Cooler Heads Prevailing on the Korean Peninsula


Over the last 70 years, opportunities to be optimistic about anything having to do with North Korea have been exceedingly rare as the hermitlike State drew further away from the rapidly modernizing world. However, in the wake of Kim Jong un's historic meeting with South Korean President Moon Jae-in, the possibility of cooler tensions along the Peninsula and an American-led arms control initiative is incredibly exciting new territory for both the Orient and the West. Yet even with such high hopes, Marshall Kim’s volatility and President Trump's sensitivity force observers to ask if this Korean honeymoon will end in tears or celebration.

Last month, as Mr. Kim became the first Supreme Leader to step into South Korea since his grandfather in 1953, smiles and pageantry inspired hope for a deal in which the Communist state would abandon its nuclear program and allow both sides of the Peninsula to reconcile. President Moon, ever the optimist, began the process almost a year ago in Berlin where he outlined his strategy to ease tensions between the two neighbors. It included inviting a North Korean delegation to the Olympics, reviving reunions of separated families and a possible meeting between he and Mr. Kim. He also called on North Korea to give up its nuclear programs that had recently kept the Pacific Rim on edge amidst a series of test launches. At Mr. Moon's insistence, his speech was delivered in the same room in which East and West German officials negotiated their reunification in 1990. On April 27th, his plan began to come to fruition as Mr. Kim made a brief visit over the dividing line before guiding the South Korean President over to his side as well. In the days since, this has paid major dividends for both leaders as Mr. Moon's approval rating has increased from 73% to 86% while 65% of South Koreans proclaim trust for Mr. Kim, up from 15% before the meeting. Many now see him, perhaps delusionally, as a charmer rather than a despot who operates the world's most reclusive and repressive regime. Even so, to the world's delight, Mr. Kim declared an end to the testing of long-range missiles and the closure of the country's nuclear test site at Punggye-ri, even going so far as to invite South Korean and American experts and journalists to verify his claims in person.

Cooling tensions along the Korean Peninsula also presents the Trump Administration with another opportunity to make a lasting impact on global arms control after pulling out of the Iran Agreement and refreshing relations with Vladimir Putin ahead of the 2021 expiration of the current START Treaty. Nevertheless, in order to do so, the Administration will need to channel the diplomatic tactics of Cold War statesmen who used arms control to lessen the risk of nuclear annihilation rather than follow National Security Adviser John Bolton, who publicly likened North Korea to Libya - a State that gave up its nuclear ambitions only to be sacked by the West a few years later. It is imperative that American leadership realizes arms control brings not just constraints on WMDs, but provides knowledge of a country's capabilities and intentions and that the alternative is a future in which countries arm themselves because they can't be sure in regard to how much danger their adversaries pose. In such a case, nearly any action could escalate to nuclear war and it would undoubtedly be a shame if it took another Cuban Missile Crisis to jolt leaders back to their senses.

As it prepares to take on a leadership role in disarmament talks, the United States will need to focus on striking a balance between its own pessimism and South Korean optimism toward the North. Experience in dealing with the reclusive regime has taught every American President since Harry Truman harsh lessons about North Korean promises - most importantly to cheer only concrete, verifiable actions and not just words. This is why veteran diplomats felt uneasy about President Trump using the Rose Garden for his speech about Korean reconciliation and insisting upon using the DMZ rather than Singapore, which has since been named host, for the North Korean-American Summit by proclaiming that "if things work out, there's a great celebration to be had, on the site." They also know that the Kims are serial cheats and that their nuclear program is central to their grip on power. That said, entering negotiations with such a negative mentality is not conducive to productive talks and could isolate Mr. Trump from Mr. Moon and Mr. Xi, both of whom have seemingly warmed to the despotic Mr. Kim as of late. Thus, the American delegation will have to show that it is appreciative of North Korea's recent steps toward openness while maintaining the discipline to not jump at a deal.

While the June 12th Summit draws closer every day, the easiest conclusion one can make is that it will take skill and at least a little bit of luck for the United States to avoid a debacle in Singapore. President Trump's skeptics worry that his hunger to strike an agreement could lead to flimsier deal terms although he claims that he will leave the table if he feels unsatisfied and would continue his policy of maximum pressure, yet it's increasingly difficult to imagine South Korea cooperating with preemptive missile strikes against the North even if the talks end on a sour note. In the event that Mr. Trump is able to play his cards right, the Summit could certainly be something worth celebrating although it may well be a slow and arduous process as opening a country to the world often is. Until then, it’s best to just continue cherishing the scintilla of hope emanating from Pyongyang as we sit tight in anticipation of peace around the perimeter of the Pacific Rim.

Winners and Losers in a Greener World


"Oil is renewable energy. It just takes longer to renew" quipped 3rd generation oilman Fred Holmes of Taft, California - home of the United States' first Naval petroleum reserve. Such sentiment is somewhat uncommon in present-day America, which has led the world in clean-tech innovation despite some factions clinging to the coal and oil that powered the world through the 19th and 20th centuries, respectively. But in the time since the Trump Administration's withdrawal from the Paris Agreement in June of 2017, China has enthusiastically stepped in to take a leadership role alongside the EU in reducing CO2 emissions and developing renewable energy solutions while Russia and the Middle East think wishfully that oil will continue its reign as earth’s most important energy resource. As the geopolitics of energy undergo a transition for the first time in a century, the world is faced with the question: who will be the winners and losers from clean power?

Since 2008, the United States has reaped the benefits of a "Shale Revolution" as dome-like tankers depart Texas and Louisiana carrying Liquefied Natural Gas, a fuel that produces half as much CO2 as oil and one fourth as much as coal, en route to Europe and Asia. It has not only tempered predictions of American decline, especially as China's thirst for LNG grows, but has also made it easier to impose sanctions upon adversaries, including Russia during its stranglehold of Ukraine. Secretary of the Interior Ryan Zinke has helmed Trump's charge to unlock vast tracks of federal land for oil and gas drilling, stating that "our goal is an America that is the strongest energy superpower that the world has ever known" and then clarifying that energy chiefly means oil, natural gas and coal. With output still rising, by 2025 the Shale Revolution will have unlocked more oil and gas in America than any other country in history, including Saudi Arabia in its 1970s heyday. The administration plans to build on this momentum by opening up offshore reserves to drilling and easing restrictions on coal mining and natural gas production that were imposed under the Obama administration. Meanwhile, Russia recently began drilling off the northern coast of Siberia where low profit margins and arctic conditions have deterred the interest of most Western firms as well as tapping Venezuelan oil in exchange for cash. It is without question that the availability of easy money via the expanding LNG market is a great motivator for both countries but the greatest force behind the growth has been China’s growing demand for energy. Although it has made considerable strides in moderating its demand for coal and oil by deploying gas and renewable energy, China remains the world’s biggest importer of fossil fuels for now as it prepares to make even greater investments to its infrastructure.

Rather than capitalize on cheap oil, the European Union has been incredibly ambitious in climate leadership, going so far as to plan to reduce greenhouse gases by 80-95% from 1990 levels over the next 30 years which will require it to almost entirely decarbonize its energy system. Despite imposing sanctions on Russia in 2014 after its annexation of Crimea, the State-owned oil giant, Gazprom, has been allowed to plan a natural gas pipeline from Vyborg to Greifswald that will double the capacity of Russian gas piped to Europe by 2019. Gazprom has also constructed a pipeline to China as the People’s Republic seeks to curb its dirtiest uses of coal, such as heating urban homes. Despite lacking the tradition of clean-energy innovation that the United States and European Union have built, China has done its best to make up for it by spending more money on energy infrastructure than both of them combined in 2017 ($132bn) and pledged an additional $7.6bn to spend on research and development by 2020. According to the International Energy Agency, China could generate up to ⅓ of the world’s wind power, ¼ of its solar power and already possesses six of the top ten solar panel producers and four of the top ten wind turbine manufacturers.It sells more electric vehicles than the rest of the world combined and has the largest power-generation capacity but ultimately still has more CO2 than any other country. Still, they put more entrepreneurial zeal into clean energy and decentralizing and decarbonizing their energy supply than anyone else and are poised to take the lead from the United States and European Union in the vanguard of the energy transition as a result. China will benefit in at least a few ways from its increasing production and use of renewables, batteries and electric vehicles. Producing more of its own energy will reduce reliance on imports that are vulnerable to global instability and increase its soft power, especially with its East Asian neighbors.

It goes without saying that the sun is setting on oil and many are wondering what will happen to established producers in the coming years. Saudi Arabia recently hedged its bet by selling 5% of Saudi Aramco, the world’s largest oil company, to contribute to its $2trn public investment fund while joining forces with Russia to form an OPEC+ cartel that will curtail oil production by $1.8mm in barrels per day in order to keep prices high. Most, if not all, Middle Eastern nations have extraordinarily hot and sunny climates that are perfect for large solar-photovoltaic parks, which store heat in molten salt and can release it as electricity at any time, and could potentially continue to be energy powers long after the days of oil have passed. However, most of these producers just see renewable energy as a way to use less oil and gas at home so more is available for export. The United States, on the other hand, just became a net-exporter of gas for the first time in 60 years but is fortunate enough to have had progressive leadership and close relations with the European Union that will continue to promote clean energy innovation despite the Trump Administration’s lack of enthusiasm. The wild card is what will happen in the developing world - particularly China. Energy Democratization - the process by which regions become more self-sufficient as power generation become more dispersed - could lead to a reduction in poverty in rural areas if they are given greater access to mini-grids and rooftop solar panels. Shanghai-based Envision invented turbines that operate at low wind speeds and can be used almost anywhere. Their goal is to create a global “energy internet” that allows companies to manage locally operated energy assets and give more power to communities. However, while it is keen on harvesting the power of its wind and sunlight, China is still a semi-autocratic State and its progress could be reversed at the whim of Secretary Xi Jinping. Other developing areas, such as Africa, have warm climates and could potentially produce an unprecedented amount of solar power which would slowly raise its people out of poverty. Unfortunately, rampant government corruption and frequent warring can easily halt any progress made in modernizing energy infrastructure.

Looking back to the Industrial Revolution, energy transitions such as that to coal and then to oil have changed the world in unpredictable ways. The next one could have equally unpredictable effects and will surely alter the geopolitical landscape as we know it. Ultimately, the race to clean energy solutions need not be winner take all if the world, especially the West, Russia, China and OPEC, collaborate in order to avoid the formation of a battleground. In the event that producers continue along the same path, the winners will be those with the most readily available resources and ability to produce new technology while the losers will be those whose vested interests and perceived lack of alternatives keep them wedded to fossil fuels. Regardless, energy-secure regions will continue to have significantly more influence in global policy-making and newly decentralized economies will open up a realm of innovation never before seen as the first-world gradually distances itself from its 20th century past.


Xi Jinping and the Pursuit of Power


Buried at the bottom of the second page of the March 1st edition of The People’s Daily was the announcement that Chinese Parliament will abolish Presidential term limits while approving a new administrative branch that merges elements of the party, police and judiciary into a powerful organization known as the National Supervisory Commission. Said organization will be able to interrogate, search, detain and punish any official from both the Communist Party and Government bureaucracy in cases involving corruption, ethics and even ideological deviation. Such a development is the latest of many signs that America has lost its wager that economic growth would propel China toward Western values and confirms that Secretary General Xi Jinping is interested not in ruling from behind the scenes, but with his power and authority on full display.


In February of 1972, President Nixon landed in Beijing to kick off a State-led tour of the country and ended 25 years of nonexistent diplomacy between China and the United States in what he designated as “the week that changed the world.” The visit marked a major shift in the balance of the Cold War as it drove a wedge between Sino-Russian relations while spurring the former to begin the process of opening itself to the world after decades of Maoist isolation. Four years after Mao’s death in 1976, Central Advisory Committee Chairman Deng Xiaoping made the Presidential succession system more orderly and predictable by installing 10-year term limits with the belief that the overconcentration of power is liable to give rise to arbitrary rule. Organized succession was also intended to create a clearer separation between Party and State, a divide that China still lacks as it uses both as ladders of authority with the former inherently outranking the latter as it possesses the loyalty of the People’s Liberation Army. Even in the best of times, with cheap goods proving to be a boon for Western consumers and retailers and financial services firms raking in billions, America has attempted to pair engagement with the need for balancing China’s rise, strengthening forces in the Pacific Rim and expanding security and trading alliances with other Asian nations.


In the midst of the Soviet Union’s collapse, the west eagerly welcomed China into the global economic system with the hope that giving it a seat at the table would bind it into the rules-based world order established after World War II. In theory, economic integration should have encouraged China to evolve into a market economy like its Western counterparts as its citizens became wealthier and yearned for Democratic freedoms, rights and rule of law. Western hope has not been entirely misplaced as China has enthusiastically embraced consumerism, become the world’s biggest exporter, is home of 12 of the world’s 100 most valuable companies and has been extraordinarily prosperous for both itself and those who have done business with it. That said, the country is still not a market economy and, on its present course, likely never will be. Not only does the State control business as an arm of its own power, the “Made in China 2025” plan will use subsidies and protectionism to create world leaders in ten industries including robotics, biomedicine, electric vehicles and more. Nationalists in the Trump administration have expressed desire for these goods’ supply chains to be rerouted back to America but appear to lack a firm plan of action. Not long ago, corporate executives would have been in an uproar, worried that this could shut them out of Chinese markets, though big business is no longer such a reliable cheerleader for the Orient’s superpower due to China’s swelling animosity toward foreign commerce. Morning raids by Chinese regulators who confiscate global client lists and computers filled with priceless intellectual property have the potential to wreak havoc upon firms’ reputations and future earnings. During a 2012 research trip to Beijing, Canadian equity analyst Huang Kun was detained and imprisoned for two years after writing a report claiming that a Chinese-focused mining company, Silvercorp, had overstated its production and the volume of precious metals contained in its mines. China has recently taken even more drastic measures against foreign businesses including shutting down every Lotte supermarket as a “fire-hazard” because it owns land southeast of Seoul on which the United States has placed anti-missile batteries. It also stopped buying bananas from the Philippines for “health reasons” shortly after the archipelagic nation contested China’s claim to Scarborough Shoal in the South China Sea. Such bold actions, especially when unchecked, will only serve to strengthen Mr. Xi’s grip around East Asia while Chinese businesses continue to penetrate foreign markets in what is becoming a grand display of economic imperialism.


The General Secretary looks to continue capitalizing upon China’s transition from autocracy to dictatorship by expanding his influence within the party and on a diplomatic stage. While the country has become wealthy beyond its wildest dreams, Xi has used his power to reassert the dominance of the Communist Party and his own position within it. He has purged potential rivals as part of his anti-corruption campaign, reorganized the People’s Liberation Army to ensure loyalty to himself, imprisoned free-thinking lawyers and stamped out criticism of the party and government online. His China is under strict Communist Party control and is more than willing to use the power of its vast markets to cow and co-opt its rivals. As it bends and breaks rules-based order to push America to the periphery of the Asia-Pac region, it is confident in both its economic and military strength, having touted State-guided capitalism as superior to free-markets since the Great Recession and more recently deploying its Navy to re-draw maps in the South China Sea by seizing reefs and islets on which it has built military installations. The rapid pace of China’s military investment and modernization has raised doubts about the United States’ long-term commitment to dominance in the region. Although the PLA could not defeat America in a conventional war, power is about resolve as well as strength and the great Western superpower has been both unwilling and unable to match China’s challenge as it becomes increasingly overt. Having previously claimed no interest in how other countries ran themselves so long as it was left alone, China has begun to grow into its role as a regional superpower. The Belt & Road Initiative, a development strategy focused upon connectivity and cooperation between Eurasian and African countries, calls for $1tn in foreign investments, including roads, railways and fibre-optic cables, dwarfing the $140bn (in 2017 dollars) Marshall Plan. This will create a Chinese-funded web of influence that includes every country willing to join so long as they accept “Chinese-based dispute resolution.” Party leadership has begun to hold its authoritarian system up as a rival to Western democracy while the Chairman offers “a new option for other countries” that involves “Chinese wisdom and a Chinese approach to solving the problems facing mankind.” Interestingly, much of the money is going to developing nations and Mr. Xi has embraced the tactics of dictators such as Ahmed Sekou Toure, of Guinea, and Robert Mugabe, of Zimbabwe, in cementing his power. His most prominent rival, Bo Xilai, was arrested and jailed following a scandal of the corruption and murder of a British businessman. He also used his anti-graft campaign to rid himself of other rivals, most notably Sun Zhengcai, a regional party chief who was once considered one of his greatest competitors for General Secretary.


To put it plainly, the window for confronting and challenging Chinese aggression is closing quickly. Although the rivalry between reigning and rising superpowers may not necessarily need to lead to war, Mr. Xi’s thirst for power has raised the potential for major instability not only in the country, but in the East in general. It is without question that Western politicians underestimated how tirelessly Chinese leaders would work to defend their authority, just as its own leaders are suffering a crisis of confidence in the wake of unprecedented partisan polarization. President Trump saw the Chinese threat early but mainly views it in terms of the trade deficit while Make America Great Again smacks of a retreat into unilateralism that can only strengthen China’s hand. Putting up with Chinese misbehavior today in the hope that continued economic growth will make them better tomorrow no longer makes sense – tolerance of abuses now will make it tougher to challenge them later. Beginning immediately, the West needs to think seriously about how to balance China more effectively. It is imperative to maintain a united front without losing sight of the strengths of a democratic, accountable government, free press and independent courts. Ultimately, the goal of both the West and the East’s lesser powers must be to mitigate the “Bad Emperor Risk”, or that Mr. Xi could be on a course that would prove a huge mistake – nobody will be able to stop him.


Russian Interference and the Growing Need for Campaign Finance Reform


Widely considered a fallen giant since the Soviet Union’s collapse in 1991 and a market-shaking sovereign default in 1998, Russia has quietly emerged as a resurgent superpower in the midst of what could become the greatest election scandal in American history. As the Eurasian giant begins anew its foray into Western politics, it is building upon a history of disseminating lies and financing rogue activists while succeeding in its aim to weaken rivals by undermining trust in institutions and deepening the divides between their citizens.


Escalating as the Cold War reached its height in the early 1960s, Russia has crafted a tradition of aggressively cultivating resentment between Americans through the work of its State intelligence service. Shortly after Lyndon Johnson ascended to the Presidency, the KGB-funded Liberty Book Club published the first piece of literature claiming that JFK’s assassination was a conspiracy – a belief surprisingly popular in many circles today. Less than a decade later, it forged provocative pamphlets intended to spark an ultimately nonexistent conflict between the Black Panthers and the Jewish Defense League. Even as the Soviet Union teetered on the brink of collapse in the late ‘80s, the KGB began the still-circulated, InfoWars-esque, rumor that the CIA created HIV in a biological weapons lab. Eventually, as Mikhail Gorbachev implemented Perestroika, active psychological measures against the West went into hiatus in an effort to reconcile with the more prosperous side of the Iron Curtain. However, this never stopped the Kremlin from working against former Soviet states and other vulnerable nations, most notably during the Yugoslav Wars of the 1990s, the annexation of Crimea in 2014 and in its ongoing support of the Assad regime in the Syrian Civil War.


Having engaged in tumultuous relationships with Russia for centuries, France and Germany have taken point in Western resistance to Putin’s grand ambitions in America’s absence. Though vague, Chancellor Merkel threatened “consequences” in the event that Russia were to interfere with the German election process while President Macron publicly accused Russia Today and Sputnik of being State propaganda channels. Preferring to handle the matter internally, Sweden and Finland rolled out media-literacy initiatives, with the former guiding students to create their own “Fake News” campaigns in order to develop a better understanding of the dynamics behind disinformation. Most recently, English Prime Minister Theresa May gave 23 Russian diplomats one week to leave Britain, suspended all “high level bilateral contacts” and confirmed that no members of the Royal Family would attend the World Cup in Moscow this summer in the wake of the Novichok nerve agent attack on former spy Sergei Skripal and his daughter in Salisbury, a city roughly 20 miles off the country’s southern coast. Across the Atlantic, however, little has been done to combat Russian interference outside of Robert Mueller’s indictment of 13 Russian nationals until Treasury Secretary Steven Mnuchin announced sanctions against five Russian entities and nineteen individuals for “attempted interference in US elections, destructive cyber-attacks, and instrusions targeting critical infrastructure”. Rather than personally take an active stance against Russia, President Trump appears to view allegations of election interference not so much as a threat to American democracy but as a personal attack against his legitimacy - an insinuation that he would not have won without Putin. This has prompted waves of “Deep State” rhetoric out of the Alt-Right, who believe a Shadow Government run by career officials working in conjunction with the media is undermining the current administration. One could even make the argument that the President’s dismissal of unfavorable reporting as “fake news” has made the country more vulnerable to disinformation by increasing the electorate’s distrust in both parties. In fact, proof of Russian success has sewn additional skepticism toward government actions but, on a very positive note, could ultimately lead to campaign finance reform, especially in regard to soft money.


Campaign contributions have also played a major role in Russia’s re-ascendance to geopolitical prominence. Whereas the Sanders, Stein and Trump campaigns were the main beneficiaries of the American propaganda campaign, the Kremlin has taken an active role in financially supporting a number of European parties as well. In Italy, where dismal public trust in authorities has led to potent disinformation, Putin has openly backed the neo-fascist Forza Nuova and ethnic-nationalist Northern League, the latter of whom signed a cooperation agreement with Putin’s United Russia party in March of 2017. Austria’s hard-right FPÖ, which controls the country’s foreign, interior and defense ministries, signed a similar agreement in December of 2016, shortly before their party leadership met with Lt Gen Michael Flynn, the President-elect’s National Security Advisor. Russia has also supported Germany’s far-left Die Linke, which descended from the East German communist party, as well as the far-right AFD, which counts Germans of Russian descent to be a major part of its base and even published its 2017 yearbook in Russian. However, direct funding of sympathetic parties is rarely proven even if it is frequently rumored. Czech President Miloš Zeman, a far-right populist, narrowly won re-election in January after the deployment of a massive ad campaign whose sources of funding remain mostly unknown. Prior to that, an investigation of the source of $12,000,000 to the pro-Brexit leave.EU campaign came up inconclusive. Tracing money in the United States will be equally difficult as donors are permitted to contribute unlimited sums of money to Super PACs and parties, thus making the determination of election tampering by foreign powers nearly impossible without a lengthy investigation.


Looking ahead to the Fall, intelligence professionals expect Russia to attempt to influence the American midterm elections in favor of populist candidates on the fringes of their respective parties as “establishment” incumbents, especially Democrats, are far more likely to show interest in further investigations into their meddling. Supporting far-right and far-left candidates will also lead to further polarization of American politics and sew more chaos and division in the West’s most affluent leader. Some states, including Pennsylvania and Virginia, have already reverted to paper ballots in an effort to prevent electronic interference while Georgia’s legislature is currently considering a bill that would do the same. Ultimately, the American election process needs far more than basic ballot security and must further consider the perils of soft money and the unprecedented influence of social media, both of which have done irreparable damage to the diverse array of political identities of the electorate. It may take what Lawrence Lessig, author of Republic, Lost, calls a “Roger Bannister moment” - referring to the first man to run a mile in less than four minutes - to show the nation how positive the effects of limiting the ability of external resources to impact campaigns are. Not only would such a moment devastate Mr. Putin’s Western influence, it would also put the country back on the road to electing men and women with great values rather than increasingly massive bankrolls, which is surely an ideal that nearly every American can agree on.


A Bull Market and Economic Competence


After nearly a decade of sustained economic growth in the aftermath of the Great Recession, volatility has finally returned to the markets with the Vix Index, a measure of future volatility, shooting from 14 to 37 in the days following the February 2nd sell-off. While the economy has retained its heat, especially after the GOP-led tax cuts and major spending increases, including an additional $80 billion to defense and $63 billion to liberal social programs, America is finally seeing signs that it is ready to cool off.


In an effort to promote sustainable growth, the Fed began raising rates in 2015, the first of five increases under former Board of Governors Chair Janet Yellen, and is poised to do so again under the leadership of Jerome Powell. Sustainability, however, may not be a part of the Trump Administration’s agenda as the GOP continues to lose ground heading into the midterm elections, which the party in control of the Executive Branch has historically struggled in. Massive tax cuts and spending increases, though appeasing to the electorate and even opponents, will add an additional $1 trillion to the national debt by 2019, bringing it to nearly $22 trillion. Most economically literate people would advise against such profligate fiscal stimulation due to the belief that it will result in unrestrained market growth, leading to instability, and that it is reckless in the way that it takes short-term political gain in exchange for long-term, sustainable growth.


One may notice a mild correlation between today’s economy and that of the late 1960s. After LBJ pushed the Kennedy tax cuts and his own Great Society programs through congress as defense spending for an unpopular war continued to escalate, the budget deficit quickly shot up from 0.2% to 2.7% of GDP (13.5x) in the years following 1965. Consequently, inflation boomed to 3% in 1968 and then 5% in 1969, culminating in a minor recession midway through Nixon’s first term. However, there are a number of differences between the economy of the 2010s and that of the ‘60s. 50 years ago, 1/3 of workers belonged to trade unions, compared to less than 11% now. ¼ had wage agreements tying their pay to inflation, a contract stipulation now so rare that it is difficult to find data for. Global competition and discounting from giant retailers like Costco and Amazon has done wonders in holding down the prices of goods. Unsurprisingly, our growth more closely mirrors that of the late 1990s, a decade where Fed Chairman Alan Greenspan insisted on business-friendly monetary policy that was able to push unemployment down to 3.8% as Clinton’s 2nd term neared its close. He felt that computerization would increase the economy’s productive capacity, releasing some of the pressure created by rapid expansion, and maintained a relatively hands-off approach as inflation stayed below 2% while wages soared. This policy allowed a bubble to form that ultimately began to burst as the country rolled into Y2K. Unlike the 90s, no single modern asset class has produced the irrational exuberance that the .com startups did. In fact, many students entering college this fall may have never heard of Healtheon or Compaq, both of which were once billion-dollar firms. The modern economy features a much more diverse range of expensive goods, with bonds and real estate serving as excellent examples, yet prices are frequently justified because low interest rates and booming growth make future flows of income look more valuable.


Playing Devil’s Advocate, one may also want to consider the theory that Americans shouldn’t necessarily worry that the Federal Funds Rate staying relatively low will lead to a leap in inflation anytime soon. First, proponents of Machine Learning and Artificial Intelligence feel that we may be on the brink of the second industrial revolution and believe that emerging technologies will allow firms to do more work with fewer laborers. Furthermore, rising wages should encourage firms to increase exploration into labor-saving technology, thus driving down prices in the long-run. Second, some economists believe that recessions damage the supply capacity of the economy as laborers’ skills may atrophy while they are out of work for months or years. A study conducted by economists at the University of California – Berkeley found that for every one percentage point rise in local unemployment during the recession, working age people were 0.4 percentage points less likely to be unemployed in 2015. While unemployment rates recovered, overall employment did not, suggesting that some were deterred from even re-entering the work force. That said, there is a relationship between falling unemployment numbers and an increase in participation by prime-age workers. Finally, making the assumption that the past is the best indicator of future behavior, we have had very reliably stable price-growth that hasn’t necessarily been disproportionate to the employment rate, effectively moving forward in a state of equilibrium that has yet to display any major signs of disruption. As a result, Americans may become less upset with globalization as the economy heats up, hiring at home expands, and firms compete for workers by raising wages while personal expenses continue to rise at a very manageable rate. Additionally, President Trump thoroughly enjoys touting recent economic gains for blacks and Hispanics, and he may continue to have the right to do so. Since 2016, wage growth has been strongest toward the bottom of the income distribution, with 27% of blacks and 26% of Hispanics living below the poverty line and experiencing some advancement, though marginal it may feel.


Regardless of the benefits, continued economic stimulation is dangerous, even reckless. Massive debt incurred by substantial tax cuts and spending increases will eventually weigh on growth. This begs the question: can America keep growing at this rate without an inflationary surge or a correction of unprecedented size. After years of weak wage growth and an expanding wealth-gap, many laborers feel that this is a worthy risk to take.


Is Populism Inherently Bad?


As the United States enters the second year of the Trump Era with more of a whimper than a bang on the heels of a government shutdown that further exposed the fragmentation of the Republican Party, the populist movement that swept the west between 2015 and 2017 appears to be experiencing stagnation after a meteoric rise to prominence. While “Make America Great Again” and “Feel the Bern” still inspire passion in the minds of millions of Americans, many long for a return to political orthodoxy, namely the use of less antagonizing themes. Across the Atlantic, the populist messages championed by Nigel Farage and Marine Le Pen have also struggled to maintain their footing despite England & Wales successfully driving the Brexit and populist candidates winning office in Hungary, Austria, the Czech Republic and Poland, the last of which just made it illegal to blame Poles for any Nazi atrocities that occurred on their soil during World War II. The Italian 5 Star Movement, with small numbers of elected officials in the Chamber of Deputies (House), Senate and European Parliament has looked increasingly competitive, capitalizing on fear of mass immigration and an economy that has grown increasingly less relevant from a global perspective since the early 20th Century. These successes prompt the question: should the establishment look to selectively adopt some populist goals?


At the very root of populism lays antagonistic rhetoric, typically highlighting the gap between political elites and the upper class, and the average citizen. This can be seen on both sides of the isle, as Joseph Stalin oft attacked the Romanovs in Pravda, the underground Bolshevik newspaper, in the same way that Candidate Trump described the Washington “swamp”, specifically the Bush and Clinton families. Populists frequently see the media as a tool of the establishment and in some cases seek to censor it, as the Bolsheviks did by force and President Trump has through promotion of the “fake news” label and frequent attacks on Twitter. They are able to vividly communicate voters’ discontent by embracing the power of nostalgia, creating an enemy out of a group vulnerable to marginalization, and doing their best to come across as genuine and unscripted. When campaigning in heavily Catholic Southern Louisiana, Huey Long would tell stories of attending Church as a child, fabricating nearly everything. While this would be nearly impossible to do in the age of social media, humanity’s gravitation toward likeable and relatable candidates will never change. Modern American populism often guides its practitioners to adopt policies from a few key issues from which it is easy to ignite passion and hatred in the minds of voters and victims alike. Most recently, globalism and mass immigration have been used to create divisiveness over America’s role in keeping world order, with the alt-right shunning globalism and the far-left proposing dangerous mass-immigration solutions. Shifting social values, especially those relating to the battles surrounding gay marriage and women’s reproductive rights, and a disappearing sense of community provoke strong reactions in both bases and allow candidates to promote “innovation” in the societal structure. Using the 2016 election as an example again, both Trump and Sanders, with Clinton opportunistically following closely behind, blasted existing trade deals, especially NAFTA, as damaging to the American working class, who ultimately sided with the candidate most vehemently opposed to it. The eventual President used this to even further capitalize upon animosity against Mexico, while Senator Sanders was able to force light upon Hillary and the Democratic establishment’s failure to keep blue-collar Americans’ interests in mind.


Despite losing in the Primary, Sanders was able to revive socialism’s status as a mainstream political ideology in the United States, especially amongst youth, college students and low income or highly leveraged individuals. On a side note, the American Socialist movement could continue to gain traction at the hands of the Universal Basic Income study that is currently being conducted in Finland.


Needless to say, there is hardly any shortage of ideas from which reformers can mine policy. America should look toward the post-World War II German and Japanese focus on on-the-job training for ways to assist newcomers and refugees looking for vocation and Americans who have lost jobs to automation. However, the claim that we should be more like Canada in providing a safety net, or other facets of economic liberalism, to people who have yet to contribute to society is certainly debatable. Self-reliance and a sense of rugged individualism are the foundation of the American identity and ensured that only the boldest and best-prepared would take major financial risks in the early days of new western entrepreneurship.


Ultimately, while the word “populist” may prompt feelings of disdain in the minds of most voters, many Americans benefit from, or support, programs proposed by one. Going back to the late 19th century, reformers were able to dismantle Marxist and agrarian “People’s Party” candidates hopes at holding office by adopting some of their ideas. In the midst of America’s rise as an Imperial Power during the McKinley Presidency through its establishment as a World Power during World War I, Presidents Roosevelt and Wilson fought oil and rail tycoons and advocated for consumer protection. Overseas, Prime Minister David Lloyd George proposed “The People’s Budget”, prompting several tax increases to support liberal welfare reforms including free school lunches and elderly pensions. Nearly a century after Chancellor Otto von Bismarck of The German Empire created the world’s first welfare state, Lyndon Johnson was able to push his “Great Society” legislation through Congress on the heels of the Civil Rights Act of 1965. This, in conjunction with the New Deal, is considered the pinnacle of 20th Century American progressive reform. Following in their paths, current lawmakers should be looking to adopt some stances proposed from the fringes of their parties in order to create more welcoming campaigns and a more inclusive political environment. These could range from killing aid to countries we feel are not adhering to our foreign policy agenda (see: Pakistan & Directorate S) to granting pardons to anyone incarcerated for marijuana possession. At the end of the day, fragmented societies and increasingly polarized politics make it highly unlikely that populism will retreat anytime soon. However, these movements on the left and right have presented both major parties with the opportunity to innovate their platforms so that they are better tailored to the needs of diverse bases. Because of this, populism should surely be viewed as less of a curse and more of a blessing in the long-run as solving the problems of the electorate will always bear fruit.