1866-1871.  It would create a rival, Habsburg pole of loyalty when Bismarck wanted the Prussian Hohenzollerns to rule the Empire.  It would greatly increase the number of Catholics inside Germany, when Prussia was overwhelmingly Protestant.  Or See William Walkers hopes of bringing Central American and Caribbean territories into the American union to offset the industrial, abolitionist North. 

[3] Whether Trump would now be doing what Biden is doing in support of Ukraine/opposition to Russia is an open question. 

Rain on the Parade.

What is “normal”?[1]  For decades before 2020, “normal” was a slow-growth economy; an aging population moving out of the labor force to begin drawing on retirement savings; a world awash in such savings; and an international demand for dollars as a safe-haven. 

The financial manifestations of this “normal” were “negative” real interest rates (i.e. below the low rate of inflation); real bond yields below 1 percent; rising prices for stocks and housing;[2] the cost of borrowing for businesses were low and corporate debt expanded relative to Gross Domestic Product (GDP); and nobody worried much about expanding government deficits and debt because the cost of servicing that debt did not grow.  So it would continue: The Biden administration’s early budget projections foresaw a decade of near-zero real short-term interest rates and a real bond yield of 1 percent. 

Then inflation surged to unexpected heights.  The Federal Reserve Bank raised interest rates sharply and says that it will go on raising them; and a “soft landing” may be impossible.  Nothing daunted, people now say that temporary rate hikes and a recession are the price you have to pay.  By 2024, we ought to be back to “normal.”  Financial markets seem to anticipate that the Fed will raise interest rates another 2 percent by Spring 2023.  After that it will begin working them down. 

But what if this isn’t what happens?  What if inflation remains stubbornly high?  What if the Fed has to push nominal interest rates (interest rates without inflation rate subtracted) as high as 7 percent and perhaps hold them there for longer than people currently expect? 

According to one projection, the ordinary person could get caught in a vise with the prices of houses and stocks and bonds down by as much as 5 percent, while private-sector debt service ate up another 3 percent of income. 

But wait!  There’s more!  Specifically, the federal government[3] borrowed a lot of money when the costs were low.  Back in the day, publicly-held debt amounted to 35 percent of GDP; now it is up to 98 percent of GDP.  Falling bond-yields off-set the rise in debt, so no one has felt the pinch yet.  Short-term debt has to be constantly renewed, so rising interest rates will push up the interest cost pretty quickly.  A Congressional Budget Office estimate projects that a 1 percentage point increase in real interest rates will increase the deficit by $250 billion.  Sooner or later, this would force our polarized (almost paralyzed) political system to find a solution involving spending cuts and tax increases.   

Recently, a friend related to me his sad tale of woe.  He had had borrowed $150,000 when interest rates were low.  He was paying 3.5 percent to the bank, with a monthly interest component $416.26.  Then the interest rate went to 3.75 percent and he paid $438.59 in interest.  Then it went to 4.25 percent and he paid $512.94.  Then it went to 5 percent and he owed $541.11.  So, he’s out an extra $125 a month.  He finds this “concerning.”  

Still, why would inflation remain stubbornly high?  Perhaps it will not. 

[1] Greg Ip, “Interest-Rate Pain Has Barely Begun,” WSJ, 21 July 2022. 

[2] Great if you already owned a bunch of stocks and bonds in your retirement account and a paid-off house.  Which I did. 

[3] That is, the American public borrowed the money, mostly to finance wars, and tax cuts I think.  There’s probably a squalid argument to be had over the stupidly-phrased “Makers versus Takers” theme launched by Mitt Romney. 

The National Emergencies Act.

            In 1933, newly-elected President Franklin D. Roosevelt claimed the right to declare a national emergency without reference to any law, without Congressional approval or oversight, and without setting any limits to what he could do or for how long he could do it.  Looking around at a country with thousands of bank failures, tens of thousands of business bankruptcies, an unemployment rate of 25 percent, and farmers in extreme poverty, most people went “Looks like an emergency to me.”  Other emergencies came along in the next forty years.[1] 

            As part of the Watergate era reaction against the “Imperial Presidency,”[2] in 1973 Congress passed the “National Emergencies Act.”  The Act, as amended, authorizes the President to activate emergency provisions of laws through an emergency declaration.  When activating the emergency provisions, the President must specify the provisions being activated and notify Congress.  An activation expires if the President declares the emergency terminated, or does not renew the emergency annually, or if Congress passes a joint resolution.[3] 

            A president can do a lot with emergency powers.  There are 123 different laws that contain emergency provisions that can be invoked simply by a presidential emergency declaration.  For example, s/he can suspending any Clean Air Act implementation plan or excess emissions penalty upon petition of a state governor or authorize military construction projects and use any existing defense appropriations to pay for such projects. 

            In the immediate aftermath of passage of the National Emergencies Act, presidents were cautious about declaring emergencies.[4]  Jimmy Carter declared two; Ronald Reagan declared six and George H. W. Bush declared four.  All related to foreign policy matters, chiefly economic sanctions.[5]  Then the dikes of self-restraint broke with the arrival of the Boomer presidents.[6]  Bill Clinton declared seventeen; George W. Bush declared twelve; Barack Obama declared thirteen; Donald Trump declared seven; and Joe Biden has declared six.  All of President Clinton’s emergency declarations dealt with foreign policy issues, again mostly imposing sanctions and the same was true of President George H.W. Bush.  Essentially the same was true of President Obama, but a couple of declarations reflected the emergence of new problems.  One declaration dealt with the H1N1 flu pandemic, while a second addressed international cyber-crime.  President Trump might be said to have extended the line begun by his predecessor.  Most of his declarations dealt with sanctions (chiefly directed against China), but he also declared emergencies in response to Covid-19 and the torrent of illegal immigrants on the southern border.  President Biden has maintained the sanctions on China, while adding ones on Russia. 

            Traditionally, national emergency declarations have dealt with foreign policy.  Recently, pandemic diseases threatening all Americans have been added to the list.  Not yet partisan goals. 

[1] The Korean War, inflation in 1971, postal workers walking off the job, that sort of thing

[2] Arthur M. Schlesinger, Jr., The Imperial Presidency (1973).  Schlesinger was a former Imperial scribe.  I’m sure many people thought of that before me.  Doesn’t make it less true. 

[3] See: National Emergencies Act – Wikipedia  Well, where were you going to look if you got curious? 

[4] See: List of national emergencies in the United States – Wikipedia  See also: War Powers Resolution – Wikipedia  The evangelist Billy Graham once responded to the observation that being “saved” didn’t seem to last for many people.  “Yes, it’s like taking a bath,” he said. 

[5] Particularly on Iran, an American bete noire since the 1979 Islamic Revolution. 

[6] “No surprise there” you’re thinking. 

Excoriating Twenty Years of American Foreign Policy.

            Riffing on Edward Gibbon, Walter Russell Mead judges that “At the beginning of the 21st Century, the world seemed more peaceful and American power more solidly entrenched than ever before.”[1]  With the Soviet Union defeated and its empire dissolved, with the whole laughable idea of Communism discredited even in the eyes of leftist academics, the Western leaders tried to understand the new world.  Mead argues persuasively that American leaders believed that “traditional forms of great-power competition and balance-of-power diplomacy” had done their duty, had their day, and now could take up the rocker at some Old Soldiers’ Home,[2] to be wheeled-out only for July 4th celebrations.  America appeared the unchallenged and unchallengeable leader of the world, the “last man standing.”  So it would always remain. 

In place of the “long twilight struggle”[3] against aggressive tyrannies, other issues had to be addressed.  The nation-state, it was argued, served well for the solution of national problems.  New problems, however, were trans-national.  The climate know no borders.  If global warming continues unchecked, we may all fry like eggs.  Population and wealth imbalances between the Global North and the Global South spur large-scale migration that can test, even overwhelm, traditional national boundaries.  Western liberal ideals have always been universal in their claims.[4]  Now the duty of American foreign policy lay in seeing these rights extended to all peoples.[5]  Finally, the means to all these ends lay in the creation of ever more powerful international institutions and ever-more comprehensive international law. 

Then things blew up in the Middle East with the 9/11 attacks, the invasions of Afghanistan and Iraq, and Iranian assertiveness. In Afghanistan and Iraq, the invasions morphed into attempts at nation-building that merely set off gory civil wars between American clients and American opponents.  Then American leaders failed to act in any effective way against Vladimir Putin’s effort to resurrect Russian power in the former Soviet Empire.  On top of this, the same leaders grossly misjudged the future development of China.  They appear to have believed that China, could be integrated into an American-designed global economy as a willing partner.   

Mead sees in all of this a “disastrous mix of mission creep and strategic incompetence.”  He wants foreign policy elites to have a “road to Damascus” experience.  He wants them to turn back to great-power politics.  There is a lot of good sense in this analysis.  However, the Afghan and Iraq wars have been wound up with Americans now (hopefully) vaccinated against more nation-building.  Putin is one man, not a global movement, and nuclear weapons alone make Russia a serious power.  The truth is that both China and climate change are grave problems that demand global solutions.  Those solutions can be both great-power politics and international action. 

[1] Walter Russell Mead, “A Feckless Foreign Policy’s Legacy,” WSJ, 19 July 2022.  See Gibbon, The Decline and Fall of the Roman Empire, Vol. I, Chapter One, “The Extent of the Empire in the Age of the Antonines,” Introduction. 

[2] Said home to be located in coastal South Carolina, close to excellent golf courses. 

[3] I know, at this point your cliché-o-meter is running wild.  Sorry.   

[4] “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights,…”. 

[5] One very real blessing of our liberty has been the continual extension of rights to marginalized groups and in the expansion of the list of rights.  So I’m OK with flying the gay flag outside city hall.  Whether we should fly it over the US embassy in a conservative foreign country is another issue. 

Two Approaches.

            Different national cultures extend beyond welfare provision.  Historically, the American government paid unemployment benefits directly to displaced workers, rather than to companies experiencing a down-turn in business.  Europe, in contrast, tended to pay companies to retain their workers during a down-turn.  From some sort of bird’s-eye view, the very dynamic American economy tended to shift assets from dying industries to growing industries, while the European economy labored under the burden of assets trapped in old industries.[1] 

            The Covid pandemic imposed an odd sort of shock on the world economy.  The disruption did not spring from serious economic problems.[2]  Serious economic problems sprang from the virus and from government responses to the emergency.  The economies could rebound once adequate responses had developed (vaccines, testing).  In the meantime, governments pumped in money.  In Europe, this took the form of governments paying companies which “furloughed” their workers.  In the US it mostly took the form of expanded and extended unemployment benefits, along with Economic Impact Payments. 

The American stock markets soared.[3]  Since, just over half of Americans own stock (mostly through their retirement plans), net worth and market income increased for many people.  For a bunch of older, but still working-age Americans, an early retirement beckoned.  Many others built up their savings to the point where they could ride out extended unemployment.  On top of this, the United States suffered a much worse hit per capita from Covid than did Europe, Japan, or Canada.[4]  This may have made many Americans skittish about going back to work if they don’t absolutely have to.  Many others got sick and had to call in sick to work. 

In any event, America’s labor participation rate has not recovered as well as have either other economic indicators or the participation rates in other countries.  With a booming economy, American employers are not able to find enough workers to fill the jobs that need doing. 

What to do?  First, work the people you do have longer and harder.  The number of hours worked actually increased from late 2019 to mid-2021.  Second, they have raised the pay for those who do work in hopes of pulling more workers back into paid work.  Labor costs have risen more in the United States than in other countries.  Third, one would expect employers to pursue mechanization as much as possible.  Will this close off the possibility of return to work for many of the now-unemployed?  Or will economic growth and innovation provide new jobs for those who want them? 

In the meantime, while excess money creation provides the basic force driving the inflation,[5] the supply-chain disruptions, the war in Ukraine, and labor shortages are making worse that basic inflation.  In turn, the inflation is providing ammo for those who oppose plans for a further expansion of the social safety net to more closely resemble that of Europe. 

[1] Greg Ip, “The Mystery of Low U.S. Labor Participation,” WSJ, 5-6 February2022. 

[2] Like, say, the collapse of a housing bubble with a devastating impact on financial systems. 

[3] I realize that I’m supposed to refer only to the S&P, but the Dow went from 26,000 in July 2020 to 36,000 in January 2022. 

[4] The death rate per 100,000 people: US, 311; Italy, 281; UK, 269; France, 233; Germany, 172; Canada, 114; and Japan, 25.  See: Mortality Analyses – Johns Hopkins Coronavirus Resource Center ( 

[5] The basic money supply, the M2, rose from about $15 trillion in 2020 to about $22 trillion in 2022. 

Welfare State.

In arguing for his Social Security program, Franklin D. Roosevelt asserted that taxes paid by all beneficiaries would “give contributors a legal, moral, and political right to collect their pensions.”  Americans once accepted that rationale.  Does that rationale still command assent?[1] 

            The welfare state grew by stages in response to new developments in society.  It can be said to have begun in the later 19th Century when European industrial societies responded to a combination of new needs and political conditions.[2]  The crises of the Great Depression and the Second World War generally led to an expansion of services provided to citizens and a more aggressive management of the economy to achieve high employment.  A third great expansion began in the 1960s and 1970s to both share out increased prosperity and to respond to new issues.[3]  In the course of the second and third waves of the welfare state, significant differences emerged between the United States and other “advanced” nations. 

            Many “advanced” countries had a problem with child poverty.  They addressed the problem with direct government payments to families with children.  Many “advanced” countries had a problem with what to do when pregnant women left the work force.  They addressed it by paying for a median of sixteen weeks of maternity leave.  Many “advanced” countries accepted the need to provide day-care (so that women could return to work) and early childhood education.  On average, they pay about $5,200 per child per year. 

            In contrast, among “advanced” countries, the United States spends the third lowest share of Gross Domestic Product (GDP) on direct benefits to families with children; the US doesn’t offer paid maternity leave; the temporary Covid emergency was the first time the US offered paid sick leave; and US public spending on child-care and early education is about half of the median in “advanced” countries.  It’s probably not a coincidence that the US has a high child-poverty rate and a lower rate of female participation in the economy. 

            How do other “advanced” countries pay for this generous social provision?  Ordinary people pay far higher taxes than is the case in the United States.  In Germany, Italy, and France, it is 47-49 percent of total compensation.  Other countries tax consumption through a Value Added Tax (V.A.T.).  On top of this, most “advanced” countries impose carbon taxes.[4]   In the United States, people pay 30 percent of total compensation in taxes.  At the national level, the US doesn’t tax consumption.  The US doesn’t tax carbon emissions.   

            Perhaps one explanation lies in the different economic histories of the US and Western Europe.  In Western European countries, much of the welfare state came into being after the Second World War.  Shared hardships and the general discrediting of conservative political parties allowed the European left and center to forge new institutions.  In contrast, the US enjoyed widely shared prosperity until the 1980s.  So the US is only now trying to figure out the issues.  It is doing after decades of a high-consumption, low-responsibility, weak solidarity mind-set. 

[1] Greg Ip, “Echo of Europe’s Benefits, Not Taxes,” WSJ, 30 November 2021. 

[2] The historian John McKay called this the “responsive national state.”  Its common features included public schools, urban reconstruction, and social insurance for the industrial working class. 

[3] For example, medicine made dramatic advances, but the fruits of those advances could be too expensive for the individual to pay.  So, Medicare and Medicaid. 

[4] Ip describes carbon taxes as “the most efficient way to curb fuel use and spur increased investment in renewables.” 

Conspiracy or Chaos?

            “The question of whether there was communication or coordination between the far-right groups that helped storm the Capitol and Mr. Trump and his aides and allies is among the most important facing the Jan. 6 investigators.”[1] 

            On 12 December 2020, a pro-Trump rally took place in Washington, D.C. Members of the “Proud Boys” took part in the rally.[2]  “Leftist activist” counter-demonstrators confronted the Trump supporters.  Fighting broke out and one of the “Proud Boys” was stabbed.  Later, some of the “Proud Boys,” led by Enrique Tarrio, tore down a “Black Lives Matter” banner hanging from the front of a Black church.  They burned it in the street. 

            On 19 December 2020, President Donald Trump tweeted that a “Stop the Steal” rally would be held in Washington on 6 January 2022.  “It will be wild.” 

            On 30 December 2020, the chairman of the “Proud Boys,” Enrique Tarrio tele-conferred with some of his most trusted colleagues.  The conference lasted a little over an hour and a half.  President Trump’s “Stop the Steal” rally in Washington, D.C., was one week away.  First, Tarrio told them that they were now members of a special leadership group for the rally.  He called it the “Ministry of Self-Defense.”  Second, he told them to keep apart from the “normies” (normal Trump supporters) at the rally and to respect police lines.  “We’re never going to be the ones to cross the police barrier or cross something in order to get to somebody.”  He also warned then against drinking too much.  Third, apparently, a “Proud Boys” meeting does not resemble dinner with Ward and June.[3]

            On 4 January 2021, Enrique Tarrio returned to Washington for the rally.  Washington police promptly arrested him for his part in the seizure and burning of the “Black Lives Matter” banner on 12 December 2020.  He made bail, but the judge required him to leave Washington.  Hence, Tarrio was not present at the rally or the attack on the Capitol. 

            According to Cassidy Hutchinson, on 5 January 2021, President Trump instructed Mark Meadows, his chief of staff, to contact Roger Stone and Michael Flynn.  Stone, in particular, has had ties to the “Proud Boys.”  Hutchinson could not say if Meadows followed that order; Meadows refuses to say, and Stone denied any contact.[4]  In any case, contact them to what end? 

            Good help is hard to get: the “Proud Boys” at the rally on 6 January 2021 ignored (to put it mildly) any orders to respect police lines and engaged in abundant “riling up the normies.” 

            In the view of one New York Times reporter assigned to the hearings, “there is no direct evidence — at least not yet — that their [Trump-adjacent figures like Stone or Flynn] ties to extremist groups were put to use in any planning for the violence on Jan. 6.”[5]  In short, “at least so far [emphasis added] there is no smoking gun laying out a detailed plot to storm the Capitol.” 

            What if there wasn’t one?  What if it was just the last chaotic episode of a chaotic term? 

[1] Alan Feuer, “Jan. 6 Panel Explores Links Between Trump Allies and Extremist Groups,” NYT, 29 June 2022. 

[2] Alan Feuer, “Proud Boys Ignored Orders Given at Pre-Jan. 6 Meeting,” NYT, 26 June 2022. 

[3] Feuer notes with disgust that the video conference was “foul-mouthed.”  He goes on to describe the attendees as using “blatantly misogynistic, homophobic, and antisemitic language.”   

[4] In 2019 Stone was convicted of obstruction of an official proceeding, making false statements, and witness tampering. 

[5] Blake Hounshell and Alan Feuer, “January 6 and the Search for Direct Trump Links,” “On Politics” Newsletter, NYT, 13 July 2022.   

Religion in China.

            Organized religion can be understood as human-created systems of order and community.  Theology can be understood as human-created systems of philosophy grafted onto the initial ethical codes of early religions.  What the members of a faith, especially any clergy, make of these systems in particular historical circumstances gives them their character. 

            When Western Liberalism and Marxism were young, organized religions often sided with conservatives.  Hence, both movements tried to fence-in religion.[1]  At an extreme, Communism sought to repress religious belief and practice.  Given the immense repressive powers of dictatorships, that should have been the end of that.  Except that, in China, it wasn’t.  While many people in any society seem to live well enough without religion, many other do not.  They often feel a desire for spirituality.  They also desire some formal ethical standards.  Buddhism, Daoism, Islam, and Catholic and Protestant branches of Christianity all have followers in China.  Forty years ago, the Communist Party adopted a more tolerant policy.[2] 

            Xi Jinping turned out to be an early adopter of religious tolerance.  For one thing, Marxism had begun as a religious faith offering a promise of a “heavenly” future to its adherents.  That faith dimmed among the survivors of the “Great Leap Forward” and the “Cultural Revolution.”  The Party inquisitors could keep open dissent at bay.  They could not stimulate enthusiastic belief.  Some alternative would be needed.  Xi is a big advocate of “virtue” in the individual and in society.[3]  So he found a lot to like in Confucianism and in Buddhism.  Perhaps to his surprise, there also are an estimated 60 million Protestants.  Given China’s economic progress and the emergence of a middle class of strivers, that may be no coincidence.[4] 

            If Max Weber explored connections between religion and capitalism, there also can be connections between religion and nationalism.  Xi appears content with religion that matches well with the goals of the Communist Party.  He is less happy with religion linked to challenges to Chinese power.  Such is the case in the province of Xinjiang.  It’s a huge province in China’s Far West.  Many people in Xinjiang had converted to Islam, but different groups fought.  These quarrels drew-in the Qing Dynasty during the Nineteenth Century.[5]  After this conquest, China’s many troubles in the Twentieth Century encouraged separatist revolts. 

If the surface of Xinjiang is barren, it’s sub-surface is rich in carbon (oil, coal).  China has steadily tightened control and encouraged migration by ethnic Chinese.  None of this calmed the province.  Along the way, Islam has become identified with nationalist resistance to China.  Since 9/11, the invasion of Afghanistan, and the Russo-Chechen wars, any Islamic activism in Central Asia can be cast in a hostile light.[6]  In this case, Islam cannot be bent to government purposes.  The brutal repression in Xinjiang arouses Western sympathy.  As once did the fate of the schoolgirls of Chibok, Bosnians, and whales. 

[1] Thus, both the American and French Revolutions legally separated Church and State.  European Liberals often moved on to aggressive anti-clericalism.  Catholicism and Orthodox Christianity fought back by linking themselves more tightly to political conservatism. 

[2] Ian Johnson, The Souls of China: The Return of Religion After Mao (2017). 

[3] In this he resembles Maximilien Robespierre.  That doesn’t mean that I’m predicting a Chinese Thermidor. 

[4] See: Max Weber, The Protestant Ethic and the Spirit of Capitalism (1904-1905). 

[5] For the sake of simplicity, Chinese imperialism is left out of textbook discussions of the “New Imperialism.” 

[6] See the very unhelpful Tunku Varadarajan, “How to Delete a Culture,” WSJ, 16-17 July 2022. 

On Our Rules Based World Order.

            From 1940 to 1990, the United States led a global struggle against aggressive tyrannies.  Despite many heartbreaks and defeats, the United States and its allies emerged victorious.   Victory posed the question of how to create some “new world order.”  The political scientist Francis Fukuyama posited an “end of History,” by which he meant that capitalist democracy represented “the last man standing” after two centuries of ideological struggle.  The Clinton administration adopted a policy of “democratic enlargement.”  It was argued that liberal states rarely fought each other.[1]  It was argued that the use of raw power to achieve national ends could be reined-in by international agreements (amounting to law) and rule-writing.  National power could—and morally, should—be used only in self-defense or to advance democratization.[2] 

            Not everyone found this analysis compelling.  Outside the covers of the American Political Science Review, the world is a messy place.  Many countries of the world are “failed” or “failing” states.[3]  There is a large overlap between “failed states” and kleptocracies in which elites plunder their countries (and the international donors trying to promote democracy and economic development).  For many rulers, “the good old rule /Sufficeth them, the simple plan/That they should take who have the power/And they should keep who can.”[4]  (Which is good for the arms industries of advanced countries.)  Moreover, the universalism of the West’s political, economic, and cultural ideals doesn’t sit well with many people in the developing world.  Democracy and Western notions of proper labor laws certainly don’t sit well with the elites ruling many developing countries.  Western environmentalism gets in the way of people trying to solve the problem of finding work for hundreds of millions of their people, along with big pay-days for themselves.  Western cultural progressivism doesn’t sit well with many ordinary people in such societies.  Trying to shove these things up their noses just breeds resistance.[5] 

            During the Cold War, the Harvard political scientist Samuel Huntington[6] believed in symmetrical opposition to the Communist powers: “we’ve got to go wherever they go.”  Those days are over.  There are no existential threats.  There is a world where economic interdependence and new technologies are ripping apart any sense of world order.  A better strategy today may lie in using air and sea power to guard the trade routes of the world, while practicing more restrained advocacy abroad.[7]  This will appeal to some natures, but not to all. 

[1] The flaw in the argument is that there have been few liberal or democratic states in history.  Most European states only granted the mass of their citizens the right to vote in the second half of the 19th Century.  Merely having a constitution and an increasingly broad electorate didn’t make a country “liberal.”  The German and Austro-Hungarian Empires, and the Soviet Union, were all false-front constitutional states.  Liberal states got along well enough with illiberal states when it suited their purposes.  But Britain, France, Belgium, and the United States all made war on illiberal states—then called empires or tribes or declining powers—when it suited them.  Which if often did.  It’s like the “Great Illusion” malarkey from before 1914 that the world’s economies had become so deeply integrated that war had become impossible.  Here endeth the sermon. 

[2] Arguably, this view of things got us the invasion of Iraq in 2003.  Knock over some tyrant, declare “Democracy is Here,” put up some big box stores, and leave the newly-contented people to manage their own affairs.  WTWTCH?

[3] Or, in the words of Jeff Spicoli, “What Jefferson was saying was, Hey! You know, we left this England place ’cause it was bogus; so if we don’t get some cool rules ourselves—pronto—we’ll just be bogus, too!”

[4] William Wordsworth, “Rob Roy’s Grave,” Memorials of a Tour in Scotland (1803). 

[5] Walter Russell Mead, “Wokeness is Putin’s Weapon,” WSJ, 12 July 2022. 

[6] Someone who actually was “the sharpest tool in the shed.”

[7] Robert D. Kaplan, The Return of Marco Polo’s World (2018). 

“You can’t always get what you want.”

            You shouldn’t believe something is true just because it’s better than the alternative.[1] 

            First of all, “he’ll be fine.”—Mike Ermentraut in “Better Call Saul” after he whacked some smart-alec in the throat and left him gagging on the floor of a parking garage.  The Federal Reserve Bank is going to raise interest rates until demand clearly falls.  If the underlying economic fundamentals—household spending for example—remain strong, then the Fed will go on tightening. 

            Second, neither cops nor the Fed are actually your friend.  Doesn’t matter what your parents told you when you were little.  They both have jobs to do.  They’re going to do those jobs.  In the case of the cops, that can mean grabbing up a bunch of teenagers having a house party while the parents are away.[2]  Yes, the recent historical pattern has been for the Fed to rush in stimulate the economy.  That pattern developed long after Paul Volker had to—and did—break a serious inflation in the l980s.  Since then, there haven’t been any serious inflationary periods.  Just the opposite: slumps and crises have repeatedly required the Fed to pump up the economy.  That is what people are used to.  They have a hard time imagining somebody being a real jerk.  But Ben Bernanke rose to the occasion during the financial crisis of 2008 and the “Great Recession.”  There’s no reason yet to think that Jerome Powell will not do what has to be done.[3]  Now, we’re not in Volker territory, but we’re close enough. 

Fourth, inflation sentiment or expectations are not the same thing as inflation itself.  Many of the signs that inflation has peaked are actually small contributors to rising prices.[4]  Energy and food prices have long been recognized as volatile, so the “core” inflation indexes exclude them from their calculations.  Same goes for raw material prices, which factor in as only minor contributors to personal consumption.  One measure of personal consumption inflation has it at 4 percent.  That isn’t the 2 percent target set by the Fed.  How long will it take to get there? 

Currently, the economy, jobs, and inflation have crowded out all the other political concerns that once excited many Americans.  As is the case with guns and abortion, people just expect President Joe Biden to “do something.”  Biden has not done a good job of explaining either the problem or the remedy.  He has not said that the Trump and Biden administrations responded to the Covid economic crisis by expanding the money supply dramatically.  He hasn’t acknowledged that his administration, in particular, overshot the mark.  Instead, he has blamed the supply-chain problems, the war in Ukraine, and price gouging by corporations.  He hasn’t told people that beating inflation is very important on many scores, not least because it hits hardest at people who can’t adjust their incomes.  He hasn’t said that it will likely be a time consuming and painful process.  He hasn’t said that it is beyond the control of “the most powerful man in the world.” 

Would anyone thank him if he did?   

[1] Greg Ip, “Beware Wishful Thinking on the Economy,” WSJ, 14 July 2022. 

[2] The party may involve finding some nominal adult to buy them a case of beer.

[3] It is only fair to point out that the off-term elections are coming in November 2022.  The Democrats have a tenuous grip on Congress.  There is likely to be a lot of caterwauling if the Fed does trigger a recession between now and November.  President Richard Nixon urged Fed chairman Arthur Burns to “give us some money.”  Burns complied. 

[4] For example, lumber prices have fallen by better than 50 percent from their peak.  Housing prices are still high and rising in many parts of the country.