politics


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Here are three trends that are often discussed in isolation:

  1. The low birth rates of advanced economies

  2. The rise of a xenophobic anti-immigration politics

  3. The fragility of the welfare state

While these subjects might seem to have nothing to do with each other, in fact they crash into each other like dominos. As rich countries have fewer babies, they need immigration to grow their prime-age workforces. But as the foreign-born share of the population rises, xenophobia often festers and threatens egalitarian policymaking.

There is no reason to think that this cause-and-effect is inevitable, but the trend is clear enough that liberal policymakers need to think hard about this doom loop and how to break it. Let’s spell it out in greater detail.

First, babies. American demographers are “freaking out as each year brings a new record low in the number of women giving birth. There are several ways to cut the fertility data—including annual births per population, or total lifetime births per woman. But every statistic tells the same story: Americans are having fewer babies than they were 50 years ago, or even 30 years ago. Japan and many European countries are dealing with their own “perfect demographic storms.”

A baby shortage sounds like an adorable misfortune of middling significance. Actually, it’s a critical problem. To expand their economies, countries need to expand their populations, particularly at a time of low productivity growth. Rich countries also need a larger and richer workforce to pay for government services to the sick, poor, and elderly. In the long term, with automation, these countries may run out of jobs. But in the short term, they are running out of people. In fact, the number of Americans between 25 and 54 years old has not grown in more than a decade.

That brings us to the second story: immigrants. As the birth rate has declined in the U.S., Canada, Western Europe, and Japan, the immigrant share of their populations has increased. This is a perfectly natural and good development. These countries have high median incomes, which are attractive to international migrants, plus their economies need new humans to sustain both GDP growth and government services.

This might sound counterintuitive to some people who’d assume that a large influx of low-skilled immigrants would be a huge drag on federal resources. In the short term, they might be. But as the children of immigrants find jobs and pay taxes, immigrant families wind up being a net contributor to the government over many decades, according to a 2016 report from the National Academy of Sciences. Beyond this economic accounting, there is a strong moral case to allow families from low-income countries move to a richer country, where they can improve their lot by an order of magnitude.

But there is a growing body of evidence that as rich majority-white countries admit more foreign-born people, far-right parties thrive by politicizing the perceived threat of the foreign-born to national culture. That concept will sound familiar to anybody who watched the 2016 U.S. presidential race, but it’s a truly global trend. A 2015 study of immigration and far-right attitudes in Austria found that the proximity of low and medium-skilled immigrants “causes Austrian voters to turn to the far right.” The effect was strongest in areas with higher unemployment, suggesting that culture and economics might reinforce each other in this equation. Last week, the far-right Austrian party triumphed in the nation’s election.

This is where the story finally connects with welfare and the future of liberalism. Rich countries tend to redistribute wealth from the rich few to the less-rich multitude. But when that multitude suddenly includes minorities who are seen as outsiders, the white majority can turn resentful and take back their egalitarian promises. Take, for example, the Twin Cities of Minnesota. They were once revered for their liberal local policies—like corporate-tax redistribution from rich areas to poor neighborhoods and low-income housing construction near business districts. But since the 1980s, as the metro area attracted more nonwhite immigrants, the metro has become deeply segregated by income and race and affordable-housing construction has backtracked. Or take Finland, that renowned “Santa Claus State” of cradle-to-grave social services, where the welfare state is being “systematically dismantled.” The far right has emerged in the last few decades, just as foreign-born population has suddenly grown.

The modern liberal vision of the U.S. is a pluralistic social democracy—the dream of a nation that uniquely promotes both diversity and equality. The marriage of those twin virtues is, perhaps, the singular American experiment—even if, outside of California, Canada seems to be doing a much better job with the execution. But an unavoidable lesson of the last few years, from both inside and outside the U.S., is that cultural heterogeneity and egalitarianism often cut against each other. Pluralist social democracy is stuck in a finger trap of math and bigotry, where to pull on one end (support for diversity) seems to naturally strain the other (support for equality).

The future of the U.S. economy depends on population growth. The future of U.S. population growth depends on immigration. But, as in so much of the world, immigration can trigger bigotry and backlash. The liberal cause requires  Americans learning to break the catch-22 of diversity and equality. If multicultural egalitarianism is the future of liberal politics, the road to the future will be bumpy.

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The legal conflict between Donald Trump and Special Counsel Robert Mueller is escalating rapidly. New reports in the Washington Post and New York Times are clear signals that Trump is contemplating steps — firing Mueller or issuing mass pardons — that would seem to go beyond the pale. Except: Trump’s entire career is beyond the pale and, in his time on the political stage, the unthinkable has become thinkable with regularity.

Trump’s actions are best understood in the context of the overwhelming likelihood he, his family members, and at least some of his associates are guilty of serious crimes. The investigation might not produce proof of criminal collusion with Russia’s illegal hacking of Democratic emails. (Though reasonable grounds for suspicion already exists in abundance.)

Where Mueller seems to be creating special pain for Trump is in his investigation of financial links between Russia, Trump, and other members of the president’s inner circle. In his interview with the New York TimesWednesday night, Trump threatened to fire Mueller if he probed into what Trump called financial matters unrelated to Russia. The Post reports that Mueller’s examination of Trump’s financial dealings is the president’s “primary frustration” and that Trump is “especially disturbed” that Mueller will access his tax returns.

Trump’s lawyers have stated explicitly what Trump hinted at in the interview: He regards an expanding of the probe as a red line that might cause him to fire Mueller. “The fact is that the president is concerned about conflicts that exist within the special counsel’s office and any changes in the scope of the investigation,” Sekulow said. A “close adviser” added, “If you’re looking at Russian collusion, the president’s tax returns would be outside that investigation.”

Trump’s team is not merely warning Mueller to stay away from random, unrelated transactions. They are specifically holding up Trump’s financial dealings with Russians as out of bounds: “They’re talking about real estate transactions in Palm Beach several years ago,” Sekulow tells the Post. “In our view, this is far outside the scope of a legitimate investigation.”

The Palm Beach transaction is a source of longtime suspicion. Trump purchased a property for $41 million and then, after improving it, sold it just two years later to a Russian oligarch for more than twice as much. This is a completely natural area for investigation. If the Kremlin wanted to finance Trump, overpaying for a property would be an obvious way to do so.

Mueller is also investigating other Trump financial transactions. Trump’s opaque business dealings include a lot of shady figures, including members of the Russian mafia. Why has Trump adamantly refused to disclose his tax returns, even at a significant cost to himself? And why does he appear to be so terrified at Mueller looking under these rocks? The simplest explanation is that he is probably hiding something deeply incriminating.

Trump has shown himself immune to widespread warnings that certain steps are simply not done. His hiding of tax returns, firing of U.S. Attorney Preet Bharara (who was investigating Russian financial crimes when he was let go), and ousting of FBI director James Comey were all steps that would seem to immolate his career. Ordering the Department of Justice to fire Mueller, or pardoning the targets of his investigations, would be an open announcement that Trump considers his financial ties to the Russian underworld and state to be beyond any legal accountability. The ominous threats emanating from the White House are that of an administration mobilizing for war against the rule of law.

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All of his bankruptcies, court cases, divorces, have only [seemingly] made him stronger. Currently with the special investigation ongoing, he continues to tweet, arguably making his case weaker, vitriolic press, yet, still he endures as POTUS.

I don’t see him resigning, being impeached, or any other impediment unseating him from power before he would need to seek re-election.

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The Trumpster unleashes more rumours and uncertainty:

One of President Donald Trump’s close friends set off a frenzy on Monday night when he told PBS that the president is “weighing” whether or not to fire Robert Mueller, the special counsel overseeing the Russia investigation.

“He’s weighing that option,” said Chris Ruddy, Newsmax CEO and friend of Trump on PBS NewsHour Monday evening.

Ruddy was seen leaving the West Wing on Monday, but White House press secretary Sean Spicer later said Ruddy had not spoken with Trump about the issue while he was at the White House.

Trump’s reported consideration of firing Mueller comes just weeks after Deputy Attorney General Rod Rosenstein appointed him to lead the FBI’s probe into Russia’s election interference and whether any Trump campaign associates colluded with Moscow.

Legal experts, members of Congress, former government officials, and even Ruddy reacted swiftly on Monday night, most with the same message: Don’t do it.

“I personally think it would be a very significant mistake — even though I don’t think there’s a justification … for a special counsel in this case,” Ruddy said.

“Firing Bob Mueller as special counsel would be an order of magnitude more seismic than firing Jim Comey,” said Andrew Wright, a professor of constitutional law at Savannah Law School. “It would be insane even by Trump-era standards.”

“It would be a disaster,” Republican Sen. Lindsey Graham told Politico. “There’s no reason to fire Mueller. What’s he done to be fired?”

“If President fired Bob Mueller, Congress would immediately re-establish independent counsel and appoint Bob Mueller. Don’t waste our time,” said Rep. Adam Schiff, ranking member of the House Intelligence Committee.

And
Richard Painter, the top White House ethics lawyer under President George W. Bush, said Trump’s consideration “had better be fake news or this presidency will be over very soon.”

Ruddy’s comments came amid a drumbeat of calls from Trump’s supporters and conservative allies for Mueller to step down — despite their initial support for him. It followed former FBI Director James Comey’s testimony last week that he ordered a friend, a Columbia Law professor, to give the press a memo detailing Comey’s detailing of Trump’s request that the FBI drop the investigation into former national security adviser Michael Flynn.

The calls also come as Mueller has been staffing up with top attorneys specializing in criminal law and fraud.

“Republicans are delusional if they think the special counsel is going to be fair,” former House Speaker and prominent Trump surrogate Newt Gingrich tweeted Monday. “Look who he is hiring. Check FEC reports. Time to rethink.”

Gingrich told CBS on Tuesday morning that Trump called him Monday night to discuss Gingrich’s feeling that Mueller has been playing “a rigged game.”

‘It’s chaos that he can put to bed’

It is not clear that Trump could fire Mueller unilaterally and without good reason, however.

“As I understand it, the special counsel regulations require termination only ‘for cause,’” Wright said. “The president would have to convince Rosenstein that there are grounds for termination. If Rosenstein refused, Trump would have to fire Rosenstein. Sound familiar? It would be Saturday Night Massacre city.”

The Saturday Night Massacre refers to the resignations of Attorney General Elliot Richardson and Deputy Attorney General William Ruckelshaus on October 20, 1973, after they refused to follow President Richard Nixon’s orders and fire the special prosecutor investigating Watergate, Archibald Cox.

“If Rosenstein did remove Mueller, then the investigation would revert to Rosenstein on the org chart,” Wright said. “But the political, congressional, and media environment would be just white hot crazy.’”

Democratic Rep. Eric Swalwell, a member of the House Intelligence Committee, said in an interview that he can’t understand why Trump doesn’t just put the speculation to rest.

“He is unnecessarily allowing it to fester, and that is creating more chaos around the Russia investigation,” Swalwell said on Tuesday. “It’s chaos that he can put to bed by just saying that he does not intend to fire the special counsel.”

Swalwell added that Trump seems to have turned questions surrounding the Russia probe into “a guessing game,” beginning with his unfounded claim in early March that President Barack Obama “wire tapped” Trump Tower phones. Last month, he suggested in a tweet that there may be “tapes” of his conversations with Comey.

“This is all beginning to look intentional,” Swalwell said. “It seems that he could answer many of the serious questions out there, but instead he’s turned this into a guessing game. The cost of this chaos is that he has brought Washington to a halt at a time that both parties would be better served working on the issues they were elected to address.”

When it comes to examining whether Trump sought to obstruct the FBI’s investigation into Russia’s election interference and whether the Trump campaign played a role, the president’s pattern of behaviour and past statements about the probe will likely come back to haunt him, experts say.

“You may be the first president in history to go down because you can’t stop inappropriately talking about an investigation that, if you just were quiet, would clear you,” Graham said Sunday of Trump.

Bob Bauer, who was a White House counsel under President Barack Obama, wrote last month that “what is most remarkable is that the president has willingly created this self-portrait.”

“As scandals in the making go, this one may become famous for featuring the president as the principal witness against himself: he seems committed to uncovering any cover-up,” Bauer said.

 

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The next debt ceiling fight fast approaches:

Debt-ceiling fights, especially amid massive deficit increases following the 2008 financial crisis, have become more difficult and politically contentious.

Perhaps the most famous came in 2011, when it appeared that Republican leadership in the House did not have enough votes from its conference to pass the debt ceiling bill just hours before it was set to be breached. Obama, in an interview in January, called the moment the most nerve-wracking of his presidency and said he had prepared a speech in case the US went into partial default on its debt.

Obama’s fear was warranted, given the massive impact failing to raise the debt ceiling would have on not only the finances of the federal government, but also the global economy.

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Ordinarily, politics and economics influence each other with economics being more of a driver on politics than politics is on economics—e.g., bad economic conditions normally lead to political changes—and normally we don’t need to pay much attention to politics to get the economics and markets right. However, there are times when politics becomes the most important driver. History has shown us that these times are when there is great economic, social, and political polarity within a country and there is the selection of populist leaders to fight for “the common man” in a battle against “the elites.” These conditions exist now. The 1930s were the last time this happened in the developed world and globally.

As we described in the study we did on populism (accessed here), our examination of this phenomenon made clear that the conflicts between the common man and the elites typically take place a) during times of economic stress due to wealth and opportunity disparities, b) when the common man believes that the country’s core values are being threatened by foreigners, and c) when government seems so dysfunctional that radical change is widely believed to be necessary. Those conditions typically lead to a strong-minded, confrontational fighter being brought to power to represent the underserved constituency, typically by pursuing more nationalistic, protectionist, and militaristic policies, which typically leads to more domestic and international conflicts. In some cases it led to democracies becoming dictatorships, and wars.

I am not saying that we are on that path, but I am saying that it has to be watched out for because if it is in the works, it is a really big deal. In watching out for it, in the early stages of a new populist administration, the main thing to look for is whether conflict moves to the point that it is detrimental to the effectiveness of government and the economy. The potential for government to become dysfunctional is unique in democracies because the relatively open checks and balances system (which, under normal conditions, is a strength of the system) and because the free media (which is normally a strength of the system) can operate in a way to incite emotional conflicts rather than encourage orderly resolutions of conflicts through the legal system. Even when it is operating well, the legal system can move very slowly, dragging out the period of conflict rather than leading to the prompt resolution of it. These conditions can reinforce emotional and antagonistic polarity because the goal of beating the opposition supersedes the goal of working together to try to find compromises that are good for the country as a whole, and that can create a self-reinforcing downward spiral. That has to be watched out for because, if it were to occur, it would have profound implications for economies, capital flows, and markets. Right now there is a whiff of it in the air.

In my opinion, the trend toward conflict leading to greater dysfunctionality, leading to greater conflict, in a self-reinforcing way is increasingly apparent in the US and UK. Over the last 24 hours we’ve seen developments in the US (pertaining to the issues surrounding Jim Comey’s testimony) and the UK (concerning no UK party having a ruling majority and the threat of a left populist leader emerging). While in both cases, so far, the political and legal institutions and systems have worked as intended—e.g., Special Counsel appointed and electoral system delivering a rebuke of a sitting government—nonetheless these developments entail the risk that political conflicts will lead to reduced government effectiveness in these two countries at especially challenging times for each of these countries (e.g., for the UK exiting the union and needing to redefine its economic and geopolitical place in the world, and for the US needing to clarify its domestic and international directions).

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May pretty much took the Conservatives out of over-all power into a hung Parliament and shared power. In the process she has ended her run as PM, she’ll likely either resign or be pushed.

Why would you call an election with 2 years left to run? Hubris.

Either way, Labour or Conservatives, no real differences.

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