What Will Replace the U.S. Based Liberal International Order?

As the tightly contested U.S. presidential election draws to a close, what effect will the outcome have on U.S. foreign policy?  I have already discussed this question in two recent posts.  First of all, we should not overly fear the rise of China, because China’s population, and especially its working-age population, will soon be in decline.  Secondly, Trump’s nationalistic and populist leanings are here to stay, regardless of how much longer Trump, himself, remains in office.

The political scientist, Michael Beckley, has a more extensive discussion about this in the current issue of Foreign Affairs. Says Mr. Beckley:

  • The era of liberal U.S. hegemony is an artifact of the Cold War’s immediate afterglow. In the coming decades, rapid population aging and the rise of automation will dampen faith in democratic capitalism and fracture the free world at its core.  The burdens of caring for older populations and the job losses resulting from new technology will spur much competition for resources and markets.
  • In the next 50 years, only Australia, Canada and the U.S. will have growing populations of working-age adults. China will lose 225 million working-age adults, 36% of its current total.  By 2050, Russia’s spending on pensions and medical care for the elderly will increase by 50% as a share of its GDP and China’s share will triple.  In the U.S. such spending will increase by only 35%.

  • The wide-spread adoption of smart machines will reduce the United States’ economic dependence on other countries. For decades the U.S. has chased cheap labor and resources abroad.  Now, automation will allow the U.S. to rely more on itself.
  • This rise of smart machines will also help the U.S. contain the military rise of its rivals. Drones and missiles will be capable of destroying enemy invasion forces.  The U.S. can capitalize on a fundamental asymmetry in war aims: whereas U.S. rivals need to seize and control territory (Taiwan, the Baltics) to achieve regional hegemony, the U.S. needs only to deny them that control.
  • The working-age populations of U.S. democratic allies will shrink by 12% over the next 30 years, while their senior populations will expand by 57%, the same problem facing China and Russia. Such challenging conditions will inevitably breed nationalism and extremism.
  • At the same time, North America will be the only region with all of the ingredients necessary for sustained economic growth.
  • The post-cold war order has fostered the most peaceful and prosperous period in human history. As it recedes, the world will become a more dangerous place with the return of great power mercantilism and new forms of imperialism.  A major example is China’s Belt and Road Initiative and its attempt to create a closed-off, parallel internet.
  • A nationalist mood has taken hold in the U.S. But warding off authoritarian powers such as China and Russia can be accomplished with advanced technology even while foreign bases are being eliminated or cut back.  Overall, this represents a realistic realignment of U.S. foreign policy rather than a retreat from the world.

Conclusion.  “The best hope for the liberal world order is that the U.S. find ways to channel growing nationalist impulses in internationalist directions.”  For example, the U.S. has previously undertaken liberal campaigns for selfish reasons.  It nurtured a community of capitalist democracies to crush Soviet communism.  The secret is to figure out how to continue this kind of outreach in the new, coming nationalistic era.

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The Long Term Social Effects of the Pandemic

With the number of new coronavirus cases in the U.S.now increasing, we are reminded that the pandemic is not yet over and that each of us needs to continue to act in a responsible manner by practicing social distancing and wearing masks in some situations.

The longer the pandemic continues, the more profound will be its lasting effects on American society.  The social science scholar, Nicholas Christakis, has taken a stab at delineating many of these social effects.  For example:

  • A vaccine won’t give us an early exit. A vaccine may not be widely available before the U.S. achieves herd immunity, which will likely occur no later than 2022.
  • Providing medical care over the internet is now not just permissible but even widely encouraged. Telemedicine has achieved a big advance in the last few months.
  • Many restaurants have now reopened but often at only 50% capacity. Of the 15 million people previously employed in restaurants as waiters, cooks, etc., half of them have lost their jobs.
  • Many other small retail firms have gone out of business, often replaced by the growth of giants like Amazon, Walmart and Target. More people will continue to work from home which means a much lesser need for office space.

  • Cramped-in apartment dwellers may want more living space prompting them to move to less dense urban areas. This will have a major effect on the real estate industry.
  • Working conditions will change. Before the pandemic less than half of shift workers had access to paid sick leave.  But a contagious disease makes it clear why this is a bad idea. Many companies, from Apple to pizza delivery businesses, are now providing paid sick leave to hourly workers for the first time.

  • Covid-19 may drive up wages in the U.S. The pandemic has emphasized the country’s dependence on all sorts of low-wage workers.  This will likely lead to better pay in the future.  In part this could take the form of more paid sick and family leave as well as more flexible work schedules and child-care subsidies.

Conclusion.  As the pandemic eventually subsides, life will return to a “new” normal, with major changes in employment and living conditions.   On the whole, these changes will reflect improvements in the quality of life in the U.S., especially for lower-income workers.

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The Economic Stakes in the 2020 Election

I continually try to clarify this blog’s point of view. I am a (mostly) non-ideological fiscal conservative and social moderate. One of the great strengths of our democracy is the constant competition between the two main parties. If one party gains too much influence, then the other party will make a comeback in the next election.

I have stated in recent posts that I like Donald Trump’s emphasis on populism and nationalism, and that progressive policies are often ineffective. 


Today let’s look at the economic policies proposed by the two presidential candidates. First of all, the Committee for a Responsible Federal Budget takes a dim view of both platforms. It projects a national debt under the Biden plan of 128% of GDP in 2030 as compared with a debt of 125% of GDP in 2030 under the Trump plan. These are both huge increases from the current level of about 100% of GDP today. While much different from each other, their platforms are quite similar in terms of new debt incurred.


Now let’s turn to the economic effects of their policies, a more complicated subject. Here is one analysis by Casey Mulligan from the University of Chicago, “The Real Cost of Biden’s Plans.” 

• New regulations implied by Biden’s plans will cost the lowest income quintile of Americans 15.3% of its total income.

• A ban on fracking, required to meet his goal of 100% clean energy by 2035, will alone cost the lowest income quintile 6.8% of annual income.

Conclusion. Many things are at stake in the 2020 presidential election, but economic effects are among the most important. In this regard, there is a clear difference overall between the two candidates.

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How Well Do Progressive Policies Work?

I am a fiscal conservative and a social moderate.  I have not yet endorsed a presidential candidate and probably will not.  However, I have definite views about major political issues, and I discuss them on this blog.  For example, I like Trump’s nationalist and populist leanings.

Today I report on another hot political issue, the effectiveness of progressive policies.  Joel Kotkin, the Ex Dir of the Urban Reform Institute, has an interesting article, “Blue Today, Bluer Tomorrow” in the current issue of the National Review.

Mr. Kotkin points out that:

  • The worst places for minorities are generally those metro areas that are bluest, such as New York City, Los Angeles, San Francisco, Chicago and San Diego. They do best in southern metro areas such as Atlanta, Raleigh, El Paso, Nashville and Phoenix.
  • Blue strategies such as affirmative action, higher taxes, expanded social programs and more regulation have not slowed down poverty’s spread. Between 1980 and 2018, the number of high-poverty metropolitan census tracks have doubled while the wealth gap between these areas and affluent areas have grown.
  • Today our core cities suffer a level of inequality far worse than in the countryside or suburbs and more closely resemble social conditions in Mexico. Rather than supporting a robust middle class, core cities suffer an ever-wider gap between the two critical constituencies – the highly educated professional class and the urban poor.
  • The recent wave of riots, the most widespread in 50 years, is not likely to make cities any more attractive. Yet in the face of these threats to public order, many blue-city politicians have taken a remarkably hands-off approach to looting and other forms of violence.
  • Urban policy is just one example of blue policies that are hurting the poor and working classes. Once a major energy producer, California is now coping with gas and electricity prices that are among the highest in the nation.  For all this suffering, California’s junior Green New Deal has provided little benefit for the environment.  The state, not including the ruinous effects of fires, ranks a mediocre 40th in per-capita greenhouse-gas reduction over the past decade.
  • Blue-city K-12 school districts are notorious underachievers. Many core-city school districts such as Philadelphia, Baltimore and Detroit, produce extraordinarily bad student test scores.  Some mostly red states such as Tennessee, Kentucky, Texas and Ohio are already shifting resources to skills education that is more practical for many minorities and working-class whites.
  • The woke agenda represents only 8% of the population. Conservative traditionalism represents only 25% of Americans.  Roughly 2/3 of Americans are thus in the “exhausted majority.”  Even nominally progressive millennials, once they begin to raise children, buy houses and start businesses are likely to reject the more intrusive policies pushed by New Left urbanists.
  • Forcing the two parties to go after suburban and small-town voters is the country’s best long term political hope. “Here lies an opportunity, born of massive blue failures, to forge a new politics that is fundamentally pragmatic and reflects the middle-class aspirations that have long defined and blessed this country.”

Conclusion.  Our country is in a big political mess right now.  Progressive left policies, so currently in vogue in many blue cities and states, are making things worse.  But there is hope in the political center if it can figure out how to assert itself.

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The American Dream Is Still Alive and Well

As we recover economically from the coronavirus pandemic (with the unemployment rate continuing to drop), we should not lose track of the many things that the U.S. is doing right.  I have been focusing on this in my last few blog entries and pointing out how important it is to return to the economic growth we were experiencing before the pandemic hit us hard in March 2020.

Today I report on a recent study by Michael Strain from the American Enterprise Institute, “The American Dream Is Not Dead,” as summarized by James Pethokoukis also from the AEI.

Consider that:

  • Wages have not been stagnant for decades. As the figure below shows, during the past three decades, wages for typical workers have grown by at least 20% (perhaps as much as 33% depending on how they are measured).  It is unreasonable to describe (as does the main-stream media) this growth as stagnant.

  • Household income growth has not been stagnant for decades. As the figure below shows, the median household saw market income plus social insurance benefits increase by 28% from 1990 to 2016.  And income after taxes and transfers grew by 44% over this same period.

  • Most Americans in their 40s are doing better than their parents were during their 40s. Again, looking at the chart below, 86% of today’s 40-somethings who were raised in the bottom 20%, have higher incomes than their parents did when their parents were in their 40s.  This represents huge upward mobility from the bottom of the income distribution.

Conclusion.  Of course, the pandemic is a temporary setback, but let’s keep in mind how well the economy has been doing in recent years.  “If you work hard and play by the rules, you can get ahead.  Your effort will be rewarded.  America is a place where you can build a better life for yourself.”

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The U.S. Is Mostly in Very Good Shape

As we continue to pull out of the pandemic and life gradually returns to normal, it is pertinent to think about other big issues facing our country.  As most of you know, I live in Omaha and, Nebraska now has, for August 2020, the lowest unemployment rate in the country at 4%.  So things tend to look good from where I am perched.

Let’s examine the severity of some of the bigger problems facing the U.S. today:

  • The Pandemic. The number of new daily coronavirus infections is steadily decreasing.  The unemployment rate dropped from 10.2% in July to 8.4% in August.  So the most important measures are moving in the right direction and we are already recovering from the pandemic.  Our decentralized policy of reopening the economy as quickly as possible with the governors in charge is working well.
  • Racism. The killing of George Floyd in late May while in the custody of the Minneapolis Police Department has led to a summer of racial discontent.  Yes, there is still (mostly) latent racism in the U.S. but it is steadily decreasing as blacks continue to move up the economic ladder.
  • Inequality and Poverty. Inequality gets the most attention in the media but (lack of) poverty is really a better measure of social progress.  And we are making steady progress in reducing the poverty rate.
  • Political Polarization. The split is largely geographical between the blue coastal states and the red interior states.  The two sides barely talk the same language. The presidential election is unlikely to resolve these differences especially if it is close and the results are contested.  For me, the worst thing about polarization is that it makes it impossible for the two sides to work together to address our debt problem.
  • The National Debt. The pandemic has turned our already bad debt problem into a severe problem.  After the pandemic subsides, we need to become far more serious about getting our massive debt under control.  The excessive cost of healthcare in the U.S. is a major component of this problem.
  • The China Threat. China is our biggest competitive rival by far.  However, the U.S. has many advantages in this ongoing economic and military struggle and should be able to maintain its dominent unipolar status for many years to come.
  • Other Foreign Policy Issues. The U.S is withdrawing most troops from the war zones of Afghanistan, Syria and Iraq, and also some troops from allied countries such as Germany and South Korea.  This represents an intelligent policy of using military resources as sparingly as possible while still defending vital U.S. interests around the world.

Conclusion.  The U.S. is responding appropriately and well to most of the biggest problems we face.  The biggest exception by far is our out-of-control national debt which will turn into a huge new financial crisis if not strongly addressed as soon as the pandemic subsides.  The current highly politicized political climate is the primary impediment to progress on this issue.

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How Is the U.S. Doing in Overall Social Progress?

The coronavirus pandemic is not over but the U.S. is already steadily recovering from it.  The number of new daily infections is continuing to drop (see chart) and the economy is also recovering well as evidenced by the drop in the unemployment rate to 8.4% in August from 10.2% in July.

As we continue to monitor the above pandemic-related numbers, it is appropriate to turn attention to other important economic and social issues as well.

The Social Progress Imperative (Institute) has just released a new report ranking most of the countries in the world on “quality of life” factors as of the end of 2019.   The U.S. ranks only 28th in the world on its list!  Here are the statistics for the U.S.:

The areas in which the U.S. ranks low (see the attached chart) are:

  • Inclusiveness.  In particular, there is too much discrimination and violence against minorities and too little equality of political power by socioeconomic position.
  • Personal Safety. The U.S. has a high homicide rate, too much “perceived” criminality, and too many traffic deaths.
  • Health and Wellness. Access to quality healthcare is insufficient, life expectancy is too low, and there are too many premature deaths.
  • Environmental Quality. Greenhouse gas emissions are too high and there is not enough biome (environmental community) protection.

My evaluation of this rating.  Several of these ratings are justified.  We have too many homicides (mostly in big cities).  We certainly have a lot of traffic deaths.  Carbon emissions are too high although they are dropping steadily.  Our biome protection is pretty good.
All of the remaining shortcomings in American society, as listed above,  are related either to minorities and/or to poverty.  But there is a strong connection between social and economic progress as shown by the chart below from this same report.

In other words, these social shortcomings will only be reduced as minorities continue to move up the economic ladder.  This requires more personal agency, i.e. more acceptance of personal responsibility for their own welfare, by individual minority citizens.

Conclusion.  The quality of life in the U.S. has some shortcomings but should be rated higher than 28th in the world.  The whole country should not be down-rated because too many minority citizens are not yet experiencing the high quality of life that a large majority of Americans do experience.

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Why the U.S. is so Strong; the Vibrancy of our Underlying Economy

Good news for the U.S. economy.  The August 2020 unemployment rate is 8.4%, down from 10.2% in July.  This shows how well the U.S. economy is recovering from the coronavirus pandemic.

Of course, the pandemic is a hit to the economy but it is a temporary hit as our rapid recovery demonstrates.  The key factor is the underlying strength of American business.  A robust free enterprise system coupled with a free democratic political system.

Edward Conard from the American Enterprise Institute describes the power of the American economy in his recent book, “The Upside of Inequality.”  As Mr. Conard says:

  • U.S. employment has grown twice as fast as employment in Germany and France since 1980. America has achieved this employment growth at medium household incomes that are 15 to 30 points higher than other high wage economies such as Germany, France and Japan.
  • As the economy grows, it values innovation more. Successful innovators such as Jeff Bezos and Bill Gates, become wealthier than innovators have in the past.
  • Information technology has opened a window of new investment opportunities and increased the productivity of the most productive workers. Moreover, in today’s knowledge-based economy, companies can scale to economy-wide success with little need for capital.  Successful innovators need not share their success with investors.
  • Without much need for capital, start-ups become all-or-nothing lotteries. The chance for enormous payoffs attracts a larger number of more talented gamblers.  More gamblers produce more outsized winners and more innovation.
  • Their success provides American workers with more valuable on-the-job training, at companies like Google, Facebook and Apple, than they can get in other high-wage, but slower growing manufacturing-based jobs.

Conclusion.  The outsized success of America’s 1% has been the chief source of growth exerting upward pressure on domestic employment and wages.  The success of America’s top 1% is an asset, not a liability.

Next:  If the public mistakenly blames the success of the top 1% for the stagnant wages of the middle class, while leaving the true sources of slow-growing wages – trade, trade deficits and immigration – unaddressed, a dangerous feedback loop is likely to ensue.  More on this soon!

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Trumpism, After Trump

Donald Trump will leave office in either January 2021 or January 2025.  It is too soon to say when because the November 2020 election is too close to call.  As the Wall Street Journal says, “he has been better on policy than we feared but worse on personal behavior than we hoped.”

But, with or without Trump, Trumpism has taken over the Republican party.  Trumpism simply refers to the nationalist and populist policies designed to appeal to its expanded working-class base.

  • Nationalism. Put America first.  Crack down on foreign countries taking advantage of U.S. companies, workers, and markets.  The best example of this is the fight with China over trade deficits, intellectual property theft, and unequal market access.  This contrasts with the traditional Republican view that trade inevitably promotes prosperity for all and freedom around the world.  Rather trade must be fair so that American jobs and wage increases are protected. Furthermore, allies should pay more for their own defense and more troops should return home from longterm deployment.  The military should be deployed only when America’s interests are directly at stake.  For example, we should continue to remove American troops from both Afghanistan and Syria.
    Other nationalist related policies are promoting the domestic energy industry, and appointing originalist and textualist judges who will interpret the laws more strictly.
  • Populism. Trump’s base wants the wall built and the southern border secured.  Voters see illegal immigration, like foreign trade, as threatening their jobs and wages.  Immigration policies should benefit the U.S. economy – such as tying legal immigration quotas to workforce needs, as opposed to family reunification.  New immigrants should be expected to learn English and get a job.
    Other populist policies are defending religious liberty and gun rights and easing government regulations in order to increase employment.
    In general, keep the unemployment rate as low as possible to provide more economic opportunities for all low-wage workers, including minorities.

Conclusion.  Win or lose in November, Donald Trump has had a big effect on U.S. politics and government policy.  The Republican party has been transformed from the party of Wall Street to the party of Main Street.  This will keep it competitive in future elections.

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How Is the United States Doing Overall?

As the U.S. Presidential election approaches, every voter should think about how our country is doing overall.

Here is how I evaluate our country’s biggest problems, including what to do about them, as we approach the November election:

  • The Pandemic. After a big surge in July, the rate of new daily infections is now dropping back down.  Furthermore, the U.S. economic recovery from the pandemic recession is gaining steam even if other economies around the world are still sputtering.
  • The U.S. economy overall. As the rate of growth of GDP has unavoidably slowed down to about 2% annually in recent years, a very important statistic is the unemployment rate.  Before the pandemic took off, as recently as February 2020, the U.S. unemployment rate had dropped to 3.5%.  This meant that there were more jobs than job seekers and wage raises across the board.  This is exactly what all low-income wage earners, including many minorities, need to move up the income ladder.
  • The national debt. Uggh!
  • Racism still exists in the U.S. but its effects are diminishing as blacks do better economically.  The key is for blacks and other minorities to take more individual responsibility for their status in life rather than blaming white cultural supremacy for their lack of achievement.
  • The China Threat. The U.S. still enjoys unipolar status as the world’s strongest country, both economically and militarily.  The Chinese economy is now growing faster than ours but, for demographic reasons, is likely to peak at about 76% relative to the size of the U.S. economy by 2040.  Of course, we should cooperate with China on both environmental (e.g. global warming) and health (e.g. pandemic) issues but clearly understand that we are competing with China in many fundamental ways.

Conclusion.  The U.S. has problems to address but they are under control (except for the debt) in a general sense.  U.S. world dominance is likely to continue for many years to come and be a major contributing factor to continued world peace and prosperity.  But let’s not become complacent!  Eternal vigilance is the price of liberty!

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