The response to the 2008 economic crisis has relied far too much on monetary stimulus, in the form of quantitative easing and near-zero (or even negative) interest rates, and included far too little structural reform. This means that the next crisis could come soon – and pave the way for a large-scale military conflict.
BEIJING – The next economic crisis is closer than you think. But what you should really worry about is what comes after: in the current social, political, and technological landscape, a prolonged economic crisis, combined with rising income inequality, could well escalate into a major global military conflict.
The 2008-09 global financial crisis almost bankrupted governments and caused systemic collapse. Policymakers managed to pull the global economy back from the brink, using massive monetary stimulus, including quantitative easing and near-zero (or even negative) interest rates.
But monetary stimulus is like an adrenaline shot to jump-start an arrested heart; it can revive the patient, but it does nothing to cure the disease. Treating a sick economy requires structural reforms, which can cover everything from financial and labor markets to tax systems, fertility patterns, and education policies.1
Policymakers have utterly failed to pursue such reforms, despite promising to do so. Instead, they have remained preoccupied with politics. From Italy to Germany, forming and sustaining governments now seems to take more time than actual governing. And Greece, for example, has relied on money from international creditors to keep its head (barely) above water, rather than genuinely reforming its pension system or improving its business environment.
The lack of structural reform has meant that the unprecedented excess liquidity that central banks injected into their economies was not allocated to its most efficient uses. Instead, it raised global asset prices to levels even higher than those prevailing before 2008.
In the United States, housing prices are now 8% higher than they were at the peak of the property bubble in 2006, according to the property website Zillow. The price-to-earnings (CAPE) ratio, which measures whether stock-market prices are within a reasonable range, is now higher than it was both in 2008 and at the start of the Great Depression in 1929.
As monetary tightening reveals the vulnerabilities in the real economy, the collapse of asset-price bubbles will trigger another economic crisis – one that could be even more severe than the last, because we have built up a tolerance to our strongest macroeconomic medications. A decade of regular adrenaline shots, in the form of ultra-low interest rates and unconventional monetary policies, has severely depleted their power to stabilize and stimulate the economy.
If history is any guide, the consequences of this mistake could extend far beyond the economy. According to Harvard’s Benjamin Friedman, prolonged periods of economic distress have been characterized also by public antipathy toward minority groups or foreign countries – attitudes that can help to fuel unrest, terrorism, or even war.
For example, during the Great Depression, US President Herbert Hoover signed the 1930 Smoot-Hawley Tariff Act, intended to protect American workers and farmers from foreign competition. In the subsequent five years, global trade shrank by two-thirds. Within a decade, World War II had begun.
To be sure, WWII, like World War I, was caused by a multitude of factors; there is no standard path to war. But there is reason to believe that high levels of inequality can play a significant role in stoking conflict.
According to research by the economist Thomas Piketty, a spike in income inequality is often followed by a great crisis. Income inequality then declines for a while, before rising again, until a new peak – and a new disaster.
This is all the more worrying in view of the numerous other factors stoking social unrest and diplomatic tension, including
- technological disruption, a
- record-breaking migration crisis,
- anxiety over globalization,
- political polarization, and
- rising nationalism.
All are symptoms of failed policies that could turn out to be trigger points for a future crisis.
.. Voters have good reason to be frustrated, but the emotionally appealing populists to whom they are increasingly giving their support are offering ill-advised solutions that will only make matters worse. For example, despite the world’s unprecedented interconnectedness, multilateralism is increasingly being eschewed, as countries – most notably, Donald Trump’s US – pursue unilateral, isolationist policies. Meanwhile, proxy wars are raging in Syria and Yemen.
Against this background, we must take seriously the possibility that the next economic crisis could lead to a large-scale military confrontation. By the logicof the political scientist Samuel Huntington , considering such a scenario could help us avoid it, because it would force us to take action. In this case, the key will be for policymakers to pursue the structural reforms that they have long promised, while replacing finger-pointing and antagonism with a sensible and respectful global dialogue. The alternative may well be global conflagration.
Trump Is Waging War on the GOP. He’s Winning.
if you’re looking for confirmation bias—and by all accounts, that’s the mode of analysis our president prefers—there is plenty of evidence to suggest that the only thing the Trump administration needs is More Trump.
.. the Trump clones did well. Sure, Corey Stewart and Kris Kobach lost. But Trump can tell himself that Virginia is a Clinton state he doesn’t need and that he couldn’t lose Kansas in 2020 if he tried. In important states—tossups he has to have for reelection—the Trump clones won. In Florida and Georgia, Ron DeSantis and Brian Kemp ran as Mini-Trumps. And not only did these two win, but they beat the kind of young, progressive minority candidates that the Democrats are itching to put up against Trump in two years.
.. Trump skeptics took a thumping. Barbara Comstock, Mia Love, Mike Coffman—all of those uppity conservatives who voted for Trump when they had to, but refused to bend the knee? Gone, gone, and gone. And in case you doubt how crucial this was to the president, he spent several minutes of his postelection press conference naming and shaming the Republican losers who did not sufficiently “embrace”—his word, he used it five times—him... Because, as everyone knows, Carlos Curbelo would have held on to Florida’s 26th District—which is 72 percent Hispanic and 50 percent foreign-born—had he gotten on board with Trump’s plan to sign away birthright citizenship. Cuck got what he deserved... The gains in the Senate are even better. Not only did Republicans add to their number, they did so while subtracting people, such as Jeff Flake and Bob Corker, who never showed the same level of discernment as Beautiful Ted. The result is a bigger, Trumpier majority, which, by extension, will put even more pressure on the one or two remaining Republican senators who have been reluctant to embrace the president... So if, for instance, the president needed the Senate to confirm a judge or a new attorney general, or—and we’re just spitballing here—vote on a trial of impeachment, then Trump is in a much stronger position... for all the talk about how Trumpism is a reaction to leftism and social-justice warriors and political correctness, the truth is that it is principally an intra-party fight... And like the Maoists, the Trumpers aren’t really interested in picking a fight with the other superpower. They’re much more concerned with controlling the near abroad—which is to say, the Republican party. That’s why they tend to focus their hatred on Republicans and conservatives who decline to get on board, rather than on Democrats and liberals. Jeff Flake is the enemy; Kamala Harris is just a random nonplayer character... Always remember that Trumpers—the people who believe in him, not the remora fish looking for their bits of chum—care very little about the left. Their real opponents are other Republicans. Seen from that perspective, Tuesday’s vote was a huge success. Because for Trumpers, it’s never a binary choice. Wherever a Trump-skeptical Republican was running against a Democrat, Trumpism couldn’t lose... In the final weeks of the midterm campaign, 4 percent looked like the most important number in politics: unemployment was under it and GDP growth over it. This was, economically speaking, as good as it gets, and most political professionals thought Republicans should be running on these numbers... Yet Trump decided to close the election with American Carnage 2. He obsessed about the caravan that was winding its way to our southern border. (No one seems to have asked why they wouldn’t be deterred by the Wall that Mexico paid for.) Trump ordered 5,000 troops to the border. Then the number was 10,000. Then 15,000. Then he said he was going to order these soldiers to fire on anyone who threw a rock in their general direction, even though the caravan was still a thousand miles away. The president ran an anti-immigration ad so vile that Fox News—the network whose journalists appeared onstage at a Trump campaign rally—pulled it off the air... In short, Trump looked at our fat, happy days of peace and prosperity and decided to run on fear, division, and chaos. And he was right... In politics, as in every other facet of life, you must always consider opportunity cost. And yes, it’s possible that some other closing message from the president might have produced marginally better electoral outcomes for Republicans. But maybe not. At the very least, the president’s gambit did no great harm. There was no big break against Republicans. Most of the races went according to form... The caravan worked. Sticking with Brett Kavanaugh was smart. There was no price for playing “false flag” games with the attempted mail-bombing of Democrats. No apologies, for anything, ever... Those are the lessons of 2018 and the doctrines that will shape the war of 2020. You can understand why Trump looked across the country on Tuesday night and tweeted, “Tremendous success tonight. Thank you to all!” He was smiling. The GOP caucuses in both the House and Senate will be even more friendly to him than before. His enemies have been crushed beneath his feet... The problem with getting rid of Love and Curbelo and Comstock is that it gives Democrats control of the House. Trumpism may not be interested in Democrats, but Democrats are interested in Trump. And now they have subpoena power... Once a new speaker is sworn in, the Democrats will be able to investigate and call witnesses and poke and prod the administration in ways we can foresee and ways we cannot. There are, for instance, reports that the president’s son expects to be indicted. If that comes to pass, any attempt by the president to protect him will face scrutiny with the force of law behind it.
.. The White House and its surrogates have announced that they welcome Democratic overreach and are prepared to make war against congressmen who push investigations. Trump expressly threatened potential investigators in his press conference.
.. But the kinds of Democrats willing to take the hardest line against Trump will be from the safest districts. Trump can’t hurt them. And, moreover, getting to overreach means enduring an awful lot of pain during the initial-reach. Clinton and the Democrats benefited from Republican overreach in the 1998 midterm elections. The experience was not terribly pleasant for them.
.. There are other problems on the horizon. The Democrats who won on Tuesday—Jon Tester, Joe Manchin, Tim Kaine—tended to be more centrist. The party’s progressive stars—Beto! Andrew! Stacey!—were wiped out, leaving Alexandria Ocasio-Cortez sitting forlornly in the corner with her movie-star cheekbones, glamorous jackets, and lost dreams of a socialist-Democratic future. This does not mean that Democratic voters will choose a nominee who is in step with mainstream politics in 2020. But these losses make that possibility more likely. The lesson has been taught, and all Democrats have to do is learn it... There’s even the possibility that Democrats may look at the midterms and the caravan and learn a lesson about immigration. They’re never going to outbid Trump on nativism, but they don’t have to. All they have to do is convince a small share of marginal independent voters that they’re not secretly for open borders and that they do take illegal immigration seriously. If you can’t do that while maintaining your liberal base, then you don’t belong in professional politics. It’s not a heavy lift... The other problem for Trump is that the numbers don’t look especially good for him. It is difficult to imagine external circumstances being better for Republicans two years from now—you can’t really top “no major wars and 4 percent.” So the macro-environment will either be equivalent or worse... In 2016, he got the second-smallest share of the popular vote (46.1 percent) of any Republican since 2000. He ran 3 points—which is a lot—behind Republicans in the House popular vote that year. And in the 2018 midterms, he pulled the Republican share of the House popular vote down to his own 2016 level, to what is likely the third-smallest percentage for Republicans since 1994.. Trump won in 2016 because even though he ran behind most congressional Republicans, their turnout was enough to pull him over the line. Over the last two years, Republicans have been pulled backward toward him, not the other way around... The good news for Trump and his Republicans is that they won’t have to beat the ’27 Yankees. They just have to beat whomever the Democrats put in front of them... for Trump in 2020, there cannot be a Morning in America campaign. There will be no 48-state mandate that realigns American politics for a generation. At best, Trump can hope to radicalize Democrats into nominating a weak contender and then gamble that the country is closely enough divided to give him a chance of drawing to an inside straight, again. This is not a crazy strategy. It might even be the best move available on the board.All of which means more chaos, more apocalypse, more carnage. More Trump.
Mollie Tibbetts’s dad: Don’t use her death to push ‘views she believed were profoundly racist’
“I encourage the debate on immigration; there is great merit in its reasonable outcome,” her father, Rob Tibbetts, wrote in an opinion column in the Des Moines Register. “But do not appropriate Mollie’s soul in advancing views she believed were profoundly racist.”
Rob Tibbetts said his family still needs time to mourn, and he asked for continued privacy. But he said he felt compelled to speak because politicians were using his daughter’s name to promote views that she would be opposed to, actions he called “heartless,” “despicable” and “shameless.” The piece expanded on some of the comments he made at his daughter’s funeral defending the Hispanic community.
“My stepdaughter, whom Mollie loved so dearly, is Latina. Her sons — Mollie’s cherished nephews and my grandchildren — are Latino,” Rob Tibbetts wrote in the piece, which ran a day after a column by Donald Trump Jr. in the same publication. ” . . . To knowingly foment discord among races is a disgrace to our flag.”
Stephen Miller Is an Immigration Hypocrite. I Know Because I’m His Uncle.
If my nephew’s ideas on immigration had been in force a century ago, our family would have been wiped out.
He set foot on Ellis Island on January 7, 1903, with $8 to his name. Though fluent in Polish, Russian and Yiddish, he understood no English.
.. In the span of some 80 years and five decades, this family emerged from poverty in a hostile country to become a prosperous, educated clan of merchants, scholars, professionals, and, most important, American citizens.
.. What does this classically American tale have to do with Stephen Miller? Well, Izzy Glosser is his maternal grandfather, and Stephen’s mother, Miriam, is my sister.
I have watched with dismay and increasing horror as my nephew, an educated man who is well aware of his heritage, has become the architect of immigration policies that repudiate the very foundation of our family’s life in this country.
.. I shudder at the thought of what would have become of the Glossers had the same policies Stephen so coolly espouses— the travel ban, the radical decrease in refugees, the separation of children from their parents, and even talk of limiting citizenship for legal immigrants — been in effect when Wolf-Leib made his desperate bid for freedom.
.. The Glossers came to the U.S. just a few years before the fear and prejudice of the “America first” nativists of the day closed U.S. borders to Jewish refugees.
Had Wolf-Leib waited, his family likely would have been murdered by the Nazis along with all but seven of the 2,000 Jews who remained in Antopol. I would encourage Stephen to ask himself if the chanting, torch-bearing Nazis of Charlottesville, whose support his boss seems to court so cavalierly, do not envision a similar fate for him.
As in past generations, there were hate mongers who regarded the most recent groups of poor immigrants as scum, rapists, gangsters, drunks and terrorists, but largely the Glosser family was left alone to live our lives and build the American dream... blind to the hypocrisy of their policy decisions. After all, Stephen’s is not the only family with a chain immigration story in the Trump administration. Trump’s grandfather is reported to have been a German migrant on the run from military conscription to a new life in the United States, and his mother fled the poverty of rural Scotland for the economic possibilities of New York City. (Trump’s in-laws just became citizens on the strength of his wife’s own citizenship.).. These facts are important not only for their grim historical irony but because vulnerable people are being hurt. They are real people, not the ghoulish caricatures portrayed by Trump... In the early 2000s, Joseph (not his real name) was conscripted at the age of 14 to be a soldier in Eritrea and sent to a remote desert military camp. Officers there discovered a Bible under his pillow which aroused their suspicion that he might belong to a foreign evangelical sect that would claim his loyalty and sap his will to fight. Joseph was actually a member of the state-approved Coptic church but was nonetheless immediately subjected to torture. “They smashed my face into the ground, tied my hands and feet together behind my back, stomped on me, and hung me from a tree by my bonds while they beat me with batons for the others to see.”.. Joseph was tortured for 20 consecutive days before being taken to a military prison and crammed into a dark unventilated cell with 36 other men, little food and no proper hygiene. Some died, and in time Joseph was stricken with dysentery. When he was too weak to stand, he was taken to a civilian clinic where he was fed by the medical staff. Upon regaining his strength, he escaped to a nearby road where a sympathetic driver took him north through the night to a camp in Sudan where he joined other refugees. Joseph was on the first leg of a journey that would cover thousands of miles and almost 10 years... Before Donald Trump had started his political ascent promulgating the false story that Barack Obama was a foreign-born Muslim, while my nephew, Stephen, was famously recovering from the hardships of his high school cafeteria in Santa Monica, Joseph was a child on his own in Sudan in fear of being deported back to Eritrea to face execution for desertion.
.. In all of the countries he traveled through during his ordeal, he was vulnerable, exploited and his status was “illegal.” But in the United States, he had a chance to acquire the protection of a documented immigrant.
.. Today, at 30, Joseph lives in Pennsylvania and has a wife and child. He is a smart, warm, humble man of great character who is grateful for every day of his freedom and safety. He bears emotional scars from not seeing his parents or siblings since he was 14. He still trembles, cries and struggles for breath when describing his torture, and he bears physical scars as well.
.. I have met Central Americans fleeing corrupt governments, violence and criminal extortion; a Yemeni woman unable to return to her war-ravaged home country and fearing sexual mutilation if she goes back to her Saudi husband; and an escaped kidnap-bride from central Asia.
.. Trump wants to make us believe that these desperate migrants are an existential threat to the United States; the most powerful nation in world history and a nation made strong by immigrants. Trump and my nephew both know their immigrant and refugee roots. Yet, they repeat the insults and false accusations of earlier generations against these refugees to make them seem less than human.
Trump publicly parades the grieving families of people hurt or killed by migrants, just as the early Nazis dredged up Jewish criminals to frighten and enrage their political base to justify persecution of all Jews.
Almost every American family has an immigration story of its own based on flight from war, poverty, famine, persecution, fear or hopelessness. Most of these immigrants became workers, entrepreneurs, scientists and soldiers of America.
.. Most damning is the administration’s evident intent to make policy that specifically disadvantages people based on their ethnicity, country of origin and religion. No matter what opinion is held about immigration, any government that specifically enacts law or policy on that basis must be recognized as a threat to all of us. Laws bereft of justice are the gateway to tyranny. Today others may be the target, but tomorrow it might just as easily be you or me. History will be the judge, but in the meantime the normalization of these policies is rapidly eroding the collective conscience of America.