Let's Reason

These past four years of the blog’s life I have kept away from writing about abortion.  It is a sensitive and highly controversial issue fraught with nuances that one can easily miss.  If I finally have decided to tackle this topic is only because I am stunned by how polarizing it has become and how easily opinions have frozen around extreme polar points with little appetite for some reasoned compromise.

First, it is important to understand that the abortion issue fought right now in America is not about morality.  It is about rights.  That does not mean abortion is not a moral choice.  Of course, it is.  But what is debated in the courts and in the streets right now is whether the right to abortion is preserved, as codified in Roe v. Wade, or it is repealed, as the leaked preliminary opinion of the Supreme Court seems to signal.

The right to abortion does not impose abortion on a pregnant woman against her will.  It simply gives women permission to exercise this option.  To support the right to abortion does not mean one morally condones abortion.  It only means one does not wish to impose his/her moral code on everybody.  On the other hand, to be against the right to abortion means that one wishes to prohibit abortion for all regardless of their moral code.  So, it seems to me the burden of convincing society why a moral objection to abortion must also become a legal prohibition against it lies with the side of those who are against the right to abortion.  Nonetheless, the pro-abortion camp is also compelled to make a case as to why the right to abortion does not cross at some point a universal moral objection to it. 

The sad reality about the fight around abortion in the US is that moral beliefs and political calculations are conmingled so that cognitive and moral dissonance muddy the waters.  That’s why we have to address both when we raise questions about abortion.

When does life begin?  The most potent anti-abortion argument is that abortion means the termination of life and as such is criminal.  But do we agree when human life begins?  Some say it begins at conception.  There is no guarantee though that a fertilized egg will result in actual life.  There are miscarriages, still births and infant deaths shortly after birth.  It seems that abortion does not terminate life with the certainty a murder terminates an actual life.  What about life starting when heart beat is detected?  Some though would argue that life starts later when the brain stem is formed by the end of the second trimester.  And the brain stem is the organ that regulates heart-beat.  So, what’s the real beginning of human life?

Is objection to abortion truly about protecting life?  Can a society legislate both, against abortion and for the death penalty?  The argument that the fetus is innocent and the death penalty befalls guilty persons is not a good one.  Don’t we have cases of innocent people who were falsely put to death only to be proven innocent afterwards?  The same question applies to abortion and gun controls.  How many innocent children and by-standers have been killed as a result of loose controls on gun ownership?  Moral consistency and integrity require that society’s respect and protection of life includes all life.

Should women’s right to control their lives be respected?  The anti-abortion view tends to ignore the impact of abortion prohibition on the welfare and freedom of women.  But then, how do we reconcile adherence to an anti-abortion stand and opposition to restrictions to protect life from the Covid-19 pandemic?  An often-used argument against such restrictions has been that they would impose unreasonable constraints on people’s liberties and personal lives.  If we are prepared to accept deaths due to the pandemic in the name of people’s liberties, can we do the opposite when it comes to women’s liberties and welfare?

Should we only value the biological life of the fetus or should we also value the actual life of newborns?   Our biological existence is only part of our whole life.  There is also the other part that is defined by the dignity and love we are given by parents and society.  Can a society oppose abortion and yet be indifferent to providing decent foster care services, or child care and support to under-privileged mothers?  Shouldn’t we support policies that show how truly welcoming society is to newborn babies?  

Is the argument against abortion inviolable even in cases of rape and incest?  Can we let anti-abortion beliefs deprive women of their dignity and instead impose on them the suffering of having to bear the fruit of violence and humiliation?  Do we wish to return to theocratic and misogynistic oppression against half of our species?  To the extent that rape and incest are motivated by a man’s desire to control the reproductive power of the female, doesn’t prohibition of abortion in cases of rape and incest reward evil and perversion? 

Should we be indifferent to the abortion of viable human life?   Can pro-abortion rights people walk away from the fact that the fetus reaches viability by 22 weeks so that what is aborted after that is pretty much a human being?  The argument that just over one percent of abortions take place after 21 weeks (The Guttmacher Institute) is not good at all.  Any termination of viable life (except for reasons of fetus deformities or risk to the mother’s life) is nearly impossible to defend.

Why don’t we aim at reducing unwanted pregnancies and, hence, abortions?  The evidence shows that abortions have declined in the US over the past few decades.  The global data show that unintended pregnancies fall as income and education levels rise.  More importantly, the rates of abortion are not lower for countries with more restrictions to abortion.   Actually, abortions have increased in countries with more restrictions and especially in those where contraceptives are less available.  Therefore, by raising educational levels, improving family incomes, and availing women to contraceptives we could lower abortions more effectively than by imposing extreme restrictions and punishment.   

As Americans we must ask why we have been so incapable or unwilling to debate the issue of abortion without making it a flash point for political wars.  European countries have managed to settle the abortion issue with much less rancor and polarization.  Europeans have achieved that by allowing abortions up to 12 to 18 weeks (below the point of viability in Roe v. Wade) and later abortions only for serious reasons related to the health of the fetus or the mother.  Are the people of Europe morally bankrupt when they allow abortions with limits?  Are the people of Europe indifferent to women when they set limits below the viability point? 

Or is it, really, our intolerance to the arguments of our opponents that prevents us to compromise in light of the many legitimate and extremely difficult questions surrounding abortion, questions we are unlikely to settle with moral or legal clarity? 

Very wealthy people do things the rest of us may not exactly understand or be able to handle.  They buy huge yachts though they may know nothing about sailing.  They buy huge mansions that could house several families.  They have multiple homes though they stay very little in most of them.  They build their own rockets to launch themselves and other rich people into space, when they should all go instead into poor neighborhoods to learn more about the human condition.

I especially admire their ability to come up with ideas how to spend their money.  I am really bad in that respect.  I keep asking myself “What else do you need? Come on you, lazy brain.  Come up with something. Anything!”  But nothing.  So, I have resigned to the conclusion that not everybody is made to be a very wealthy person.

Elon Musk is one of those, not just very, but extremely wealthy persons.  He achieved this by establishing the electric car as a viable alternative to fossil-fuel burning cars.  That has social value.  It has also made him fabulously wealthy.  And being in that rarefied class of humans, he is now starting to do things that make the rest of us scratch our heads.  Like his offer (successful as it now sounds) to buy Twitter at a cool $44 billion price.  The questions abound: “is this a reasonable price?”  “Does he know how to recoup his investment?” “Will he run Twitter responsibly or will he let it turn into a megaphone of misinformation?”

I have some observations and questions of my own that I like to share here.  If they have appeared elsewhere, I apologize for being redundant.

Let’s start with what Mr. Musk’s offer to buy Twitter means from the standpoint of financial behavior, investing in particular.  Financial economics assumes that investors are rational value maximizers.  This means an investor invests his money on projects that promise to maximize his payoffs net of any costs, including the original capital invested.  The reason we apply value (or more generally speaking wealth) maximization as a criterion of capital investment is because we assume that people have a positive utility of money.  That is, no matter how little it is, you feel some satisfaction from an extra buck.  Elon Musk does not wish to be this kind of investor.  “I don’t care about the economics at all” he declared referring to his offer of $44 billion.  Are we then to conclude that wealth maximization ceases to be relevant when one’s wealth exceeds some very large amount of money?  (Musk’s wealth is estimated at well over $200 billion.)

Now, wealth maximization is nothing like a law of nature.  Behavioral economics shows that people often violate this principle.  We also know that CEOs buy other established firms for the satisfaction of corporate empire building.  Or because of hubris, that is, an overconfidence about the expected payoffs of a new acquisition.  Ultra-rich investors may also engage in acquisitions because beyond a very high level of wealth the marginal utility of money is so tiny that it is easily overtaken by other behavioral factors.  Even if Elon Musk were to lose all $44 billion, he would still be an extremely rich person.  So why should his spending/investing behavior be constrained by the criterion of wealth maximization?

Which brings us to a very implication.  If capital investments are not driven by value creation but rather by other motives, what happens then to responsible and accountable use of scarce resources?  The theoretical basis for value maximization is that value originates from the efficient utilization of resources (tangible and human capital), which means we seek maximum output for minimal use of input.  Investments that fail this criterion become less valuable in the market for capital (e.g., stock and bond markets) and drive the enterprise out of existence, thus terminating the waste of resources.  In this paradigm, individual investors and financial institutions are the gatekeepers of capital to ensure its productive use.

However, If I am a very wealthy person, I can finance a project for a long time using wealth from other sources with disregard to the efficiency criterion.  It is well-known in finance that commingling the payoffs of different projects can procrastinate the destruction of value caused by inferior projects.  And if I run my business as my private concern, I can escape accountability to a board of directors.  Thus, indifference to economic losses and private ownership place investments beyond the disciplinary power of gatekeepers, like directors or investors at large. 

This may very well be happening in this takeover of Twitter.  Mr. Musk has said he plans to unlock Twitter’s (monetary) value, that is, create additional value but has offered no business plan to this effect.  And yet venerable financial institutions like Goldman Sachs, J P Morgan Chase, Citigroup, Bank of America and BNP Paribas, have lined up to provide funding. 

We may have various other reasons why we must be skeptical about extreme wealth, but the breakdown of financial responsibility in the use of economic resources must give serious pause to financial economists about the validity of value maximization and its alleged social value under states of great wealth.  It should also give pause to the rest of us if we are concerned with the best utilization of our scarce resources.

And now two questions of political nature.  By adding Twitter to his portfolio, Mr. Musk does not violate any anti-trust laws.  But he adds to his economic and by extension political influence.  The same is true of other super-rich people like Bezos, Zuckerberg, and Gates.  We need to distinguish between being rich through passive investments that endow no control over the operations of firms and active investments that do.  Being rich is one thing.  Personal control of major firms in important sectors of the economy is another. And it should concern us greatly.

Finally, what about the concern that under Elon Musk’s control Twitter will become a free-for-all platform with little regard to whether it harbors misinformation and hateful or fearmongering messages that undermine democratic institutions and public trust?  To that concern I respond by asking, why didn’t we then see a coalition of democratic and public-good minded interests to come forward and counter-bid for Twitter?  The money is certainly there.  Why don’t they put it where their mouths are?

Elon Musk may be viewed as an egregiously outspoken and maverick tycoon.  But his latest foray into social media forces us to consider serious questions about market-driven economics as well as political influence and liberal politics. 

It is not an exaggeration to say that today we have a crisis in the exercise of freedom.  Not that freedom was never before in crisis.  It is only now, however, that technology and mass communication tools have expanded the voices and the audiences on the subject of freedom as it is understood by the individual and not just the traditional gatekeepers of freedoms.  That means the exercise of freedom is influenced by a multitude (some would say a cacophony) of voices.

The crisis of freedom is most salient in democratic societies because it is there where freedom can be debated widely and with least encumbrance.   We have seen how contentiously democratic societies have responded to the containment of our freedoms in order to defend against the pandemic.  In this post, I will not talk about freedoms in democracies versus autocracies.  I will rather talk about some generic freedoms that we do not hear or talk about as much as their importance suggests.  And yet, I believe they are critical and can help us understand part of our modern discontent.

The freedoms I have in mind are those D. Graeber and D. Wengrow call primordial freedoms in their book The Dawn of Everything: A New History of Humanity which I have referenced in a past blogpost.  They are: the freedom to move; the freedom to disobey; and the freedom to reorganize social relations.  The important message of the book is that in the course of human history, there have been times that human communities were able to organize themselves in ways that made enjoyment of these freedoms possible to a greater degree than it is possible to us. 

Freedom to move means that if and when we feel our freedoms to be threatened, we vote with our feet and move away.  That’s what humans used to do for millennia.  That’s what Europeans did when they sailed to the New World to escape persecution in their native lands.  That’s what migrants from war-torn and oppressive countries do today as they gather outside the borders of America and Europe.  Actually, the freedom to move was widely exercised until the emergence of states and national borders some 400 years ago.  The strict immigration and naturalization laws we now see around the globe are even a more recent phenomenon of the last century and have further hemmed in our freedom to move.  And with the earth’s ecology and climate being damaged by our modern way of life, our freedom to escape natural degradation becomes more elusive by the day.  On the other hand, modern technology has allowed millions of workers to decouple their employment from their domicile thus giving them the freedom to live in communities more suitable to their preferred life style and values.

Freedom to disobey is not the same as freedom of expression or peaceful protest.  It is the freedom Antigone claimed when she gave her brother a proper burial against the commands of her King and for which she sacrificed her life.  We now live in states that exercise sovereignty over a broader range of individual initiatives than ever before.  Bureaucracies are the handmaids of state power spinning out proscriptions and prescriptions of how to live our daily lives.  They draw legitimacy from the complexity of modern life.  They purport to assist us in navigating a myriad of actions fraught with risks and unwelcome consequences that bureaucrats (i.e., the class of experts) wish to protect us from.  But inherent in their power is the temptation to cross the line that separates them from encroaching our freedoms.  How much respect and credibility state bureaucracies have with the public determines whether the arm of the state is seen as an enabler or a usurper of freedoms.  In many countries, the policies to fight the covid pandemic were deemed by many people as overbearing and we saw wide-spread civil disobedience.  As life becomes more complex, thus, fueling greater regulation of people’s lives, how we defend the freedom to disobey against the power of the state will increasingly test our understanding and exercise of freedom. 

Freedom to reorganize social relations is I believe the ultimate and most precious freedom, one that has suffered the most as we have ossified and been brainwashed into patterns believed to be immutable.  At the end of the cold war, Francis Fukuyama proclaimed the End of History, meaning liberal democracy had proven its mantle and there was no other path forward for the humankind.  The present state of the world is anything but the triumph of liberal democracy.  What history teaches and the Dawn of Everything makes abundantly clear is that human history is not linear so that we can extrapolate its future state from our present experience.  Even more important is the fact that humans have tried a variety of social organizations with public welfare results that compare very well to those offered by the modern agricultural-industrial states.  Therefore, the historical experience of humankind is such as to suggest there are always alternative paths that can lay a claim on its future.

We have reached a point of collective awareness about the big challenges we face as a species.  We have been given many warning signs as to what the perils are if we continue down the same road.  Climate change, threat of pandemics, overpopulation, and technological innovations with unmitigated unintended consequences will test our freedoms.  And yet we seem to make little progress in standing up to the call of our times. 

Regrettably this failure is not only one we can attach to authoritarian states.  Liberal democracies around the world have also been captured and used by the winners not only for political influence but worse to control the information and knowledge that a responsible debate demands.

If there is any kind of freedom a liberal democracy ought to preserve is our capacity to re-imagine our future and shape it to serve the common good and our inescapably shared destiny.   

Think what happens when we decide to invite others to go out to the movies or dinner.  With how many of them do we have similar tastes of cuisins or movies?  So, how many should we invite?  We make these calculations because we wish to avoid frictions and disagreements.  Sometimes the potential difference of opinion may be such that we prefer to cancel the whole outing.  In these and other similar cases, we are faced with the problem of scaling up.

Anthropologists have found that the scaling up problem applies to the formation of larger communities of people as they attempt to expand from clans to tribes and beyond reaching all the way to state formation.  It was found, for example, that indigenous communities in New Guinea had difficulty holding together more than 300 people.  Going beyond that size, discord and intragroup frictions ended up with the break-up of the community.

But then they found one indigenous community, the Ilahita, which numbered over 2,500 people.  So, how had the Ilahita succeeded scaling up beyond the typical size?  The answer was two, let’s call them, social innovations.  One was the performance of rituals that brought the whole community together, thus fostering a spirit of common experiences.  The other was the adoption of common Gods that demanded certain code of behavior by all members.  Solidarity and cooperation were further built across the community by bringing members of different clans together in preparing rites and carrying out common projects for the community. 

Another way to promote intragroup harmony is to differentiate ourselves from another community.  We can do this by adopting cultural and other customs very different from those of the neighbors.  Once such red lines are set, then intergroup competition – the familiar Us versus Them – strengthens the cohesion of a community. 

These findings have implications for our times.  What if present-day states are experiencing scaling up challenges, they are ill-equipped to navigate?  History shows that large conglomerations of different tribes, ethnic or religious groups have been kept together by the power of the state (the Roman, the Ottoman and the British Empires are some example).  The motto of the French monarchy, one king, one law, one faith, perhaps best exemplifies the top-down imposition of one overarching force to keep the state’s subjects together by suppressing individual differences.  But what if we try to scale up on the basis of free choice?  What if we have a menu with something for everyone and we are fine with it?  That is, what is the power of democratic rule to overcome the challenge of scaling up? Can we still all agree to go out to dinner without tearing up our friendship?

A relatively modern approach to scaling up is the appeal to some universal human rights.  This is what the American Declaration of Independence and the Declaration of the Rights of Man and of the Citizen of the French Revolution aimed for.  The United Nations has also adopted a declaration of human rights as a way to build tolerance across people around the globe regardless of race, gender, ethnicity, nationalism and religion.  As we see, though, this approach is not working well at the national or international level.

Let’s stay closer to home and talk about the American experiment.  When we hear that the American Republic is an ongoing project working toward a more perfect union, this is an admission of our difficulty in overcoming the challenge of scaling up.  From its beginning, the American project faced two challenges.  One was the religious diversity of its people.  The constitutional separation of church and state was a way to prevent antagonisms across creeds that would spill into politics.  After the Protestants’ acceptance of American Catholics and Jews, the Judeo-Christian tradition was coined as a unifying national motto.  We no longer hear much of it today though.  One reason is that it does not include other Americans, like Muslims, Hindus, and the non-religiously affiliated.  The other more important reason is that the politicization of Evangelical and other conservative religious groups has tarnished the brand of the motto and has rendered it unappealing to many Americans, especial younger ones.

The other challenge for America was how to scale up by admitting into its citizenry Black Americans.  More than 150 years after the Civil War, racial equality and harmony are still an unfinished project.  Immigrants present the same challenge.  Not every American agrees to scaling up by admitting immigrants into the fold.

The problem with scaling up does not start and end with just how many people of different races, ethnicities, religions and so on a state encompasses within its jurisdiction at some point of time.  The scaling up challenge can also come from within a society because of the evolving nature of cultural and moral norms and personal choices.  Awareness about the rights of women, the rights of people regardless of sexual and gender orientation, as well as changing views toward secular and religious freedoms, to mention a few, can open up fissures in social cohesion and jeopardize the scaling up project.

In the background of these challenges, there lies a reality of American life that is the opposite of what the Ilahita used as their social glue.  While they brought different clans into common projects of cooperation, American life has drifted toward segregation, not only along the old racial lines, but also along class lines.  Living parallel and rarely intersected lives – that is, meaningfully intersected lives – we miss the opportunity to understand the human condition of our fellow citizens.  With little appreciation of other people’s problems and values we gather into silos of narrow interests and identity politics.

The scaling up problem is not uniquely American.  It is the problem of societies that wish to become more inclusive without abandoning though the principle of democratic consent.  Is there an iron law of social evolution that says we cannot scale up as much as we wish?  Or is it just another challenge which is within our capacity to overcome?

The signs that liberal democracy is ailing are too many to miss.  We see them here in the U.S.  We also find them in international surveys.  Organizations like The Freedom House, the Economist Intelligence, and V-Dem have documented a decline in democratic norms and a rising discontent with how democracy works. 

In its 2020 survey in 34 democratic countries the Pew Research Center found that 52% of the people asked expressed dissatisfaction with how democracy worked in their countries.  This percentage was 59% in the U.S., 69% in the U.K., and 58% in France.  Across the sample, the dissatisfaction mostly stemmed from the perception that elected officials are disconnected from the people’s concerns.  Now dissatisfaction with how democracy works does not mean rejection altogether.  The percentages of dissatisfaction do not seem to correspond to the perceived quality of democracy in the various countries.  It is often the case that citizens in more democratic countries are actually more critical of their democratic institutions. 

What is more worrisome, however, are the trends toward more or less democracy across the globe.  The Freedom House and IDEA (International Institute for Democracy and Electoral Assistance) found that in 2020-21 more countries moved in an authoritarian direction than a democratic direction.  The Freedom House has found that democratic standards have declined for 16 years in a row.  And backsliding toward less democratic rule has occurred even in well-established democracies.  Some of this can be attributed to public health policies to contain the Covid pandemic, but the dissatisfaction with democracy goes beyond that.

The receding satisfaction with democracy among citizens of democratic countries along with the economic successes of the Chinese one-party politico-economic model and the forceful way Russia is challenging Western values have heightened the anxiety about the future of liberal democracy.  Liberal democracy is in competition with one-party capitalism and autocratic governments and the question seems to be which system is or will be perceived as the best in delivering results for the people.  From a geopolitical standpoint, the concern is whether countries will coalesce around different governing models which will then choose to compete – not necessarily by peaceful means – for influence and economic resources.

To have a thoughtful debate about liberal democracy, it is important, I believe for us in the Western world to realize that liberal democracy in the modern era is mostly a western phenomenon and our anxiety about its state and future may not be shared equally by the rest of the world.  In the West, liberal democracy grew gradually over several centuries to serve religious, political and economic freedoms.  The Reformation gave a first opening to religious freedom by rejecting the centralized authority of the Church of Rome.  The Enlightenment period philosophers promoted freedom from unaccountable state (monarchical) authority.  And the market economy was the way to establish economic freedom. 

These developments made the individual a central agent in the practice and allocation of power, and inevitably it fostered a highly individualistic attitude and approach as a way of life.  The rest of the world, however, developed out of other historical experiences and human needs.  Contrary to our celebrated individualism it is the socio-centric principle that is celebrated in many parts of the world outside the West.  Therefore, the practice of democracy may be understood differently or influenced by other underlying cultural conditions in the rest of the world.  The Western sense of cultural superiority has often led Westerners to overestimate the universality of their values and, thus, to be often disappointed when other nations do not fully adopt them.   

We also need to recognize that although the West gave rise to liberal democracy, it is also the one that gave the world fascism and communism that stood opposite to democracy.  That means, liberal democracy has not been a constant organizing principle in the West.  Liberal democracy, therefore, has waxed and waned even in its Western cradle.  Today, we face again an ebbing of popular confidence in the efficiency of democratic states to address human needs, fears and aspirations.  Questions about economic security and cultural and national identity have acquired such critical importance within wide swaths of the citizens of democratic countries that now they threaten to undermine their democratic systems. 

I think that in order to understand the changing fortunes of democratic governance we need to identify its foundational principles.  The first is tolerance toward other peoples’ ideas, beliefs, and ways of life.  The other is acceptance that we are all members of one species, which means we refuse to be racists or xenophobic.  And the third is that we trust that the passing of governing power through elections does not forestall our return to power.  These are sentiments that do not remain constant over time.  They change and they are challenged.  And as they change and are challenged our faith to liberal democracy is tested by our capacity to accept others, tolerate new beliefs and ways of life, and have trust to the rules of political process.

Today a good number of Western democracies are been confronted with issues that test our tolerance and trust to each other.  The economic freedom promised by the model of market economy is seen to reward more the accumulation of wealth than being concerned with the basic needs of the everyday citizen.  Our tolerance regarding racial issues and matters of personal choice is challenged by differences of opinion about secular and religious freedoms.   And under the weight of immigration and economic globalization, our attitudes toward foreign people and nations have grown more ethno-centric.

Institutions like democracy and market economy are not ends in themselves.  They are instruments toward solving needs and it is as such they are judged by people.  What the rest of the world sees now is that Western democracies find it difficult to deal with the changes and challenges of our times.  No wonder then they start to question the value of democratic governance. 

I would conclude then that the responsibility to restore the appeal of democracy, especially in its liberal form, belongs to the West.

In her book about the history of capitalism, professor Joyce Appleby asks whether “the universal benefits of global access to goods and information will triumph over protective impulses.”  At the time her book was published (2011), this question sounded more speculative than as a reflection of reality.  Eleven years later, things have changed so dramatically in the global stage that questioning the sustainability of economic globalization is no longer a theoretical matter.

I see three developments that have pushed globalization to the corner.  The first was the rise of economic nationalism in the U.S. and other western countries.  The second, is the global aspirations of China.  And the third is the Russian war on Ukraine this year. 

In modern times, we have witnessed ebbs and flows of economic globalization.  In the 19^th century, a wave of globalization prospered during the Victorian era under the aegis of Pax Britannia and lasted until the break out of World War I in 1914.  This was followed by 30 years of protectionism and economic instability.  Then in 1944, the Bretton Woods agreements put the foundations of the post-war international economic order with the creation of institutions, like the World Bank, the International Monetary Fund (IMF), and the GATT (a precursor of the World Trade Organization).  Still though country by country differences in trade and investment restrictions as well as the abstention of the Soviet Block and China from this economic order made globalization spotty and terribly incomplete. 

Then in the 1980s, a wave of deregulation and liberalization across the globe as well as the introduction of the market economy in China and the countries that emerged from the break-up of the Soviet Block ushered an unprecedented growth of transnational commerce and business. 

These periods of economic globalization share a common condition.  Namely, the presence of a world power that maintains freedom of movement, enforces a framework of resolving economic disputes, and has a strong currency to serve as the international means of payment.  This role, however, requires domestic political and economic strength and stability.  And this is where we find the weak point of the global economic order.  That was the case with Great Britain, which, exhausted from two world wars, had to relinquish its global leadership to the US.  So, we have to ask what staying power the U.S. now has to continue in this role.

J. M. Keynes had recognized that domestic instability is the main threat to international stability; and, furthermore, that unemployment and worker discontent breed populism and political instability.  Unfortunately, the architects of the latest global economic order failed to heed this lesson.  Instead, they placed more weight on the aggregate gains (e.g., GDP) from international trade than its effects on blue-collar workers and their communities.  Without a policy of blunting the blow of global competition through income support programs and retraining, workers were left to bear the brunt of globalization.  The main issue was not unemployment per se but the loss of reliable and well-paying jobs caused by de-industrialization due to the offshoring of U.S. jobs mostly to China. 

Their electoral revolt against the political establishment in D.C. came in the presidential election of 2016.   We saw the same political reaction in the Brexit vote and the Yellow Vest protests in France.  Now even the Biden administration has been forced to adopt a more cautious stand toward globalization despite the presence of many globalists in its ranks.

Even before the war in Ukraine, the growing antagonism toward China had led many policy makers within and outside the U.S. government to the conclusion that economic disputes and grievances could not be defended if the production and control of important goods and technologies were controlled by global rivals.  Semiconductors, 5G technologies, and Artificial Intelligence are some of the most important areas where U.S. dependence on foreign producers is deemed to pose a national risk.  The Russian invasion in Ukraine brought forth the same problem for the European countries which are heavily dependent on Russian energy.

Free markets work when buyers and sellers can uphold the free flow of goods and market dominance does not impose unfair burdens to others (as, for example, big tech firms, like Apple and Google, are often accused of doing).  The same principle holds in international markets.  Nonetheless, countries, like individual firms, have incentives to exploit their dominance in certain markets to further their national and economic interests.  Take, for example, the U.S. practice of using its currency to impose financial sanctions on rivals.  It is natural then for rival powers to look elsewhere for alternative payment systems.  Whether it is energy, technology, currency or the financial system, once countries lose their trust that access to these “goods” is unencumbered, they start to retrench from international commerce.

Another by-product of global distrust is the pursuit of national industrial policies in economic sectors different countries value as essential to their security.  The U.S., for example, has earmarked billions of dollars to support industries in sensitive tech fields.  The adoption of an industrial policy in a country where it was previously an anathema signifies the strength of the forces that are now working against economic globalization.

Finally, the uni-polar paradigm that had sustained long periods of economic globalization is now challenged, not only by China, but other countries as well, including Russia and India.  In a world in which countries vie for global influence, economic and technological advantages inevitably become the means toward attaining global aspirations.  None of that works in favor of economic globalization. 

In light of these developments, we have to ask:  Is economic globalization possible if the leading participants fail to maintain domestic economic and political stability?  Is economic globalization possible in a multi-polar world where national interests clash with the free flow of goods, information, and know-how?

In last week’s post, I wrote about big turns human history has taken over the millennia.  Not all turns are equal.  Some are monumental while others are insignificant.  Depending on our understanding of what was gained and lost compared to previous stages of human condition, some turns are judged to be wrong and others to be beneficial. 

Also, some turns have long-lasting effects and durations measured in centuries, even millennia.  Others just knock us off a trajectory for a while but they are not strong enough to jettison humans to an entirely different course.  Judged at the beginning, it’s not easy to tell whether new developments will be history-changing events or just temporary detours along the existing path.  So, it’s worth asking what kind of event the Ukrainian war is.

For starters, I have the sense that this war will create winners and losers that will see their ambitions and worldviews to be bolstered or dampened regardless of their disposition toward Russia and Ukraine.  Thus, there will be ironically unintended winners and losers on both sides of the conflict.  

Hawkish attitudes and re-armaments will be on the rise.   This war is waged by a nuclear superpower against a country in the immediate periphery of Western Europe.  It is natural that otherwise pro-peace politicians will see it prudent to bolster their countries’ national defenses.  Germany has already announced a significant change in its national stance in relation to its defense budget and more importantly toward foreign conflicts.  For those traditionally invested in hawkish worldviews, the Russian invasion is the perfect foil to exploit in order to advocate a more adversarial posturing against geopolitical rivals.  In the US, calls for a bigger defense budget have found their way into the federal budget proposed by the Biden administration for 2023.  It is a pity that after consuming the so-called post-Cold War peace dividend in the long wars in Afghanistan and Iraq, the U.S. will continue expanding its already huge military budget.  Whether out of prudence or geopolitical hawkishness, the worlds’ economies will bear a greater defense burden at the expense of other worthy causes.

Social support and quality of life programs will be set back.  When more fiscal resources go to guns less money goes to butter.   After the 2020 presidential elections, the U.S. found itself in a historically unique position to move toward a return to a progressive path.  However, in the fog and misinformation of politics, progressivism has recently gotten a bum rap.  Many, even Democrats, forget that from the start of the 20^th century until the 1960’s it was the progressive movement that gave Americans protection against poverty in retirement, financial swindles, consumer fraud, work-related hazards, ruinous sickness, environmental degradation, voting suppression, and racial, sexual and gender discrimination.  But in the latter part of the last century and the first two decades of this we have witnessed an alarming retrenchment of our socio-centric attitudes that have made us inured to the dire challenges we face like opioid and drug deaths, decay of the social fiber, stagnant wages, onerous student debt, child poverty, and declining health indicators.  All that now is in danger of being de-prioritized under the fear of international conflicts and uncertain peace, and the calls for rearmament.  Beyond the U.S., projects aiming at uplifting the less privileged parts of the world are likely to receive less attention and funding.

Pro-climate and environment initiatives will be put off.  The weaning away from fossil fuels requires an international order that allows countries, especially those heavily dependent on imports of oil and gas, to plan their transition to renewable energy sources.  The orderly transition is needed to both avoid abrupt rises of fuel costs that can trigger an economy-wide inflation and allow the energy-hungry sectors of the economy to function at normal levels.  With Europe mostly dependent on Russian energy, this approach to transition has been upended.  Energy price-induced inflation is on the rise triggering corporate and popular discontent as well as political discord in the West.  And given that military equipment still runs on fossil fuels, the power of the oil and gas industries will see a comeback.  Of course, an argument can be made that energy-importing countries will become averse to being dependent on energy suppliers that pose national security risks and will accelerate the switch to renewable energy.  Nonetheless, in times of conflict and national rivalries, the emotions of fear and risk aversion are more likely to favor more drilling than the use of sun and wind to produce energy.

International commerce and business will be reconsidered.  International commerce is driven by the opportunity for profit and the gains from specialization in what each country does best.  But very early it was also recognized that if nations forged close trading and business ties, they would have less reason to go to war.  This is what drove the U.S. and other western economies to expand their markets and production to China and the countries that emerged in the post-Soviet era.  However, the promise of transnational cooperation as a result of commerce vanishes when country specialization in essential goods as well as their trade are used as power proxies in national conflicts.  Europe now realizes that dependence on Russian energy can make it an unwilling hostage to Russia’s foreign policy ambitions.  The U.S. has also come to the conclusion that supply chains of essential goods that originate in China can become a matter of national security.  Like-wise, non-western powers are making the same calculations.  Once the suspicions about each party’s intentions harden, both the production and trade of goods starts to be repatriated and, thus, the bonds among countries wither away.

It took two extremely ruinous world wars in the 20^th century for the global community to realize that cooperation and peaceful resolution of conflicts ought to be the way forward.  Despite the lackluster performance of the U.N., international treaties on trade and the environment and other multilateral bodies, they have all served us better than anything of the kind in past periods.

So, will we let the war in Ukraine derail us from the project of building a more durable and cooperative international order?  Global cooperation is especially urgent now that the humankind faces the near existential dangers of climate and environmental disaster.  If we are wise enough to understand what is at stake, we should not allow the war in Ukraine to become anything but a short detour. 

Hesiod, the 8^th century Greek poet and mythology writer, tells us that the Gods created four different races of humans until they settled on ours, the fifth.  For those who see the world as a half-empty glass, the Gods stopped perhaps too soon.  They should have tried a few more races.

We are that last race of humans that has survived to this day.  Our close relatives and potential rivals for survival, the Neanderthals and Denisovans, are now just faint echoes in our DNA.  I am not sure whether we have a collective sense of our ultimate biological triumph, but we certainly have come to behave as the entitled species of all creation. 

The need to feel superior goes beyond comparing ourselves to other species; it also affects how parts of humankind view other parts and their ways of life or how new generations of humans look at the accomplishments of past generations.  Our need for superiority, however, fails us in both ways.

First, we fail to recognize the merits of other cultures and different ways of life.  An early example of this comes out of the stories of the first century BCE geographer Strabo, who wrote that he had difficulty understanding the ways of the Celts.   In the age of explorations, it was the Europeans who fell victims of cultural misunderstanding and hubris.  They were unable to appreciate the civilizations of the people they found in the New World.  By dismissing their culture and their social and political customs, they became indifferent to their demise.  The same thing happened when the first colonists arrived in North America.  But soon they were surprised to find that those “primitive” natives were sophisticated enough to outsmart the Europeans in logical thinking and debating skills.  Kandiaronk of the Wendat tribe is a legendary North-East American native who dazzled his European encounters with his brilliance, oratorical skills and keen political sense.

The second way we fail to develop a better self-awareness is to believe that our way of doing things represents a definite progress over older modes of life and, if in doubt, we do away with our skepticism by postulating that our ways came about as the result of an inevitable evolutionary historical process, which is the equivalent of saying “it is what it is.”

But evidence from archeology and anthropology shows that our modern ways are not the only possibilities nor the inexorable result of the march of history.  Instead, humanity has lived in different ways, some of them better than ours, and our reading of human history as a linear trajectory of constant progress is a false reading of history.  In reality, our human path is full of wrong turns which later generations have tried to correct with what we – quite subconsciously and ironically appropriately – call historical turning points.  Thus, many of these landmarks of progress instead of representing genuine innovations, they should be better understood as attempts to set humanity back to the right course.

According to our familiar narrative of historical evolution, things developed along the following path:  emergence of agriculture led to formation of cities which led to the creation of dynastic and centralized power centers with aristocracies and elites which led to using religion to legitimize authority, enforce moral and legal order, and create cohesion; and as a result of all that we had the emergence of social classes and inequality.

But, as said above, this course of human experience is not the only one we see in the historical record.  Across the globe, from the Americas to Europe to the Middle East, India and China, there were societies living in city-like arrangements who managed their administration and food production without resorting to centralized command and organization.  These societies organized themselves through people’s assemblies, were ruled with considerable degree of consensus, and in many cases had and applied an egalitarian ethos.*

Viewed from the perspective of these societies, the development of dynastic and centralized power, secular and religious elites, social classes, inequality, and recurring warfare represent wrong turns that moved humanity away from ways of life that had none or very little of these maladies.

Contrariwise, from our standpoint of the conventional reading of history and under the notion that humanity was never anything better, we interpret our breakthroughs as entirely new innovations in human history.  Thus, to us, the birth of democracy in Greece is an innovation against dynastic power.  The Enlightenment is the rebellion of reason against dogmatic thinking and superstition.   Socialism and progressivism are political movements against extreme inequality and social injustice.   The development of environmental and climate awareness is our intellectual achievement, though coming after centuries of human-inflicted ecological damage.  What we miss is that a lot of what we call progress has been experienced by humans before us.    

The benefit of a fresh understanding of the history of humankind in its entirety is to realize that our modern world is not the only possible one.  That our ancestors were sophisticated enough to organize societies that avoided some of the shortfalls of our own world.  Though not exactly Gardens of Eden, these pre-modern societies show us we are not locked in some sort of a black hole of human condition out of which we can not escape if we choose to.

Thus, the most exciting way to imagine the future may not be what new corners of our present world and life we will discover.  The most exciting and hopeful vision of the future may instead be what different but better worlds our creativity can take us to if we have the wisdom to avoid wrong turns. 

*  The story of Kandiaronk and how pre-modern societies lived come from The Dawn of Everything: A New History of Humanity of David Graeber and David Wengrow.

Much has been written to explain the Russian war against Ukraine.  As I have mentioned in this blog, most of the explanations or justifications revolve around the geopolitical antagonism of Russia and the West, and especially the U.S.  Geopolitics enters the picture when the equilibrium of power between rivals is disturbed and creates a fear of being overrun in the calculations of the slipping rival. 

The upset of the equilibrium can be caused by the faster economic or military advancement of one of the rivals or changes in the world order that offer spillover advantages to one of the rivals.  That’s why, geopolitical powers, in general, favor the proliferation of states that opt for a similar social, economic and political order.  That was the case of oligarchic Sparta and democratic Athens that I wrote about in a recent post.

The balance among rivals can be also upset by the relative economic decline of one of the rivals.  Sustained and prolonged deterioration of the economy degrades a state’s domestic prosperity and social tranquility and most importantly the means to keep its military parity with a rival.  Economic failure was one of the suggested causes of the collapse of the Soviet Union in the late 1980s.  In their book “Balance: The Economics of Great Powers” Glenn Hubbard and Tim Kane make a very strong case for the importance of fiscal strength as they look at the decline of several superpowers from ancient Rome to Great Britain.

So, it is interesting to ask whether any of the factors that may disturb the equilibrium of power appears to have played a role in explaining Russia’s invasion of Ukraine.  That is, if geopolitics has been used in this debate so much, let’s take a closer look at it.  So what I aim for in this post is to sketch a thought process that raises some worth-noting doubts against the strict geopolitical argument.

Turning first to the military balance, I find its explanatory importance rather weak.  First, Russia has the world’s largest nuclear arsenal.  Second, the threat from its immediate European neighbors has been nonexistent.  Europe’s heavy reliance on Russian energy has signified thus far more willingness to cooperate than to antagonize Russia.  In fact, European states have been accused, and not without reason, for underfunding their military budgets.  Third, though a serious military force, NATO has never made any consequential threatening moves against Russia.  Although, Russia loathes America’s military presence in Europe, it is extremely unlikely that the U.S. would start a hot war against Russia without the acquiescence of its European allies, which have proven to be anything but warmongering.  Fourth, Russia went through an extensive modernization of its armed forces and years of armed conflicts in Chechnya and Syria, should have boosted its war readiness.  Finally, the domestic political mood in the U.S. prior to the invasion of Ukraine was definitely against any more foreign military interventions after the exhausting wars in Iraq and Afghanistan. 

What about the economic balance?  Admittedly, the Russian economy has remained relatively undiversified and heavily dependent on the extraction industries of oil, gas and minerals.  And its model of favoring an oligarchic structure saps entrepreneurial dynamism from the economy.  Although far behind in aggregate economic numbers, Russia has, nonetheless, made progress in closing its economic gap with the US and Europe.  Using World Bank data and real GDP per capita (in constant 2017 dollars) I found that the Russian real per capita GDP rose from 29% to 43% of the U.S. real per capita GDP between 2000 and 2019.  (But it has lost ground versus the real per capita GDP of China.) Therefore, in terms of one of the most meaningful measures of economic power, it is Russia that has gained economic ground, not the U.S.

However, something else has happened in the periphery of Russia that has become a perceived threat to Russia.  This is the move of most of its former European territories (like the Baltic states) and allies in the Warsaw Pact (Hungary, Poland and others) toward democratic liberalization.  This would not have mattered if Russia had itself successfully transitioned towards democracy after the collapse of the Soviet Union.  But after ten critical years were wasted by Russia (with help from the West), twenty more years of rule under Putin have turned Russia inward, illiberal, if not outright autocratic, and hostile to political ideas and economic development not controlled by the regime.  In addition, the traditional hostility of the Russian Orthodox Church against western culture has played its own role in this state of affairs.

Russia is not unfamiliar to this pattern of not heeding the demands of the times.  Before the Tsarist regime was swept away in the Bolshevik Revolution, Russia had failed to follow Western Europe in the exploits of the new capitalist order and instead kept its peasant and workers in a state of serfdom.  In the 1980s when the Western economies were reforming their inner workings and putting the foundations of a new global economic order, the Soviet regime failed to heed China’s bold switch to the market economy while retaining its communist system.  

It seems to me Putin is falling into the same trap.  Unwilling to tolerate a more open and democratic society and tethered to business oligarchs he prefers to align himself with like- minded leaders like Syria’s Assad, Kazakhstan’s Kassym-Jomart Tokayev and Belarus’s Alexander Lukashenko.  But in the crucial European periphery Russia has seen its old parts and allies to turn toward western-style democracy.  It is useful to note that Belarus and Ukraine along with Russia were the initial constituent members of the Soviet Union.  It is plausible, therefore, to argue that after facing the very real possibility of losing Belarus to a pro-western opposition, Putin decided to rather not face this possibility in Ukraine, even if this meant a devastating war.

My argument, therefore, is that the persistent clinging of the Russian national narrative to the notion of an imperial nationalism and the inability of successive Russian regimes to adjust to a changing world may better explain the war against Ukraine than any serious disturbance of the military or economic parity. 

The economic sanctions imposed by western countries on Russia in the aftermath of its invasion of Ukraine include the freezing and even the seizure of assets owned by Russian oligarchs in western countries.  Bank accounts, prized real estate properties and luxury yachts are now out of the reach of their owners.  The West considers this class of mega-rich Russians to be an extension of the state apparatus that has enabled the Putin regime to control the economy and influence domestic public opinion.   The sanctions against the Russian oligarchs imply that their riches are ill-gotten and unworthy of protection under the rules of the international free-market system.

That is the West’s position now.  But Western countries and their wealth management industries held different views until quite recently.  In fact, the international financial system, mostly following Western rules and practices, bears responsibility for abetting the creation of an international system of kleptocracy.  Before the Russian oligarchs started to make their mark in the international scene, the West was already living comfortably with tax havens in far away islands, Swiss secret bank accounts, and even within their own jurisdictions, and had no problem with their banks and tax-related advisers that specialize in aiding their own wealthy citizens with tax avoidance, and even evasion.

The extent of the international network of advisers and clients engaging in secretive financial and tax avoidance and evasion schemes was laid in full view thanks to the leaks of the Panama Papers in 2016 and the Pandora papers in 2021.  These papers revealed how offshore entities created by mostly western firms sealed the identity of world leaders, politicians, business people, kleptocrats, fugitives and drug lords as they stashed their money in tax havens around the globe.

I will draw from two articles published in The Atlantic to give a sense of the problem of kleptocracy and how it erodes democratic and free-market institutions.  Franklin Foer in “How Kleptocracy Came to America” (March 2019) shows how the U.S. failed to block the flow of dirty money to its shores.   According to Foer, the American Government, including Congress, got an early warning about the looting of the Russian treasury in the 1990s from Richard Palmer, a CIA operative.  Palmer described how well-connected Russians were siphoning billions of dollars abroad in the chaotic days of the transition to capitalism during the Yeltsin years.  Congress ignored Palmer and Russian money kept coming to American banks with no scrutiny.  And when Russia’s reformist prime minister Yegor Gaidar asked for help to track the money he was rebuffed by the White House.

In a 2018 study, Berkeley economist Gabriel Zucman and his co-authors estimated that the wealth of Russian oligarchs stashed abroad equaled the wealth of all Russians kept in Russia itself.  According to a 2019 estimate $1 trillion was leaving the developing economies each year either through laundering or tax evasion. 

A lot of this money flows into the choice real estate markets of New York City, Los Angeles, Miami and London.  The boon to the real estate industry is so huge that when the Patriot Act was passed after September 11 for the purpose of stanching the funding of terrorist and drug groups, the real estate industry lobbied successfully to exempt itself from the disclosure rules.  Thus, illicit money could flow into the U.S. anonymously through shell companies.  Foer writes that Global Witness, an NGO fighting dirty money, found that in some U.S. states it was easier to set up a shell company than to get a library card.

The noose around foreign money tightened a bit after the 2007 financial crisis but it still left gaping holes.  For example, When the Obama Administration asked Congress permission to share U.S. bank information on foreigners’ holdings with other countries it was turned down.  And when in 2014 the OECD countries agreed to enforce the same practice, the U.S. refused to sign on.  Ironically, U.S. refusal to share information with other countries does not stop it from demanding others to share financial information with U.S. authorities. 

In a more recent article, “The United States Has a Dirty Money Problem” (The Atlantic Jan/Feb 2022), Anne Applebaum offers more insights into the workings of the international kleptocracy and the role of tax havens.  For example, just two tax havens, Jersey Island and Cayman Islands, hold assets that account for almost 10% of the global GDP.

Anne Applebaum notes that there are several reasons why countries do not close down the kleptocratic system.  First, many of the practices used by foreign kleptocrats have been used by wealthy citizens and industries in the West.  Banks, real estate, and the supporting professional trades in western countries are loath to losing lucrative sources of revenue.  Second, kleptocracy utilizes sophisticated practices and tools that only a few law enforcement civil servants can master.  Even when they do, they are intimidated by the opposing interests. 

Another reason is that investigating journalists and the news media lack the resources to take on corruption cases.  And activists who stand up to domestic corruption, like the Russian opposition figure Alexei Navalny, are persecuted and silenced by the authorities. 

Finally, the international kleptocracy has developed the expertise and connections to mount full war against reforms.  So much so that the Western industries and politicians that stand to benefit often come to their defense.  Anne Applebaum warns that the international kleptocracy tries hard to corrupt democratic institutions, politicians, government bureaucracies and the independence of the press. 

The truth of the matter is that the West could have stymied the growth of the powerful Russian oligarchs if it had not enabled the culture of permissiveness toward plutocrats, including its own, that gave rise to the international world of kleptocracy.    

When we enable powerful interests to accumulate wealth through illicit tactics, we allow them to boost their political influence and to partake in the market system with advantages denied to ordinary citizens.  The West ought to shut down the whole world of kleptocracy, not just its Russian branch.