System Demise, and What Happens Next?

“Democratic capitalism no longer works well enough to keep together a country of 325 million people and to guarantee domestic peace,” the German journalist Holger Stark declared in the news weekly Der Spiegel, trying to explain Donald Trump’s America to his German readers. I think Mr. Stark is right; our way of governance is under deep systemic stress from both sides of the money/power equation.

The disrobing of the financial Emperors began with the financial collapse of 2008. As the elite who run the financial world stood naked amid their misdeeds, we glimpsed how, among many other things, they had packaged and sold bad real estate loans under false pretenses, for profit, with the complicity of the ratings agencies. (Iceland suffered mightily. See deeper coverage in my book Out in the Cold.)

The moment lasted no longer than it took their Maitre d’s to sweep the crumbs from the Emperors’ Michelin-rated dinner tables. The systems of financial governance they support patched things up, bailed them out and dispatched that nasty little business, and fast.

But the markets were left in turmoil. The elite’s solution was austerity, which resulted in rising unemployment. This led to mass protests and the Occupy Wall Street movement. Occupy seized on rising inequality as a rallying device, calling themselves “the 99 percent,” pointing out that the top one percent of income earners, who are less affected by austerity measures, are generally the decision makers who caused the problem in the first place.

I think to watch the nascent Obama administration repair the Emperors’ balance sheets was a revelation for middle America. The former party of the working man, made up of all those out-of-work cadres to whom Donald Trump would later appeal, showed flyover country that whichever flag of political leadership flies over the land, the infestation of money has rotted the system clear through.

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It’s ALWAYS About the Money

In a Maslow’s hierarchy, the Financial Times columnist Martin Wolf ranks capitalism as more fundamental than democracy. He writes, “Democracy cannot function without a market economy.”

“In today’s world, it is not capitalism that is in imminent danger, but rather democracy. A predatory form of post-democratic capitalism, not the end of capitalism, is the threat.” By this Mr. Wolf means we should fear authoritarianism.

Mr. Wolf works for a newspaper whose focus is money, so it is not surprising that he might overlook flaws in the workings of the money part of the money/power question. But there are glaring flaws, and they give rise to alienation.

An alienated center’s loss of faith in institutions invites the rise of the fringes, the peripheral haters and dividers that always rise at times when the disillusioned are too crestfallen to keep up their guard. Opportunist would-be leaders are always ready to exploit such an electoral mood, and this is what we call the rise of populism, an affliction from which we currently suffer.

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The post-post-Cold War world is well and truly in flux. Conflicting signals are everywhere. Vladimir Putin’s unapologetic Russian nationalism has brought along bits of east Europe, notably Victor Orban’s Hungary and a grudge-wielding conspiracy theorist whose destructive policies seem driven by personal vendetta, the power behind the throne in Poland, PiS chairman Jarosław Kaczyński.

Brexit deflated proponents of the European project. Donald Trump has NATO rightly alarmed. Mr. Putin’s loans to Marine Le Pen’s Front Nationale seek and may attain influence over a Europe teetering on terminal division.

We all see the challenges facing the German chancellor, who looks more tired by the day, after her fateful acceptance of 1.1 million refugees (or was that 890,000?) in the summer of 2015. A narrative is emerging that she “represents what many voters consider the failings of the past.” Her painful audience with the U.S. president could scarcely have bucked her up before the September electoral challenge from the SDP head Martin Schulz, who has the clear and canny benefit of having been away in Brussels and untainted by the immigration wars.

Still, for every Orban in Hungary there is an Austria, where 73-year old Alexander Van der Bellen ultimately won the presidency last December with 53.8 percent over Norbert Hofer, heir to Jörg Haider’s anti-Muslim, anti-immigration Freedom Party. In Bulgaria the center-right has held, with the pro-E.U.-integration (and corruption-plagued) Boyko Borissov likely to retain his premiership after elections at the end of March. Then too there is the Dutch rejection of the nasty, isolated Geert Wilders. It appears the power side of the money/power question could go either way.

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An epic, scene-setting battle is being fought right now, before our eyes, and it is historic. After the 25 year lull we called the “post-Cold War,” this is the world-defining struggle for what comes next. It is history on fast-forward. For now, it is hard to see the emerging landscape for the early spring fog. The 7 May runoff in France and September elections in Germany will help to illuminate the path forward.

The potentially good news on this side of the Atlantic is that Donald Trump’s act wears thin as fast a Wal-Mart t-shirt. We have fast come to know him as a slight-of-hand president, a purveyor of diversion, and there is every chance that his dissipation of the common trust will in time bring the country to a crisis that will not end well. In the context of the times we live in, if there could be a worse time for my country to have installed an ignorant, self-involved unsteady hand on the presidential tiller, I can not think of when it would be.

His rank dissimulation may – just may – prevent our president from being trusted long enough to cause physical harm. How we get from here to there is plenty fraught. But surviving the Trump threat won’t be the end of our woes, for they are systemic. We will still be left to repair our system’s corrupted relationship between money and government. A subject for future consideration.

 

Note: Less than an hour after publication of this post the U.S. Senate did its part in the institutional disassembly process by changing its rules so that sixty votes are no longer needed to confirm a Supreme Court Justice.

This article also appears on Medium.

It’s Show Time for French Elections

This will get you up to speed on the state of things one month before the French election: The center-right Républicains and center-left Parti Socialiste have dominated French politics since the founding of the Fifth Republic in 1958, and this year neither may advance to the final round. Among the Républicains, the two best known candidates went down in turn. Former President Nicolas Sarkozy’s comeback attempt was turned back early, then in the primaries’ second round, Alain Juppé was defeated by former Prime Minister François Fillon, who promptly became embroiled in a scandal that has brought his poll numbers down to 18%. He is currently polling in third place.

President François Hollande’s hapless governance has brought the center-left Socialistes’ prospects down with him, and the Socialistes have chosen to radically shake up their status quo. As on the center-right, the expected standard bearer, Manuel Valls, fell decisively in the primaries to a harder left candidate named Benoit Hamon, who proposes shortening the work week to 32 hours, and a tax on robots. He languishes in last place, most recently polling 14.1%.

The candidates most likely to finish one-two are Emmanuel Macron and Marine Le Pen. Macron has positioned himself squarely in the center, having left the Socialistes to form a party called En Marche, meaning sort of “on the move,” or “let’s go!” While Macron, 39, is accused of a lack of policy heft, he is just about tied atop the polls with the leader of the Front Nationale, Marine Le Pen. Le Pen has worked hard on the “de-démonization” of the anti-EU, law and order party she inherited from her father, the holocaust denier Jean-Marie Le Pen. The firebrand populist hopes to benefit from the rise of nationalism in the west, and from the “Trump effect.”

Here is one in a series of election ads (with English subtitles) that seeks to show Le Pen’s steely determination and patriotism:

The first round of the elections in Sunday, 23 April, with the top two candidates moving to a runoff two weeks later. Conventional wisdom suggests the rest of the political spectrum will close ranks against Le Pen, behind whoever emerges as her opponent in the second round, to be held Sunday, 7 May. More on that then.

Ukraine: What to Do Now

kyiv

War Museum, Kyiv

Eleven weeks after Viktor Yanukovich fled Kyiv the stakes for Ukraine, and geopolitics, are clear. A set of shrewd western responses may or may not keep Ukraine whole. More broadly, the international norms of state sovereignty and territorial integrity are under assault, and will come undone at the world’s peril.

Russia seeks to dismember Ukraine using a unique, hybrid strategy that just might work. If the U.S. leads from behind, Russians in eastern Ukraine lead from the shadows, cloaking thuggish revanchism in the language of human rights and self-determination.

Ukraine’s inability to govern itself, every single dreary day since independence, is its original sin, and the pending election between the “gas princess” and the “chocolate king” doesn’t hold out much prospect for progress. When Polish Foreign Minister Radek Sikorsky says “I think Ukraine is paying the price of 20 years of strategic illusions of being able to be neutral and of not paying enough attention to their security sector,” you can almost see his lips mouthing “raving, criminal incompetence.”

In a virtual tie for second biggest problem, Russian perfidy leads European ambivalence  by percentage points. Who do you favor to pull into the lead in this race? The authoritarian, deniable mystery troops, or the herd of 28 finicky EU cats led from behind by you-know-who?

Russia’s advocates (including top-notch liberal columnists) argue that the expansion of NATO and the failure of the West to find a role for Russia in Europe, especially during the humiliating years of post-Soviet economic collapse, bred a resentment in Moscow that manifests in the Putin of today.

It doesn’t hold up. Russia is a charter member of the OSCE (even as its proxies in Slavyansk held OSCE observers for a week). It joined the Council of Europe in 1996. From 1998 until the present crisis Russia was a member of the G-8. The Russia–NATO council was created in 2002 at Russia’s request, and Russia joined the WTO in August 2012.

Participation in these clubs hasn’t promoted Russian integration into Europe because Russia’s priority is not integration with Europe. The real cause of Russia’s behavior, Jan Techau argues, “is its archaic understanding of what constitutes a sovereign nation….”

Techau writes, “Moscow could never accept a structure that gave Luxembourg or Portugal, Georgia or Poland the same legal rights as Russia.” European organizations just aren’t Russia’s style.

Let’s be clear: Russian disinformation notwithstanding, the Maidan was no Pravy Sektor-inspired Nazi uprising. With a generation and counting lost to corruption, at long last Ukrainians young and old rose up and said, enough. That is what happened.

When Russia calls the interim government in Kyiv illegitimate, recall that the country was left in its current predicament when the Kleptocrat-in-Chief Mr. Yanukovich fled under cover of night. To Russia.

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We seldom delve into political matters here, at least U.S. domestic ones, and let's keep it that way. Yes we'll criticize China and Burma and North Korea, but based on the way they treat their people, they richly deserve it.

But reading the current Foreign Affairs makes me throw up my hands. In a special edition focused on "The World Ahead," a who's who of veterans of the American Thinking Establishment scolds the U.S. for its proflicagy.

Richard Haass, who was for the Iraq war before he was against it contributes a primer on "The Consequences of Fiscal Irresponsibility" as if none of us has been reading the papers and we were all just waiting for him to weigh in. (See also Ken Pollack of the Brookings Institution and Iraq.) Les Gelb explains "The Primacy of Economics" as if he's known it all along, but just waited until now to explain it to us unwashed.

These people make it their paid job to advise the wise and explain it all to the hoi polloi. Some advice to the wise along these lines might have been more useful before the September, 2008 collapse of Lehman Brothers, and surely prior to the November/December 2010 edition of Foreign Affairs. Don't you think?

This kind of establishment group-think has gone a long way toward getting us where we are now. It argues for more alternative thinking, sort of like the original thinking of Andrew Bacevich and Chris Hedges, to name two. Ian Bremmer has written a thinking book about the state of relations between states today. This issue of Foreign Affairs, meanwhile, reads like all their leading lights have known about this coming calamity all along, of course, and will now deign to explain what it all means.

Foreign Affairs is published by the Council on Foreign Relations, as establishment an organisation as we have. Its "board of advisors" includes Fouad Ajami, Tom Brokaw, Jim Hoagland and Colin Powell, among others, who represent as establishment a group as there is in this country. They've spent the current issue sagely explaining what, if they were earning their money, they'd have helped to prevent in the first place.