Europe

Free Trade's Heavy Cost

Joel Kotkin — Tue, 02 Aug 2022 20:28:58 -0400

Free trade and open markets are great ideals. These principles, over the last few centuries, but especially since World War II, have created tremendous wealth, particularly in the developing world. But free markets were made for human society, not the other way around.

Many thinkers on the right, however, have embraced a form of free-market fundamentalism that’s as ideologically brittle, entrenched, and impervious to critique as any Leftist vision of social utopia. These doctrinaire free-marketers believe that if China seeks to capture a huge industry like telecommunications through subsidies and protect their market, that will benefit us all.

“Huawei’s a great example,” says former Duke University chair of political science Mike Munger. “This is just 5G technology! How could it not be great? It benefits consumers!” According to this view, the U.S. and other Western companies should just get out of the way and find another business that Beijing does not care so much about dominating. The problem, however, is that we no longer live in a world where America is monumentally richer or has far greater technological prowess than its rivals. We no longer reliably call the shots.

This reality has been unfolding for a generation. Asian and European nations have long prioritized their export industries, helping them gain dominance in many markets, from steel and cars to semiconductors. By contrast, big American capital, bolstered by cheerleaders in the corporate media, sacrificed our nation’s communities and the personal aspirations of countless workers for the sake of greater profits.

Munger cites imported semiconductors, smartphones, and other American-branded tech as big wins for our economy. This may be true for the investors who own piles of big tech stock. The technology is also cool for consumers, if sometimes very pricey. But what did this system produce for the overall U.S. economy and the health of its workforce? Google, Microsoft, and the other oligarchic firms make virtually nothing here. Apple may be “headquartered” in Cupertino, but more than 90 percent of iPhones, iPads, and MacBooks are made in China, albeit “designed in California.” Despite their endless virtue-signaling, these corporations are indifferent to the national economy. Instead, many have become China’s ultimate cheerleaders and enablers, with venture capital firms raising billions to fund new firms in the Middle Kingdom—in other words, subsidizing the competition.

Apple epitomizes this new corporate mindset. With ever-increasing dependence on Beijing, the company is supporting Xi Jinping‘s promised “China dream” of greater wealth and technological supremacy. In 2016, Apple negotiated a $275 billion deal with China that guarantees the firm’s continued dependence on Beijing, with additional promises to share vital technology with our most important global adversary. The company also recently announced plans to source some of its chips from China. All the while, Apple continues to enable and profit from China’s ever-expanding surveillance state.

Simply put, what has benefited Apple, American investment banks, and China, mirrors a general decline in U.S. economic prowess. Our traders, publicists, and media may be world-beaters, but much of the rest of the country flounders. Between 2000 and 2007 alone, the United States hemorrhaged 3.4 million manufacturing jobs, about 20 percent of its total. It lost a further 1.5 million manufacturing jobs between 2007 and 2016. These rapid losses were unique in American history and without parallel in other major Western countries. Throughout the period between 2004 and 2017, the U.S. share of world manufacturing shrank from 15 to 10 percent, while our reliance on Chinese imports doubled, even as dependence on Japan and Germany shrank. According to the Economic Policy Institute, the trade deficit with China has cost as many as 3.7 million jobs since 2000.

Read the rest of this piece at American Mind.

Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Photo: Don Shall via Flickr under CC 2.0 License.

Media War in Ukraine: Class and Gender

James V. Catano — Wed, 13 Jul 2022 20:28:58 -0400

Like all physical conflicts, the current war in Ukraine is also an ongoing war of narratives, in this case one making heavy use of visual imagery. As they have played out, the threads of these narratives have a telling sequence of their own, revealing the tragic arc of most wars as they confront the ultimate—and ultimately gendered and classed—victims of modern warfare: women, children, the elderly, the poor and working classes.

War narratives do not open with such storylines of course, and this conflict is no different. Before the first shot was fired, the West provided satellite images of Russian’s early military buildup along Russian and Belarussian borders. It was an interesting strategy, a visual foretelling that put Russia in a defensive position from the first, establishing a story-line that made its military moves seem predictable and almost robotic, a product of earlier Soviet mismanagement.

Without dismissing in the least the admirable resilience and capabilities of the outnumbered and outgunned Ukrainian forces, it is important to recognize a key motif in this storyline that is part of Western mythos: individualism over collectivity. In this narrative thread, the unified front displayed by Ukrainian forces is not entirely overlooked. Rather, stress is laid on the failure of Russia’s military to properly delegate authority, a theme long-stressed in Western narratives opposed to collectivity in general.

On the heels of that media opening, another key thread has been built, one allied with an ethos of individualism as embodied in a regular aspect of most narrative: key characters. Not surprisingly, the most significant characterizations to date are of the war’s primary protagonist/antagonist figures: Volodymyr Zelensky and Vladimir Putin. As the war’s central hero/villain figures (no matter which side the story is told from) they embody key class and gender distinctions, but with an ironic yet important reversal in storylines.

Putin’s early public persona has shifted over time as he has morphed from shirtless romance hero to suited executive, a role more in keeping with both his age and his current role. The infamous pre-war photo of germaphobe Putin and French President Emmanuel Macron, separated by a 20-foot-long table, only enunciates Putin’s splendid isolation. The setting, which hearkens back not to a socialist state but to Tsarist excess and luxury, underscores his current persona.

As was made clear from the viral vignette of his dressing-down of the Head of Russian Intelligence, Putin now embodies the role of an ironically Western, Apprentice-like corporate executive and member of a masculinist elite—albeit one with nuclear weapons and a penchant for murdering his opponents.

Contrast Putin’s autocratic put-down with the now-famous selfie video of Zelensky and his cabinet refusing to leave downtown Kyiv. In occupying the foreground of this informal video Zelensky is not attempting to establish his singularity or dominance (photo above). Rather he is one among equals, visually embodying group cohesion.

At the same time, Zelensky’s visual placement among this band of brothers is augmented by his delivery of what are admittedly formal but nevertheless powerful lines. As his fixed, hand-held phone captures the small group, Zelensky quietly repeats “tut/tyt”: “here,” “here,” “here” while he names each individual cabinet member, thus solidifying the group’s physical and metaphorical placement together and among the inhabitants of Kyiv.

Read the rest of this piece at Working-Class Perspectives.

James V. Catano is producer/director of Enduring Legacy: Louisiana’s Croatian Americans and author of Ragged Dicks: Masculinity, Steel, and the Rhetoric of the Self-Made Man. He is Professor Emeritus of English and Screen Arts at Louisiana State University.

Europe's Entrepreneurial Paradox

Nima Sanandaji - Klas Tikkanen - Kristoffer Melinder — Sun, 10 Jul 2022 20:28:58 -0400

When mapping the concentration of superentrepreneurs in the world, we find a paradox in Europe. Half of the top-ten countries with the most superentrepreneurs are found in Europe, yet Europe is far behind the US and Canada when it comes to high-end entrepreneurship. Another perhaps surprising fact is that gender equal Europe has a particularly strong deficit of women superentrepreneurs.

In the world of today, there is a need to create value through business growth, rather than financial engineering. The superentrepreneurs project is about studying high-end entrepreneurship and focuses on the close to 2 500 individuals in the world who have built up billion-dollar fortunes, by creating new companies or growing small businesses into large successful ventures. The point is mainly to measure the tip of the iceberg; by looking at superentrepreneurs, we can understand which countries are more conducive to free enterprise in general.

Switzerland, a knowledge-intensive economy with business-friendly regulation overall, has more than four superentrepreneurs per million adults, the second highest rate in the world after Singapore. Cyprus, with a favourable tax system, ranks third, slightly above the US which has the fourth highest concentration of superentrepreneurs in the world. Sweden, a leading country in Europe in terms of research and development investments, has the sixth-highest concentration of high-end entrepreneurs.

Countries with the highest concentration of superentrepreneurs per capita Based on comparison of all countries with at least one million inhabitants
		Total superentrepreneurs per million 15-64 year old population, both sexes
1	Singapore	4.7
2	Switzerland	4.1
3	Cyprus	3.6
4	USA	3.1
5	Israel	2.6
6	Sweden	2.0
7	Ireland	1.9
8	Australia	1.8
9	UK	1.8
10	Canada	1.7

Ireland, which has a rapidly growing tech-sector, ranks on seventh place, followed by the UK on ninth place. Half of the countries on the top-ten list are located in Europe, but while some European countries have a high concentration of superentrepreneurs, in Europe as a whole there are only 0.8 superentrepreneurs per million adults. This is only a quarter of the 3.1 superentrepreneurs per capita found in the US, and half the level of Canada—even Oceania and China have a higher concentration than Europe.

The lack of superentrepreneurs reflects the fact that Europe still largely relies on old fortunes, rather than new ones created through new companies. European nations have historically progressed because they have been at the forefront of technology and new wealth creation, and while countries such as Sweden, Switzerland, and the UK still are at the forefront of technological development, the same cannot be said of all of Europe. A study by McKinsey & Company recently pointed to the fact that the US and China are dominating in fields of technology such as quantum computing and 5G, while Europe despite its strong science base and robust pool of talent is lagging in the technology race.

We find that in all regions of the world, most superentrepreneurs are men, with only one out of twenty billionaire entrepreneurs being women. Of the Chinese high-impact entrepreneurs, as much as 8 percent are women, while the level is 4 percent in the US and below 3 percent in Europe. China has three times more women superentrepreneurs, per capita, compared to Europe, while the US has six times as many.

The lack of women amongst European high-impact entrepreneurs is in part because education, health, and elderly care in European systems are limited by public sector oligopolies and regulations. In Europe, women-dominated parts of the economy, therefore, offer limited opportunities for high-impact entrepreneurship. The US as well as Asian economies such as China are more open to entrepreneurship in health and education, which explains why otherwise gender equal Europe is so far behind in this regard.

European societies would benefit from fostering high-end entrepreneurship, as our global outlook shows a clear link between superentrepreneurs per capita and the level of unemployment. One more superentrepreneur per million adult inhabitants is linked to 0.88 percentage points lower unemployment. The effect is strongest for the broad middle class with intermediate education, for whom one more superentrepreneur per million adults is linked to 1.1 percentage points lower unemployment.

There are several policy factors that are positively correlated with a higher share of superentrepreneurs: stronger property rights protection, ease of doing business, lower profit taxes, and lower capital gains taxes, are all positively linked to the rate of superentrepreneurs. There is also a link between strong performance in schools, as measured by the international PISA study, and the share of high-end entrepreneurs. The European entrepreneurial paradox exists because conditions for high-end entrepreneurship are good in a few countries, such as Sweden and the UK, but are lacking in Europe as a whole.

European decision-makers should make it a priority to encourage entrepreneurship in general and remove barriers to entrepreneurship in women-dominated fields of the economy, such as education, health, and elderly care. In the long-term, Europe cannot remain a world leader in technology and prosperity, without also boosting entrepreneurship. To compete with China and the US in the global race of technology and business, European nations need to boost research and development spending, and continue the process of market integration.

Authors:

Nima Sanandaji, Director European Centre for Entrepreneurship and Policy Reform

Klas Tikkanen, Chief Operating Officer Nordic Capital

Kristoffer Melinder, Managing Partner Nordic Capital

China and Russia Rejoice at America’s Quest to Go Green

Ronald Stein — Mon, 16 May 2022 20:28:58 -0400

China and Russia are great War historians of WWI and WWII, and know that the countries that control the minerals, crude oil, and natural gas, controls the world! Biden has done an excellent job of relinquishing “CONTROL” for the “green” materials to China, and relinquishing “CONTROL” of the crude oil to the Organization of the Petroleum Exporting Countries (OPEC) and Russia! God help America!

How is it possible that America has allowed itself to become so dependent on authoritarian countries like China, Russia, Venezuela, and Saudi Arabia over the 30 years since the end of the Cold War? The weaponization of energy by China and Russia have been extensively discussed in the three books co-authored by Ronald Stein and Todd Royal, including the 2022 Pulitzer Prize nominated book, “Clean Energy Exploitations – Helping Citizens Understand the Environmental and Humanity Abuses That Support Clean Energy.”

America is in a fast pursuit toward achieving President Biden’s stated goal that “we are going to get rid of fossil fuels.” Today, Biden supports and encourages banks and investment giants to collude to reshape economies and energy infrastructure with their Environmental, Social and Governance (ESG) divesting in fossil fuels movement. ESG is an extremely dangerous precedent as the American people never voted to give banks this sort of control over our country.

In addition to relinquishing national security to our dependence on China and Russia, that dependency for the fuels to move the heavy-weight and long-range needs of more than 50,000 jets in the world, more than 50,000 merchant ships circumventing this globe, and the military and space programs, will continue to be the catalyst for shortages and inflation in America.

As the world’s eight billion continues to grow its population, the increasing demands for those oil-based products will face shortages of supply–the obvious impact for Americans being continuous shortages and inflation.

China, the world’s top greenhouse gas polluter ignores climate pledges as it tops the list in building new coal plants. It continues to lead all countries in the domestic development of new coal plants, commissioning more new coal capacity in 2021 than the rest of the world combined. China has just over half the number of coal plants in the world and relies on them to generate about 60 percent of its electricity.

Due to the Biden administration’s failure in energy leadership, the United States has never looked weaker and vulnerable to China, Russia, and OPEC which are savoring in their growing control of Americas’ energy demands.

The reason much of the European Union (EU) became so dependent on Russian oil and natural gas specifically, is green politicians like Angela Merkel of Germany and Boris Johnson of the UK that have done everything in their power to wreck Western extractive industries; fracking and exploration bans, punitive taxes, onerous environmental processes for drilling new wells and mines, and outlandishly subsidizing electricity generation from breezes and sunshine. Joe Biden is following the actions of Germany and the UK.

Read the rest at CFACT.org.

Ron Stein is an engineer who, drawing upon 25 years of project management and business development experience, launched PTS Advance in 1995. He is an author, engineer, and energy expert who writes frequently on issues of energy and economics.

Photo: courtesy CFACT

The "Myth" of Russian Gas

Hügo Krüger — Mon, 09 May 2022 20:28:58 -0400

Russia’s invasion of the Ukraine may be paid for with its oil and gas sales to Europe, but this gift is one that may stop giving. Russia’s oil resources are increasingly located in the hardest to reach areas, and far from the markets, notably in East Asia, which could conceivably replace the EU.

The mistake that many analysts make about Russian Gas is that they don’t distinguish between the pre- and post soviet gasfields. The two largest Russian gasfields, Urengoy and Yamburg were built in the 1970s during the Leonid Brezhnev years. As was the case under communist rule, the politburo had central control over the nation’s gas infrastructure and decisions were made when economic common sense as well as human rights were not taken into consideration. The debt for these large projects were enormous, but they were absorbed by the sweat and blood of those who lived under the red flag.

With the dissolution of the Soviet Union, the newly founded Russian state under Boris Yeltsin enacted a series of privatization reforms, as the country moved from a command economy to a market economy. Under advice of the Harvard Boys public utility companies like Gazprom handed out shares to the public in exchange for vouchers.

“Gazprom began to distribute shares under the voucher method. (Each Russian citizen received vouchers to purchase shares of formerly state-owned companies). By 1994, 33% of Gazprom's shares had been bought by 747,000 members of the public, mostly in exchange for vouchers. Fifteen percent of the stock was allocated to Gazprom employees.”

In theory structural reform were supposed to bring market capitalism and all its blessings to Russia, but in practice they laid the seeds for a feudal oligarchy which quickly moved to exploit the system and strip mine the national assets while simultaneously plundering the treasury. By 1998 it became clear that the reforms were a failure.

“After seven years of economic “reform” financed by billions of dollars in U.S. and other Western aid, subsidized loans and rescheduled debt, the majority of Russian people find themselves worse off economically. The privatization drive that was supposed to reap the fruits of the free market instead helped to create a system of tycoon capitalism run for the benefit of a corrupt political oligarchy that has appropriated hundreds of millions of dollars of Western aid and plundered Russia’s wealth.”

The political consequences were devastating as ordinary Russians experienced life expectancy falling by almost 10 years during peace time and hyperinflation setting in. The late Russian expert, Dr. Stephen Cohen described the horrific conditions in Russia in 1998 as he pleaded to the US public to “help Russia”.

“Most Russians lack money even for essential goods and services. (Wage arrears to federal employees alone, including soldiers and schoolteachers, exceed $4 billion and are growing.) That is one important reason the Primakov government has to print new rubles despite strong US disapproval. The IMF should release the remaining $13 billion in new loans promised in July to the previous Russian government but withheld from Primakov’s, the first installment of $4.3 billion specifically to back rubles for long-overdue wages and pensions. This would directly help Russians in distress and avert hyperinflation.”

Putin came to power on the backdrop of the economic devastation and failings/humiliations of the Yeltsin years. He moved quickly to use the state majority shareholder’s positions to make his own political appointees in Gazprom - who still held a monopoly license over Russian Gas. In the year 2000 he fired Gazprom’s founder and then CEO Rem Vyakhirev, replacing him with his own political appointees like Dmitri Medvedev and Alexi Milner. Their task was to end asset stripping so that Gazprom could be run like a proper utility and put an end to Vyakhirev’s private family fiefdom.

But another unintended consequence of privatization was that Gazprom inherited the natural gas infrastructure from the USSR without having to pay much debt on them and this situation gave the Russians a competitive advantage when selling to EU markets. All that Gazprom had to do was to pay the operations and transport cost. Realizing that eventually they won’t have the Soviet built gasfields forever Gazprom started looking at laying a new 4,107 kilometres (2,552 mile) Pipeline to the untapped Yamal region that was eventually fully commissioned in 2006. The Yamal-Europe pipeline connects Russia’s Yamal Peninsula and Western Siberia with Poland and Germany, through Belarus. For reference, the length of the pipeline is more than twice the distance between Berlin and Moscow.

Already in 2007 the German Newspaper Der Spiegel started asking critical questions about this pipeline and Russia’s ability to supply gas to Europe forever. The Yamal region is located in the far north in increasingly harsh environmental conditions.

“But the gas exploration teams are operating in highly challenging terrain. "Yamal is probably the world's most difficult extraction region," says Roland Götz, an expert on Russia at the Berlin-based German Institute for International and Security Affairs. The peninsula is covered with countless rivers and lakes, completely impassible in the summer, and its coastlines are surrounded by shifting masses of pack ice that sometimes tear meter-deep gashes into the ocean floor, making it difficult, if not impossible, to lay pipelines.” the German Newspaper Der Spiegel started asking critical questions about this pipeline and Russia’s ability to supply gas to Europe forever. The Yamal region is located in the far north in increasingly harsh environmental conditions.

The sentiment was shared 10 years later in 2017 by Dr. Frank Umbach Research Director at the European Centre for Energy and Resource Security. The Yamal gas was simply too expensive and could not compete with low gas prices.

Yamal also involves Russia’s most advanced LNG project. Its shareholders include PAO Novatek (with a 50.1 percent stake), France’s Total S.A. (20 percent), China’s CNPC (20 percent) and China’s Silk Road Fund (9.9 percent). The huge $27 billion project (involving three liquefaction trains, each with a total capacity of 5.5 million tons) starts operation at the end of this year when the first train opens (the full capacity of 16.5 mt is to be reached by 2022/23). However, the venture’s business plan was built on the expectation of global oil prices above $60 per barrel; it is unlikely to be profitable with crude hovering near $45gas fields.

Then in 2019 the Haque Centre for Strategic studies came out with an even more critical report that questioned Russia’s unsustainable business model.

In contrast to Russia’s more limited oil reserves its natural gas reserves are the largest in the world. The challenge here is not to produce the gas but to transport it and sell it at a profit. The rise of Liquefied Natural Gas (LNG) shipping now enables the monetization of remote gas reserves (and these are plentiful) throughout the world. US shale gas is increasingly providing a soft ceiling for gas prices, as US shale oil has done for oil prices since 2014. Russia will remain the key supplier of gas for the European Union (EU) but with the advance of LNG, abundant LNG import capacity within the EU and the liberalization of European gas markets, its influence on gas prices has diminished.

Clearly Russia was failing to monetize its reserves while America was winning the LNG Goldrush. The obstacle has always been Geography and a map of the world’s gas pipelines shows this clearly. With the sanctions underway, the Russians have put themselves into yet another quagmire. What do they do with the gas that is currently flowing if the EU decides to push through with the sanctions?

There currently isn’t pipeline that connects the eastern to western Siberian gasfields. Therefore Russia cannot just sell its gas on the east Asian markets and if they stop pumping they risk damage to their own upstream infrastructure if the pressure rises.

Source: AJ Labs

The recent high ruble or gold rush might sound impressive for as long as the Europeans are willing to buy Russian gas, but what are those who claim that Putin’s move was “genius” are going to say when Russian gas is simply too expensive in comparison with other sources like American LNG?

If the history of this war taught us anything, it’s the lesson that William Cassey, Ronald Reagan’s CIA Director taught the Soviet Union, the price of extraction and not the quantity of resources in the ground is what matters.

Hügo Krüger is a Structural Engineer with working experience in the Nuclear, Concrete and Oil and Gas Industry. He was born in Pretoria South Africa and moved to France in 2015. He holds a Bachelors Degree in Civil Engineering from the University of Pretoria and a Masters degree in Nuclear Structures from the École spéciale des travaux publics, du bâtiment et de l'industrie (ESTP Paris). He frequently contributes to the South African English blog Rational Standard and the Afrikaans Newspaper Rapport. He fluently speaks French, Germany, English and Afrikaans. His interests include politics, economics, public policy, history, languages, Krav Maga and Structural Engineering.

Photo: Gail Hampshire via Flickr, under CC 2.0 License.

Correction, May 12; Urengoy and Yamburg were built in the 1970s during the Leonid Brezhnev years replaces Urengoy and Yamburg were built in the 1970s during the Nikita Khrushchev years.

The Kids Are Not Alright and the Center is No Longer Holding

Joel Kotkin — Sun, 24 Apr 2022 20:28:38 -0400

Across the West, the young are losing faith in the future.

The recent French election provides a case study. In the first round vote, voters narrowly favored President Emmanuel Macron, the epitome of “enlightened” elite rule, over Marine Le Pen, the doyenne of French fascism. While those two are now facing off, it was Jean-Luc Mélenchon, a grizzled former Trotskyite with a far-left agenda, who finished first among voters under 35, followed by Le Pen, while Macron was far back in the pack as the established parties of the left, center and right all collapsed.

Students at the Sorbonne, many of whom backed Mélenchon, are taking to the streets to protest the choice between far-right Le Pen and the elite technocrat Macron, who now seeks to win them over by declaring a net-zero emissions agenda, based in large part on nuclear power.

Much the same youthful alienation is evident here. Ahead of a likely rematch between what would be a 81-year-old Joe Biden and a 77-year-old Donald Trump, American politics seem geriatric and sclerotic. And the pandemic has only made things worse. Young workers were particularly vulnerable to job loss, as they were overrepresented in high-risk service sector industries, notes Pew. And now they are in the crosshairs of inflation, most notably for rents that are up 17 percent in major cities already this year.

Despite notions that younger voters would remain reliable Democrats,, Biden has already lost his majority among the young, the same troubled generation that helped elect him. Biden has seen his approval number among the twenty-something members of Generation Z plummet from 60 percent to 39 percent, notes Gallup. Among Millennials—those born between 1981 and 1996—he’s plunged from 60 percent to 41 percent. Other polls, including a new one from Quinnipiac, show the same dynamic.

Here, as in France, it turns out that young voters are not the sure thing many progressives had hoped. Pollster Sam Abrams has found that a small majority of students reject both political parties; only 18 percent think the Democrats are moving in the right direction which looks good only in comparison with the 10 percent who think that Republicans are doing so. Most young voters, according to the Pew Research Center, are neither liberal, outside of cultural issues, nor conservative. A strong majority think the country is headed in the wrong direction.

Why so alienated? Start with economics. In the United States, the odds of a middle-class earner moving up to the top rungs of the earnings ladder has dropped by approximately 20 percent since the early 1980s, meaning the young face diminished prospects. A Deloitte study projects that Millennials in the United States will hold barely 16 percent of the nation’s wealth in 2030, when they will be by far the largest adult generation. Gen Xers, the preceding generation, will hold 31 percent, while Boomers, entering their eighties and nineties, will control 45 percent of the nation’s wealth.

Read the rest of this piece at Daily Beast.

Photo: mSeattle via Flickr, CC 2.0 License

The Working Classes Are a Volcano Waiting to Erupt

Joel Kotkin — Wed, 20 Apr 2022 20:28:38 -0400

Whatever the final outcome, the recent French elections have already revealed the comparative irrelevance of many elite concerns, from gender fluidity and racial injustice to the ever-present ‘climate catastrophe’. Instead, most voters in France and elsewhere are more concerned about soaring energy, food and housing costs. Many suspect that the cognitive elites, epitomised by President Emmanuel Macron, lack even the ambition to improve their living conditions.

The French elections reflect the essential political conflict of our time. On one side, there is a powerful alliance between the corporate oligarchy and the regulatory clerisy. On the other, there are two beleaguered and angry classes – the small-business owners and artisans, and the vast, largely unorganised service class. The small-business class generally tends to favour the populist right, whether in America, Australia or Europe. These people want the government out of their business and to be left alone. Meanwhile, workers tend towards the populist left, which promises to relieve their economic pain.

The common feature is the politics of anger and resentment. In the first round of the French elections, a majority voted either for Marine Le Pen and other rightist candidates, or for the old Trotskyist warhorse Jean-Luc Mélenchon and other candidates of the hard left. The establishment parties, like the centre-left Parti Socialiste and the Gaullist Républicains, were left way behind. The ultra-green Parti Socialiste mayor of Paris, Anne Hidalgo, won less than two per cent – a pathetic performance from the onetime ruling party. Intriguingly, voters under 35 went first for Mélenchon and then Le Pen, leaving the technocrat Macron in dismal third place among the young. Macron only won decisively among voters over 60.

We may, as de Tocqueville put it during the early stages of the Industrial Revolution, be ‘sleeping on a volcano’. A still inchoate rebellion from below against the concentration of wealth and power above seems to be gathering momentum. Across the 36 wealthier countries of the Organisation for Economic Cooperation and Development (OECD), the richest citizens have taken an ever-greater share of national GDP in recent years as the middle class has become smaller. Heavily in debt, mainly because of high housing costs, the middle class ‘looks increasingly like a boat in rocky waters’, suggests the OECD.

One key indicator of the declining middle class is rates of home ownership, which are stagnant or plummeting, particularly among the young, in the United States, the United Kingdom and Australia. In the United States, the chance of middle-class earners moving up to the top rungs of the earnings ladder has dropped by approximately 20 per cent since the early 1980s. Life expectancy in the US has dropped to the lowest levels in a quarter of a century.

This growing class division is a global phenomenon. In 1974, the proportion of global corporate income that went to labour was about 64 per cent. It dropped to 59 per cent by 2012. This pattern has applied not only to wealthy markets in the West, but also to labour-rich markets like China, India and Mexico. In 2017, the Pew Research Center found that poll respondents in France, Britain, Spain, Italy and Germany are even more pessimistic about the next generation than those in the United States. Such sentiments are shared in countries like Japan and India, where many new college graduates fail to find decent employment. Well over two thirds of Mumbai youths are pessimistic about their prospects.

This erosion of opportunity sets the stage for a potential combustion of class anger, particularly as the pandemic and now Russia’s invasion threaten to make things worse. The unemployment rate reached 32.5 per cent in South Africa during the pandemic years, with almost two thirds of young people with no job in sight. The story is unfortunately similar elsewhere in Africa, with regional powers such as Kenya and Senegal reporting over 40 per cent unemployment. This is a recipe for chaos. Several Latin American, African and Middle Eastern countries have also defaulted on long-term loans and more may follow.

Even China seems poised for an outbreak of class warfare. Since 1978, China’s Gini coefficient, a key measurement of income inequality, has tripled. China has gone from being highly egalitarian to becoming more stratified than Mexico, Brazil or Kenya, as well as the United States and virtually all of Europe. China, notes one observer, is now developing ‘something resembling a permanent caste system’.

Read the rest of this piece at Spiked.

Photo: Olivier Ortelpa via Flickr under CC 2.0 License.

We Told You So: On Trade, the Working Class Was Right

Christopher R. Martin — Thu, 07 Apr 2022 20:28:58 -0400

It seems impolite to say “we told you so,” but the working class and labor unions were so unjustly maligned more than two decades ago—when they fought the push to expand unfettered global trade—that it seems more than fair to serve some humble pie to global trade’s champions.

With today’s broken supply chain and working-class communities across the nation still struggling from the loss of millions of U.S. manufacturing jobs, it’s important to look back at the consequential trade agreements a generation ago, when then-President Bill Clinton assured “a future of greater prosperity for the American people.”

Back in late 1999, the World Trade Organization held its Third Ministerial Conference in Seattle. It was the first (and, to date, the last) WTO ministerial conference to be held in the U.S. Others have been held in places such as Singapore, Doha, Cancun, Geneva, and Bali – locations inconvenient for American protesters. Some are hostile to the concept of protest itself.

During the Seattle conference, America’s working class could see the storm on the horizon for the American economy. Fifty thousand people showed up to protest the WTO during its Nov. 30-Dec. 4, 1999 meeting and their presence couldn’t be ignored. It became known as “The Battle in Seattle.” The ranks of protesters included thousands of union members who were concerned that the lack of global labor regulations would encourage even more multinational corporations to shift manufacturing operations to offshore locations with low-paid workers and few labor protections.

A majority (52%) of Americans supported the protesters in Seattle, according to a national Business Week poll conducted after the conference. In another survey, the same percentage predicted that the future global trade economy would hurt average Americans.

The protests of 1999 warned of what might happen to advance the global trade economy. And the warnings were right. In 2000 the U.S. Senate approved permanent favored nation status for China, greasing the wheels for its accession to the WTO in 2001.

The protesters were also correct that the WTO would not help workers. Despite their occasionally welcoming language about labor standards, or their creation of a working group on Trade and Labour Standards at the 1999 meeting, the WTO ultimately took no action. More than 20 years later, it still has not endorsed any labor standards to aid the working class in this country or in any of the member countries.

Read the rest of this piece at Working-Class Perspectives.

Christopher R. Martin is a professor of digital journalism at the University of Northern Iowa and the author of No Longer Newsworthy: How the Mainstream Media Abandoned the Working Class (ILR/Cornell University Press).

Photo: courtesy Working-Class Perspectives

When the Arc of History Bends Back Toward the Dark Ages

Joel Kotkin — Tue, 05 Apr 2022 20:28:58 -0400

The notion that “the arc of history” favors humanity extends across the political spectrum from George W. Bush to Barack Obama. Yet rather than facing the dawn of a progressive future, we may be entering “the great regression,” a period where the world becomes more hierarchical and feudal, less prosperous, and much less free.

A decade or two ago, optimism was buttressed by the economic boom that followed the end of the Second World War and was further extended by the collapse of Communism. This “end of history” moment seemed to be the dawn of a future that was more like Star Trek, with advanced technologies used to deliver universal prosperity under a regime of enlightened rulers. Instead, today’s new world order is a springtime for dictators, revanchist ideologies, and the pitiless global struggle for supremacy.

In place of the broad-based prosperity enjoyed by Europe, Australia, and North America that gave birth to capitalism and modern democracy, those regions have become more feudalistic, hierarchical, and profoundly unequal. The middle class, which was critical in destroying feudalism and ushering in the prosperity of the modern world, has lost ground to a small aristocracy of financiers, as corporate and tech hegemons have increased their power over the global economy.

Once-dynamic Western societies are now stagnating as they did in feudal times. Median incomes have stayed flat while the populations of post-industrial societies are growing slowly or not at all—a problem exacerbated by the COVID-19 pandemic. The mid-20th-century liberal “golden age” has receded under the rising tide of autocracy. Indeed, according to a recent study by Sweden’s University of Gothenburg, nearly 70% of the world’s population lives under some kind of autocracy, including illiberal electoral regimes, up from 50% in 2011. Belief in democracy is also declining, most disturbingly among young people who are intimately acquainted with the shortcomings of Western liberal democracies but have no historical memory of what life was like under previous autocracies.

Although the united Western response to Vladimir Putin’s invasion of Ukraine offers some hope of a revived liberal alliance, the most likely solutions to the crisis will come from deals struck between monarchs fighting over turf and prestige. While no one is expecting the UN bureaucracy to broker a solution, dictators like Turkey’s Recep Tayyip Erdogan have a vital role to play. At the moment, global oil shortages have already empowered autocrats in Saudi Arabia, the United Arab Emirates, Qatar, and Venezuela. Soon Iran’s mullahs, saved by Europe and the United States, will see their own windfall as Western nations purposely surrender their capacity to generate energy on their own.

The United States’ failure to prevent Russia’s strategic dominance of Europe’s energy sector or China’s relentless drive for global preeminence is not a predetermined fact of history—rather, it reflects choices made by our ruling establishment. Rather than seek, as in the past, to boost the United States’ productive power with investment in manufacturing and energy, corporate and political elites in the United States have comprehensively demonized and dismantled precisely those industries in the name of a green ideology that Joel Garreau calls “the religion of choice for urban atheists.” It is no coincidence that the very industries that tend to spread wealth to ordinary workers, enrich owners, and support an independent middle class are portrayed as being full of deplorables and contributing to the climate apocalypse. Like the early Christians, today’s climate activists employ religion to strangle dissent and control opinion.

Read the rest of this piece at The Scroll.

Foreign Threats Demand a Muscular Domestic Response

Joel Kotkin — Sun, 20 Mar 2022 20:28:58 -0400

With our natural resources, our productive capacity, and the genius of our people for mass production we will...outstrip the Axis powers in munitions of war.
Franklin Roosevelt, Message to Congress, Jun 10, 1941

War, or the threat of war, should awaken nations from their dogmatic quarrels. So too should concentrated economic threats and assaults on our political system from unfriendly powers. It is not so much a matter of good global intentions but the embrace of hard-headed national interests, not only in the realm of energy and manufacturing, that will be key in responding to the autocratic challenge.

In the end, it’s only the nation state—in alliance with other similarly minded states—that can stand up to the threats now coming from our primary adversaries, China, and Russia. NATO does not build planes and failed to counter Russian threats; the UN has not exactly stamped out aggressive wars. Meanwhile the global economic hegemons have backed policies on energy and manufacturing that have made our autocratic enemies, and their allies like Iran, stronger.

Fortunately, America has revived itself before, albeit often later than would have been ideal. We freed ourselves from Britain through Hamilton’s embrace of industrial development; Lincoln’s development of credit systems, the Homestead Act, and the development of industries proved critical to defeating the slave economy of the south. Massive American production was critical in defeating Nazism and, over the ensuing four decades, under both parties, the United States managed to innovate and out produce the Soviet industrial state.

To be effective at countering that vast effort, a new American nationalism must transcend Donald Trump’s often hyperbolic “America First” rhetoric. We are fighting a primarily economic war, not against ideological opponents like the USSR or Mao’s China, but against leaders strategically motivated by imperial revanchism. In countering these autocratic moves, we cannot count on the United Nations, the European Union, or the globalist grandees of Davos. The current challenge can only be met by a national response on every level—from our increasingly weakened military, to our industrial and agricultural establishment—as well as an embrace of America’s uniqueness and historic mission.

Successful nationalism lies in tapping the power of our productive economy—real products, not just digital ones—as occurred under Franklin Roosevelt and successive presidents. America’s rise to global predominance in the last century, and its creation of a vibrant middle class, had its roots, notes economic historian Robert Gordon, in great investment in physical infrastructure and production. In contrast, our current focus on digital technology and social media has resulted in a slow and diminished productivity and growing social inequality. This has been made worse as by what one analyst describes as “the transformation of disruptive tech companies into rent seeking monopolies.”

Read the rest of this piece at American Mind.

Photo credit: Nikolas Zane, via Flickr, under CC 2.0 License.