Friday, June 22, 2018

The swift passing of the American Century.

Over the span of history, the American Century – those years of American global leadership dating back roughly to D-Day – may turn out to be barely the blink of an eye. Thirty years ago, conservative scholar Francis Fukuyama declared that the rise of liberal democracy in the post-World War II era and the collapse of the Soviet Union marked "the end point of mankind's ideological evolution and... the final form of human government." Would that it was true.

As Steve Bannon, Donald Trump's former strategic advisor, travels across Europe, urging European nationalists forward in their attacks against the evils of immigration and globalization, it is apparent that the American Century may be coming to an end. It may be self-evident that the new generation of European nationalists are Trump's natural allies, nonetheless, it was jarring to see him lash out on Twitter this week against German Chancellor Angela Merkel. In the wake of America's turn to Trumpism, Merkel has assumed the tacit mantle of Leader of the Free World, yet it is a mantle that has increasingly undermined her political standing in Germany. Merkel's defense of a united Europe has placed her in the direct path of the storm of ethnocentrism and nationalism sweeping the continent and contributed to the decline of her Christian Democratic Party in the polls. Trump, whose resentment of Merkel is palpable, was only too happy to pile on.

Hiking in the Julian Alps and Soča River valley of Slovenia, and spending time in Budapest over the past few weeks, it was apparent that the wars and wounds of the past century continue to lie just below the surface, and it is evident that across much of Europe the political commitment to liberal democracy that America nurtured – and the advance of which Fukuyama and many others believed to be irreversible – is increasingly under siege. According to each person I talked to over the course of our trip, the old rivalries – nationalist, ethnic, religious – continue to lie just below the surface, even as economic prosperity has continued to grow. It was an eye-opening experience for me, as someone educated in America, for whom World War I, in particular, lies buried deep in the past. 

Slovenia is a small country with barely two million people, yet one hundred years ago, when the Soča River marked the border between the Kingdom of Italy and the Austro-Hungarian Empire, almost one million people died in a series of battles – chronicled by Ernest Hemingway in A Farewell to Arms – that spanned a period of two and one-half years. 

The seeds of World War II were, of course, sowed in the treaties that followed World War I, as the borders of Europe were redrawn and war reparations were exacted. World War II began with Hitler's invasion of the Czechoslovakia in 1939, with the avowed purpose of reestablishing German sovereignty over lands that had been taken from it in accordance with the Treaty of Versailles two decades earlier. Each place we traveled had in the not too distant past been part of a different country or seen its borders redrawn: Slovenia was once part Italy, part Austro-Hungary; The Italian city of Trieste had for hundreds of years been part of Austria; and Hungary today – once the seat of the Austro-Hungarian Empire – is just a shadow of its former self, having lost 70% of its land area in the wake of two world wars. 

Hungarian Prime Minister Viktor Orbán – a right wing populist on the leading edge of the nationalist wave sweeping Europe – is using that history to great political effect. As a Czech friend now living in Poland pointed out when we were in Budapest, Orbán no longer flies the European Union flag alongside the Hungarian flag above the Hungarian Parliament – as is customary in E.U. member countries – but flies the "Székely" flag instead. Székely Land is an area in central Romania that used to be part of Hungary and continues to be inhabited by an ethnic Hungarian minority. Székely Land is to Orbán what the Sudetenland of Czechoslovakia was to Hitler: It is proof of the unfairness of the international order; an unfairness that Orbán uses effectively to stoke the ethnic resentments that lie at the heart of his nationalist politics.

For Americans, borders – with the possible exception of those separating Israel and Palestine – are generally presumed to be settled facts. Yet as one looks across the world – from Serbia to the South China Sea – that is less true than we imagine, as deference to international law is giving way to regional politics and power. Vladimir Putin – who makes no bones about his resentment over the loss of Russian territory in the wake of the collapse of the Soviet Union – is aggressively seeking to upend the post-World War II rule-based international order and re-legitimate Great Power politics. He justified Russia's invasion of eastern Ukraine and annexation of Crimea using the same argument that England and France used to entice Italy into World War I, that Hitler used to justify Germany's invasion of Czechoslovakia that marked the beginning of World War II, and that is mirrored in Viktor Orbán's flying of the Székely flag: the legitimacy of retaking historical lands in order to reunite ethnic nationals with the Motherland. It is a view, incidentally, that Donald Trump appeared to endorse during the recent G-7 meeting in Canada. 

In Slovenia, the walls of the former summer palace of Yugoslav leader Josip Broz Tito are festooned with post-World War II photos of Tito with fellow strongmen of that era. With the end of the Cold War, the era of the strongman steadily receded and democracy seemed to take hold. By the end of the 20th century, even the dictators of Africa and South America had largely disappeared, as Hugo Chavez and Fidel Castro, along with the potentates of the Arab world, became the outliers. The leaders of Russia and China looked to find a modus vivendi with the west and seemed to recognize the inevitability of the global trend toward liberal democracy. 

No longer. Tito's photos of the world as it was just a few decades ago provide a reminder of how brief the tide of democracy has actually been. The influence of America and the post-war institutions that we helped to create is waning, as we watch the emergence of leaders in countries across the globe increasingly unrestrained in their hostility to democratic values. The images of Tito with Egyptian President Gamal Abdel Nasser, whose mantle has now been assumed by General Sisi, beg the question of whether the Arab Spring, which at the time appeared to mark the apotheosis of that tide, may from the vantage point of history turn out to have been its high-water mark, before the beginning of a long retreat. 

For Donald Trump, the immigration crisis in Europe and rise of right wing movements is a validation of his own domestic stance. He may be President of the United States, but he ran for office in opposition to the American Century and all it stood for, as he transformed the resentments of his base voters into a conviction that the seventy years of American leadership in the post-World War II world has inured to their detriment. As right-wing movements posted wins in recent elections in Slovenia and Italy, televised images in our hotel room in Budapest of caged immigrants along the U.S.-Mexican border gave cover to those movements and conveyed a clear message to those in Europe seeking to hold the line against the rising nationalist tide: Don't look to the United States for leadership in your time of crisis. 

The most jarring aspect of Trump's tweet, however, was the notion that an American president might think nothing of egging on German resentments and chauvinism. Over the past 70 years, Germany has been nurtured by American leadership from its horrific past into a position of constructive leadership in the world, yet in Germany – as in the Balkans and Hungary – there is little doubt that those resentments and chauvinism that linger just below the surface can be stirred up again should the right demagogue happen along. And we can see it happening before our eyes: as Angel Merkel's party has declined to 36% in the polls, the nationalist right-wing party has risen to become the third largest party in the German Bundestag; this time with the American President urging them on.

Follow David Paul on Twitter @dpaul. He is working on a book, with a working title of "FedExit: Why Federalism is Not Just For Racists Anymore."

Artwork by Jay Duret. Check out Jay's political cartooning at Follow him on Twitter @jayduret or Instagram at @joefaces.

Saturday, May 26, 2018

The perfidy of Paul Gigot.

After endless pandering to Donald Trump, The Wall Street Journal editorial page seems to have had a moment of epiphany on Friday. Scanning the landscape of collapsing international negotiations, hollow threats, perplexed allies, and bemused and emboldened adversaries, editorial page editor Paul Gigot recognized the Trump record for what it is: "A pile of impulsive, ill-considered threats that are increasing business uncertainty, slowing the economy, and irritating friends the U.S. needs on Iran and Korea."

This is quite a turnaround for Gigot. As much as any serious opinion leader across the conservative landscape, Paul Gigot has been an enabler of the worst of Donald Trump. Forget sycophants like Fox's Sean Hannity or InfoWars' Alex Jones, or even Rush Limbaugh, who are avowedly in the entertainment business; the lesser-known Gigot has long been a serious, respected representative of the Fourth Estate, and among the most influential journalists on the right. As important as those other three might be in keeping the Trump base motivated and engaged, it is Gigot's migration away from the Journal's traditional hawkish, free-trade, small government conservatism in favor of Trump's America First populism that has lent the greatest credence to Trump and Trumpism among erstwhile mainstream Republicans. Gigot may not rip his shirt off and yell and scream like Alex Jones, and he does not have the mass following of Hannity or Rush, but his words have arguably been more consequential – and, as such, his actions more reprehensible – because he and his loyal readers should know better.

The unveiling of Spygate, Donald Trump's most recent conspiracy theory, provides a case in point. It was just over a week ago that Donald Trump lashed out at the FBI and Department of Justice, accusing "Deep State" conspirators of embedding spies in his presidential campaign. Those spies, Trump now suggests, instigated the acts of collusion with Russian operatives that are now being blamed on Trump and his campaign, and which are the subject of Robert Mueller's investigation. "If the FBI or DOJ was infiltrating a campaign for the benefit of another campaign, that is a really big deal," Trump tweeted, inflaming his followers and starting new tremors across the nation's capital. "Bigger than Watergate!"

Trump loyalists were quick to grab the baton and run with it. House Intelligence Committee Chair Devin Nunes led the charge to force the disclosure of FBI treachery, stating “If they ran a spy ring or an informant ring and they were paying people within the Trump campaign–if any of that is true, that is an absolute red line.” And, as if on cue, Paul Gigot's team stepped in to lend credence to it all, as Kimberley Strassel – a fixture on The Wall Street Journal op-ed page and a member of Gigot's editorial board – put the Journal's imprimatur on the escalating wave of what-ifs in a piece entitled Was Trump's Campaign Set-up?

What-ifs, of course, are a common Trumpian trope:

What if President Barack Obama was born in Kenya? 

What if Susan Rice used her powers as National Security Advisor to conduct domestic surveillance for political purposes? 

What if there was a web of corruption between the FBI, the CIA, and the federal judges who participate in the Foreign Intelligence Surveillance Act process, to use FISA warrants for political purposes.

Then this week: What if the FBI, DOJ and CIA orchestrated a plot to plant evidence of Russian collusion on members of his campaign, to discredit him. That would be a huge deal! And he is right. It would be. If they did.

Trump has taken us down these ratholes for years. He gave life to the Birther movement, knowing instinctively that it could be used to build a political following. He continues to use his accusations against Barack Obama, Susan Rice, the FBI and the FISA courts to incite his supporters. And just as Strassel jumped in to lend credibility to Trump's newest conspiracy theory, Gigot and the Wall Street Journal editorial page have taken the bait and given credence to one self-serving Trump conspiracy theory after another, including the Susan Rice unmasking controversy and accusations of FISA court abuse.

Trump's What ifs? roil the news cycle, keep his base voters enflamed, and distract attention from whatever else might be going on. It matters little that the accusations and outright lies come to nothing, because the accusations serve their purpose in the moment, and the legacy of distrust and suspicion that they engender endure. That, of course, is the point. Trump has already gotten what he wanted out of Spygate: Rod Rosenstein gave credence to the charges by agreeing to an investigation, which was followed up by the much-ballyhooed meeting in the White House where the purported Spygate evidence was disclosed. But, most important, according to recent polling, 61% of Republicans have embraced Strassel's hypothesis and believe that Trump was framed by the FBI and the Department of Justice. And Trump knows well that once planted, these beliefs can live on, despite whatever evidence might be presented to disprove them. After all, according to a Economist/YouGov poll this past December, a majority of Republicans continue to believe that Barack Obama was born in Kenya, so it is an easy bet that by the time Robert Mueller publishes his report, a fair share of Republicans will be set in their belief – regardless of evidence Mueller's team might present – that Donald Trump was framed.

What is it that has kept Gigot and Strassel from realizing that Marco Rubio was right when he warned that Donald Trump was a con man, and that Ted Cruz was not exaggerating when he judged Trump to be a pathological liar and irredeemable narcissist – despite plentiful and unending evidence of both. Does Kim Strassel not understand that her validation of Trump's conspiracy theories gives license to millions of Republicans who should know better than to embrace his most outrageous and destructive lies?

It is hard to know what led to Gigot's change of heart this week, when he tacitly acknowledged the vacuousness of Trump's presidency. There is nothing new to Trump's impulsive, ill-considered threats; indeed those are what have defined him from the beginning. Was it Trump walking back his tariff threats against China, while continuing to threaten our allies? Or was it watching Vladimir Putin and Xi Jingping stepping into the void created by America's disengagement from its position of world leadership, as evidenced most recently by German Chancellor Angela Merkel and French President Emmanuel Macron, each making the pilgrimage to Russia to kiss the ring, and discuss the path forward on Iran, as well as regional and energy security on the continent.

Or perhaps it was Gigot's realization, as Trump clamored to address Xi's demand that the U.S. ease restrictions that have crippled ZTE Corporation – the giant Chinese company that had been sanctioned for stealing intellectual property and selling restricted technology to our adversaries – that leaders across the globe have figured Trump out, and instead of Trump playing them, they are playing him. Or perhaps he just succumbed to the narcissism and venality of it all: Over the past two weeks, we learned about both the $500 million that China invested in Trump's new Indonesia project – announced just two weeks ago, but largely buried beneath all the rest of the news in TrumpWorld – and the $107,000 Trump pocketed last year leveraging his new reach as President to sell deodorant and bath robes.

When the dust settles, and it turns out that it was the FBI that was doing its job and it was Donald Trump who was violating the trust of the nation, Paul Gigot will have to look in the mirror and ask himself how he let himself get in so deep, and became an enabler of a man whose every action and tweet serves a single interest: his own. Gigot has been complicit – as the Wall Street Journal was last week in endorsing Trump's spygate gambit – in Trump's continuing destruction of institutions and comity that are essential to the nation's future. Perhaps Gigot's editorial on Friday suggests he has woken up. One can only hope; he has a lot to answer for.

Follow David Paul on Twitter @dpaul. He is working on a book, with a working title of "FedExit: Why Federalism is Not Just For Racists Anymore."

Artwork by Jay Duret. Check out Jay's political cartooning at Follow him on Twitter @jayduret or Instagram at @joefaces.

Thursday, May 10, 2018

Peace in our time.

Donald Trump set World Peace in his sights this week as he welcomed home three Americans who had been held captive in North Korea, and who were released into American custody during a meeting between North Korean President Kim Jong-un and Trump's new Secretary of State, Mike Pompeo. The President thanked the Korean dictator – who he had spent much of the past year ridiculing on Twitter – praising him as an excellent and honorable man, and announced that the two would meet in Singapore in June where, as he tweeted out later, "We will both try to make it a very special moment for World Peace!"

Should Donald Trump succeed in his summit with Kim, and win an agreement to destroy North Korea's nuclear arsenal and ballistic missile capabilities, it will be widely viewed as an achievement of titanic proportions. It was, after all, Trump's predecessor and nemesis, Barack Obama, who suggested that dealing with the North Korean nuclear threat loomed as the greatest challenge that Trump would face as President. For center-left Americans, whose disdain for Trump knows few limits, and for Europeans who have just seen one more rebuke from the American President in the form of the abandonment of the Iran nuclear deal, Trump's achievement – should it come to pass – would be a bittersweet moment. But none would be more torn between their relief at the resolution of the North Korean threat and their distaste for the man on whose watch it transpired than the members of the Norwegian Nobel Committee, who would have no choice but to award the Peace Prize to Trump.

Lost in the drama of the North Korea prisoner release this week and the pending summit meeting between Trump and Kim is the enormity of the changes in global strategic relationships whirling below the surface. European leaders, who hoped that much of Donald Trump's isolationist America First campaign positioning would soften once he was in office have been disappointed. He said he would walk away from the Paris climate agreement, and he did. He promised to walk away from the Trans Pacific Partnership, and he did. He promised to demand that NATO allies increase their defense spending, and he has. He promised to demand changes to global trade relationships, and he has. He promised to reject the Iran nuclear deal, and this week – to the consternation of our erstwhile European allies – he did. Importantly, much of Trump's isolationist positioning reflects a growing discomfort among the American electorate, including Bernie Sanders supporters on the left as well as among the Trump base. According to Pew Research, over the past half-century, Americans have become steadily less supportive of the country's global role and obligations, a sentiment reflected in Trump's MAGA rhetoric.

For nations with their own regional ambitions – notably China and Russia  – Trump's willingness to pull the United States back from its leadership role in the world has been a welcome change. Russia and China in particular have long chafed at American hectoring of their anti-democratic political systems, as well as its military encroachment on what each sees as their historical and rightful spheres of influence. Both countries were signatories to the Iran nuclear deal, but while each expressed official disappointment in Trump walking away from the deal, both Russian President Vladimir Putin and Chinese President Xi Jingping recognized that every action that Trump takes to distance America from the world ultimately inures to their benefit. For example, in the wake of Trump's decision to pull the United States out of the Iran accord, China committed to continuing its imports of Iranian oil, and announced that it will pay for Iranian oil in yuan – the Chinese currency – rather than dollars. This provides a strategic benefit to China, as establishing the yuan as a global reserve currency alternative to the dollar is an important long-term goal of the country.

In the Middle East, where the United States has been the dominant power since the collapse of the Soviet Union three decades ago, Vladimir Putin has pushed – with Donald Trump's support – to restore Russia's historic role as a force in the region. The success of Putin's efforts was evident this week as the simmering conflict between Israel and Iran burst into open military conflict. Prior to launching a counterattack against Iranian forces in Syria, Israeli Prime Minister Netanyahu flew to Moscow to consult with Putin, to make sure that Israeli actions would not run afoul of what the Russian potentate would understand to be appropriate defense of Israel's national interests.

Similarly, the growth of nationalist movements across Europe – aided in no small measure by Russian information operations – has enabled Putin to reassert Russian influence in countries that only a few years ago pleaded for membership in NATO to escape influence from Moscow. Nationalist Hungarian Prime Minister Viktor Orban is not alone in gravitating toward Putin, both in recognition of Hungary's dependency on Russia for 80% of its energy supplies, as well as Putin's greater tolerance of Orban's authoritarian inclinations.

The North Korea situation should similarly be viewed against the backdrop of China's determined efforts over the past several years to push back against American power in East Asia, exemplified by China's military buildup in the South China Sea and Xi Jingping's "Asia for Asians" efforts to bring its Asian neighbors into a common strategic alliance against western, former colonial powers. It may well be that China is pushing North Korea to make a deal with the United States – as many people assume – out of fear of Trump's trade threats, as well as the prospect that Trump might actually attack North Korea. On the other hand, China may see the North Korea nuclear negotiations as an opportunity to pursue its own strategic objective of removing American forces from East Asia. It is notable that before this March, Xi Jingping and Kim Jong-un had never met face to face, but since the prospect of a summit between Kim Jong-un and Donald Trump became real – and Kim suggested the removal of American troops from the Korean peninsula as a quid pro quo for the dismantling of his nuclear program – Kim and Xi have met two times. Removing or reducing the footprint of American forces from South Korea, and, in so doing, rolling the U.S. military presence in the region back to its last Asian foothold in Japan, would be a major achievement for Xi, removing a major obstacle to China's growing political and military dominance in the region.

While a deal with North Korea that included the withdrawal of American troops from South Korea would have been dismissed out of hand by any of Donald Trump's predecessors, he has already indicated that he could be amenable to such a proposal. Bringing American troops home was a central theme of Trump's America First campaign rhetoric, and making good on his campaign promises continues to be the animating principle of his administration. Working out a peace deal with North Korea would be an accomplishment few could ignore. It would buttress his bona fides as a master negotiator in the eyes of his supporters, and – along with an economy that continues to gain momentum in the wake of last year's tax cuts – would make him a formidable candidate in 2020 – Robert Mueller notwithstanding. And then there would be the greatest incentive to making a deal happen: Trump would accomplish the task that Obama himself declared to be the most difficult to achieve, and grab a Nobel Prize in the process.

How titanic Trump's achieving could prove to be will depend on how history ultimately assesses the motivations of and objectives realized by the parties to any ultimate deal. While it is certainly possible that Kim Jong-un has simply been cowed by Donald Trump's threats and decided that this is the time to sue for peace, it may well be that China has stepped up pressure on North Korea to make a deal because China sees an unsurpassed opportunity to achieve its own objectives. What may be viewed in the moment to be a significant achievement for the U.S. President – should it come to pass – may, could come to be viewed differently the passage of time. Rather than an event that heralded peace in our time, it could instead come to be seen as a critical event in China's ascendency as a regional, if not global, power.

Follow David Paul on Twitter @dpaul. He is working on a book, with a working title of "FedExit: Why Federalism is Not Just For Racists Anymore."

Artwork by Jay Duret. Check out Jay's political cartooning at Follow him on Twitter @jayduret or Instagram at @joefaces.

Monday, March 26, 2018

The problem isn't Facebook. It is us.

On Meet the Press this weekend, Virginia Senator and Intelligence Committee co-chairman Mark Warner weighed in on the controversy surrounding Facebook and Cambridge Analytica, bemoaning "the broad weaponization of information." Weaponization was a notable choice of words. Substitute "effective utilization" for "broad weaponization," and Warner's words would have reflected common business school marketing wisdom rather than partisan political rhetoric.

Much is being made of Cambridge Analytica's use of Facebook data for the purpose of profiling the electorate for Steve Bannon and the Trump presidential campaign. "We broke Facebook," asserted former Cambridge Analytica employee Christopher Wylie, who claims to have created “Steve Bannon’s psychological warfare mindfuck tool.” Once again the choice of words was incendiary; replace the words "warfare mindfuck" and with "profiling and persuasion," and Cambridge Analytica's services appear more benign.

"Behavioral micro-targeting" and "psychographic messaging" – the buzzwords preferred by Cambridge Analytica CEO Alexander Nix – are what Madison Avenue has long specialized in, dating back to when the Leo Burnett ad agency convinced Philip Morris that a cowboy on a horse was the best way to sell Marlboro cigarettes to young American men. Nor is there anything particularly new about applying marketing strategies to politics. That dates back at least to Richard Nixon's presidential campaign in 1968 when – as chronicled in Joe McGinniss' The Selling of the President – the twenty-eight year-old Roger Ailes and J. Walter Thomson ad man H.R. Haldeman integrated corporate marketing techniques into candidate packaging and voter persuasion.

That was a half-century ago. In the intervening decades, micro-targeting and voter turnout strategies – the essence of any political campaign – have become increasingly sophisticated, as technology has enabled finer-grained voter identification and targeting. Clinton polling maestro Mark Penn's "NeuroPersonality Poll" and "microtrends" model, which segmented the electorate into archetypal groups based on personality profiling (remember the soccer mom?) and targeted distinct campaign messaging to each group, was one forerunner of Cambridge Analytica's "psychographic" modeling. In a similar vein, Karl Rove and Michael Dodd elected and re-elected Bush '43 using voter segmentation strategies and "wedge issues" to motivate turnout among each of the social conservative voter groups that Grover Norquist had cobbled together fifteen years earlier as the base of the post-Reagan GOP coalition.

While people continue to lash out at Mark Zuckerberg for allowing Facebook data to fall into Cambridge Analytica's hands – along with three Congressional committees and three dozen states attorneys general seeking to look into the matter – it is unclear what, if anything, either company did wrong. For all the company's bravado, Cambridge Analytica's "psychographic" profiling was just one more iteration of voter profiling efforts that have sought to integrate Myers-Briggs and similar personality tests into political campaign strategies. The real difference this time around was not the granularity of the data that landed in Cambridge Analytica's lap or the techniques that it used to manipulate that data, but Steve Bannon's recognition of the power of Facebook – and of social media in general – as a platform for galvanizing simmering anger across disparate communities into a cohesive political movement.

As Internet philosopher and critic Jaron Lanier has observed, the world of social media is built around emotional engagement, and negative emotional engagement has proven to be a more powerful force than positive emotional engagement. "I think a lot of people perceive a sort of arc of improving empathy and ethics in civilization." Lanier commented late last year. "Recently, it’s been reversed. The Arab Spring turned into this terrible wave of terrorist nihilism. When women got together to try and improve their lot in the gaming world, it turned into Gamergate, which turned into the alt-right. Black Lives Matter preceded this normalization of racism and white supremacy that was just unthinkable a year before. 

"All of these movements, that are so social media-centric, provide the fuel to the social media system. But to maximize the value of that fuel, it’s routed into negative purposes, so the people who are the most irritated by whatever is going on that’s positive are introduced to each other. The backlash is vastly more powerful than the initial attempt. My prediction is that #MeToo will create some kind of horrible social event through social media in about a year."

What made Steve Bannon different was not the use of psychological profiling and voter targeting – or the availability of Facebook data – but how he tailored his messaging to a social media eco-system. Barack Obama's data analytics and messaging began down that path. Obama's message of Hope and Change was well-suited for emotional engagement in the social media world and energizing younger voters. Steve Bannon took things one step further, explicitly optimizing emotional engagement online – as Lanier suggests – through negative messaging, including, notably, building on the negative emotional backlash to Obama himself.

None of Bannon's test phrases were particularly new. The "deep state" and "the NSA is watching you" and "build the Wall" were each themes of Alex Jones' right-wing conspiracy mongering InfoWars in 2012, while "drain the swamp" dates back almost twenty years to Pat Buchanan's 1999 acceptance speech as the Reform Party presidential candidate. What made Bannon different was that rather than starting with a candidate and then seeking to build messaging that might work – the traditional political campaign practice – his objective was to develop a basket of slogans which produced the greatest emotional resonance for the purpose of catalyzing a political movement, and then set about to find a candidate who could become the vessel to embody them. Donald Trump became Steve Bannon's guinea pig; and it worked.

The delinking of emotional resonance from actual performance with respect to specific issues also set Bannon's approach apart from older generations of GOP strategy. The strategies developed by Grover Norquist around the Reagan Revolution, Newt Gingrich and the Contract with America, Karl Rove for Bush'43, and the organizers of the Tea Party, each embodied the traditional premise that candidates be held accountable for delivering on specific policy issues – e.g. cutting taxes, cutting spending, banning abortion, opposing gay marriage, etc. In contrast, Bannon's messaging was more aspirational – more blatantly Leninist, as he once noted – tied to bringing down the status quo and the establishment, untethered from accountability for any particular outcomes. To paraphrase Selena Zito's famous observation, Bannon's political messaging allows Donald Trump to be evaluated by his core supporters for what he says, not for what he does.

Public indignation and Mark Zuckerberg's mea culpas notwithstanding, Cambridge Analytica's access to Facebook data is not the critical issue people should be focused on. If people are upset about how Facebook data is being used, we have only ourselves to blame. Facebook did not give away any data that we did not give away first. Years ago, we made a deal: we would get free online services; in exchange, Internet service providers, social media platforms, apps, and the rest of the online world, would get our data – a few, if any, of us actually gave any heed to how they might use it. Perhaps Facebook violated its terms of service, allowing Cambridge Analytica access to data it should not have had, but that is not where the deeper problem lies. The real story – and it is one that cannot be litigated or regulated away – is how we behave on social media itself, where all of our worst instincts, our tribalism and hostilities, are amplified and played out to the extreme.

That is what Steve Bannon understood; it is what he has learned to exploit; and – as he is now taking his show on the road, and looking to do to Europe what he has done to America – it is not apparent that there is an easy way to deal with it. The problem is not data, but the larger issue of the culture of social media. To put it in Mark Warner's terms, it is not the information that has been weaponized; it is us.

Follow David Paul on Twitter @dpaul. He is working on a book, with a working title of "FedExit: Why Federalism is Not Just For Racists Anymore."

Artwork by Jay Duret. Check out Jay's political cartooning at Follow him on Twitter @jayduret or Instagram at @joefaces.

Tuesday, March 20, 2018

Cyber warfare comes of age.

Consider this possibility: What if Russia's information operation targeting the 2016 presidential election was just a side show, a distraction that has drawn our attention away from more significant cyber operations. It is one thing to get people yelling at each other online, and to instigate marches and demonstrations in the streets. It is another thing altogether to derail trains loaded with lethal chemicals, contaminate the water supply in major cities, or shut down the power grid across large parts of the country.

Last Thursday, the Department of Homeland Security published a Technical Alert authored by DHS and the FBI entitled "Russian Government Cyber Activity Targeting Energy and Other Critical Infrastructure Sectors." It was a notification that Russian government "cyber actors" have compromised energy, nuclear, water, aviation, and critical manufacturing facilities in the United States. The story made the front page of the New York Times – below the fold, overshadowed by the latest happenings in the Mueller investigation – and got a few quips from late night comics, and then quickly receded from the news.

In all of our yelling back and forth about what Russia did or didn't do around the 2016 presidential election – and whether it constituted an act of war or just some kind of geopolitical mischief – we may have deluded ourselves into believing that this is what is meant by cyber warfare.

Of course, we know that it isn't the extent of it. We hear Ted Koppel's warnings of the cyber apocalypse to come. We worry about the attacks on credit reporting companies, and hackers stealing our identities and selling them on the dark web. And we know that all sorts of actors, from Russia, China and Iran, to 400-pound guys sitting on their beds in New Jersey, are in on the game. Yet, somehow, as much as we understand the threats are out there, we show little concern over the extent of the risks that cyber warfare could mean to us, as evidenced by how little heed was paid to the DHS alert.

According to DHS, Russian cyber efforts accelerated in 2015 – around the same time as its information operation with respect to the election began – and they have advanced their capabilities to wreck havoc in the United States from being a theoretical risk to literally having their finger on the trigger.

“We now have evidence," observed Eric Chien, a security technology director at the digital security firm Symantec, "they’re sitting on the machines, connected to industrial control infrastructure, that allow them to effectively turn the power off or effect sabotage... All that’s missing is some political motivation.”

If this sounds like something out of an action movie, it should. Ten years ago, the plot of the 2007 film Live Free or Die Hard, centered around Thomas Gabriel – played by Timothy Olyphant – a disgruntled Department of Defense software engineer who went rogue after the Joint Chiefs of Staff ignored his warnings about the vulnerability of the country's cyber infrastructure. Gabriel decides to prove his point through a cyber attack blowing up a gas pipeline network and utility plant. Of course, the eternal Die Hard hero, Bruce Willis, playing NYPD cop John McClane, thwarts Gabriel's plans and saves the day, aided – notably – by Fredrick Kaludis, aka Warlock, a seriously overweight computer hacker living in his mother's basement, probably in New Jersey.

As it turns out, movies have played a significant role in our understanding of cyber warfare. In the opening pages of Dark Territory: The Secret History of Cyber War, author Fred Kaplan tells the story of when President Ronald Reagan watched the movie War Games in June of 1983. War Games stars Matthew Broderick as David Lightman, a high school teenager who unwittingly hacks into a Pentagon mainframe computer and sets the world on a course for thermonuclear war. Broderick and his girlfriend, played by Ally Sheedy, spend the balance of the film trying to undue the havoc he has wrought.

The next day, President Reagan asked his national security staff whether what happened in the movie was plausible: Could someone hack into our defense computers and launch a nuclear war? According to Kaplan, Reagan's question took Pentagon and National Security Agency officials by surprise. The whole cyber world was in its infancy, and, apparently, it had not occurred to the best and the brightest of the military and intelligence communities that while they were developing new forms of cyber warfare to unleash upon America's enemies, our enemies might be preparing the same capabilities to unleash against us. Yes, they concluded, to their chagrin, it was plausible. The episode changed the course of America's cyber warfare efforts.

A decade later, in 1992, the writers of War Games collaborated on the movie Sneakers. As Kaplan tells the story, that movie created a similar ah-hah moment for the incoming director of the National Security Agency, Rear Admiral Mike McConnell. Sneakers revolves around efforts by the NSA to recover a mysterious cryptographic device that, it turns out, can hack into any computer system – the Federal Reserve Bank, air traffic control, missile defense, whatever. In a climactic moment, Cosmo, the teenage hacker-turned criminal mastermind – played by Ben Kingsley – who created the device, describes the new cyber world to his erstwhile college hacker friend, Robert Redford: "The world isn't run by weapons anymore, or energy, or money. It is run by ones and zeros, little bits of data. It's all just electrons... There's a war out there, old friend, a world war. And it's not about who's got the most bullets. It's about who controls the information: what we see and hear, how we work, what we think. It's all about the information." Admiral McConnell had been struggling to define the mission and purpose of the NSA he had been appointed to lead. When he saw the movie, he realized that Ben Kingsley had defined it for him.

In 2013, Vladimir Putin's top general, Valery Gerasimov, emphasized the elevated role of cyber warfare in the Russian strategic arsenal: "The role of non-military means of achieving political and strategic goals has grown, and, in many cases, they have exceeded the power of force of weapons in their effectiveness." The Pentagon, in turn, showed its heightened concern earlier this year in a Nuclear Posture Review that proposes to expand its policy regarding appropriate first-use of nuclear weapons responses to include significant cyber attacks.

Cyber warfare capabilities as described by the DHS are part of a new strategic balance. In the 1980s, we won the Cold War and beat the Soviet Union into submission through a strategic arms race that only we could afford. Now, the Pentagon's Nuclear Posture Review – viewing a significant cyber attack on par with a nuclear one – suggests that Russia has successfully recreated a balance of power with the United States without having to match our spending on missiles and bombs. Recreating a balance of power has been central to Vladimir Putin's ambitions. The Russian president – who was re-elected this week to a new six-year term – will soon stand with Joseph Stalin and Catherine the Great among Russia's longest-serving and most consequential potentates. Putin has made no secret of his desire to push back on western encroachment toward Russia's borders since the fall of the Berlin Wall, and to return to the great powers world of the 19th century, where the dominant states each had their respective – and respected – spheres of influence. Russia's strategic concern about being encircled by hostile forces may smack of paranoia, but it is useful to keep in mind that the Russian nation has been invaded by foreign powers at least once each century for the past half-millennium.

While the Pentagon's cyber warriors have offensive cyber capabilities equal to, if not greater than, Russia's, our cyber defenses are more problematic. As Mike McConnell has observed, while the lion's share of cybersecurity expertise rests with agencies of the federal government, more than 90% of the physical infrastructure of the Web is owned by private industry, making investments in adequate cyber defenses problematic. The DHA alert specifically focused on this vulnerability.

A balance of power in the cyber world is fundamentally different from a balance of power with respect to nuclear weapons. Unlike nuclear war, cyber warfare can be fought in many ways – as the 2016 election interference campaign suggests. Cyber attacks can be launched in an unlimited degree of gradations, from small air traffic control disruptions at a single airport to the destruction of the utility grid in a major city. These gradations, as well as the challenges of attribution inherent in cyber events, are particularly well-suited to Putin's purposes. The balance of power of the Soviet era was based around the doctrine of mutually-assured destruction, which meant that both sides had their finger on the button, but neither had an incentive to push it. In contrast, cyber warfare is already in active use, with myriad variations in its targets and scope. This suggests that it cannot be contained as the Pentagon imagines – other than, perhaps, with respect to catastrophic events – which begs the question: what are effective responses?“

Attribution is a critical issue, as it is essential to effective deterrence. The essence of deterrence is the certainty of consequences for proscribed behavior, but it all rests on "ascribing agency to an agent." As we have seen in events from the little green men that led Russia's incursions into Crimea and Ukraine, to the poisoning of former Russian spies Sergei Skripal and Alexander Litvinenko, Putin likes to push and prod, to test limits and gauge reactions, as he pursues his objectives, even as he denies responsibility and minimizes consequences. So, too, with respect to the election hacking, where attribution of responsibility to the Russian state has been difficult to prove, much less the determination of an appropriate response. Given these considerations, one can imagine that Vladimir Putin will have significant incentives to expand his use of cyber, and the leverage that flows from it, to achieve his strategic goals.

The brilliance of the Russian strategy – if indeed it was a strategy – of paring the attacks targeting our political institutions through social media, and those that now threaten our critical public and economic infrastructure, is that the degrading of our political infrastructure has undermined our capacity to respond to threats to our physical infrastructure. If we cannot manage civil discourse around the most mundane issues in our day-to-day politics, imagine what our discourse looms to be when we seek to ascribe blame because the lights have gone out and airports are shut down in the midst of a tit-for-tat cyber escalation.

Follow David Paul on Twitter @dpaul. He is working on a book, with a working title of "FedExit: Why Federalism is Not Just For Racists Anymore."

Artwork by Jay Duret. Check out Jay's political cartooning at Follow him on Twitter @jayduret or Instagram at @joefaces.

Thursday, March 15, 2018

When meddling is strategic doctrine.

On Morning Joe last week, a journalist who has covered the Russia story commented that it was hard to take Steele's Russia dossier seriously early on. "He was saying, the Russians are coming, the Russians are coming, and, contrary to the conspiracy theories, no one was so hard to believe there was a Russian conspiracy or that this story could be true..."

Skepticism around the notion of a "Russian conspiracy," and the idea that the Russians might be coming, influenced how Steele's material was received by much of the media. A Russian conspiracy? The very idea of it is so 1950s. We imagine that the Cold War years are deep in our past, and we are way beyond that now.

Despite the conviction of U.S. intelligence agencies that Vladimir Putin personally directed the information operation against the U.S. election, Putin denied everything in a recent interview with Megan Kelly on NBC. He insisted he knew nothing about it and was dismissive of the significance of allegations by Robert Mueller that Russian citizens were involved. "So what if they're Russians?" Putin protested. "There are 146 million Russians. So what?... Maybe they're not even Russians. Maybe they're Ukrainians, Tatars, Jews, just with Russian citizenship." 

The remarkable thing is not that he denied it, but that anyone would give any weight to Putin's answer. It is an oddity of our media culture that we presume that people have an obligation to tell the truth. Putin is the head of the Russian state, and whether you like him or not, there is simply no reason to believe that he has some kind of moral obligation to divulge his nation's intelligence strategies on U.S. television. Yet, somehow, we do, and, by the manner of her questioning, Megan Kelly did too.

Russia's history with "information warfare" is long and deep. In 1954, my grandfather, a conservative intellectual, wrote a book called The Fifth Weapon. It opened with a quote from Stalin's Premier Vyacheslav Molotov, who asserted that the Soviet Union would never fight America militarily, but instead would weaken America internally through other means, ultimately allowing the Soviet Union to "settle our accounts with America" on its own terms. The "fifth weapon" referred to the collection of non-military Soviet tactics designed to disrupt American democracy through the manipulation of language and dissemination of fake news, with the objective of steering public opinion and weakening America and other western societies from within.

Those tactics had a long history in Russia. Perhaps the most effective information warfare campaign in history – the publication of The Protocols of the Elders of Zion – had been launched a half-century earlier, just after the turn of the century. Attributed to the Okrana – the secret police of Tsar Nicholas II and forerunner to the KGB – The Protocols were disseminated during a period rife with anti-Jewish massacres across Russia. The Protocols were subsequently embraced and promoted by individuals ranging from Adolph Hitler to Henry Ford, and its central premise of a Jewish cabal that runs the world continues to reverberate in radical rhetoric on the right and the left across the globe.

When Barack Obama told Vadimir Putin to "cut it out," he seemed to be suggesting that the information warfare tactics launched by Putin surrounding the 2016 election was a prank of some kind, rather than central to Russian strategic doctrine. Just three years earlier, in an article in 2013, General Valery Gerasimov, the Chief of the General Staff of the Armed Forces of Russia – Putin's top general – described the critical role of information warfare: "The very ‘rules of war’ have changed," Gerasimov observed. "The role of nonmilitary means of achieving political and strategic goals has grown, and, in many cases, they have exceeded the power of force of weapons in their effectiveness."

The "Gerasimov Doctrine" mirrored Molotov's view that non-military tactics constitute an essential path to achieving victory. In the opening comments of is 2013 article, Gerasimov suggested that "In the 21st century, there is a tendency to erase the differences between the state of war and peace. Wars are no longer declared, and when they begin, they do not follow the pattern that we are accustomed to... A completely prosperous state in a matter of months or even days can turn into an arena of fierce armed struggle, fall prey to foreign intervention, plunge into the abyss of chaos, humanitarian catastrophe and civil war." Given this new frame of reference, Gerasimov continued, "The emphasis of the methods of confrontation used is shifting towards broad application of political, economic, information, humanitarian and other non-military measures implemented with the use of the protest potential of the population." 

As much as we view Russia today as distinct from its Soviet forebears, Gerasimov's doctrine reflects a Russian view of its relationship with the world that dates back to the Tsars: fear of encirclement, vulnerability to invasion, a desire to build a perimeter of friendly or neutral regimes around its periphery, a resistance to political and cultural pressures from the West, and an awareness that it is militarily overmatched. Gerasimov's perspective mirrors Soviet doctrine, where anything from fifth columns to agitprop to proxy wars were tools, preferred to actual engagement of Russian soldiers on the ground.

A more challenging question than whether Vladimir Putin directed Russian efforts to meddle in our democracy is: Why wouldn't is. Most Americans fell asleep after we declared victory in the Cold War. Separated by oceans and our belief in the inevitable triumph of liberal democracy, we laughed when Mitt Romney suggested that Russia remained our greatest geo-political adversary. We had moved on.

Russia, on the other hand, never moved on. Putin has made no secret of his ambition to resist the influence of the West and roll back the decline of Russian global power and regional hegemony. We should not view the notion that Russia might harness the power of social media and use it as a tool against us as a conspiracy – or surprising. Military confrontation is not – and has never been – an option upon which Russia could rely. In contrast, the rise of information technology and social networking offered Russia with a new theatre for information warfare that has been central to its strategic world view for more than a century.

A woman who worked in one of the St. Petersburg 'troll factories' referenced in Mueller's indictment, "that turned lying, telling untruths, into an industrial assembly line," observed that Russia's tactics could never work against Russians. "Who really reads the comments under news articles, anyway? Especially when they were so obviously fake... But for Americans, it appears it did work. They aren’t used to this kind of trickery. They live in a society in which it’s accepted to answer for your words." 

The burden is not on Vladimir Putin to cut it out. This is our problem. Putin is simply doing what he views as in his and his country's best interest, using tools and strategies that they have refined over the generations. Whatever response people might have in mind – expelling diplomats or adding some new sanctions – will not fix things. We have made ourselves vulnerable to Russia's efforts by our own behavior; our penchant for conspiracy theories, our increasing insistence on assuming the worst of those on the other side in our political wars, and, as the woman from St. Petersburg suggested, our guilelessness.

That was the Russian objective all along: deepening the political rifts that divide us and exacerbating our dysfunction; anything more than that was just an added bonus. We have become so obsessed with partisan games that it has become difficult for us to see simple truths and dangers that are right in front of us, and to grasp how much we have at stake if we continue down the path we are on.

Follow David Paul on Twitter @dpaul. He is working on a book, with a working title of "FedExit: Why Federalism is Not Just For Racists Anymore."

Artwork by Jay Duret and Alex Dworetzky. Check out Jay's political cartooning at Follow him on Twitter @jayduret or Instagram at @joefaces.

Friday, March 09, 2018

Peace in our time.

After weeks of resignations, scandal and a deepening legal turmoil, Donald Trump had a good week – or at least a good couple of days. Between tariffs and North Korea, Trump was on his game.

Say what you will about whether he announced tariffs to change the story from hush money paid to Stormy Daniels, it worked. Tariffs knocked Daniels off the front pages of the newspapers, and replaced that story with the image of a the strong, deeply caring President greeting steelworkers in the White House, hearing their stories, and basking in their appreciation for defending them, their families and their communities against the onslaught of the world. It is exactly what he promised.

When he is running the show, Trump is a master of imagery and narrative. Surrounded by beefy steelworkers, hearing their stories, offering them praise. The working man's hero making America great again.

Scott Sauritich, a local union leader from a Pennsylvania steel town told his story. "My father, during the '80s, he lost his job due to imports coming into this country. And I just want to tell you what that does to a man with six kids is devastating. So I never forgot that looking into his eyes in my household what that does to a family. You hear about it, but when you're actually involved and it impacts you, it's - it'll never leave you." 

Your father must be very proud of you, the President offers. He is center stage with the cameras rolling. It is his show. He is relaxed, affable, and shows an easy sense of humor.

But the breadth of the tariffs is already beginning to fade. Just days ago, the White House insisted there would be no exemptions to the American action, but Canada and Mexico, the largest and fourth largest sources of imported steel, have already been excluded. Exemptions are also expected for other allies. Certainly South Korea, the third largest source of imports, which just delivered Trump a possibly earthshaking meeting with Kim Jong-un, will not be punished for its efforts. Together, those three represent 35% of steel imports into the country.

That leaves Brazil and Russia as the last of the top five largest importers, which together deliver a further 20+% of imports into the U.S. Then there are Japan, Taiwan and Germany, three staunch allies, who make up another 12%. Time will tell whether, as attention turns elsewhere, pressure from allies, Congress, and the ever-curious Russia story, will further erode the impact of tariffs celebrated by the steelworkers that Trump gathered around himself. Suffice it to say, if Trump gives in to the pressures he is already facing, as much as 75% of imports may turn out to be reduced or waived altogether. But Trump lives for the attention and adulation in the moment, and seems oblivious to whether anything of enduring value survives.

Trump's reality show chops have been on display of late, and he is very good at it. His new favorite platform – the White House meetings with bi-partisan groups of Senators to knock heads and make deals – have all the appearance of what one might have hoped for from a President Trump, based on how he sold himself on the campaign trail. At the meeting on guns, Trump sat California Democrat Diane Feinstein – the architect of the automatic weapons ban that has long since lapsed – to his left. He orchestrated a back and forth between the Democrats and Republicans, suggesting what could and couldn't work, shocking Republicans in the room as he deferred to the Democrats. Feinstein became visibly giddy with excitement as the President put the real issues on the table and swatted aside the legitimacy of the National Riffle Association as a player in the legislative deal making.

We had seen this performance before, when Trump put himself front and center in a similar meeting on DACA and immigrations. There, he presaged the staged nature of the proceedings as he literally welcomed the Senators into his "studio." He was the master of ceremonies, and set a strong tone laying out the issues, leaving Republicans dumbstruck as the man who rode visceral partisan anger over immigration to the presidency positioned himself as a neutral arbiter; a dealmaker serving the nation's interest. Then, as with guns, he assured the group that, like Prometheus stealing fire from the gods, he would take the heat; he would bear the political risk of passing an immigration bill over what was certain to be angry objections from the Republican base.

The Republican base, of course, is the Trump base, and each time, once the cameras were off and the Senators had retreated to their chambers, Trump reverted to his political safe space. No deals made in his studio survived the light of day. Stephen Miller, Trump's 32 year old senior advisor who presides as the Prefect of the Doctrine of the Faith, is now responsible in Steve Bannon's absence for pulling Trump back from the brink when he makes commitments that violate his oath to the MAGA faithful; and so he did. The deal on DACA died a swift death as Miller added new conditions that quickly scuttled the purported deal. Progress toward action on guns was put to bed by an announcement by the NRA that they had met with Trump a few hours after the meeting. Whatever Trump might have suggested in that room was mistaken; his position on guns was not really what he said it was.

On Thursday, Trump blindsided his own foreign policy team by agreeing to meet face-to-face with North Korea's supreme leader Kim Jong-un. It has all the makings of more great television. Saudi Arabia and China laid out the script for the rest of the world, that the President can be seduced by a hero's welcome with high production values. The South Koreans – who lie in the path of Kim's artillery and are most vulnerable to nuclear annihilation should the cascade of insults between Kim and Trump lead one of them to actually start something – stroked Trump's ego furiously as they announced the pending meeting.

If it comes to something, the solution to the North Korea problem that South Korea's National Security Advisor suggested was at hand would cement Trump's legacy. But we are a long way from that. A meeting in and of itself – regardless of what it leads to down the road – looms to give each of the two leaders what they value most. Kim Jong-un will get to stand side-to-side on equal terms with the most powerful man on the planet. For his part, Donald Trump will stand before the assembled cameras of the world, as Clinton, Bush and Obama had each failed to do, and declare peace in our time.

Commenting after the White House ceremony, Scott Sauritch did not see the cynical side, the risk that he was just a prop in one more episode of a reality show presidency. "I think this all needs action right now," he emphasized. "Let me tell you something...this change in the steel industry, this attention to what's going on right now had to happen... For the infrastructure and the safety and security it needed to happen." 

Sauritch, like many of Trump's supporters, may take him at his word, but, as with all of the President's striking performances, it is the next day that matters; and the day after that. In DACA and guns and infrastructure week, and now with tariffs, once the show ends and the cameras stop rolling, Trump's attention fades and his commitment withers, and, at the end of the day, little of substance is actually achieved.

If there is a deal to be reached with North Korea – or even for real negotiations to begin – members of the foreign policy establishment have observed that the President will need a diplomatic infrastructure that he currently does not have. Right now, we have no ambassador on the Korean peninsula. Nor, apparently, does Rex Tillerson have a staffed East Asia desk. In an earlier time, one would have assumed that the President would task Jared Kushner to put together the North Korea peace deal. But his star has faded of late, and, in any event, his plate is probably full with Mexico, the Middle East and China, to say nothing of his own personal legal defense and lack of security clearance.

Getting to an actual deal will be the difficult part, not arranging one face-to-face meeting. A meeting, after all, does not required Kim to relinquish his nukes or Trump his rhetoric. But should a deal be struck and a written agreement actually drafted, getting it signed – which is the point of greatest political risk – could present a challenge all of its own. If you don't believe that, just ask Stormy Daniels.

Follow David Paul on Twitter @dpaul. He is working on a book, with a working title of "FedExit: Why Federalism is Not Just For Racists Anymore."

Artwork by Jay Duret. Check out his political cartooning at Follow him on Twitter @jayduret or Instagram at @joefaces.

Wednesday, March 07, 2018

Our politics, turned upside down.

If there was any doubt that Donald Trump has turned our politics upside down, that question has been settled. According to the Quinnipiac University Poll released this week, American voters oppose Trump's proposed tariffs on steel and aluminum by a 50% to 31% margin, and nearly two-thirds disagree with his assessment that a trade war would be good for the country. But it is the partisan breakdown of those numbers that show that our politics have truly disappeared down the rabbit hole. According to the poll, 58% of Republicans support Trump's tariffs, while 73% of Democrats oppose them, and 67% of Republicans agree with the President that a trade war would be good for the country and could be easily won, while 90% of Democrats disagree. These results are literally the opposite of what, in the world before Trump, one would have expected.

Dating back to the post-World War II years, free trade was a defining principle of the Republican Party. Democrats have long been split between free traders and protectionists, but not so the GOP. When Richard Nixon and Ronald Reagan broadened the GOP coalition to bring white southern and working class Democrats into the fold – former members of Franklin Roosevelt's New Deal coalition who had been weaned on big government and protectionist sentiments – the party acquiesced to the interests of those voters and tacked hard to the right on social issues, but the Wall Street and Main Street business Republicans who had long represented the core of the GOP gave no ground on their core economic principles, including their commitment to free trade and free markets.

GOP support of free trade was historically coupled with its pull-up-the-bootstraps stance with respect to individuals in the job market. In his famous 47% comments to a group of hedge fund managers during the 2012 presidential campaign, Republican nominee Mitt Romney denigrated Americans "who believe that they are victims" and lean on the government to solve their problems rather than packing their bags when times were tough and moving to where the jobs are. Four years after Romney's defeat, however, working class Americans hunkered down in dying rural communities – former Democrats who had morphed into the activist base of the GOP – eagerly embraced Donald Trump, as he rejected Romney's traditional GOP message and told those voters instead that they should sit tight and he would bring their jobs back.

Now that Donald Trump is proposing to deliver on his promises – showing himself as more Huey Long than Mitt Romney – business Republicans who fell in lockstep with him in return for massive tax cuts are protesting what in their view is Trump's abandoning of a core principle of Republicanism. But there is no reason they should be surprised; Donald Trump ran against the Republican Party as much as he ran as part of it, and the peasants with pitchforks who carried him to the White House are surely as deserving of their payday as those GOP elites who cashed their checks last Christmas. But if the Quinnipiac numbers are correct, we may be seeing more than just payback for delivering votes on election day. Donald Trump may have completely flipped the script as he competes his overhaul of the GOP, leaving old guard, free trade, free market Republicans on the outside looking in. 

Donald Trump is correct. The world has taken advantage of American foreign and trade policies in the decades since World War II and the Cold War. But that was the point. The global economic order that America championed in the wake of the Second World War was built around opening up our own markets to international competition to allow nations across the world to lift much of their citizenry out of extreme poverty. It was not a charitable undertaking on our part. After the world had suffered through two world wars, after the treaty ending the First World War pushed the German people into a degree of privation that led to the rise of Hitler, and after the Second World War left much of Europe and Japan in ruins, it was clear that a different path was going to be necessary if we were going to avoid a third world war.

Coming of age in the 1960s and 70s, when 50% or more of the people across the globe lived in extreme poverty, it was hard to imagine – as illustrated here – that in our lifetime that the percent of the world population living in extreme poverty would decline to below 10%, as it did by 2015. As it turned out, a billion or more prisoners of starvation across the globe were lifted out of extreme poverty – with hundreds of millions entering the middle class in countries where none existed before – as much as anything by an economic vision championed by the GOP and resisted by protectionists within the Democratic Party. In the decades following the Second World War, first Europe and Japan, then India and East Asia and China, and ultimately Africa have seen improvements in standards of living across a variety of metrics to an extent that once was unimaginable. 

Donald Trump's most loyal supporters – former steelworkers and others who were forced along the way to compete with low cost workers and government subsidized industries across the world – see Trump as their champion. Many old school Democrats, such as Ohio Senator Sherrod Brown, similarly celebrated Trump's proposed tariffs. “This welcome welcome action," Brown exclaimed "is long overdue for shuttered steel plants across Ohio and steelworkers who live in fear that their jobs will be the next victims of Chinese cheating.” 

It turns out, however, reports of the death of the steel industry have been greatly exaggerated, as the data paints a more ambiguous picture than simply one about an American industry suffering at the hands of the perfidious Chinese. As the graph here illustrates, the tonnage of steel produced in the United States has remained roughly unchanged over the past three decades, even as employment in the steel industry has declined by roughly two-thirds. This suggests that it is the jobs that have disappeared, not the industry, and that investment in advanced technologies has been the primary culprit leading to the loss of jobs rather than competition from China. 

While Trump – and more notably Steve Bannon, before he disappeared from the administration – has consistently pointed the finger of blame at China, Chinese imports are barely a factor with respect to domestic steel consumption and import competition. Canada and Mexico, our partners in the increasingly integrated North American market, are two of the five largest sources of steel imported into the United States, along with Brazil, South Korea and – interestingly – Russia. Of the top ten, China is 11th, with less than a 2% share of imports. This is not to say that China has not been the primary culprit in the evisceration of U.S. manufacturing; it has been. Our trade deficit with China eclipses our trade imbalances with literally all of our other trading partners combined. But even if China is the problem, it is not apparent how Trump's proposed steel tariffs are a solution.

The picture that the data paints with respect to the impact of technology on steel production and employment is illustrative of the entire manufacturing sector. As this graph from the St. Louis Federal Reserve Bank illustrates, industrial production – shown in the blue line – has risen steadily since the 1970s, with periodic dips during economic recessions, even as manufacturing employment – the red line – has declined from a peak of over 19 million workers, to below 13 million currently. The simple truth is that the world of manufacturing has changed, and all of the MAGA hats and #MAGA tweets are not going to restore the bygone era of people's imagination. Trump's tariffs may give American steel a competitive advantage in the domestic market, but trends in automation and robotics suggest that employment impacts will be far less than economic nationalists imagine. As was the case with his tax cuts, Trump may sell the proposed tariffs on the basis of restoring lost jobs for his working class supporters, but the economic benefits will likely flow to the company CEOs, directors and investors.

Donald Trump conceded as much last July, during a visit a county in upstate New York that he had won with nearly 57% of the vote eight months earlier. Straying off message in the face of the harsh realities on the ground in an economically ravaged community, Trump told workers there the truth: Sitting tight and waiting for the jobs to return was an fool's errand. Companies in other regions of the country were grappling with chronic labor shortages, he said, and people should pack up their belongings and move to where the jobs are. "It's OK," he said. "Don't worry about your house." Trump knows that he has been peddling false hopes with his promises to return the nation to its manufacturing heyday, but so far, it has worked for him.

Free trade and the elevation of a billion people out of extreme poverty in the decades since World War II is as much a defining Republican victory as the fall of the Iron Curtain. But the days when the GOP was a party with a global vision of security through economic cooperation is swiftly disappearing into the fog of memory. Long-time Republicans swallowed hard over the years as one GOP President after another walked back the party's traditional embrace of civil rights, and its moderation on social issues, as the price of building a winning electoral coalition. Now, the final old time pillar of Republicanism is crumbling.

Over the course of the primary campaign, and now as President, Donald Trump pushed the Party of Lincoln into uncharted territory, first with his demonizing of immigrants, then his coddling of neo-Nazis, and now with his full-throated embrace of a trade war. Economic nationalism may not sit well with traditional Wall Street and business Republicans as the new mantra of the GOP – and indeed it offers no solutions to the working class voters that have fallen under Trump's spell – but according to the Quinnipiac Poll, the rest of the party is getting on board. Those traditional Republicans – bought off for thirty pieces of silver – looked away time and again as Donald Trump exploited the worst angels of our nature. It is a little late for them to start complaining now.

Follow David Paul on Twitter @dpaul. He is working on a book, with a working title of "FedExit: Why Federalism is Not Just For Racists Anymore."

Artwork by Jay Duret. Check out his political cartooning at Follow him on Twitter @jayduret or Instagram at @joefaces.

Saturday, March 03, 2018

The hidden price of presidential hubris.

As a class, investors have enjoyed the fruits of the Trump presidency. From the day of his election through this past January, the Dow Jones rose 48%, from 17,888 to 26,616. That is a rally of unheard of proportions for a large cap market index. After it hit that high in late January, the market corrected by 10%. Despite those who feared the worst, the pullback was a healthy – and needed – correction for a market that has been careening upward. Over the past week, the economic momentum encapsulated in the stock market's advance has been shaken by Donald Trump's apparent eager embrace of a trade war, and his willingness to threaten the myriad advantages that the United States has enjoyed as the architect of the post-World War II international order.

If you talk to investment advisors these days, they are an optimistic bunch. The world, they will tell you, is in a uniquely aligned period of economic expansion. Even Japan, which has been mired in economic stagnation and deflation for several decades now, is finally showing signs of growth. At home, the U.S. has rebounded from the 2007-08 global financial collapse more robustly than most areas of the industrialized world. Unemployment has continued a long, steady decline, domestic manufacturing is growing, and, as illustrated in the graph here, consumer confidence has steadily improved, to its highest level in nearly two decades.

Just as the stock markets had bounced back from the correction that began in late January, Trump threw a wrench in the works, announcing that he planned to institute a 25% tariff on steel imports. One might have thought that by now the world would have learned not to over-react to Trump's words, and instead waited a few days to see if there was any substance to his announcement or if it was just one more tactical diversion to draw attention away from what has been one of the most tumultuous weeks of his presidency, but markets are easily spooked by threats of tariffs and trade wars. However glowing the global economic context might look, these threats are a reminder of the risks that politics can pose, and harken back specifically to the Smoot-Hawley Tariff Act of 1930. That Act put in place protectionist tariffs and trade policies in the wake of the 1929 stock market crash. The retaliatory tariffs and trade war that ensued are widely credited with deepening the Great Depression. Trump's words proved to be hard to gloss over, and within the first hours following his announcement, $400 billion in market value evaporated. Within two days, the Dow dropped 1,000 points.

The threat posed by Trump's continuing flirtations with economic nationalism goes well beyond the tit-for-tat consequences that we might face should he go forward with imposing tariffs on one industry or another. It is easy to forget how dependent upon the rest of the world we have become, not just with respect to confronting global issues like the terrorism or climate change, but in the more mundane issue of how we pay our bills from one month to the next.

Talking about debt and deficits has gone out of fashion, and for good reason: after a decade of zero and near-zero interest rate policies by central bankers around the world, the annual interest cost on the federal debt has remained artificially low, assuring that the financial cost of federal deficits has been far lower than the political cost of doing anything about them (i.e. raising taxes or cutting spending). While total outstanding federal debt held by the public has grown ten-fold since Ronald Reagan was president – from $1.2 trillion in 1984 to $11.7 trillion in 2016 – the net interest cost in the federal budget has barely doubled, rising from $111 billion to $240 billion, as the average interest rate paid on the national debt plummeted from over 8% to under 2%. 

In a world where borrowed money costs so little, Congress finally decided that yelling and screaming about deficits isn't worth it; a new consensus emerged: deficits don't matter. The moment of capitulation came when Republicans – including members of the formerly anti-debt Freedom Caucus – embraced tax cuts estimated to cost $2.2 trillion. After that, the budget deal costing $300 billion was a cakewalk. 

The result of that capitulation is projected to be trillion-dollar deficits for years to come. That, in turn, means that the United States will be depending on the good will of the international community for years to come – a consideration that does not appear to factor into Trump's view of the international landscape. 

Our ability to fund massive budget deficits year after year without feeling much pain has not been just because of zero interest rate policies that have been in effect since the 2008 collapse, but also because for the past half-century the U.S. dollar has been the reserve currency of the world. Both of these circumstances are now at risk, and both suggest that the future may not be as accommodating as the past. 

As the global reserve currency, foreign countries have a number of reasons to invest their currency reserves in dollars. It is an advantage that French President Valéry Giscard d'Estaing famously described as an "exorbitant privilege" granted to the United States as the overseer of the post-World War II international order. As illustrated in this graph from the St. Louis Federal Reserve Bank, foreign investment in federal debt – shown here in blue –has increased substantially as the amount of U.S. federal debt has grown. The other areas illustrated in the graph are domestic private investors in green, and holdings by the Federal Reserve Bank in red. As of 2016, foreign investors held 53% of the $11.7 trillion of publicly-held federal debt, with China and Japan together holding $3.3 trillion, or one-third of the total.

Interest rates are already heading upward as the world economy is picking up steam, just as the Congress and the President have committed to a path of massive increases in annual borrowing. We are now dependent on the international community to assure adequate demand for our bonds, and minimize the interest costs we are forced to pay. Should rates rise to where they were in 2007 just before the global financial collapse – around 4.5% – the net interest costs in the federal budget would nearly triple from the current $220 billion to $650 billion per year. Should rates rise to where they were when Bill Clinton was president – 6.5% – interest costs would rise nearly four-fold to $850 billion. That would represent a cost increase of $630 billion, or more than the entire cost of the budget for the Department of Defense last year. And those numbers are based on the debt outstanding as of 2016, and therefore understate the risk posed by rising rates.

Donald Trump has carefully honed his disdain for the international order constructed by the United States over the past half century and is more than willing to lash out at the world in whatever manner he chooses when it serves his domestic political interests. We saw that this week, as he stirred up a hornet's nest by announcing import tariffs and endorsing the idea of a trade war. Casting aside the international order may be good domestic politics for the President, but there is a very real price to be paid if it goes too far. China has long-bristled at the exorbitant privileges the United States enjoys and has demonstrated that it is more than eager to step into any void created by the United States walking away from its historic leadership role – or by any actions of the American President that alienate the good will of the rest of the world. Already, China is pushing to shift the pricing of oil contracts from dollars to the Chinese renminbi, a critical step in unwinding a half-century of dollar hegemony in the global energy markets, and scaling back the privileges that we enjoy, including the incentives that foreign central banks have to purchase our debt. 

In these circumstances, the last thing we need is the President antagonizing the rest of the world for his own momentary political advantage. Right now, those same countries he is antagonizing are the ones that he is assuming will buy the trillions of dollars of bonds that will fund his tax cuts. They don't have to do that if they don't want to. If they decide to turn their backs on him, we are going to learn very quickly that federal deficits do matter after all.

Follow David Paul on Twitter @dpaul. He is working on a book, with a working title of "FedExit: Why Federalism is Not Just For Racists Anymore."

Artwork by Jay Duret. Check out his political cartooning at Follow him on Twitter @jayduret or Instagram at @joefaces.