Saving democracy from democracy itself

democracy-under-test

First and foremost, I hope that everyone reading this post enjoy a merry Christmas (or, if you are not a Christian, at least a good holiday). I am sure that 2016 has been a tough, strange, sad, and maddening year, given the occurrences of many ‘weird’ events throughout this year. As we are welcoming 2017, which is only a few days ahead of now, it may be worthwhile to spend a little bit time to reflect stuff that has occurred in the last 12 months.

There is one inconvenient condition, at the least, that we must all acknowledge on the first hand: democracy is not working well. I do not know to which extent you deeply support the notion of democracy or its ideals, and I do not even know if you support its very essence at all, but the first precondition that we must be aware is that there is something wrong with how we implement democracy across the world.

We even need to start asking ourselves: how do we actually define a democracy? If we think democracy is no more than voting, protesting, and changing governments, then something is wrong with our conceptual framework about this idea. Even China, all that we know as a one-party authoritarian state, regularly holds direct elections (although constrained on the village level) and experienced almost 100,000 protests in 2015, although the nature of these protests was mostly about grievances against local governments. Is it a sign of democratization? Assuming ceteris paribus, I do not see its democratizing prospects in the long run, given that majority of the middle class in China still support the Communist Party regime.

That’s the case for China. Then we have the populist-wave phenomenon in the Western world. People in this hemisphere have experienced the refugee crisis, suffered from terrorist attacks, seen worsening inequalities, and undergone stagnant income gains with sluggish economic growth rates. We’ve seen the impacts of ‘Brexit’ (even though the real Brexit has not really taken place), and the biggest amplifier of all, the fact that we will see Donald Trump (and all the brouhaha that we have known) becoming the 45th President of the United States.

Perhaps the world is preoccupied with the Brexit and Donald Trump phenomenon, but do not get entrapped in such common knowledge bias: the quality of democracy is in decline worldwide. Stanford-based political scientist Larry Diamond, in his January 2015 research paper, has highlighted that since 2005 onward, the growth of democracies has stagnated, and even slightly declined. Looking at the current context, we’ve seen quite a number of these illustrations. The increasing centralization of power in Turkey under Erdogan. Putin’s continued dominance in Russian politics, despite economic crisis and stagnation. The victory and ongoing rule of hard-line populist parties in Poland and Hungary. Excluding 25 other cases that Diamond listed in his paper.

Remember one thing in the first place, though: they gain power not through illegitimate means, but through elections, many of which are actually competitive.

I am not saying that democracy is going to collapse anytime soon; indeed, both Larry Diamond and Dan Slater (another renown political scientist based in University of Chicago) concurred that democracy will stay in the long run. Rather, what they (and also I) worry is that certain political forces may hijack the very purpose of democracy for their own advantages. That, I argue, may lead to the subsequent decline in the quality of the democracy itself. After all, differentiate the concepts of ‘democracy’ and ‘rule of law’; the former relates to what ideas are best accepted by the majority in a polity, while the latter relates to the checks and balances of the former. The current tendency, nevertheless, is that democracy has been so seriously misused that we all begin to see the unexpected – and oftentimes unwanted – consequences: clientelism, political corruption, populism, demagoguery, tyranny of the majority, polarization, and ‘manipulation of the game’; or, to put it in layman’s term, the fact that any alternating government will not be able to change the existing flaws in the political system.

This is not to say that other alternatives are necessarily better than democracy; Przeworski et al., in a signature 2000 paper, has argued that economic development bears little (or even no) correlation with a country’s political status as either a dictatorship or a democracy. That said, it does not matter whether a country is still ruled by an authoritarian regime or has already democratized; as long as the government can deliver outcomes as promised to the people, there should be a degree of stability. What I am saying here, in this regard, is for us to experience ‘a rude awakening’ of the current flaws in the implementation of democracy.

Here are some personal suggestions that I can think of in how we can save the benefits promised by democracy from its debilitating disadvantages, especially as we are welcoming 2017:

First and foremost, acknowledge that democracy does not make us ‘live in paradise’.

Our ‘obligation’ to preserve democracy has been largely ceremonial and superficial: we go to voting booths to vote for candidates, and end of story. I don’t care whether you have ever voted or not, but I get the feeling when people express their dissatisfaction and voice that ‘whoever becomes elected, nothing has ever changed’. Presidents or prime ministers come and go, but some problems are becoming worse. In the 2016 US election alone, over 100 million eligible voters did not cast their support to either Hillary Clinton or Donald Trump (let alone Gary Johnson or Jill Stein). I may understand the prevailing sentiment among these people about these candidates, and acknowledging that, on the first place, is a first step to deconstruct our thought processes about the notion of democracy.

Second, when you are presented with contradictory arguments, no matter how uncomfortable or painful they are, ‘do not hide in safe spaces’.

Many of us may find the statement ‘politically correct’ allergic. And sometimes, I personally feel that, too. Nonetheless, most of our time, we have been raised in a way that we can only voice out issues that conform to the ‘politically correct’ notion. Any slight deviation from the general consensus will be immediately ‘shut down’ by tirades of ‘political correctness’, and sometimes with credible threats of coercion. What’s the consequence? We refuse to listen to ‘inconvenient truths’, preferring ourselves to stay within our own comfort zones that we have been so deeply imbued with. I don’t care if you are a liberal, a conservative, or simply ‘an ordinary guy’, but if we, even at the very first place, have begun to censor our mindsets with filters of certain notions or perceptions associated with ‘the other party’, we end up labeling the other side into a monolith. Liberals shutting down the conservatives, conservatives shutting down the liberals, etc. Bubbles proliferate, and when they explode, the outcomes can be fatal. Civil conflicts, riots, uncompromising polarization, winner-takes-all attitude, or even mass casualties, all these outcomes are possible. Why don’t we all minimize our ego and start listening? Not that their ideas may be entirely correct, but at least, we may find a certain degree of ‘virtues’ in their arguments. Unfortunately, this second step may be the most difficult thing to do (given our prevailing dogma, stereotyping, and other biases within our mindsets).

Third, educate ourselves about civic rights. And as long as you have enough resources, do something.

I am sure that most of us have, at least, been engaged in a certain community-themed action, no matter how small it is. Be it visiting elderly people, providing free food for poor or homeless people or refugees, or volunteering for an NGO or a religious or social movement, such actions can already be considered as ‘breeding grounds’ for us to learn more about issues related to our society. We do good things not only to wish ourselves ending up in heaven, or to win more business contracts for our enterprises because of good publicity (ironically, that’s what CSR is all about), but also to understand in further depth about the roots of these problems. Why there are such communities that they may need our assistance. Understanding their issues, listening to their perspectives, and fully discerning their hardships may be another step to make us more aware about the concept of civil society.

Most importantly, if you are parents (I am still a 21-year-old guy, by the way), and your children are still young, educate them about the importance of civil society. Get them involved about these issues. You may disagree with me to a certain extent, but I do believe that the earlier we are exposed to these problems, the more we become aware of what we can contribute to solve these problems.

Fourth, compromise, no matter how unpopular it is.

Compromise often sounds dirty, or something like a C-word. But, again, be aware of the existing reality: society is a set of constantly competing interests, ideas, power, and forces. There are a lot of diverse groups from ethnic, racial, social, economic, religious, and various other defining features. It is correct that we strive to advocate our ideas, and sometimes we may have to compete with others, but when these become winner-takes-all struggles, it poses a danger to our long-term democratic values. After all, one feature of democracy is that it is raucous, noisy, and oftentimes chaotic. However, in the end, still, we must come to the realization that some of our interests do not always overlap with the others, but we can not overlook them, either. They are still part of our society. In the end, there are some painful compromises we must make. I do not ask for us to completely give up our rights, but to trade some issues of ‘minor’ importance, which may be of major importance for the other. This does not sound popular at all, but that is why I ask all of us to make such sacrifices, occasionally.

Fifth, and lastly, remain critical of our surrounding environment.

This may be difficult to apply in certain hybrid or authoritarian regimes, but after all, dissenters still exist everywhere. When we vote somebody to a public office, we entrust him or her with a significant degree of trust that the leader will do something. That we will hold our support toward them accountable. That is why, no matter what policies the leaders do, do not stop being critical. Write our thoughts, ideas, and feedback about certain policies in a civic and restrained manner (especially if you live in a country that does not seem too much like a democracy). If you are afraid to do so with the central or federal government, at least start from the localities we live in. Do not hesitate to criticize when there are things worth raising for.

I do not guarantee whether all these five suggestions are applicable, but if you believe that democracy is the least bad form of political system (as I personally also do), I still believe that these ideas are worth for consideration. Particularly in the age of social media – and the massive flurry of deliberate misinformation or ‘fake news’ – never before has it become so imperative for us to maintain our critical-thinking skills. I choose to believe that this matters, not only for this generation, but for future generations to come.

Additional readings:

 

Is Democracy In Decline? Published by Georgetown University.

Papers citing Larry Diamond’s paper, as listed in Google Scholar link here.

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Reality check: a Donald Trump presidency

random-trump-drawing

I even doubt if the Donald Trump character that I drew here had, if any, any bits or pieces that look like Donald Trump at all.

The reality is, prepared or not, like it or not, there are strong odds that Donald Trump – everything you associate with The Apprentice, ugly oranges, strange hair, tweets that look like one generated by a bot, and all his dangerous wordings and thinking – can become the leader of the most influential global power, or the so-called ‘Free World’, within less than 3 days. It’s never been this close, it’s never been this unbelievable, and it’s never been this ridiculous. Even his pussy-gate, which had led many people to believe that he is finished even before the electoral race commences after the Access Hollywood leaks about his lewd conversation with Billy Bush, does not dampen the support from his electoral base in a long run.

Nate Silver (statistician, data journalist, founder of FiveThirtyEight) upped the odds of Donald Trump beating Hillary Clinton from previously the 13% to 18% range to now over 35%. The ‘firewall states’ – so sacrosanct for Clinton’s electoral-college attainment that they appear almost impenetrable – now began to look vulnerable. All of a sudden, the prospect of a guy that appeared more like a 3-year-old toddler dressed in a 70-year-old costume leading the world’s largest economy, most outspent armed forces, and biggest nuclear arsenal is looking more like a possible reality. You thought this looked like an AI-scripted plot gone badly awry, but welcome to the reality. And soon, pretty likely, we will have a presidential version of The Apprentice, this time just much scarier. So much so that Economist Intelligence Unit (EIU) has considered a Trump presidency as one of ‘major global risks’.

Prediction is a horrible job, because indeed, nobody really knows what will actually happen in the future. Nate Silver may try out his best using statistical analysis and polling aggregation, but even this is prone to measurement errors, this time simply because there are so many third-party and ‘undecided’ voters who can produce massive swings, either in favor of Hillary Clinton or Donald Trump. For now, it is obvious that Clinton has more paths to secure at least 270 electoral colleges (out of 538), but so much stuff can happen within the next 3 days that any scenarios, regardless how insane and crazy they are (just like Trump’s candidacy itself), can actually occur.

In this blog post, I will do that horrible job, and I caution that much of the assertion may remain false, all using the current degree of knowledge that I know about Trump’s words, statements, and ideas. Watching all the three presidential debates may make you question whether you are watching a celebrity gossip battle or a high school bully taunting the ‘good one’ on class monitor selection, but I will try to use some of the ideas that he uttered, compare them with the reality, as well as how he relates with the Republican Party in general. Truth be told, he has had a very uneasy, love-hate relationship with GOP, and this may significantly impact his presidency (if he wins).

Here we begin:

Immigration

The ‘I’ word now looks more like a derogatory term thanks to his bombastic rhetoric about, well, immigration. Looking at the way he perceives of Mexicans and Muslims, there is a strong likelihood that a Trump administration’s immigration policy will be extremely tough, especially on people originating from either Latin America or Muslim-majority countries. Deportation of illegal immigrants will be commonplace, considering that the United States has more than 12 million unregistered ‘aliens’. There is also a strong likelihood that he will stop receiving Syrian refugees (while the top three countries of origin of refugees in the US are from Myanmar, Democratic Republic of the Congo, and Somalia), but the likelihood that he will stop all refugee flows coming to the country is very small. Nonetheless, immigration flows to the US, by and large, will remain largely unaffected, given that the country remains competitive in terms of attracting talents from all across the globe. However, one caveat is that a Trump administration will strictly tighten visa and immigration requirements for people coming to either visit, study, or reside in the country for quite some time, which can have a dampening economic effect.

Chances of clash with the Congress on this issue: 50:50

Economy

A Trump administration is likely to go huge on investment in infrastructure as a ‘massive stimulus package’, which it promises to be between US$500 billion and US$1 trillion. Construction-related industries will likely to see a boom, should his plan be realized. The problem, nevertheless, is that he will go into conflict with his fellow Republicans in the Congress (if he considers himself so) because of the latter’s belief in ‘small government’. This, I predict, will be a significant point of contention between President Trump and Congressional Republicans.

Chances of clash with the Congress on this issue: high

But, his proposed tax cuts will be largely favored by many businesses, although the consequence would be to deepen current account deficit that US has been faced with for a very long time. The previous Obama administration has managed to reduce the deficit from a record of US$1.4 trillion in 2009 to US$0.4 trillion in 2016 fiscal year, but even such accord can be at stake when his tax cuts are enacted. With mounting debts (over US$20 trillion) and multiple postponements on debt ceiling, plus his infrastructure stimulus plan, a Trump administration will have two options: go for the rational option (that is to borrow more from either China, Japan, or Middle Eastern oil-rich countries), or go nuts (manage the economy like Trump did to many of his defaulted businesses). Even if he opts the latter path, the question is now whether he can affect – let alone coerce – the Federal Reserve to implement his policy ideas of doing ‘massive haircuts’ for US dollar. If that happens, United States is officially a banana republic, and the entire global economy will go bananas too.

Chances of clash with the Congress on this issue: low

Here comes the free trade. Trump has repeatedly stated that he vows to withdraw from Trans-Pacific Partnership (TPP), to end US membership in World Trade Organization (WTO – which US ironically was the founder itself), and to impose 45% import tariffs on Chinese products, as well as to tear the entire NAFTA agreement with Canada and Mexico. This comes, all in all, when so many of Trump’s signature products are actually manufactured from overseas. Still, even we are supposedly not surprised to hear statements like these. This is the era of globalization, and any single product you purchase can have different parts assembled in different countries. But with the politics going extremely toxic on globalization and trade, we all hear cries of protectionism being voiced out.

I predict what happens next is otherwise. A Trump administration is likely to massively expand United States free trade agenda, because either Trump thinks on almost anything as a businessperson, that when there is something that can be traded, then there’s a chance you can strike a deal, or because there would be intensely huge pressure from the US Chamber of Commerce and other business associations that can lobby and influence the Congress, so much so that Trump is forced to make a compromise. Whether it will be bilateral free trade agreements, it remains to be seen. Regarding TPP, and to a lesser extent, TTIP, it is quite likely that President Trump will force all the participating countries to return to negotiation tables to extract further concessions regarding the issue of currency manipulation (when almost every country does it), although many leaders in TPP countries have repeatedly stated that there will be ‘no more rooms for further negotiation’ (by the way, the trade deal was signed in New Zealand in February this year). There is a quite limited chance TPP will be passed, given the bars set by the administration will be extremely difficult to accomplish, and negotiations can even end up in collapse.

Warning: the odds of a global recession also increase significantly given the massive deficits and/or significant debt accumulation resulting from his policies, and the biggest victims would be the middle and working classes.

Chances of clash with the Congress on this issue: 50:50

Great Wall 2.0

His idea of ‘building borders’ will be highly unlikely to materialize; the fact is, much of the US-Mexican border currently has been sealed with wired fences and literal border walls, with frequent patrols by border guards, and to some extent, even drone surveillance. Trump administration will face increasing pressure from Native American reservation groups, environmentalists, as well as Hispanic communities. It is also quite likely that any of these social movements can start a long-term occupation of any portions of the border in order to resist his government, and the response is potentially brutal (as you can see with the militarization of police and their responses on Dakota Access pipeline protests).

Chances of clash with the Congress on this issue: 50: 50

Supreme Court

I am almost certain that with the Republicans expected to retain their control of the House of Representatives (and quite possibly the Senate as well), both President Trump and the Congress will appoint right-wing justices into the Supreme Court. Many issues, such as same-sex marriage, Citizens United, and especially abortion, will see their progress being put at stake. There is even the possibility of shrinking the Supreme Court (as of now, there are 9 justices, but with the death of Antonin Scalia early this year, the existing number is 8, so many issues remain tied).

Chances of clash with the Congress on this issue: low

Climate Change

There are two possible scenarios, both good and bad, occurring in Donald Trump administration. If his tax cut plans are applied to all sectors (assume ceteris paribus), there is a possible boom in renewable energy industries, probably because he simply does not care too much about it. On the other hand, there is also a quite big likelihood that he will reduce spending on environment-related agencies, or possibly defund them, or even disband them. Agencies like Environmental Protection Agency (EPA) will likely to see their responsibilities and authority largely reduced. Fracking practices, especially in natural gas, will remain in place, and quite likely expand should the tax cuts be applied to oil and gas-related industries altogether.

Chances of clash with the Congress on this issue: low

Science & Technology

Trump administration will likely make a compromise on H1B visa, or what Michio Kaku called as ‘genius visa’, which allows talented individuals all around the world to live for a certain period of time working in the United States. It is quite possible that a lot of the efforts will be put in developing the country’s space industry, mostly by working with the existing private space exploration companies, such as SpaceX. Development in science and technology will remain largely unaffected, except that much of the focus will still go on defense-related areas.

Chances of clash with the Congress on this issue: low

Foreign Policy

Here comes the longest part. To make long short, I’ll just outline them, one issue per each paragraph, below.

Russia: President Trump will likely align closely with Vladimir Putin (BFFs?)

NATO: The structure of the defense organization will remain in place, but with Trump cozying up to Putin, NATO will increasingly look like a ‘paper tiger’. Almost no attention will be paid on the conflict in Eastern Ukraine

Syria: President Trump may possibly end support on moderate rebel forces operating in the war-torn country, and shift their focus to indirectly support Bashar al-Assad, instead, with the major aim of ‘wiping out ISIS’

Iraq: He may not really ‘take the oil’, but Iraq may align itself more closely with either China (thanks to One Belt One Road initiative, in which Iraq is listed as part of it) or Russia (for weapons)

Afghanistan: There remains uncertainty whether Trump administration will retain American forces in the country, but if they do, the country will increasingly bandwagon to China to help stabilizing the country

Nuclear weapons: Although Trump once repeatedly asked ‘why can’t we use nuclear weapons?’, as long as he cozies up to Putin, the strange ‘equilibrium’ should remain in place

Saudi Arabia: With United States-Saudi Arabia relations already severely strained under Obama administration (Iran nuclear deal, 9/11 bill, threats of selling off US$750 billion in American assets), and President Trump increasingly reluctant to protect the country, it is highly likely the country will build its own nuclear bombs, especially to anticipate the expiry of the Iran nuclear deal

Iran: If Trump abrogates the nuclear deal, tensions will significantly increase in Middle East, and Russia may possibly oppose US move (but Saudi Arabia will be quite happy to hear about it)

China: The country may receive a huge boost with a Trump presidency, given that his campaign rhetoric regarding China, so far, is mostly about economy. He did not raise questions about Taiwan, human rights, Tibet, or Xinjiang, and pretty likely he will never raise any of them. Indeed, with the administration significantly reducing their leadership roles in international order, China, as the world’s second largest economy, will fill out the vacuum. Many neighboring countries will have to reluctantly bandwagon with China, given their current dilemma of having China as the largest trading partners, but in critical necessity of US to provide them security assurances

US alliance in Asia: Obviously, the decades-old US alliance system in Asia will be at stake. Countries that may worry the most are Japan and South Korea, which have relied on American nuclear umbrella to ensure their survival in the last six decades. With Trump administration reducing their commitment, these two countries will be faced with a huge dilemma. Japan’s effort to pass constitutional referendum to recreate an armed force were hampered by massive protests, while South Korea’s more eagerness to build nuclear weapons may anger not only North Korea, but also China, its largest trading partner. With ongoing anemic economic growth, it is quite likely that the two countries will bandwagon further with China, given their high dependence on exports to support growth

Populists in Europe: Trump’s victory, correlated or not, will likely provide a major boost for the populists in many European countries. We’ll see how things roll out in the upcoming 2017 elections in France and Germany; the closest one is to see the second run-off of presidential election in Austria scheduled to be held by the end of this year

Mexico: US relationship with Mexico under Trump administration will be largely uneasy, and any friction can bring Mexico into economic recession (United States accounts for more than half of Mexico’s annual trade volumes)

Southeast Asia: Trump’s commitment to Southeast Asia will drastically decline, unlike Obama’s overtures

South China Sea: Let alone South China Sea (the biggest winner will be China). Expect countries like Malaysia and the Philippines to bandwagon further with China, which they now do. Vietnam, having a more negative sentiment towards China rather than US in spite of the devastating war, will be forced to rely further on ASEAN, whose solidarity has been in question

India: President Trump will likely align very closely with PM Narendra Modi (perhaps Trump will learn some Hindi too, with terrible accent)

Dictators: The fact that he described Vladimir Putin as ‘great leader’ and had met with Egyptian president Abdel Fattah el-Sisi may indicate that he will be very pragmatic in befriending any leaders, regardless of the fact whether they are democrats or dictators. By the way, US foreign policy has had a long history of supporting authoritarian leaders, so this will be hardly a surprise

*****

While this may be a brief glimpse of what a President Trump can potentially do, I caution that there are also ‘plot twists’: some of his plans may not work out, and there is a pretty high chance he won’t even be the president for a full four-year term up to 2020. Think of these scenarios:

  • Trump commits a scandal when he is a president
  • Trump’s ongoing lawsuits and trial proceedings result in his impeachment (especially if Republicans begin to abandon him when the wrongdoings are so severe)
  • Trump is in feud with his vice president, Mike Pence, and there have been rumors about their own discord even during the election season
  • Trump falls ill due to ‘too much stress’, and announces resignation
  • Trump falls ill and needs to be hospitalized ‘for quite some time’
  • Trump conflicts with the GOP, and the latter thinks of strategies to begin impeaching him

Still, remember, nobody – let alone I myself – bears assurances whether these predictions will work out or not. He may try to temper himself, or that he may go on with all the big pushes. I am talking about what Trump may do, simply from a rational assessment basis. Things may go wrong, and things may go right.

I only hope your vote on November 8 can make the difference. Good luck, the world.

Why intellectuals fail

the ivory tower

 

I actually kinda struggled in the beginning to think of the title for this post, whether I should put ‘why intellectuals fail’, or probably, ‘why demagogues succeed’. You may think these two titles give very few differences, but in an era where it is becoming increasingly difficult to define a populist, a demagogue, a ‘nativist’, or other titles in political extremism and their intensifying blurriness in the world of conventional politics, which I am very sure as hell someone out there is ready to launch the tirades, I would rather choose the former over the latter, while possibly raising a degree of criticisms from some of the intellects.

Also, debating whether the fair share of responsibility on the current rise of populism-laden politics lays squarely on the fault of intellectuals or on the so-called ‘demagogues’ is like playing a game of chickens and eggs. Such causality is prone to open-ended interpretations by different people who have distinctive views on this phenomenon. A lot of the commoners will blame the intellects, or the so-called ‘elites’, as being held accountable for their preference to anti-establishment leaders. On the other hand, reverse the worldview, and those ‘mask-wearing devils’ would place the blame solely on the stupidity of these people themselves, as well as the demagogues who continue to tout wrongly misplaced ideals and notions of the societies.

Whatever it is, here is the truth: just like the Schrodinger’s cat dilemma – whether the cat, having been put into a radioactive container, is alive or dead – both views may actually be correct. Nonetheless, as this post is intended largely as an op-ed, and as I am entitled to my own opinion, I would rather discuss on the question of how today’s global phenomenon is made possible, in large part by the ‘failure’ of the intellectuals themselves.

First and foremost, we can hardly deny the fact that these recent years have been pretty rocky for global affairs. We have Donald Trump currently organizing, colloquially speaking, the world’s largest presidential-scale entertainment show that out-Apprentice the Apprentice itself, the so-called 2016 US presidential election. His past statements in the last few weeks have been disastrous, yet weirdly speaking, over 40% of US electorate (comprising most of the adults living within the States) are still willing to vote for him, because, ‘the devil you know’. Any extraterrestrial civilization passing by our planet may likely voice their confusion about what is wrong with human civilization; even if Elon Musk’s simulation argument were true, the ‘creator’ of this universe-sized simulated world will also be confounded whether there have been ‘programming errors’ with the game itself. But, sometimes facts are just simply stranger than the fiction. And then this is followed by the rise of ‘alt-right’ political movements in various European countries; one of them almost won the presidential election in Austria this year (but a run-off election will be scheduled by the end of this year). Afterwards, we have witnessed ‘Brexit’; albeit given its status as a non-binding referendum, this has caused unprecedented impacts towards its economy, and to a certain degree, the stability of global economy as well. The Nigel Farage Show Season 1 is being aired, and it remains effervescent.

What do these illustrations have in common? People are losing trust on the establishment. On the politicians, on the ‘experts’, on the elites, not excluding the ‘intellects’, which I emphasize in this post. It is like – how I should describe it – what the experts say and what the people truly experience are reflected into two different versions of reality. One major tenet is globalization. Experts, intellects, much of the ‘elites’, all of them have been focusing on the benefits of globalization and its associated embroideries, like free trade, immigration, economic mobility, cosmopolitanism, what have you. Here’s the thing: do most professors in any Ivy League school (say, Harvard, or Princeton, or UPenn) precisely understand the suffering of a working-class family in Detroit, Cleveland, or any other Rust Belt cities? Do most faculty members and scholars working in London School of Economics, or any elite universities in London, Oxford, Cambridge, or other places alike ever visualize themselves being a working-class family living in Birmingham or other industrial towns in England whose manufacturing jobs continue to shrink? I ask these questions not because I try to be populist (indeed, I have been very fervently against the notion of populism itself), but rather to simply give a preliminary view of the existing perception gaps among the people inhabiting the ‘ivory towers’, and the rest who are ‘outside’.

Looking at Branko Milanovic’s chart – which I have attached in two previous posts, it becomes apparent that there are bigger forces that affect such skewed imbalances. Many people in the developed world have seen their real incomes either staying flat, or actually decreasing, in the last two decades. 80% of American population, while comparatively prosperous relative to the rest of the world, is economically insecure, as their incomes can hardly match the soaring living costs (although calculations massively change when the term is shifted into ‘disposable incomes’). A bigger percentage of people are more likely to be less wealthier than their preceding generations. McKinsey Global Institute, having conducted research on 25 advanced economies, estimated that over 65-70% of the population in those countries have experienced such stagnant – or even dropping – income growth. Who is the ‘easiest’ culprit to catch? It’s globalization. With jobs offshoring to emerging markets – notably China, but also other developing countries – the manufacturing sector is shrinking in terms of workforce. Productivity increases actually in cumulative terms, but the primary driver is automation and other high-tech industries, which employ increasingly fewer people than before to produce greater outputs. Capital income is growing faster than labor income, thanks to the increasingly dominant role of service sectors. Social mobility becomes more difficult to attain given such situation. ‘Experts’, as though becoming a new N-word, actively talk about ‘economic prospects’, ‘huge opportunities’, and other shiny, Pollyanna-ish terms, but once the scenery shifts, things change. More people are working on makeshift jobs – sometimes two, or even three – to make ends meet (apologies that I do not have the dataset for now, but try Knoema or Quandl to find if there’s any).

And then all the resistance begins. People pointing fingers to the government, one whom they think has become increasingly co-opted, or fallen prey into, vested political and economic interests. People start to ‘attack’ the ‘experts’, the intellects, delivering a death verdict that all the educated people are ‘part of the elite’. This is what has happened with Brexit; all we can only hope is that Donald Trump ‘ends’ his presidential-sized Apprentice show after the electoral race is over. Many start to think experts, intellects, and ‘all the educated’ are components of the government, the establishment, those in power; these people trust more on politicians spreading false flags, fake statistics, conspiracy theories, and all other matters that might want to make us mummify ourselves with tinfoil. These are the two sad things that I need to say: first, ‘we’ have been neglected by these intellectual elites. Second, and worse, many of ‘us’ have been exploited by those demagogues in such situations for their own political advantages.

Where are the intellects, then? I’m very sure that as most schools are pushing scholars to produce as many research papers as possible (which, sadly, have a high probability of being neither read nor cited in their lifetimes), they won’t focus so much time on probing deeper into the actual real-world issues ‘out there’. I apologize if this sounds like over-generalizing (again, this is my opinion piece), but such is the stark truth in the academia. The academics who perform better than their peers in terms of paper citation may be more likely to be invited into either government bodies or major corporations as advisers; this is what solidifies a lot of people’s views that ‘intellects are part of the establishment’! This is also why they would prefer listening to populist preachers (say: Breitbart, Infowars, which Eric Andre referred to as ‘war on info’) who offer bombastic – yet deeply rotten – info, rather than to the boring, formal, robotic-like explanation by these experts. They are more willing to have leaders that are ready to make mountain-moving announcements, rather than policy wonks who will deliberately consult with multiple parties, refer to research papers (occasionally), and continue adjusting their policies to ‘satisfy everyone’.

Of course more scholars right now are becoming increasingly proactive in addressing such issues openly, but given all the shocks we have endured in the last few years, it still takes time for more people within the academia circle to start ‘coming out’ and exchanging views more actively with the communities, which I personally believe (though not yet totally proven) can reduce the euphoria of populism that has taken hold so much of the developed world today. For sure, the ‘mummies’ inside the ivory towers need to be ‘woken up’.

 

To read more (from the websites of what you call the ‘elitists’):

McKinsey Global Institute – A new perspective on income inequality (to understand the surge of populism today)

Project Syndicate – A brief history of (in)equality

Quartz – Why Trump’s voters are not complete idiots

On US election: some thoughts

us presidential candidate pixel art

Source: pixelfigures.tumblr.com

I’m not an American – first and foremost, but let me share some thoughts about what I perceive as one of the world’s most bizarre electoral competitions throughout human history (perhaps some exaggeration, but anyway).

Truth be told, most elections are ‘intense’. Intense in a way that society gets polarized for quite some time, some stuff (perhaps altercation) occurs, then a candidate with the biggest shares of votes wins, and gets elected, and society gets back to their normal ways of life, all the way until the next election is scheduled. In the US context, electoral history has been dominated by the two parties alone: Democrats and Republicans. The observable pattern – most of the time – is a Democrat administration, or when voters are dissatisfied with their performance, simply punish by voting them out of office, replacing them with a Republican one.

Despite some major historical events, one can say that the political phenomenon is almost reminiscent of that in ‘Groundhog Day’: support your candidate, get crazy about him (or her), engage in online debate or vitriol, and once election result comes out, things go back to normalcy.

This time, it is a truly bizarre event if I would have to be honest. Not sure if Elon Musk’s ‘universe-as-a-simulation’ argument is correct, but sometimes it makes you question whether the creator of this universe (whether it’s God, or a 17-year-old super-player playing a universe-sized Sim-like simulation) is running on a bad script. Nobody knows, but you are free to make your own ontological deduction.

We’ve got Donald J. Trump – whatever title you want to attach, I’ll let you decide. Racist? Check. Narcissist? Check. Braggadocio? Check. What’s his task? Making America great again. Up to this point, I can hardly decide whether he wants to ‘become president of the United States’ or ‘make America great again’. Here, up to this point, Trump has become the sole Muslim-baiting, Mexican-baiting, African American-baiting, women-baiting great wall-championing candidate for the Republican party, as the media likes to refer. Even more confounding for us, the rest of the world (and majority of Americans I bet), Trump is getting massive support from a significant portion of US population, mostly from the largely White working-class groups. Is he ‘funny’ or ‘dangerous’? He’s so ‘funny’ to the way he already gets the world ‘alarmed’ at his presidential prospect. Building a wall that borders Mexico, proposing a ban on ‘Muslim’ immigration to the US from countries harboring terrorists (my country is one of them, although I am myself ethnic Chinese and ‘Buddhist’), imposing 45% tariffs from imported products from China, and putting global economy at stake by proposing ‘US debt default’ (the art of the deal, huh??), refusing to honor decades-long security commitments with its allies (NATO, Japan, South Korea, etc), and ‘pivoting away from the whole world to make America great again’. What I’m scared is his ideas, but what I’m scared even more is the way he has repeatedly flip-flopped his statement; saying one idea is ‘great and awesome’, only to end up saying ‘the idea is horrible, terrible, and dangerous’. The worse thing is he is still garnering significant support, and that shows no signs of abating. Reality is sometimes weirder than our imagination.

And then, all the way, we’ve got Hillary (insert whatever you want, ‘Killary’, Hillary-Monsanto-Goldman Sachs-TPP-Clinton, etc). A more sane and politically experienced candidate – having been in US Senate and being the most well-traveled Secretary of State), my opinion towards her is that she is hardly different from any other politicians. She flips-flops (say, on TPP), gets paid huge sums of money by Wall Street (you know, the big banks), and has close ties with some of the world’s nastiest dictatorships. More recently, she self-clones herself to ‘somewhat’ look like Bernie Sanders. I do not say she is a good candidate, either, given some of the existing controversies in her past track records. But, again, as a politician (and just like any other typical politicians), she is the one that can make huge promises, compromises with all sides, and delivers a portion of them. She envisions herself as ‘de facto continuing Obama’s third term’, only that she will be more hawkish in her foreign policy (as already demonstrated in Libya, and probably Syria should she get elected). You hate her simply because ‘you hate her’, but this is all the more given the fact that she is a centrist, and if one looks into the median-voter theorem (one of the most common theories in political science), the one that can stay in the median position is the one most likely to win the elections, because people would prefer ‘status-quo’.

Of course people had expectations of Bernie Sanders (and indeed very high). Despite his apparent failure to become the presidential candidate from Democratic Party, it is remarkable that he could build such a huge appeal within a time span of less than a year (ironically, so did Trump). Using his credential as a ‘democratic socialist’ – in fact I would consider him more as a European-style social democrat, he championed the ideas of free college, universal and free healthcare, and all the measures to force the ‘one-percent’ to pay taxes and support the poor, low-income, and working class in the United States. His zeal – and his enthusiasm – captured so many people’s attention, and even myself. To some degree, I actually felt the Bern. There’s always a but, nevertheless. I truly admire his ideals, but if I have to be honest (especially to Bernie bros or Bernie-or-bust people), Bernie’s Achilles’ heel has been that he has yet to detail his policy proposals on what precise measures he’s going to do to achieve his goals. It’s like he’s dreaming big – and extremely big, but he seems ‘stuck’ in continuously touting his dreams. I also have thoughts circulating in my mind that a Bernie Sanders presidency may struggle to put forward his ideas – especially amid the Congress, dominated by tons and tons of special interests, all of which may eventually force him to compromise and sacrifice some of his ideals. Unlike Hillary, Bernie seemingly does not appear ‘ready’ to become unpopular. Don’t we all realize that politicians are people who know when to attract popularity, and when to enact unpopular policies? I am trepidated by the prospects of a Bernie presidency not because of his ideals that will threaten economic stability, but rather his potential ‘inability’ to do so due to the tough reality of politics – forcing him to confront his own Icarian tragedy. Still, with the fact that Bernie is so close to the ‘core’ of the Democratic Party right now, to some extent this has also forced Hillary to adopt policy positions that are leaning, somewhat, to the left-wing of politics (although I may doubt her not flip-flopping), and largely changed the landscape of American politics these days – altogether with Trump.

Now the real conundrum is Trump. His sensationalist acts, his tweets (which look more like tweet-bots), his arrogance, and his extremely unpredictable temperament could have been ‘acts of suicide’ in other places. But, he’s gaining more popularity than ever. Trump supporters remain largely committed to support him. You may call them idiots, stupid, low-IQ, mentally ill, jerks, retards, paranoia-laden people, but the reality is much more complicating, and it is such over-generalization that continues to perpetuate why this guy could still maintain a huge, staunchly support base. With the fact that a huge bulk of his supporters are working-class people, perhaps I could show you one graph prepared by Branko Milanovic shown below:

chart_of_the_century

Source: World Bank

Other than the world’s poorest population, the ‘biggest losers’ in globalization are the middle- and working-class population in the high-income economies, especially US – one of the most unequal countries among OECD countries. Trump phenomenon is not itself a unique phenomenon alone; Brexit, the rise of far-right populist movements, the resurgence of ultra-nationalism, are moments that can be very easily exploited by political Machiavellians, agitators, and demagogues (and I do not deny that Trump is just one of them). Also, it is not that Trump supporters are ‘blind’ of his wrongdoings: they know his misdeeds, but their assumption is: “better the devil you know”. As the US election in 2016 is one that pits two unpopular candidates, voters have only one option: select the one that is ‘less evil’ than the other. Trump supporters argue that they fully understand the ‘devil’ in Trump, but at least he’s ‘open’ about it, and they have this suspicion of ‘Clinton’, all the secret agenda, conspiracy theories, and stuff. Such vulnerability is a very huge rabbit hole that can be ceaselessly exploited by fellow demagogues to amplify their voices. Most people on the other side (and not necessarily Clinton supporters) fail to notice such pattern, and this is where they continue to chastise Trump supporters as being on the categories I highlight above. I am very sure there are Trump supporters who are not racists, bigots, or even from ethnic minorities (although he may say some bad stuff). In short, there is almost no ‘culture of dialogue’ between the two sides, and no wonder polarization becomes increasingly uncompromising and intense.

Part of this strange phenomenon, also, lays the blame on the intellects. Does a professor teaching in Harvard, or Stanford, or Princeton, understand the feelings of a blue-collar worker in Mississippi or Alabama? I am not saying that all faculty members are elitists (note that a huge portion of them are active on projects that try to empower communities), but given the growing inequalities in income, wealth, and economic and social opportunities, this is also another possible pathway that can lead to the rise of demagogues, regardless if a country is already a well-established democracy, or if a country is already high-income or not. The ‘understanding gap’ between the intellects and the rest of the country is huge – especially with the ivory-tower tendencies of the former – but I think I need to devote one special blog post that explains ‘the failure of intellectuals’.

This election, therefore, will be very vividly watched across the world. Whoever becomes the president – either it’s Trump or Clinton – will determine the future trajectory of the United States, and the international order as well. In spite of numerous existing domestic problems, US remains the world’s largest economy, and it remains a key determinant to stabilize the global order. The commander-in-chief whose credential is ‘the big bro in the Apprentice’ is not the one that will necessarily keep the order in shape; Clinton is by no means popular, either, but she understands what being a politician is – when to become ‘popular’, and when to enact unpopular policies. US’ global image has improved under Obama administration (after its notorious association with Iraq War under George W. Bush government), although it is not flawless. If Trump wins, it may be either the global order is at stake (if he is consistent with his big ideals, which I already doubt them given his own flip-flopping), or that many countries will simply ‘stay away’ from US. In the context of Asia, most countries – rather than risking war with China and asking US for security guarantee – will, no matter how unpopular it is, choose to cozy up to Beijing, given their substantial economic leverage.

The whole essence of this election is neither to ‘dump Trump (and his supporters)’ nor ‘lock her up’ (in the context of Clinton). It is about the next 4 years where US will go, and what the future generations will learn about political processes in their country. While obviously this is an unpopular election, as a non-American, I appeal to people there to please build up a ‘culture of dialogue’ between different political spectrum. For the rest of the world, I would say that we also need to prepare for the ‘worst-case scenario’ in the future. We may possibly witness big changes in the international order, but we don’t know.

Democracy as a ‘sinking ship’?

democracy

 

The notion of democracy has been going through a turbulent path these days. From a contemporary aspect, we can refer to phenomena like the Brexit, the rise of nativists-populists epitomized by that corn-haired Donald Trump, and most recently, the military coup attempt in Turkey last Friday. We criticize such outcomes as malcontent, harbingers of something more dangerous to come, or short-sighted, but if we take into account deeper consideration, aren’t all these enabled – either directly or indirectly – from the very core processes we consider as ‘democratic’ instead?

This is not an academic paper that tries to discuss about democracy (although I would be very interested to author one), but – as a way to showcase my right of civil liberties – let us have a frank discussion about it. First thing first, we need to acknowledge that there are no perfect political ideologies, even in the concept of ‘democracy’. To understand about the existing dichotomy, let us the origin of this notion back into Ancient Greece, somewhere around 6th (or maybe 7th) century BC. Aristotle, or our genius philosophy bro’ who invented almost every field we study today, postulated that the main aim of democracy is to achieve freedom. On the other school of thought, we got the other partners-in-crime (Plato and Socrates, one of whom the other betrayed) who argued that democracy is no different from mob rule, or most commonly referred to as ‘tyranny of the majority’. One alternative proposition – or maybe compromise – offered by these philosophers was to use the term ‘polyarchy’. Defined as ‘rule by more than one person’, polyarchy still slightly differs from democracy in that the former postulates a set of institutions, constraints, and procedures that aim to balance the utilization of democracy, which the latter actually does not posit. If we adapt these debates to contemporary settings, the resulting outcome – voila! – is polarization within the society. People debate on how democracy should be done and represented. One school wants maximum participation from the people – and the people alone, while the other wants a more procedural, representative, and legally-constraining measures to not let democracy ‘erupt into complete anarchy’, which this school dreads of.

Efforts to promote democracy have been tied in orthodoxy as part of the Western world’s foreign-policy approaches in their contemporary ‘nation-building’ projects. United States – the current world superpower – is still actively promoting this idea (though no longer as active as in the past), and is followed suit by other European countries. Through epic makeups, democracy is parceled and decorated as though they were ‘gifts from Santa Claus’. Except from the cases of US-led democratization in Germany and Japan in the aftermath of World War II, most of their efforts have been largely mixed. Ironically, indeed, the idea of ‘democracy promotion’ was so subverted that the West ended up supporting any regimes they could label as ‘democratic’ – as long as they were anti-Communist. Military intervention in Iraq and Afghanistan (as well as Libya, Syria, etc) did not produce any tangible democracies; what we have is instead the rise of ISIS (or a more derogatory one, Daesh), the continuation of tribal, sectarian, and ethnic warfare, and regional instability. What the heck is wrong with all these so-called ‘democracy promotion’ things?

Many scholars have offered various answers and interpretations in order to answer such prevailing puzzle, but many of their explanations are contextually dependent on the regions they are specializing in. Experts such as Scott Mainwaring, James Fearon, David Laitin, David Collier, and Steven Levitsky have expertise in the Latin American contexts – and Collier and Levitsky have published a paper that aims to categorize democracies based on their knowledge in this region. On the other hand, we have experts such as Dan Slater, Tom Pepinsky, Eddy Malesky, Donald Emmerson, etc, who specialized in the context of Asia-Pacific region. We also have scholars that try to explain democracy from a political-economic framework, such as Dani Rodrik, William Easterly, and Stephan Haggard. And then we have scholars that explain democracy through massive global datasets that they have toiled to develop, such as Barbara Geddes, Adam Przeworski, Monty G. Marshall, etc. These are just some people I mention which papers I have read, and I’m sure there are way many more of them whose works I have yet to review. As each of them may offer some variation of insight about the dichotomy of democracy when compared to other issues, I can hardly type in through their postulation in this blog post (it’s too long, and I need to spend quite a large amount of time re-reading their papers).

The best explanation, I would emphasize, is to read Why Nations Fail, co-authored by Daron Acemoglu (MIT economist) and James A. Robinson (Harvard economist). They focus on the role played by institutions, which actually matter more than democracies do, in delivering outcomes from the authority to the people. Thus, here is the premise: if a country can not build an inclusive institutional setup that accommodates everyone’s interests, then the polity is designed to doom. While this book provides a largely historical perspective, in case you want to explore even further, you can try to read their another book titled ‘Economic Origins of Democracy and Dictatorship’. With tons of pages of intricate econometric formula and analyses (which most people, and me – and even some grad students I bet – struggle to comprehend), they provide evidence as to how institutional setup established in the past can affect the political prospects of those countries. I do not recommend you (and myself) to read the latter before taking more Economics and Econometrics courses; Why Nations Fail itself already offers a huge range of fascinating case studies that are more exciting than your high-school history textbook.

In case you want the simplest explanation, I would suggest reading an article written by Fareed Zakaria, titled ‘The Rise of Illiberal Democracies‘. Published in Foreign Affairs in 1997, Zakaria provided a thought-provoking argument about the need to differentiate the concept of ‘democracy’ and ‘constitutional liberalism’ (or, in simpler terms, rules and legal regulations that protect individual civil liberties). He attributed that the problem of many newly emerging democracies these days – back in the 1990s, when this article was published – was that these polities paved way for populists and strongmen to seek popular legitimacy to justify their autocratic rule. Going back to the ‘democracy promotion’ mode by US government and its allies, we all came to consolidate the correlation between democracy and ballot boxes alone, all the while overlooking other sets of factors and variables. Here, Zakaria had prophesied his pessimistic trajectory of how such populists – or other political agitators – made use of ballot boxes, securing the widespread support of the existing electoral base, all in the name of justifying their strongman-style rule, or implementing other policies many had thought could be a ‘shot in the arm’, but instead ended up as ‘gunshots in the arm’. Without a certain mechanism in protecting individual civil liberties, democracies can literally become what the ancient Greeks called as ‘tyranny of the majority’. Thus there came the phenomenon of illiberal democracies, where parties or regimes in power make use of elections solely as their defining feature of democracy to consolidate their power and empower their supporters, largely at the expense of protection of civil liberties. I recommend you to read this article, given its (ongoing) relevance to the present contexts in global politics.

Lastly, what about the question of polarization? In a seriously insightful paper, titled ‘Democratic Careening‘, Dan Slater actually refuted the argument by several scholars that ‘democracy is collapsing’. Instead, he stated that ‘democracy can not collapse, but rather careen’ (perhaps as you can see from the Paint-drawn illustration above). Democracy, to some aspect, can become like a ‘warzone’ with two opposing sides intensely fighting against each other – either on the streets or in the legislature – over the competing notions of democracy. He emphasized, in particular, about horizontal accountability (rule of law, checks-and-balances between state institutions) and vertical accountability (political participation among the public). The big ‘danger’ that could cause the war-zone to occur, in this regard, is when leaders in power cause both these features to compete against – rather than complement – each other. This can be achieved by leaders either disproportionately enlarging their executive powers to the degree that they become almost personalized, or that they agitate for mass mobilization among the supporters to take to the streets when there is any ‘threat against their legitimacy’. While Slater only focused on the comparative analysis of Thailand and Taiwan, this argument can be further expanded to look into other countries. Let’s say, the Chavismo phenomenon in Venezuela, how Erdogan rallied his supporters to take to the streets in response to the ‘coup attempt’ (or so the media said?), or the exploitation of ethnic, religious, or social-based cleavages to the ruling powers’ advantage.

This writing can be further explored into a further work, but I would rather stop here, risking the boredom of Internet readers (especially in the age where people simply share articles without really reading them or even clicking the links). In summary, I would say that democracy – in spite of its problems – can be ‘nurtured’, only if there are strong institutional setups from the beginning which can provide checks and balances on elected leaders, and all the while respect people’s civil liberties. Democracies matter, but so do institutions and the principle of constitutional liberalism. If implemented immaturely, we will continue to see any existing weird phenomena resulting from ‘democratic’ processes in the future, and even more half-baked democracies. Democracy is not sinking, but it can be bent in lieu of the desires of the leaders in power. Thus, I would rather advocate for the idea of liberal democracy, rather than ‘democracy’ in itself alone.

In the words of Ronald Dworkin, “democracy is a substantive, not a merely procedural, ideal.”

 

NB: In case you want to have some more independent study about democracy, here are some useful sources that you can refer to.

Readings (only two first):

Daron Acemoglu and James A. Robinson – Why Nations Fail

Francis Fukuyama – Political Order and Political Decay

Datasets (about the quality of democracy):

Freedom House – not too frequently referred to in academic discourse, but very useful in media and public discussions as the tone is much easier to comprehend

Polity IV – more complicating, but more useful, and is mostly referred to in academic discourse (on a scale of -10 to 10, dictatorships are labelled with scores -6 to -10, democracies from 6 to 10, and hybrid regimes, or what you call as ‘illiberal democracies’, scored precisely in between)

 

Hope these references help.

A tale of caution to Hong Kong?

hk 3d map

Nobody really knows, as a tautological premise, whether history exactly repeats itself (despite the seemingly obvious repetitive patterns if one looks at various cases). While I caution to maintain objectivity – to some degree, this case study, while not necessarily meaning there existed parallels between what happened in Venice and what currently is taking place in Hong Kong, carries directions which may possibly lead to a convergence. Nobody really knows what will really happen in the future, but studying from the case of Venice, one should sense some sort of alert.

The story of Venice was one part of a chapter (Chapter 6 – “Drifting Apart”) in ‘Why Nations Fail’, written by MIT economist Daron Acemoglu and Harvard political scientist James A. Robinson. Basically, this historical case study highlighted how an inclusive government institution, if not supervised carefully, can become an extractive one instead, which ends up inhibiting, rather than stimulating, development in a society.

And here the story goes.

Remark: the case study is entirely written by Acemoglu and Robinson.

*****

HOW VENICE BECAME A MUSEUM

The group of islands that form Venice lie at the far north of the Adriatic Sea. In the Middle Ages, Venice was possibly the richest place in the world, with the most advanced set of inclusive economic institutions underpinned by nascent political inclusiveness. It gained its independence in AD 810, at what turned out to be a fortuitous time. The economy of Europe was recovering from the decline it had suffered as the Roman Empire collapsed, and kings such as Charlemagne were reconstituting strong central political power. This led to stability, greater security, and an expansion of trade, which Venice was in a unique position to take advantage of. It was a nation of seafarers, placed right in the middle of the Mediterranean. From the East came spices, Byzantine-manufactured goods, and slaves. Venice became rich. By 1050, when Venice had already been expanding economically for at least a century, it had a population of 45,000 people. This increased by more than 50 percent, to 70,000, by 1200. By 1330 the population had again increased by another 50 percent, to 110,000; Venice was then as big as Paris, and probably three times the size of London.

One of the key bases for the economic expansion of Venice was a series of contractual innovations making economic institutions much more inclusive. The most famous was the commenda, a rudimentary type of joint stock company, which formed only for the duration of a single trading mission. A commenda involved two partners, a “sedentary” one who stayed in Venice and one who traveled. The sedentary partner put capital into the venture, while the traveling partner accompanied the cargo. Typically, the sedentary partner put in the lion’s share of the capital. Young entrepreneurs who did not have wealth themselves could then go into the trading business by traveling with the merchandise. It was a key channel of upward social mobility. Any losses in the voyage were shared according to the amount of capital the partners had put in. If the voyage made money, profits were based on two types of commenda contracts. If the commenda was unilateral, then the sedentary merchant provided 100 percent of the capital and received 75 percent of the profits. If it was bilateral, the sedentary merchant provided 67 percent of the capital and received 50 percent of the profits. Studying official documents, one sees how powerful a force the commenda was in fostering upward social mobility: these documents are full of new names, people who had previously not been among the Venetian elite. In government documents of AD 960, 971, and 982, the number of new names comprise 69 percent, 81 percent, and 65 percent, respectively, of those recorded.

This economic inclusiveness and the rise of new families through trade forced the political system to become even more open. The doge, who governed Venice, was selected for life by the General Assembly. Though a general gathering of all citizens, in practice the General Assembly was dominated by a core group of powerful families. Though the doge was very powerful, his power was gradually reduced over time by changes in political institutions. After 1032 the doge was elected along with a newly created Ducal Council, whose job was also to ensure that the doge did not acquire absolute power. The first doge hemmed in by this council, Domenico Flabianco, was a wealthy silk merchant from a family that had not previously held high office. This institutional change was followed by a huge expansion of Venetian mercantile and naval power. In 1082 Venice was granted extensive trade privileges in Constantinople, and a Venetian Quarter was created in that city. It soon housed ten thousand Venetians. Here we see inclusive economic and political institutions beginning to work in tandem.

The economic expansion of Venice, which created more pressure for political change, exploded after the changes in political and economic institutions that followed the murder of the doge in 1171. The first important innovation was the creation of a Great Council, which was to be the ultimate source of political power in Venice from this point on. The council was made up of officeholders of the Venetian state, such as judges, and was dominated by aristocrats. In addition to these officeholders, each year a hundred new members were nominated to the council by a nominating committee whose four members were chosen by lot from the existing council. The council also subsequently chose the members for two subcouncils, the Senate and the Council of Forty, which had various legislative and executive tasks. The Great Council also chose the Ducal Council, which was expanded from two to six members. The second innovation was the creation of yet another council, chosen by the Great Council by lot, to nominate the doge. Though the choice had to be ratified by the General Assembly, since they nominated only one person, this effectively gave the choice of doge to the council. The third innovation was that a new doge had to swear an oath of office that circumscribed ducal power. Over time these constraints were continually expanded so that subsequent doges had to obey magistrates, then have all their decisions approved by the Ducal Council. The Ducal Council also took on the role of ensuring that the doge obeyed all decisions of the Great Council.

These political reforms led to a further series of institutional variations: in law, the creation of independent magistrates, courts, a court of appeals, and new private contract and bankruptcy laws. These new Venetian economic institutions allowed the creation of new legal business forms and new types of contracts. There was rapid financial innovation, and we see the beginnings of modern banking around this time in Venice. The dynamic moving Venice toward fully inclusive institutions looked unstoppable.

But there was a tension in all this. Economic growth supported by the inclusive Venetian institutions was accompanied by creative destruction. Each new wave of enterprising young men who became rich via the commenda or other similar economic institutions tended to reduce the profits and economic success of established elites. And they did not just reduce their profits; they also challenged their political power. Thus there was always a temptation, if they could get away with it, for the existing elites sitting in the Great Council to close down the system to these new people.

At the Great Council’s inception, membership was determined each year. As we saw, at the end of the year, four electors were randomly chosen to nominate a hundred members for the next year, who were automatically selected. On October 3, 1286, a proposal was made to the Great Council that the rules be amended so that nominations had to be confirmed by a majority in the Council of Forty, which was tightly controlled by elite families. This would have given the elite veto power over new nominations to the council, something they previously had not had. The proposal was defeated. On October 5, 1286, another proposal was put forth; this time it passed. From then on there was to be automatic confirmation of a person if his father and grandfathers had served on the council. Otherwise, confirmation was required by the Ducal Council. On October 17 another change in the rules was passed stipulating that an appointment to the Great Council must be approved by the Council of Forty, the doge, and the Ducal Council.

The debates and constitutional amendments of 1286 presaged La Serrata (“The Closure”) of Venice. In February 1297, it was decided that if you had been a member of the Great Council in the previous four years, you received automatic nomination and approval. New nominations now had to be approved by the Council of Forty, but with only twelve votes. After September 11, 1298, current members and their families no longer needed confirmation. The Great Council was now effectively sealed to outsiders, and the initial incumbents had become a hereditary aristocracy. The seal on this came in 1315, with the Libro d’Oro, or “Gold Book”, which was an official registry of the Venetian nobility.

Those outside the nascent nobility did not let their powers erode without a struggle. Political tensions mounted steadily in Venice between 1297 and 1315. The Great Council partially responded by making itself bigger. In an attempt to co-opt its most vocal opponents, it grew from 450 to 1,500. This expansion was complemented by repression. A police force was introduced for the first time in 1310, and there was a steady growth in domestic coercion, undoubtedly as a way of solidifying the new political order.

Having implemented a political Serrata, the Great Council then moved to adopt an economic Serrata. The switch toward extractive political institutions was now being followed by a move toward extractive economic institutions. Most important, they banned the use of commenda contracts, one of the great institutional innovations that had made Venice rich. This shouldn’t be a surprise: the commenda benefited new merchants, and now the established elite was trying to exclude them. This was just one step toward more extractive economic institutions. Another step came when, starting in 1314, the Venetian state began to take over and nationalize trade. It organized state galleys to engage in trade and, from 1324 on, began to charge individuals high levels of taxes if they wanted to engage in trade. Long-distance trade became the preserve of the nobility. This was the beginning of the end of Venetian prosperity. With the main lines of business monopolized by the increasingly narrow elite, the decline was under way. Venice appeared to have been on the brink of becoming the world’s first inclusive society, but it fell to a coup. Political and economic institutions became more extractive, and Venice began to experience economic decline. By 1500 the population had shrunk to one hundred thousand. Between 1650 and 1800, when the population of Europe rapidly expanded, that of Venice contracted.

Today the only economy Venice has, apart from a bit of fishing, is tourism. Instead of pioneering trade routes and economic institutions, Venetians make pizza and ice cream and blow colored glass for hordes of foreigners. The tourists came to see the pre-Serrata wonders of Venice, such as the Doge’s Palace and the horses of St. Mark’s Cathedral, which were looted from Byzantium when Venice ruled the Mediterranean. Venice went from economic powerhouse to museum.

*****

 

Harmonizing US-China trade relations : TPP and RCEP

tpp_rcep2

 

Source: Asia Maritime Transparency Initiative (CSIS)

 

The realm of US-China relations in 2015 are, indisputably, game-changing and vastly different from US-China relations that we experienced in 2005. A decade has passed, and we have seen the increasingly closing gaps between United States and China in regard to their global power. 2014 was a pivotal year, when for the first time in history, US lost its monopoly of a country with double-digit trillion US$ in terms of GDP values. While the former has managed to accumulate over 17.5 trillion US$ in GDP, China, in that regard, has leapfrogged by adding almost 1 trillion US$, strengthening its position into 10.5 trillion US$ as of last year. It is not simply a matter ‘if’ – the question is simple: when will China overtake the US? My most rational forecasting (humbly speaking, with significant percentages of potential errors) is 10-15 years. Time is running short, and at least, China has succeeded to become the world’s largest economy, if one looks at the country’s purchasing power parity (PPP), at an estimated 17.6 trillion US$. Despite the fact that China has been gradually slowing down to a ‘new normal’ of growth rate, and most recently, the stock market crash taking place in the last one month, it doesn’t mean China has stopped generating its industrial output; the country simply wants to move up one stage into a more ‘high-quality’ economy (how high-quality it will be remains a good question), driven more actively by domestic consumption, and in a pattern widely similar to what Americans did after World War II, international trade. The economic slowing-down has pretty much forced Beijing to expand its trade agenda into a more complex level than before.

China has at least succeeded in some of its international initiatives: the country already established two development banks (AIIB and NDB) in 2014 alone, the ‘One Belt One Road‘ economic initiatives, planned to link Asia, Africa, and Europe into integrated transport and trading networks, have enjoyed significant support from many developing countries, particularly those in Asia and Africa. China is also moving along with free trade agreements, most recently with South Korea and Australia. The biggest one being negotiated right now, RCEP, is set for completion – should all parties agree – before the end of this decade (at most).

These bring challenges to United States, no doubt. Having recently recovered from 2008 financial crisis and hampered by the ongoing bipartisan politics in numerous policy agendas, it is undeniable, therefore, that the world will question if America will still remain relevant as the world’s global power in the decades to come. I dare not answer that question; it has to, to be honest, require a few upcoming presidents, all with sound, carefully planned, and long-term power projection ambitions, while at the same time bridging the bipartisan conflicts of interest. This will not be easy, for sure. Everyone knows how many innumerable difficulties President Barack Obama has encountered in ensuring his proposals pass the Congress. Most recently, the almost-casualty was the Trade Promotion Authority (TPA), a fast-track, no-Congress-amendment negotiating power critically needed to pass Trans-Pacific Partnership (TPP), the largest proposed free trade agreement in history. Already an elephant in the room, President Obama only began to aggressively promote and pitch the TPP in 2014 – all despite the fact that United States expressed its interest as early as 2008, and it was poorly-timed as ruptures between Obama and his own allies, Democratic Party, were increasingly deteriorating. It was only through a pragmatic, ironic compromise when Obama decided to gain ‘alliances’ with the Republicans that the fast-track authority was eventually signed into law by end of June 2015, giving him unprecedented negotiating powers with the rest of the trading partners.

Who are in the trade agendas?

Remember, RCEP is not firstly proposed by China. But because China is the largest economic power among all the negotiating parties, there exists perceptions that RCEP is solely a ‘Sino-centric’ initiative. Wrong. Known as Regional Comprehensive Economic Partnership, it is currently a negotiated, integration-based free trade agreement between 10 ASEAN member-states (Indonesia, Malaysia, Singapore, Thailand, Philippines, Brunei, Cambodia, Laos, Vietnam, Myanmar) and 6 Asia-Pacific countries by which ASEAN already conducts free trade with in the last few years, notably China, Japan, South Korea, India, Australia, and New Zealand. All combined, the trade agreement comprises nearly 30% of the world’s GDP (approximately 22.5 trillion US$). The primary goal of RCEP is to integrate the existing ASEAN FTAs with the neighboring countries into a single platform. There is a disparity among the countries, of course: Myanmar’s GDP per capita is less than 900 US$, while the levels in Singapore and Australia alone are more than 60-fold larger. Some countries like Cambodia and India also have not developed strong industrial bases, especially in manufacturing, if compared to major powerhouses like Japan and South Korea. That is why the negotiating parties are willing to be more pragmatic in enforcing the trade rules, in particular ensuring that a certain degree of protectionism can be applied to protect sensitive industries, particularly state-owned enterprises (SOEs), the still-dominant driving economic forces in countries like China and Indonesia.

On the other hand, TPP (Trans-Pacific Partnership) brings in a fewer number of countries compared to the former. Firstly negotiated by Brunei, Chile, Singapore, and New Zealand in 2005, US only entered the negotiation phase near the end of presidency of George W. Bush in 2008. Since Obama’s term, the United States has increasingly played a more pivotal role in ensuring the passage of the agreement. Unlike RCEP, it is a rules-based agreement which, repeatedly touted by Obama administration, attempts to ‘enforce 21st-century gold standards in global economy and redefine international trade’. Currently, the agreement consists of United States, Canada, Mexico, Peru, Chile, Japan, Malaysia, Singapore, Brunei, Vietnam, Australia, and New Zealand, all the while encompassing 40% of the world’s GDP (approximately 30 trillion US$). Other than TPP, there are also two other trade agendas that are currently being negotiated and proposed: a proposed massive trade agreement with European Union named as TTIP (Transatlantic Trade and Investment Partnership), containing a larger 50% of the world’s GDP (almost 40 trillion US$), and the lesser-known TISA (Trade-in-Services Agreement), which will bring in 50 countries controlling 70% of the world’s GDP, enforcing a near-complete trade liberalization in service industries.

 

tpp new york times

 

Source: The New York Times

 

The idea of TPP is nothing short of controversies, of course. American service industries, and to some extent, also Singaporean, Japanese, and New Zealand will definitely reap the benefits, but median income wages for US manufacturing workers will slightly decline. This is obvious, because the ‘compulsory rules’ in liberalization will force companies to shift production to destinations offering lower labor costs, such as Malaysia, Peru, or Vietnam. Agriculture also remains hotly debated as US and Japan are yet to reach any consensus about the privatization and end of subsidies for Japanese agriculture, while American automakers steadfastly demand any protection measures from competition with Japanese car giants. President Obama also promises that the TPP will enable strict enforcement of labor and environmental protection, but how strict will the rules be enforced remains an unresolved question (most of the drafts are not even released to public). This is particularly concerning given the red-flag reports about labor conditions in Malaysia, Vietnam, as well as in Mexico and Peru. Pharmaceutical prices are also a huge concern, as the Big Pharma insists on intellectual copyrights for the new drugs, therefore posing an obstruction to the creation of generic drugs in developing countries. The impact on state-owned enterprises, particularly in Malaysia, Singapore, and Vietnam, will be mostly detrimental as well, as the firms will be forced to compete, on equal playing terms, with multinational businesses, especially those from US and Japan themselves. Currency manipulation, never regulated in IMF but proposed to be a punishment-imposing mechanism in TPP, makes both Japan and Malaysia afraid.

Nonetheless, as the Trade Promotion Authority (TPA) was eventually signed into law on late June, there is increasing possibility that the TPP will come into force by either the end of 2015 or the beginning of 2016. Even the passage of TPA is not by itself an absolute guarantee the TPP will be passed as well; the House Democrats will continue their ‘rebellion’ in upcoming votes (and there will be a presidential election next year). Still, the completion of this world’s largest free trade agreement, no matter how imperfect it is, will solidify Obama’s presidential legacy before he leaves the office.

Cold trade wars?

There is already much speculation if China and US are involved in some sorts of zero-sum game with the emergence of their TPP and RCEP trade agenda. If one looks at the fact that US does not participate in RCEP, and that China is not in TPP, one will simply take the easiest conclusion that there remains an ongoing ‘winner-takes-all’ mentality in the aspect of the two countries’ relationship. Again, this is a matter of perception; such worldview is not necessarily correct, but neither it is wrong, too. There exists, indisputably, a ‘race’ for more international influence from both countries, especially in their economic relationships.

But one does not simply go into a single corner to understand the full picture: China has not fulfilled all the ‘gold standards’ required by US in TPP negotiations, and US does not even have an existing free trade agreement with ASEAN. It is true that only in the recent years that China has gradually attempted to embrace economic reforms in lieu of its slowing-down growth rate, but Rome is not built in a day. The state-owned enterprises, loathed as they are for the inefficiencies, remain the major driving force of Chinese economy, and simply letting them compete with global firms will be analogous to learning to swim in a pond when one does not yet learn to swim in a pool. US participating in RCEP will bring more disadvantages just because US has not yet proposed any FTA with ASEAN member-states (except Singapore), due to the trade diversion effects potentially taking place upon the implementation. And, we all know, American government will not (almost for certain) ‘compromise’ with their high, ‘gold’ standards, largely insisting on the rules instead of the integration.

Major compromise: let it be

In the current format, the only best thing that can be done so far is to let the TPP and RCEP negotiations go separately as usual. None of them has entered into force, realizing that there are just too many issues all the negotiating, concerned countries will have to talk about. Still, sooner or later, even if these agendas eventually fail, trade will still take place as usual among the countries, but just on a wholly different level of integration, and in a way that would be rather chaotic and difficult to integrate. Nonetheless, both China and US realize that these are not simply the fixed-ending initiatives; they are simply the first step to a mega-regional economic integration in the future. TPP will not be limited to 12 countries only, as RCEP is not simply for 16 countries. China has resurrected again the FTAAP (Free Trade Area of the Asia Pacific) proposal in APEC 2014 Summit in Beijing. Once an American idea in bringing ‘harmonious’ integration among Asia-Pacific economies, the agenda failed in the early 21st century, given the perceived protectionism imposed by many of the countries at that time. That still exists, of course, to some extent, but given the increasing global economic integration brought about by globalization and disruptive technologies, one can no longer turn back the tide of time. United States can still play a major leadership role in Asia vis-a-vis China, only if the country is willing to let the latter integrate into the global stage. Still, to remain relevant in the world’s largest and most populous continent in a few decades to come, US should ensure that it can play an active economic role in more Asian countries, particularly in formulating a future US-ASEAN FTA. What I see is that US will only begin negotiating for such free trade agreement, if and only if ASEAN member-states can improve their trade regulations upon the adoption of RCEP in a few years. China, and other Asian countries, can also begin negotiating for upgraded versions of TPP, if and only if they can reform their economic structures, and ensure that the state-owned enterprises become more competitive, and more willing to improve their productivity rates. Only through hard compromises, can the TPP and RCEP eventually lead into FTAAP itself, which, I foresee, will take either one, or two decades, or even longer.

I’ve told you, it won’t be an easy, and nice, process. But still, an eventual integration is still minutely possible.