Addressing Inequality

The  Davos show is beginning this week.  I am not going, but I am in Zurich and close enough to see the ads for ever-bigger and better private planes to take the elites to elite places.  All of this against a background of calls for inequality.

The problem with addressing inequality is that the rich have convinced themselves that they have fairly earned and fully deserve every penny in their off-shore tax-haven bank accounts, and governments (the enemy, socialist, communist) have no right to raise taxes or change loopholes and rules that strongly favor the continued accumulation of wealth by those who already have most of it.

Famed French economist Thomas Piketty has argued that it is a natural law that the rate of return on capital will exceed overall economic growth rates; as long as that is true those who own capital will get richer compared to those who do not.  Hence his only solutions to inequality are to tax the wealth that the rich accumulate, or wait for wars or depressions to destroy that accumulated wealth.

That is a bleak view and wholly unnecessary.  One can easily reduce the rate of after-tax returns on capital (which are what matter for accumulation) by legislation.  Progressive income taxes PLUS high estate taxes did the trick for decades in the US.  High pre-tax incomes were readily allowed, but strongly progressive taxes meant that  the higher the additional income the smaller the net gain, which disincentivized the pursuit of astronomical incomes.  Simply going back to the tax structure of the 1970s, or even early 1980s, would reduce the extreme inequality from high CEO and financial sector earnings.  Then a high estate tax will block the inter-generational transmission of inequality.

Even simpler would be to knock out some of the strange quirks in the tax system that actually enhance the after-tax return to capital.  One is the step-up valuations of assets at death, which saves the very rich billions in taxes for no sensible reason (shouldn’t all capital gains be taxed at the same rate?  Why give an exemption to capital gains that happen to have not been realized at the time of one’s passing?)  Another is the preferential tax treatment given to capital gains, which are taxed at a substantially lower rate than wage earnings.  If it is the case, as Piketty argues, that returns on capital tend to be higher than the growth of wages (which are linked to the growth of the overall economy), then to put a much higher marginal tax on wages as well is to create a double-whammy against wage earners, and guarantee an escalation of inequality.

All of this is straightforward and much discussed.  But there are other approaches to inequality that do not rest so much on trying to equalize incomes and are far more effective.

It doesn’t matter much to the opportunity and life chances of a child  whether their parents eat chicken or beef, whether they drive a Porsche or a Chevrolet, and whether they have antique furniture or shop at IKEA.   What does matter is whether that child has an adequate diet of protein and micro-nutrients; fresh air and space to play; access to information; quality preschool and formal education; and medical care to address illnesses and injuries and issues of sight, hearing, or emotional problems.

So what if we let differences in income continue to determine what kind of cuisine, car, and furniture people have.  But for things that are really important for child development and opportunity, we should take those things out of the realm where income has a major effect differentiating access.  That is, they should be treated like public goods (like police protection and roads) and provided by public authorities — but with more attention to high and uniform levels of quality in their provision than is often the case today.

Of course, the question will be raised — how to pay for those public goods?  The answer can be taxes that do not focus mainly on income.  They could be provided by taxes on spending — value-added taxes, luxury taxes (on yachts, and cars and homes above a certain capital value), liquor and cigarette taxes, hotel and travel taxes, etc.   No one is forced to pay such taxes; they are voluntarily occurred by choices to consume certain goods and services or at a certain level.  But they can provide the means to make opportunity-goods available to everyone, and thus avoid the most noxious effects of inequality — that severe inequality closes the doors to future opportunity.

So don’t worry about differences in income inequality – just make them less relevant!

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ISIS in Paris

Take a pleasant farm and field. Introduce a flow of water from diverse sources. If the water mixes into the soil and feeds the mix of crops, the result is greater prosperity. But if the water pools in stagnant, non-circulating ponds it feeds disease and pests. If travelers going back and forth between the farm and foreign places bring back weeds that take root in the ponds and spread, the entire farm can be ruined.

Something like this has been happening in Europe over the last few decades. From 1970, Europe – which had for four centuries been a vigorous exporter of people around the world – became an importer of people from Asia, Africa, and the Middle East. Immigration has generally been healthy for societies: new ambitious people entered America, Australia, Argentina, and Canada and created a quilt-work of different faiths and ethnicities. But in each of these cases, the immigrants were encouraged (or demanded) to assimilate. They were asked to learn the language, conform to the laws, attend the schools, and work alongside prior generations of immigrants, natives and mixed native-immigrant communities. They might keep their own weekend schools to transmit their historic cultures, cluster in certain neighborhoods, and enrich the local social scene with their own ethnic and religious festivals (what could be more American than St. Patrick’s Day?). But they aimed above all to succeed in the greater society, and their success was welcomed if they made the grade.

Like Frank Sinatra – the child of Italian immigrants from New Jersey – who told us that if you can make it in New York you can make it anywhere, immigrants aimed to blend in and take leading roles in entertainment, by founding their own businesses, and in the professions (breaking down the barriers to high-level corporate offices took longer).

Yet most Europeans and European leaders never viewed the immigrant workers from Asia, Africa, and the Middle East as valuable newcomers who, if required to adopt the manners and values of Europeans, could enrich and fully join their societies. They preferred to think of them as “guest workers” who would do their tasks and then return home, or as “multi-cultural” adjuncts to mainstream European societies who would cluster in their own ponds and remain separate, following their own culture’s rules and dictates rather than giving them up in order to blend into their new European homes.

Allowed to fester in stagnant pools with weaker services and education and limited employment opportunities, and few links to the broader society, the immigrant communities became filled with resentment and anger, especially among the younger, native born generations. Neither immigrants with a strong work ethic grateful to leave the dangers of their homeland, nor true natives with all the opportunities and full embrace of the society of their birth, the 2nd and 3rd generations born into the segregated pools of immigrant communities were in a position of fraught identity conflicts and economic anxieties – ripe territory for the invasion of radical messages promoting anti-Western attitudes and siren calls to join the fight to redeem and counter historical and current humiliations.

These frustrations broke out in recurrent racial and immigrant riots in Europe, from Brixton in England to the banlieues of Paris. But now add to this existing mix a new flag-bearer in the Middle East, a dramatic, media-savvy, and powerful new organization at war with the West and urging loyal Islamic youth to join their battle both in the Middle East and in Europe. How could the rise of such a group – first al-Qaeda and then, even more powerful and successful the Islamic State (ISIS) – not increase the intensity of violence and conflict between Muslim youth and Europe?

When the Arab revolts broke out in the Middle East in 2010, Western nations had an opportunity to vigorously support moderate elements in the inevitable revolutionary struggle of moderates vs radicals, or to stand back and let the revolutionary dramas play themselves out.

Of course, it did not take much knowledge of revolutionary history to know the outcome of the latter course: revolutions typically descend into civil war and the triumph of authoritarian and radical regimes. Only in older societies, with some prior experience of democracy, and strong links to outside democratic powers, are revolutions against authoritarian rule likely to lead to democratic outcomes. From Libya to Syria to Yemen, these conditions were generally lacking in the Middle East and North Africa, so in the absence of strong external support for moderates and efforts to isolate and extinguish extreme radical groups, dangerous outcomes were likely.

Yet as revolutions descended into civil wars and extremist groups like al-Qaeda spread and morphed and multiplied, Western powers did little. Perhaps believing that Western interventions in Iraq and Afghanistan had led nowhere (in entirely different conditions, as in Afghanistan the West entered a state already at war with the Soviets, and in Iraq the West itself overturned a stable dictatorship), no powers were willing to stay involved in trying to shift the balance in the 2010-11 revolutions. Perhaps they also believed that jihadism and violence in the Middle East would stay in the Middle East, ignoring the ease with which radical ideology has spread across borders throughout history, or the potential for easy and powerful linkages between the radical jihadists of the Middle East and the pools of anxious and radical youths that had developed in Europe.

The horrors and foolishness of this approach are now evident in the blood on the streets of Paris, traceable directly to the influence of ISIS. It will be a long struggle to change this situation; we have likely set up a decade or more of danger and struggle in European capitals and several decades of struggle in the Middle East.

It is important to immediately work to overcome the isolation of immigrant communities in Europe. The deal that Europe offers should be the same offered to immigrant communities (including Europeans) when they settle in countries of immigration such as America or Canada – you – or your children – can obtain full membership in the society including citizenship provided you accept the values and practices of your new society; but if you are unwilling to accept them you should go home.

In the Middle East there must now be a struggle that transcends the Sunni-Shi’a conflicts that have dominated for centuries; instead the battle must be between the forces of civilized order and the forces of barbarous disorder. The leaders of Iran and Saudi Arabia need to make clear on which side they want to be counted, and only if it is the former should they be admitted to full trade and relations with the rest of the world.

Several decades from now, our children will wonder at how our generation could have been so blind to the risks of climate change and simply kept polluting the skies. They will also wonder how our generation could have been so blind to the risks of unassimilated immigrant communities, and of conducting wars against jihadis in the Middle East with half-hearted and poorly planned overseas efforts combined with unchecked torture and surveillance at home.

It is not too late to change course, but the first step is to understand why the course taken in the past decades was so wrong.

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Hope as we move toward the New Year

It would not take much for 2015 to be a better year than 2014.  2014 was marked by a major outbreak of Ebola, war between Russia and Ukraine, renewed active war in Gaza, civil war in South Sudan, the rise of the remarkably brutal Islamic State, surprising new strength for radical right-wing parties in the European parliament, rising authoritarianism in Turkey and Hungary and a military coup in Thailand, frightening large-scale terror attacks in Nigeria and Pakistan, and even the mysterious disappearance of not one but two civilian airliners over south Asia — all against a backdrop of rising economic inequality in both rich and poor nations and economic stagnation for much of Europe, Japan, and the U.S.

Fortunately, there are signs on the horizon of positive trends, just beginning in late 2014, that may carry over into 2015 and indeed make it a better year.

First, the U.S. economy looks to finally be regaining true strength.  For the first few years of recovery, up through 2013, the U.S. saw weak growth (generally 2%), no gains in wages, and reductions in the unemployment rate coming mainly from withdrawals from the workforce.  But in the second half of 2014, we saw real gains in jobs, some increases in wages, and much stronger growth (probably 4% for the 3rd and 4th quarter, although a lot of that increase was in health care spending, so we will have to see if that is sustained, which would NOT be ideal).

Second, the world economy will continue to gain from low oil prices.  The explosive gains in US production of oil and gas from shale finally shattered the high price plateau for fossil fuels, and there is no reason to think high prices will suddenly return.  This will cause pain to Russia, Iran, Nigeria,Venezuela, and other regimes that have relied on oil revenues to float their governments; but for most countries and peoples it is an economic gift.

Third, the global middle class continues to grow, and with it, demands for accountable and more effective government.  In the short run, this can appear disruptive, with protests in places as diverse as Taiwan and Hong Kong, Ukraine, Bosnia, Turkey, Thailand, Brazil, Venezuela; but in the long run these peaceful protests should bring about more open and responsive governance.

Finally, technology continues to run wild.  I don’t mean the sky-high valuations of such speculative disrupters as Uber, Snapchat, Instagram, AirBnB, and others, or the growth of Facebook and Twitter as necessary tools of communication in daily life.  I mean the continued progress of stem-cell research, 3-D printing, solar and wind energy, battery storage, robotics, and other technologies that so far have not contributed significantly to GDP or quality of life, but may be just on the verge of doing so.  Perhaps in 2015 we will see some energy, or life-saving medical, or manufacturing breakthrough (I do NOT mean curved TVs) that will transform our lives.

It is also possible we will see some global political good news too.  India and Brazil, two potential powerhouses for the world economy, completed elections that should lead to reforms that will support renewed growth.  Iran and the U.S. may complete negotiations that will limit Iran’s nuclear capabilities and restore its relations with the world.  China appears determined to root out corruption at home but also to improve relations with its neighbors.  And Tunisia continues to make progress toward consolidating its democracy, showing that the Arab Revolts of 2011, for all their tragedies, were not a total loss.

Maybe we will even solve those airline mysteries!

Here in the U.S. we hope that the recent wave of protests regarding racially-biased police excesses will bring better training, transparency, and oversight of policing, and that these protests, as so often in America, will herald an improvement in our democracy.  The alternative to grid-lock in Washington looks increasingly like better and more responsive local government, and that is what these protests should bring.

So let’s hope for a better year next year.  Doomsayers (of which I am sometimes one) will worry about a stock market crash, an eruption of greater war in Ukraine, a disruptive collapse of authority in Russia or Nigeria, and an expansion of IS or other wars in the Middle East.  So 2015 could be even worse than 2014.  But let us hope for all of our sakes that the positive outweighs the negative in the coming year.  The world deserves a break!

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Why the fight against IS is not going well

When a radical revolutionary group with a threatening ideology seized a strategically important region, a war-weary United States agreed to limited participation in an allied effort to dislodge the radicals and recover the lost territory, providing several thousand troops and supplies.  British, Canadian, Australian, French and Japanese troops joined the effort, as did smaller forces from Italy, Poland, Greece, and other nations neighboring the lost region.  But after five years of fighting, the cause was lost, and the radicals consolidated their control and posed a threat to Western interests for most of the following seventy years.

The years were 1918-22, the territory was the Russian Empire, and the revolutionary group was the Bolshevik (later Communist) Party.  Although the Bolsheviks seemed near exhaustion from fighting their own civil war against Russian conservative forces, while the allied forces had just emerged from triumph in World War I, it was the Bolsheviks who triumphed.  They won because of their far greater determination and cohesion and ideological support against allies forces that were hamstrung by divided objectives, little desire to continue fighting after years of draining war, and lack of public support at home.

The situation in the fight against the Islamic State (IS) in the Middle East today is remarkably similar.  While forces in the front-line countries of Syria and Iraq may be capable of defending rumps of their territory, and trading tactical wins and losses with IS, they are in no way capable of mounting the major sustained offensive operations that would be necessary to completely defeat IS and recover the territories this radical group has taken over.  For that, an allied force including the United States, Turkey, Iran and other more powerful nations – including European countries and the Gulf nations – is needed.   Only a multi-pronged offensive effort with strong air and ground forces in coordination, likely drawing on Iraqi forces backed by Iranian arms, troops, and expertise from the east, Kurdish forces backed by Turkish arms, troops, and expertise from the north, and Sunni Syrian forces backed by Gulf money and armaments from the west, can grind down the resourceful and well-equipped forces of IS.

Yet the prospects for such a coalition to act remain dim.  The U.S. and its European allies are exhausted from the long wars in Iraq and Afghanistan; already suffering from long recessions and vast spending on overseas military expeditions, their publics show little enthusiasm for a renewed fight in the Middle East, even against an enemy as frightful as IS.  Moreover, as in 1918, the key allies are divided on their objectives:  Iran will only support a campaign against ISIS that promises to maintain Syria’s leader Bashar al-Assad’s authority; Turkey and Saudi Arabia will only support a campaign that promises to remove Assad from power.  The United States has therefore tried to mount a campaign against IS with no explicit strategy for Assad’s future.  But the result has only been to gain tepid support from any key potential allies.  Disagreements over Syria strategy do not end there, but as the sudden resignation of US secretary of state Chuck Hagel suggests, extend deep within America’s leadership.

By contrast, support for IS is growing both locally and internationally.  Just as the Bolsheviks used the fact of western intervention in Russia’s revolution to argue that their enemies were backed by Western capital bent on exploiting hapless Russians, so ISIS argues to Sunnis in Syria and Iraq and across the world that Western infidels are trying to undermine and oppress their religion.  Not only have Sunni populations in Iraq and Syria — who have been shunted out of power by Shi’a leaders in those countries – enthusiastically rallied to IS’s banner, so too have disgruntled Sunni individuals and radical groups in other countries, including Europeans, Egyptians, Palestinians, Tunisians, Chechens, and others.  Indeed, anywhere that Sunni Muslims feel oppressed or excluded by their society, IS’s program to build a powerful, defiant Sunni state in the Islamic heartland has massive appeal.   IS can bide its time and recover from a few tactical reversals; whether it loses Kobani or succeeds in capturing Ramadi are local issues.  In the long run, IS will be gathering its forces and seeking to increase its funding and arms for the days that can march on Baghdad, mount terror attacks on Western nations and their Middle Eastern allies (including Turkey and Saudi Arabia), and undermine what it sees as the apostate state of Iran.

Can anything be done to overcome the divisions among the potential allied coalition?  It will be immensely difficult.  Most analysts believe that Bashar al-Assad is content to leave IS in control of parts of Syria as long as he controls the key Damascus-Aleppo corridor and the coast; meanwhile Assad’s brutality and US bombing are driving more Syrians to support IS as the best hope of gaining security from Assad’s reach.   Thus the only way to bring Syria’s powerful armed forces into the fight against IS is to remove Assad from power.  There lies the hub of a deal:  Syria’s military and elites could be promised that if they replace Assad they will be fully supported in their efforts to recover all of Syria.  Yet they would have to agree to an inclusive regime that respects and incorporates the Sunni majority in that country, not just a revived Alawite oligarchy.  Similarly, Iran would have to accept Assad’s departure and promise to support a regime in Iraq that respects and incorporates the Sunnis of that country; something it has notably failed to do in the last decade.  Finally, Russia would have to be assured that its strategic agreements and naval base at Tartus in Syria would be maintained by a new Syrian regime; otherwise Russia will act as spoiler and supply Assad with sufficient weapons and other support to maintain his rule.

In 1918-1920, the allies in Russia won many local victories against the Bolsheviks, defeating them in Estonia, Odessa, and Siberia.   Yet due to divisions among the various allied forces and lack of resolve at home, as well as lack of support from Russians who remained committed to the Bolshevik cause and the weakness of the Russian conservative White armies, the allied forces never were able to follow-up those local victories with a successful drive into the heart of Bolshevik power.  The Bolsheviks maintained control of Petersburg, Moscow, and most of European Russia, and waited out the declining Allied resolve.  In the 1920s, one ally after another decided to withdraw their expeditionary forces from Russia, leaving the Bolsheviks in control to build up their state over the following decades.

Something similar seems the most likely outcome in today’s Middle East.  The divisions among potential allies abroad, and lack of resolve and public support at home, will likely doom efforts to overcome the more committed, cohesive, and determined forces of the Islamic State.   In the mélange of jihadist forces that contended for power in the wake of collapsing authority in Syria, the IS was initially dismissed as just another terrorist group.  Much the same underestimation was made of the Bolsheviks in 1917-1918; among the Mensheviks, Kadets, Socialists, Octobrists, Progressives, and other anti-Tsarist parties the Bolsheviks hardly seemed the main threat until they took over the government in a coup.

The Islamic State should not be taken lightly; it has gone from just another terrorist group to leadership of a region stretching from the outskirts of Aleppo to Mosul to the outskirts of Baghdad (an area larger than Lebanon or Israel) with a population of over two million, tens of thousands of armed fighters and financial resources in the billions of dollars.  It has displaced Al-Qaeda as the leading force of Islamic opposition against the West, and seems to draw new supporters and allies among jihadist groups every week.   Against this powerful and committed adversary, neighboring nations and distant America have been able to mount only isolated, sporadic attacks.  Such limited, half-hearted actions cannot succeed in destroying the Islamic State.  It appears we shall have to get used to having yet another major source of terrorism and war in the region for many years to come.

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What China Wants

Last week’s APEC meeting in Beijing shed new light on China’s relationship with America and the world. It has become increasing clear what China wants. China seeks a role in Asia comparable to the role that America has enjoyed with regard to Europe; as the unquestioned (but not always followed) leader of an alliance that seeks to protect their region from outside pressures and influences.

As with the U.S. and Europe, China will continue to seek strong economic ties outside the alliance where those are helpful, but for security it wants clear leadership and support from other countries in Asia for China’s goals of greater economic and military power. China does not simply view the U.S. as a hegemon that it wants to supplant, but as a country whose days as global hegemon are over. In Beijing’s view, Washington should make way for other, equal powers, to have leadership over some areas of the globe.

In fact, I think China will find its relationship with other Asian countries more like America’s relationship with Latin America – that is, other Asian countries will view Chinese power with a mixture of admiration and suspicion, and will foster their own nationalism and resistance to China’s hegemony even while seeking advantages from allying with China on certain issues.

Overall, China’s rise to greater regional power and America’s loss of global hegemon status are inevitable. America’s dominance was a result of victories in WWII and the Cold War that left other powers weak. But with China’s rise – now with over four times the population and an economy of equal size (in PPP terms) to the U.S. – it is inevitable that a more balanced arrangement of global power should arise. The only real question is whether that transition will lead to more cooperation between a China and U.S. who increasingly share responsibility for major global issues, or to conflict.

There is a major risk that China and America become rivals, fighting proxy wars or even direct skirmishes over Chinese control of archipelagos in the western Pacific, and over Chinese conflicts with Japan, the Philippines, Vietnam, or other countries. Yet that seems to me the less likely outcome. In fact, China and America share so many interests – in a stable global economy, in free and open sea lanes for transit of raw materials and manufactures, in maintaining peace in the Asia-Pacific region, and in coping with global environmental threats – that cooperation for the most part is more likely.

Last week’s agreement between China and the U.S. on goals to reduce carbon emissions is an excellent example of that cooperation.  At the same, last week showed how differences could be handled.  On human rights, one of the most contentious issues, Chinese President Xi Jinping claimed that China was making progress, although that progress was not yet complete; while President Obama had to make public declarations that the U.S. is not involved in fomenting unrest in Hong Kong.

On the whole, last week’s meeting should reassure those who have been forecasting an inevitable war between a rising China and a declining U.S.  The nature of the relationship will change, but that is good; the world is changing fast and the relationship between the U.S. and China needs to develop and mature to keep abreast of those changes. Judging from last week, that process is moving forward nicely.

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What we learned from the U.S. Election

1) American voters can still swing. Older voters, working-class whites, and young voters can swing in their votes or their participation (huge increases in youth and minority turnout are good for Democrats; weak participation by these groups is good for Republicans) enough to dramatically change election outcomes.   We have seen Democratic triumphs and a Democratic Congress during the Clinton and Obama first terms, and Republican triumphs and a Republican Congress in their second.  But we also saw Republican triumphs during the GW Bush first term, and Congressional changes or even Presidential losses after Republicans George HW Bush’s first term and GW Bush’s second term.  So all predictions of a “permanent” Republic or Democratic majority – which seem to issue forth every eight years! – look hollow.

2) American remains geographically and ideologically polarized. The Northeast and West Coast look predominantly Democratic; the Plains states, Rocky Mountains, and the South look predominantly Republican.   National elections rest less on changing these patterns than on the ability to get out the vote and win strong majorities among supporters in a few key swing states, especially in the mountain states (Colorado, Nevada and New Mexico), the Midwest (Iowa, Ohio, Minnesota, Wisconsin, Michigan), and the mid-Atlantic (Virginia, North Carolina, and Pennsylvania) plus Florida.

3) American foreign policy is more than ever a hostage to domestic politics. If President Obama chooses to persist in his policies of withdrawal and caution in the international arena and in eastern Europe, the Middle East and Afghanistan in particular, he will gain little cooperation from Congress, and will be perceived more than ever as weak and unable to act effectively.  On the other hand, if President Obama chooses to work with a united Republican Congress and adopt a firmer military and strategic stance, he may yet manage to revive perceptions of American strength and resolve.  But that also risks making foreign policy dependent on a Republican hard-core in Congress that has been more aggressive in foreign affairs than most Americans believe is wise.

4) American domestic and economic policy is now essentially frozen for the next two years. Congress is likely to block any progressive changes on immigration or taxation policy, while Obama is likely to veto any changes in health care policy.  It also remains to be seen whether Obama will be able to make any appointments to the federal judiciary or bureaucracy in the next two years; if not the government will continue to suffer from crucial shortfalls in key personnel.

It is now two years until the next major shake-up in American politics.  Hilary Rodham Clinton looks like the politician to beat — but the Republicans, now controlling  Congress and more governorships and state houses than ever — will do everything they can to prevent a Democratic Presidential victory in 2016.  But do the Republicans have any candidate who can beat history?  I do not see anyone now — but two years is an eternity in politics, and it will not be until middle of next year until we know for sure how the race will shape up.  It will be an interesting year.

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Addicted to Denial

Few countries would want, as their national bird, an ostrich with its head firmly in the sand.   Yet more and more countries would seem to qualify.

In Brazil, this week’s elections pivoted in part on the devastating impact in Sao Paolo of the worst drought in 80 years, which has led to water cut-offs, water trucks under police escort, and Sao Paolo’s main reservoir being drawn down to only 4% of its capacity. How could the situation grow so dire in one of the wettest countries on Earth?   The answer: Denial.   For many months, the PDSB political party, which controls Sao Paolo state, refused to admit a problem or implement water rationing for fear it would hurt the chances of Aecio Neves, the PSDB candidate in presidential elections.  But as the drought has continued, the policy has backfired, with Neves held accountable not only for the drought but for PSDB’s mismanagement of water supplies, and losing out in the presidential poll.

Brazil’s PSDB is not alone in preferring denial of a problem to taking action to solve it. Indeed, that seems to be the preferred strategy for leaders facing difficult issues.   Citizens of Europe and the United States were assured that there was no risk of Ebola spreading outside of Africa – until cases appeared in Madrid and Dallas, where denial had produced a lack of preparation among hospital staff to deal with infected victims.

Such denial is familiar to workers in Europe, who have been assured by their leaders that austerity policies are working and leading to economic recovery – until news came this month that growth was still anemic and many European states had slipped back into recession. In the U.S., economic policy-makers similarly deny that their measures to deal with the impact of the 2008 recession have failed, pointing to a fall in unemployment as evidence of their success.  But they ignore the fact that labor force participation rates remain well below their levels before the crisis, and that real wages have not recovered and private debts remain high.  If the core of the Great Recession was excessive debt and stagnating incomes, then we are still in it, and denying that does no one any good.

Throughout the year, European and American foreign policy leaders strived to deny the extent of Russia’s role eastern Ukraine, labelling the movement of Russian troops and armaments onto Ukraine’s territory merely an “incursion.”  The risks to stability in Iraq from the Islamic State were similarly underplayed, leading to utter shock when IS took over large chunks of Iraqi territory.

Of course, the greatest and most prolonged denial is that the U.S. faces any risks from climate change, or that there is anything that we can do about it.   Despite the rising losses of U.S. land to seawater incursions in Florida and Louisiana, despite the damage caused by tidewater flooding during hurricanes Sandy and Katrina, despite the visible movement of dozens of species northwards and the resumption of steady upward temperature rises (summer of 2014 is now officially the hottest summer ever recorded), denial that climate change exists continues apace.

Even on the most basic domestic issues, with problems well-supported by facts, the majority of politicians and the public are happy in their denial: for example that much of U.S. infrastructure is dangerous and lags well behind our economic competitors in China and elsewhere, or that health care in the United States is twice as expensive as in most other developed countries and produces worse outcomes. (The Commonwealth Fund has ranked the U.S. dead last in its survey on the quality of health care in developed nations in every survey since 2004; the U.S. is first in spending per capita but 11th out of 11 in Access to care, Efficiency, Equity, and Healthy Lives).   Yet politicians constantly block spending on much-needed infrastructure, and conservative pundits complain that any government interference will ruin the best health care system in the world.

There was a time when America and other nations rewarded the media and scientists for identifying and publicizing problems that affected their security, health, and well-being; and they rewarded politicians who competed to provide the best solutions. Yet those days seem gone.  Today the highest pay goes to spin-doctors who can obfuscate or create plausible deniability about problems or our ability to respond to them; and politicians seem to feel safest if they can simply deny a problem exists, at least long enough to pass the cumulating crises on to their successors.

Whether it is on health care, economic growth, real wages, epidemics, threats to international security, our climate or our infrastructure, the public and the media should demand that problems be acknowledged, and that responses – even if painful – be undertaken before crises become overwhelming.

Denial is more comforting, of course, than tackling a difficult problem and taking measures to stop it from growing.   However, as Brazilians in Sao Paulo have come to realize, as they now face not only water shortages but the threat of electricity rationing and massive layoffs from industrial facilities that lack power and water because reservoirs have been drawn down to where they can no longer produce hydroelectricity, it is much better to face up to a problem and implement plans to deal with it before it becomes an insurmountable crisis.  Ebola and ISIS are only the two latest cases of small problems that grew far more dangerous while leaders denied the risks.

Truth is dangerous and often hard to find. Still, when problems first become visible, people should not be comforted by politicans’ denials, but be suspicious and questioning.  We need to find leaders who can act like far-sighted eagles, not ostriches.

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