Cuba and Castro

One of the last great revolutionary leaders of the 20th century has passed away.   One may hesitate to call Fidel Castro “great” – but whether you admire or revile him, no one can deny that he exercised global influence over a generation of revolutionary leaders, from Latin America all the way to Africa, and managed to keep his small nation in defiant opposition to the United States for over half a century.

As an expert on revolutions, I can offer some perspective on Castro as revolutionary leader.  He was not a monster like Stalin or Mao, who blithely embarked on policies that slaughtered or starved tens of millions and dismissed the costs.   Rather, Castro came to power and ruled as an idealist who believed he was rescuing the Cuban people from the harsh exploitation of early 20th century capitalism, in which American companies reaped much of the profit generated by Cuba’s economy, while Cuban men labored like slaves on sugar plantations and women turned to prostitution to support themselves.   Unlike the Russian and Chinese Communists, who fought their way to power in bloody civil wars that tore their countries apart for many years, Castro and his revolutionary guerillas were a small force that played cat and mouse with the army of the Cuban dictator Fulgencio Batista.  Their achievement was to just survive and win popular admiration, until Batista’s own apparent disregard for his people and his nation, and his dependence on his U.S. patrons, led both his army and the Cuban people to abandon him, allowing Castro’s forces to take over the island.

Once in power, Castro was embraced as a nationalist hero.  When Cuban refugees tried to persuade American President John F. Kennedy to support their effort to take back the island, promising that Cubans would rally to their side and desert Castro, the result was one of the unmitigated disasters of U.S. diplomatic history.  The promised defections never materialized, and the invasion forces at the Bay of Pigs were sent packing.  But one of the results was to ensure that Castro would always see the United States as his dire enemy.  Already leaning toward communism as a way to bring equality and hoped-for economic betterment for ordinary Cubans, Castro forged ever stronger-ties with the Soviet Union and became a champion of communist and anti-American guerilla movements and governments around the world.

Of course, Castro’s imposition of a communist system on Cuba strangled rather than strengthened the economy.  Castro’s early policies provided some widely-admired gains, as his barefoot teachers and investments in health care gave Cubans universal literacy and one of the highest levels of doctors per capita in the world.  Unfortunately, both gains were squandered, as Cuba’s socialist economy provided no opportunities for the newly-literate to become successful entrepreneurs, and Cuba’s medical personnel were sent around the world as a way to gain support and earn hard currency.

As the oppressiveness of communist party rule and the stagnation of what had been Latin America’s most advanced economy became apparent, Castro had to deal with rising voices of opposition.   He dealt with them harshly.  Even old comrades were imprisoned, and thousands of opponents were executed.  As in other communist regimes, there was no freedom of press, speech or assembly.  But Castro’s rule was more frustrating than dangerous for ordinary Cubans.  After the years of the murderous Batista regime, which sent death squads throughout the countryside and sold nearly half the economy to American interests, Castro’s regime was seen as a significant improvement.   As one Cuban émigré put it to me – “Castro is like changing a wife-beating husband for one that is kind but lazy and cannot keep a job.  At first, you are grateful just not to be beaten every day.  But eventually, you do start to wonder when your economic situation will ever improve.”

The best hope for such improvement will come from the integration of Cuba into the global economy, with new opportunities for foreign investment, trade, travel, and migration.  This is the path that President Obama and Cuban leader Raoul Castro, Fidel’s brother, are embarking on, however hesitantly on the part of the latter.   Some may hope that such actions will accelerate after Castro’s passing – but it is almost certain that insulting Fidel’s memory and attacking his legacy will have no positive effect on his brother.   What we have learned from the last fifty years is that Cuba’s government will not be forced or bullied into changing its ways; rather it may shift gradually if Cuban are treated with the respect and dignity that they believe Castro’s revolution – even if it did nothing else – earned for their country.

 

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Trumponomics — Will it help or hurt?

Some hopeful commentators, even liberals like Paul Krugman, have expressed the hope that Donald Trump might enact some good economic policies, of they kind they have advocated.  This includes a vigorous spending program on infrastructure, tax reforms to simplify and reduce tax burdens, and deregulation.

All of that would be good, but as always, the devil is in the details.  How would these policies be financed?  What trade-offs will be made (there is never a free lunch)?  And who will benefit most from the changes?

The answer to the latter question is already quite clear: the proposed tax reforms direct most of their benefits to the top 0.1%.  This is the only group that will benefit from ending the inheritance tax, and the group that will gain the most from Trump’s proposed personal income and corporate tax cuts.  Such cuts will do little to actually boost the economy, as the rich who benefit will put most of their gains into asset acquisition, which as we have seen for the last ten years produces asset inflation but little economic growth.

The infrastructure spending program, if it is to be effective in creating jobs and boosting the economy, would have to be massive, spending somewhere between .5 and 1 percent of GDP.   But where would the funds for that come from?  The Federal government only gets and spends about 20% of GDP, so such a program would be a 5% increase in Federal spending.  Yet the Republicans in Congress have said they want to increase defense spending as well as cutting taxes.  What room will there be for a large infrastructure program unless massive cuts are made elsewhere (and cuts in health care, education, and regulation are already being contemplated — things that are the most vital to ordinary Americans)?   America already has a substantial debt, and large liabilities for medicare and social security for a very large and fast-aging cohort of baby boomers. Some have projected that Trump’s budget plans, like those of G.W. Bush and Ronald Reagan before him, will simply sink the government under debt (few fans of President Reagan know or care that he was responsible for the greatest increase in US Federal debt, in percentage terms, in U.S. history since WWII).  A modest increase in the U.S. debt is certainly sustainable, but large increases just as spending on the elderly is set to increase will likely crowd out other needed spending.

Corporations are already sitting on massive piles of cash because they do not see opportunities for profitable investments in job-creating activities.  The type of people who have withdrawn from the labor force or feel underemployed — older workers on disability, workers without high-level craftsman skills, and young high school graduates looking for white-collar work — will not benefit from infrastructure construction projects.  Unlike in the era of rapid growth, today’s youth cohorts are no larger nor better educated than the generation they are replacing.  Rebuilding our roads and bridges may be necessary to prevent further clogging and decay of our economy’s arteries, but is not likely to transform the labor market or return us to 1960s and 1970s levels of economic growth.

In addition, Trump’s protectionist trade policies seem certain to hurt growth; that will likely offset any short-term gain from higher government spending.

What the U.S. economy needs is higher spending aimed at raising the productivity of average workers — education, investment incentives for hiring workers, trade deals to boost exports.  And that spending needs to be financed by taxes that allow the government to manage its debts.  Some of that could come from creating a separate Federal capital account; some could come from a value-added tax on consumption; some could come from a more progressive tax system.

But the Trump plan has none of these features.  It is instead an exact repeat of the G.W. Bush plan of higher debt, higher military spending, and policies aimed to increase the returns on financial and capital investments that benefit the very rich.  We know how that ends.  But it seems we are headed that way again, and full throttle.

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Why Trump Won

Many explanations have been offered for why Donald Trump won the election.  He didn’t — the reality is that Clinton lost, and why is not hard to understand.  My account below will be published in Russia Direct.  Feel free to share, but if you do so please note that this is from that publication.

Why Trump – Why Not?

Jack A. Goldstone.  Forthcoming in RUSSIA DIRECT

Elites across the U.S. and the world are puzzled by the election victory of Donald Trump.  They should not be – it is no more surprising than the fall of one more domino in a line that has already toppled half a dozen others.

Trumps’ victory follows the victory of the Brexit vote, and the rise and popularity of anti-liberal, nationalist leaders in the Philippines, Turkey, Hungary, and of course Russia.  Around the world, the rising polarization of wealth, the anger of those being left behind and trapped in the decline of social mobility are venting their anger at what they perceive as selfish elites.

The data make clear that there was no huge outpouring of support for Donald Trump. He received 59.7 million votes overall; slightly less than Mitt Romney received in 2012 (60.9 million) and a hair more than John McCain received in 2008 (59.6).   Trump defeated Clinton because she failed to generate as much enthusiasm as President Obama, who received 65.9 million votes in 2012 and a whopping 69.3 million votes in his first election in 2008.   Large numbers of people who voted for Obama in earlier elections either stayed home (as with many of the Bernie Sanders voters) or voted for Trump.

In the electoral college, the results were a surprise only because of overconfidence by Democrats and the biased judgements of urban-based elite media and commentators (plus polls that skewed toward urban voters).  But a quick glance at the state and county maps of Republican and Democratic voting makes the outcome very clear.  In the major cities where global finance and high technology has enriched the economies, and large numbers of the highly educated and higher-income households are located, voting went Democratic; in the rural areas dependent on the domestic economy, and particularly those hurt by the financial downturn since the Great Recession and by stagnant incomes, voting was overwhelmingly Republican.  (I took a long drive through rural Virginia and North Carolina the week before the election – Trump/Pence signs were visible everywhere, but hardly any Clinton/Kaine signs could be found; and Virginia is the state where Tim Kaine had been governor and is currently U.S. Senator.)

Overall, the electoral college results were clear:  as has usually been the case, the Northeast and West coast states went Democratic, while the southern and mountain states went Republican.  The crucial swing states were those in the upper Midwest – from western Pennsylvania and Ohio through Iowa, Wisconsin and Michigan.  All of these were states that had voted for Obama in the previous two elections, but all of them went to Trump in 2016, giving him a large victory in the electoral college.

The key swing voters in these swing states were the “white working class” — whites who had not attended college.  These were the groups who felt the most pain in the late 2000s as their savings and homes crashed in value, while the high-paying union jobs that had been the foundation of their communities and their prosperity continued to fade away.  In 2012, they voted strongly against Mitt Romney, who was seen as exactly the kind of predatory elite private equity trader who had enriched himself by closing factories and shipping jobs abroad.  But in 2016, they voted strongly against Hilary Clinton, who was also seen as representative of the Wall Street elites who had engineered bailouts for bankers and gotten rich themselves, while the white working class struggled to survive.  Trump, in comparison, was seen as a self-made man who had no patience for political correctness, who would not give special favors to minorities and immigrants, and who would “make America (meaning their America, of small town Midwestern communities) great again.”

This group of voters are now neither Democrats nor Republicans; rather they are supporters of anyone who promises to pay attention to their needs and shake up the system that they feel has neglected and scorned them.  They supported Bernie Sanders in the Democratic primaries, and Donald Trump in the Republican primaries.

The real question we should be asking is not why Trump won the election; it is why so many voters rejected mainstream politicians from BOTH the Democratic and Republican parties, and voted for insurgents who aimed to overthrow the establishment of their parties and the nation.  In short, why were so many voters willing to support what amounted to a revolution against politics-as-usual, a revolution aimed at blowing up the status quo?

The answer to that question is easily revealed in the graph shown below.

income-vs-growth

In this graph, from the St. Louis Federal Reserve Bank, the upper blue line shows the growth in America’s economy.  To be more specific, it shows the real (adjusted for inflation) level of GDP per person.  This grew rapidly from 1993 to 2000, suffered a brief pause in the recession of 2001-2002 (the dot.com bust), then continued to rise strongly to 2007.  It again paused and dipped for the Great Recession of 2007-2009, but then rose again, reaching an all-time high in 2014.

One would expect that in a fair and open free market society there would be a strong relationship between rising national income and rising household income.  Certainly there would be some increase in inequality as the benefits of growth would not be spread fully equally, but on average one would expect that as society as a whole grew richer, the people of that society would grow richer as well.

This was the case from the end of World War II all the way to the 1990s.   But as shown by the bottom red line in the figure – which tracks the real median household income in the US – for the last 15 years that expected relationship has failed.  Over this period, the median household income has dropped; household income stopped rising in tandem with national economic growth from 1999 to 2007, first remaining flat even as the economic grew, then dropping by ten percent after 2007, even as the overall economy returned to steady growth.

There are a number of words to describe this state of affairs, but the obvious ones that leap to mind are “unfair,” “unjust,” and “intolerable.”   No doubt most of the US population has not been poring over graphs like this one – they don’t know the data or the trends. But what they do clearly see and resent is that highly visible pockets of the economy are enjoying strong economic growth; it is visible in New York, San Francisco, Seattle, Denver, Los Angeles, Houston, Miami, and Chicago.  These and other centers of design, finance, and professional life are thriving and driving a growing economy.   But the median households across the country – especially in rural areas and former manufacturing centers – are being left out of this growth; instead their incomes are falling.   Some people blame immigrants; others blame globalization or sending jobs abroad.  Economists and media pundits often blame technological advances for leaving uneducated workers behind.  But for many households with stagnant or falling incomes watching the rising wealth of the bankers, executives, and urban professionals, the result that matters is a hatred of the elites who have manipulated the rules of the game to favor themselves and capture all the fruits of national economic growth.

The result is not all that different from what happened in East Germany for households who received TV images of the quality of life in West Germany, and increasingly realized that they were being left behind.  The East Germans felt that their leaders had betrayed them; those leaders lost all legitimacy, and they were abandoned in what became a revolutionary movement that quietly toppled the communist regime.

American has always had high inequality; that is not the issue.  In the past, high inequality was combined with two elements that composed the “American dream.”   First, while some attained enormous wealth, average incomes rose as well.  Not everyone would become a Rockefeller or Ford, but everyone could expect a rising income over their lifetimes if they worked hard.   Second, the path for mobility was open to all – anyone with the luck, brains, or business talent could strike it rich and move to the top of the income hierarchy.   That opportunity was fueled by an open frontier in the 19th and early 20th century, and by a huge increase in public education and professional and white collar jobs from the 1960s to the 1990s.  In those years, those with the ability and effort could put themselves through a good public college and get a professional or government job with excellent income and solid benefits.  Parents from the lower and working classes whose children could be encouraged to be disciplined and hard-working could count on their children being able to get an outstanding education and achieve high levels of professional success.

In the last twenty years, both these elements of the American Dream have been stripped away.  Average incomes have stagnated then declined, even though the overall economy has grown.  In addition, avenues to social mobility have dried up.  Funding for public universities has plummeted, and costs have skyrocketed compared to working-class incomes.  The number of professional and white collar jobs has grown only slowly, and those positions are increasingly taken by the children of well-to-do parents who can provide superior pre-school, private, and college educations, connections that lead to valuable internships, and pathways to top jobs.  A 2015 PEW study of social mobility in the U.S. states that “the United States is very immobile. The persistence of advantage is especially large among those raised in the middle to upper reaches of the income distribution.”

As the American Dream is what legitimized the high level of inequality and the position of elites in the eyes of the average working family, the erosion of that dream has undermined the legitimacy of today’s elites.  Instead, a substantial number of Americans want to “take down” the selfish and privileged elites that they see running Washington D.C. and betraying them.  These people responded with wild enthusiasm to Donald Trump’s promise to “drain the swamp.”

In sum, the income patterns in America over the last 15 years made it inevitable that sooner or later an uprising would occur against the ruling establishment.  Whether it drew from the left (Bernie Sanders’ supporters) or the right (Trump supporters) or both, an anti-elite movement was going to gain traction.  Yes, there are bigots, racists, sexual aggressors and xenophobes among Trump supporters, given that Trump himself has shown these characteristics in his speeches and actions.  But these are not the groups that pushed Trump to the Presidency.  If not Trump, it would have been another populist who, sooner or later, would have overcome an opponent from the hated elites.

Throughout history – as I have shown in my own historical research (see the new edition of my book Revolution and Rebellion in the Early Modern World, forthcoming from Routledge next month) – whenever selfish elites monopolize economic growth and produce a polarization of incomes, the result is a loss of legitimacy and the rise of insurgent movements to overturn the social order that is no longer providing expected routine benefits.  Since the 1990s, the US has been repeating these conditions.  The surprise should not be that Donald Trump (or someone like him) was elected President.  The surprise should be:  why did it take so long?

 

 

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Be very afraid

Dear Friends,

I have now returned from my 9 months in Hong Kong, where my plans to start a new program in public policy — what would have been HK’s first School of Public Policy — came apart in the face of mainland Chinese actions to suppress political engagement in Hong Kong’s universities.  As we have since seen, China has eroded the rule of law and government autonomy in Hong Kong.  But this is just part of a global trend, what I would call the growth of the global “strong man’s club” of leaders who put their personal programs above the law, trading on a strong nationalist and xenophobic ideology to win popular support for extreme actions against minorities and opponents.

The club now includes Xi Jinping in China, Vladimir Putin in Russia, Recep Tayyip Erdogan in Turkey, Abdel Fattah el-Sisi in Egypt, Rodrigo Duterte in the Philippines, Viktor Orban in Hungary — and in the latest development, Donald Trump in the U.S.

There is good reason to be concerned about what this means for democracy; I stand by my warning published three weeks ago in Canada: http://www.theglobeandmail.com/opinion/how-trump-would-reshape-america/article32374019/

Whatever one thinks of specific policies voiced by the Trump camp, the real danger is to the very institutions that undergird our democracy — rule of law (including innocent until proven guilty), a free and accurate media, checks and balances within government, and an independent and non-ideological Supreme Court.  We should all work to preserve these elements after election of a president who has never known checks and balances, never had to work within a system that he did not control and dominate, and never — even in winning the highest office in the land — had to make the compromises typically required for effective policy-making.

I do hope that President Trump will govern in a different spirit than candidate Trump campaigned.  He may well do so.  But while hoping for the best, it would be sensible to prepare for a difficult time for democracy both at home and abroad.

 

 

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Trump and fatherhood

My colleague Jeremy Mayer recently wrote a compelling article for the American Interest:

Big Daddy Trump

Jeremy points out that the defense of Trump’s candidacy by praising his children is a highly stilted and inappropriate way to evaluate a presidential candidate.  I completely agree — we are not choosing the father of our nation (George Washington had that wrapped up long ago), but someone to negotiate with world leaders, deal with Congress, appoint Supreme Court justices, and develop a compelling vision for an inclusive, fair, and trusted America.  A father who has used wealth and privilege to help his children to exceptional success is not an obvious choice for that role.

I urge you to look at Jeremy’s article.  But I also have some of my own thoughts on why Trump’s family has been a focus of media attention in this campaign.

America is an astoundingly superficial country.  That is, after all, what the Kardashians are all about –a pandering to superficiality.  This is part and parcel of the information overload world as we find it.  Whether on social media or the silver screen, we look for celebrity, whether our own or others.  And those who succeed in the celebrity game, and that includes Trump, get a great deal of presumption for wisdom and talent.

When choosing a president, most people do not have the time or interest to dig deeply into the complexities of policy issues.  They would prefer to leave that to professionals — and rightfully so.  It’s hard for me to explain the consequences of globalization or the global decline of democracy so that I think I understand it, and I spend hours every day thinking about this.  So most people need to find another way to make their choice.  And quite understandably, they look for signals that are easier to grasp to guide them, signals that can be gleaned from simpler questions.

One way to evaluate a politician is asking whether they can be “trusted.”  Another is to say “what are their values?”   In Europe people face the same problem but they have (historically) been more willing to judge on “what has this person accomplished” and “what do other successful and important people say about them.”  Trump would never have left the first primary if these were the key questions in this country.  But they are not —  in America it is “trust” and  “values” that seem most important.

I think these are absolutely legitimate questions — the problem is that it is all too easy to fake or misdirect to answers.  Hilary’s emails are not a true gauge of whether she can be trusted with confidential information or tough decisions in action — but they are an easy media hit for attacking on that issue. And I fully agree that children are not just the image, much less the certain outcome, of their parents; I don’t know how anyone who has had children can think otherwise.  But saying someone is a “good father” seems to imply the right values — thoughtful, generous, selfless, hard-working, fair, etc.  So that too is an easy media hit, especially if you happen to have a jackpot telegenic offspring.

This means that Ivanka Trump is a great asset, and as telegenic as she is, it is understandable that the media dotes on her, and justifies claims that Trump is the right kind of person to lead the nation.

Yet I think the more that Trump’s character is on display in the campaign, the more HE will be seen to be untrustworthy, ungenerous, and superficial in the way he deals with his political opponents and the task of running a presidential campaign.  As we already saw from the plagiarism incident with Melania, family can cut both ways, and the “amateur hour” nature of Trump’s campaign will likely produce further stumbles.

A lot will depend on the upcoming TV debates.  Will Trump appear presidential, calm and skilled in dealing with his opponent?  Or will he appear superficial, excitable, and disdainful?  If the latter, even Ivanka’s halo will not prevent him from crashing.  And if he does crash, given the divisions and disarray within the Republican party, he may lead the GOP to a historic defeat.

At the same time, Clinton has trust issues as well, and the electorate may not be motivated to vote for her either.  This may be one of the first “none of the above” Presidential contests in American history.    The bottom line is that this election, like most of those in America, will not turn on policy issues, but on trust and values. Because of that, it is anybody’s election to lose.

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How Global Patterns of Inequality are changing — and raising geopolitical risks

My new essay on this topic has been posted on FOREIGNAFFAIRS.COM at

https://www.foreignaffairs.com/articles/world/2016-03-28/wealthier-world-poorer-nation

Here is a summary of the conclusions:

_________________________________________________________________

Emerging nations are suspended between being rich enough to have a stake in global leadership, and still often being treated as if they do not. The result is an increasingly aggressive stance by countries from China to Saudi Arabia and Turkey. The people of the developing world are on the move, yet their movements are resented and seen as dangerous, so that instead of being helped they are fenced out. The people of the rich world are themselves increasing resentful and frightful, and voting for extremists and populists who thrive on such sentiments.

Sadly, it would be unrealistic to present simple or easy solutions to these threats. The rich will not easily give up their wealth, nor the will the people of Europe and America, the Middle East and Asia, suddenly find fellowship and understanding. It may take a generation of conflict before leaders and elites recognize that growing inequality is doing more harm than good, and undertake a global cooperative effort to unwind the economic imbalances and nationalist resentments that have now built up for an entire generation.
But nations can start at home. Adopting legislation to provide more opportunities and essential services, as well as affordable basic health, housing and retirement security to diminish the scope and sting of inequality within their own societies, will start to reduce the festering anger within. Such measures are essential to restore the cooperation within nations that will enable them to respond rationally to new challenges.

The combination of diminishing inequality among nations and increased inequality within them has produced anger and aggression, and raised threats around the world. Diminishing inequality among nations will not be reversed. Accepting that fact calls for a wholesale revision of global governance institutions (including better institutions to cope with the inevitably swelling flows of migrants and refugees). The rise in inequality within nations, however, is something that can and should be addressed. Responding more thoughtfully to rising inequality and its consequences, both internally and globally, is essential. Otherwise, the world’s internal politics and international relations will become ever more extremist and more dangerous.

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I’m Back!

Dear Friends,

Some of you may have noticed the long silence on this blog site.  I have spent the last three months transitioning to a new position, as the founding Director of a new Institute for Public Policy at the Hong Kong University of Science and Technology.

This is my “Pivot to Asia,” where I think many of the critical policy issues of the coming decades will have to be faced.  These including aging, climate change, emerging market growth, internet policy, and promoting innovation and new technologies (robotics, AI, IoT, renewable energy, biotech, etc.).   As  you may know, while Silicon Valley gets the credit for innovations on the web, on many exciting developments, from financial technology to robotics and holographic projections, Asian countries are in the lead.  This is also a ring-side seat to sea what changing economic fortunes come to China, and a safe-viewing distance to watch the circus known as US Presidential politics.

For me this is a great opportunity — HKUST is one of the world’s fastest rising and highest ranked universities, and is in a growth phase that will include public policy, particularly science and tech-related policies.  If you will be visiting Hong Kong, or are looking to join us in building a new public policy research and graduate center in Asia, please let me know.

Of course, the last three months have also seen a string of world-changing events, including the shift of Turkey and Russia into ever greater authoritarian rule, the migrant crisis in Europe, the clear slowdown in Chinese growth, and the remarkable rise of Donald Trump to the top of GOP politics.  So there will be plenty to comment on as I resume.

First is a reflection on why there seems to be a global rise of strong leaders, driven by widespread anger and anxiety.  Glad to be back — I hope you again enjoy these occasional posts.

 

 

 

 

 

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