Month: July 2022

Authored by Michael Walsh via AmericanMind.org,

“The following is an excerpt from Michael Walsh’s forthcoming book, Against the Great Reset: Eighteen Theses Contra the New World Order, which will be published by Bombardier Books and be available October 18, 2022. Walsh has gathered a series of essays from among eighteen of the most eminent thinkers, writers, and journalists—including the American Mind’s own James Poulos, as well as Claremont Senior Fellows Michael Anton and the late Angelo Codevilla—to provide the first major salvo in the intellectual resistance to the sweeping restructuring of the western world by globalist elites.”

Part I: The Problem

What is the Great Reset and why should we care? In the midst of a tumultuous medical-societal breakdown, likely engineered by the Chinese Communist Party and abetted by America’s National Institutes of Health “gain of function” financial assistance to the Wuhan Institute of Virology, why is the Swiss-based World Economic Forum (WEF) advocating a complete “re-imagining” of the Western world’s social, economic, and moral structures? And why now? What are its aspirations, prescriptions, and proscriptions, and how will it prospectively affect us? It’s a question that the men and women of the WEF are hoping you won’t ask.

This book seeks to supply the answers. It has ample historical precedents, from Demosthenes’s fulminations against Philip II of Macedon (Alexander’s father), Cicero’s Philippics denouncing Mark Antony, the heretic-hunting Tertullian’s Adversus Marcionem¸ and the philosopher Friedrich Nietzsche’s Nietzsche contra Wagner. Weighty historical issues are often best debated promptly, when something can yet be done about them; in the meantime, historians of the future can at least understand the issues as the participants themselves saw and experienced them. Whether the formerly free world of the Western democracies will succumb to the paternalistic totalitarianism of the oligarchical Resetters remains to be seen. But this is our attempt to stop it.

So great is mankind’s perpetual dissatisfaction with its present circumstances, whatever they may be, that the urge to make the world anew is as old as recorded history. Eve fell under the Serpent’s spell, and with the plucking of an apple, sought to improve her life in the Garden of Eden by becoming, in Milton’s words, “as Gods, Knowing both Good and Evil as they know.” The forbidden fruit was a gift she shared with Adam; how well that turned out has been the history of the human race ever since. High aspirations, disastrous results.

The expulsion from the Garden, however, has not discouraged others from trying. Indeed, the entire chronicle of Western civilization is best regarded as a never-ending and ineluctable struggle for cultural and political superiority, most often expressed militarily (since that is how humans generally decide matters) but extending to all things both spiritual and physical. Dissatisfaction with the status quo may not be universal—timeless and static Asian cultures, such as China’s, have had it imposed upon them by external Western forces, including the British and the Marxist-Leninists—but it has been a hallmark of the occident and its steady civilizational churn that dates back at least to Homer, Plato, Aeschylus, Herodotus, Pericles, and Alexander the Great, with whom Western history properly begins.

The philosopher Friedrich Nietzsche, assaying the inelegant Koine, or demotic, Greek of the New Testament in Beyond Good and Evil, observed: “Es ist eine Feinheit, daß Gott griechisch lernte, als er Schriftsteller werden wollte—und daß er es nicht besser lernte”: “It’s a particular refinement that God learned Greek when he wanted to become a writer—and that he didn’t learn it better.” Nietzsche, the preacher’s son who became through sheer willpower a dedicated atheist, was poking fun at the fundamentalist belief that the Christian scriptures were the literal words of God himself (Muslims, of course, believe the same thing about the Koran, except more so). If something as elemental, as essential to Western thought as the authenticity of the Bible, not to mention God’s linguistic ability, could be questioned and even mocked, then everything was on the table—including, in Nietzsche’s case, God Himself.

With the death of God—or of a god—Nietzsche sought liberation from the moral jiu-jitsu of Jesus: that weakness was strength; that victimhood was noble; that renunciation—of love, sex, power, ambition—was the highest form of attainment. That Nietzsche’s rejection of God was accompanied by his rejection of Richard Wagner, whose music dramas are based on the moral elevation of rejection, is not coincidental; the great figures of the nineteenth century, including Darwin and Marx, all born within a few years of each other, were not only revolutionaries, but embodied within themselves antithetical forces that somehow evolved into great Hegelian syntheses of human striving with which we still grapple today.

Wagner, the Schopenhauerian atheist who staggered back to Christianity and the anti-Semite who engaged the Jew Hermann Levi as the only man who could conduct his final ode to Christian transfiguration, Parsifal. Charles Darwin, ticketed for an Anglican parsonage but mutating into the author of On the Origin of Species, The Descent of Man, and all the way to The Formation of Vegetable Mould through the Action of Worms. Karl Marx, the scion of rabbis whose father converted to Lutheranism and, like Wagner for a time, a stateless rebel who preached that the withering away of the state itself was “inevitable”—and yet the state endures, however battered it may be at the moment.

It’s fitting that the “Great Reset of capitalism” is the brainchild of the WEF, which hosts an annual conference in the Alpine village of Davos—the site of the tuberculosis sanatorium to which the naïf Hans Castorp reports at the beginning of Thomas Mann’s masterpiece, The Magic Mountain. Planning to visit a sick cousin for three weeks, he ends up staying for seven years, “progressing” from healthy individual to patient himself as his perception of time slows and nearly stops. Castorp’s personal purgatory ends only when he rouses himself to leave—his Bildungsreise complete—upon the outbreak of World War I, in which we assume he will meet the death, random and senseless, that he has been so studiously avoiding yet simultaneously courting at the Berghof.

Central Europe, it seems, is where the internal contradictions of Western civilization are both born and, like Martin Luther at Eisleben, go home to die. And this is where the latest synthetic attempt to replace God with his conqueror, Man, has emerged: in the village of Davos, in the canton of Graubünden, Switzerland: the site of the annual meeting of the WEF led by the German-born engineer and economist Klaus Schwab, born in Ravensburg in 1938, the year before Hitler and Stalin began carving up Poland and the Baltics.

Once more into the breach, then: behold the present volume. In commissioning sixteen of the best, most persuasive, and most potent thinkers and writers from around the world to contribute to our joint venture, my principal concern has been to offer multiple analyses of the WEF’s nostrums and in so doing to go poet Wallace Stevens’s “Thirteen Ways of Looking at a Blackbird” a few better. Then again, given the surname of the WEF’s chief, perhaps a better, more potent literary citation might be Margret’s little ditty from the Büchner/Alban Berg expressionist opera, Wozzeck (1925): In’s Schwabenland, da mag ich nit—”I don’t want to go to Schwab-land.” Nor, as Hans Castorp’s journey illustrates, should anyone wish to visit Davos-land if he prizes his freedom, his possessions, and his sanity. To the Great Resetters, we are all ill, all future patients-in-waiting, all in dire need of a drastic corrective regimen to cure what ails us.

In these pages, we shall examine the Great Reset from the top down. The eminent American historian Victor Davis Hanson begins our survey with “The Great Regression,” locating Schwab’s vision within its proper historical context. He is followed by Canada’s Conrad Black and America’s Michael Anton and their views of capitalism and socialism, with not a few attacks on conventional, osmotic wisdom that will both surprise and enthrall. Britain’s Martin Hutchinson outlines the contours of the Reset’s “Anti-Industrial Revolution,” even as the American economist David Goldman confronts both Schwab’s notion of the “Fourth Industrial Revolution” and China’s immanentizing its eschaton in real time, along with the Red Dragon’s commitment to the upending of Western civilization and its own Sino-forming of a post-Western world.

American writer, editor, and publisher Roger Kimball tackles the implications of a neofascist Reset in his essay, “Sovereignty and the Nation-State,” both of which concepts are under attack in the name of “equality,” its totalitarian successor “equity,” and the political consequences of our re-embrace of Rousseauvian concepts as applied to governments. British historian Jeremy Black discusses the misuses toward which the study of history has been and will be put to by the Resetters. The late Angelo Codevilla contributes what alas became his final essay, “Resetting the Educational Reset,” to sound the tocsin about the dangerous left turn of the once-vaunted American educational system, now reduced to a shrill, sinistral shell of its former dispassionate glory.

From Down Under, the Philippines-born Richard Fernandez twins two eternally competing faiths, religion and science; the American-born, Australian-based political sociologist Salvatore Babones contributes a remarkably clear explication of the kinds of transportation feasible under the “green energy” regimen the Reset seeks to impose upon us, and its practical and social implications. Writing from Milan, Alberto Mingardi, the director-general of the Istituto Bruno Leoni, gets to the heart of the Great Reset’s deceptive economic program with an essay concerning faux-capitalist “stakeholder capitalism” and its surreptitious replacement of shareholder capitalism in the name of “social justice.”

The Great Reset, however, is not strictly limited to matters financial, pecuniary, or macroeconomic. Social and cultural spheres are of equal importance. James Poulos looks at the Reset’s unholy relationship with the predatory Big Tech companies that currently abrogate the First Amendment by acting as governmental censors without actually being commanded by an act of Congress or, increasingly, an arbitrary presidential mandate. From British Columbia, noted Canadian author and academic Janice Fiamengo weighs in on the destructive effects of feminism upon our shared Western culture while, on the lighter side, Harry Stein examines the history of American humor—which in effect means worldwide humor—and how the leftist takeover of our shared laugh tracks has resulted in a stern, Stalinist view of what is and what is not allowed to be funny.

The British writer Douglas Murray has a go at the permissible future of Realpolitik under the panopticonic supervision of the Reset, the Chinese Communist Party, and the Covid hysterics, while the American journalist John Tierney lays out the road to civilizational serfdom that the unwarranted panic over the Covid-19 “pandemic” has triggered during its media-fueled run between 2019 and 2022. My contribution, in addition to this Introduction, is an examination of the Reset’s—and, historically, elitist tyranny’s—deleterious effects on Western culture: the very thing that gave birth to our notions of morality and freedom.

At its heart, the Great Reset is a conceited and self-loathing central-European blitzkrieg against the cultural, intellectual, religious, artistic, physical, and, most of all, moral inheritance we have received from our Greco-Roman forebears. This has been latterly shorthanded, with the rise of “wokeness,” to “white” culture. Typically racialist, if not outright racist, the cultural Marxists behind wokeness insist on reducing humanity to its shades of skin color and then claiming that although all skin colors should achieve in exact same proportions to their share in a given population, some skin colors are better than others and any skin color is preferable to white. It’s a deeply repellent principle that masquerades as a perversion of Judeo-Christianity but is in fact a simultaneous attack on individuality and merit that seeks to roll back the scientific and cultural advances of the past two millennia, wielding both science and culture as weapons against our shared technological and moral heritage.

The goal, as always, is power—the eternal fixation of the socialist Left…

The Federal Communications Commission (FCC) granted Elon Musk’s SpaceX permission to provide Starlink high-speed satellite internet to users in vehicles, vessels, and aircraft, potentially changing the game regarding the current dial-up speeds on commercial jets and cruise ships. 

In its authorization memo dated Thursday, the FCC said, “We agree with SpaceX and Kepler that the public interest would benefit by granting with conditions their applications. Authorizing a new class of terminals for SpaceX’s satellite system will expand the range of broadband capabilities to meet the growing user demands that now require connectivity while on the move, whether driving an RV across the country, moving a freighter from Europe to a U.S. port, or while on a domestic or international flight.”

This permission is crucial for SpaceX to expand its high-speed satellite internet service on commercial airline carriers. It has signed deals with Hawaiian Airlines and semiprivate charter provider JSX. 

Last month, Royal Caribbean Group requested the FCC to immediately clear the way for next-generation high-speed internet on cruise ships. Just like airlines, cruise ship internet speeds while sailing range between 3-5 Mbps for download, very similar to speeds to ones in commercial jets. For reference, the average US household has a download speed of about 43 Mbps. 

The age of remote working and the internet of everything is pushing a need for high-speed satellite internet. 

The FCC’s authorization also allows semi-trucks, RVs, and anything that moves, even a Tesla, to use Starlink for portable use. 

However, there is a condition the FCC noted for in-motion Starlink service. SpaceX must “accept any interference received from current and future services authorized.” 

Bloomberg notes SpaceX has more than 2,500 satellites in low Earth orbit, serving at least a half-million Starlink customers worldwide. Here’s a coverage map:

Speedtest.net clocked Starlink’s average internet speed in the US at around 90.55 Mbps in 1Q22, up 38% from 65.72 Mbps YoY. Imagine receiving those speeds on a commercial jet and/or cruise ship — would change the game of remote working. 

By Jack Phillips of The Epoch Times

At least seven people were killed and 29 more were injured in shootings across Chicago over the Fourth of July weekend, officials said on Sunday morning.

Authorities said that a male and another male were shooting at each other at the 2200 block of South Wentworth Avenue at around 10:50 p.m. A 24-year-old unidentified woman was shot in the torso and was later pronounced dead at Stroger Hospital, officials told the Chicago Sun-Times and ABC7.

The incident left a 42-year-old injured, and an official said she’s in good condition at a nearby hospital, the paper reported. One of the suspects, a 38-year-old male, was shot in the buttocks and is in critical condition in Northwestern Memorial Hospital, authorities said.

Early on Sunday, a 35-year-old male was shot dead at around 3 a.m. while in a vehicle in Brighton Park, officials said. The male was in the passenger seat as a female driver was driving a car on the 3800 block of South Kedzie Avenue when he was hit in the neck by gunfire.

And on Friday, authorities said a 26-year-old male was shot and killed in the South Side’s Englewood district. The male was outside about 5:45 p.m. in the 6500 block of South Wolcott Avenue when someone approached and shot him.

On Sunday, two people were injured and one person—a 24-year-old male—died in a shooting at Grand Crossing on the South Side, police said. They were shot in the backyard of a house in the 7000 block of South Harper Avenue at around 5:30 a.m. local time.

Police said that in another incident, a 29-year-old male, identified as Keishone Roberts, was shot dead in the 4300 block of West Van Buren Street in West Garfield Park, the paper reported. He was shot several times after someone approached him and opened fire. He was pronounced dead at Stroger Hospital sometime later.

Around midnight Saturday, a 30-year-old male was shot and killed in the 9000 block of South Escanaba Avenue when someone shot him in the head, police said. Other details about the incident weren’t provided.

Authorities also confirmed that a man was shot and killed while riding a bike in the 2100 block of East 71st Street at around 4 p.m. Saturday. The man, 26, was struck in the head and arm before he was taken to a nearby hospital and was later pronounced dead.

During the Fourth of July weekend in 2021, more than 100 people were shot, of which 19 died. That prompted Chicago Police Chief David Brown to say that residents should expect more officers on the streets this weekend.

“While I won’t give a number, we do have adequate resources … where we need them,” Brown said last week, according to reports. “Navy Pier obviously is a focus. All of our high-violence areas—obviously the top 55 beats—are a focus. As well as areas within every neighborhood” and “downtown.”

And last week, officials said that a 19-year-old male suspect, Anthony Heredia, was charged in the fatal shooting of a 17-year-old girl in a Chicago parking lot of a business. Police told Fox32 that the girl approached Heredia who produced a gun and fired shots at her.

Authored by Kane Zhang via The Epoch Times,

The Cyberspace Administration of China issued new regulations on June 27 requiring all online platform operators to authenticate users’ identities and verify the account information submitted by users during registration.

The new regulations require the network information service provider to display user IP addresses on their page of account information, which would facilitate Beijing’s monitoring of user locations.

The new rules will take effect on Aug. 1, when companies will need to validate every user’s online identity.

‘Illegal’ Posts Critical of Regime

Current affairs commentator Lu Bei told The Epoch Times that the new rules allow the regime to maintain its control over information as it faces growing criticism online.

Lu said that Beijing aims to extend its centralized control of information systems into citizens’ everyday lives, supervising their every move. The regime has been know to use network technology in a way that violates the rights and privacy of ordinary citizens, while at the same time failing to monitor the movement of criminals.

On June 28, China’s Ministry of Public Security said on its public WeChat account that its cybersecurity department had investigated more than 600 cases of “illegal” posts by the “internet water army” or “internet navy”—many fake accounts that get paid to post positive comments to inflate companies’ online image—and arrested more than 4,000 suspects, according to the state-run People’s Daily.

The report said that those commentators had spread unfavorable views of China’s economy, and that some had released “illegal and harmful information to manipulate or disrupt the order of online public opinion.”

Lu believes that Beijing’s crackdown on the so-called “illegal internet navy” is to keep people from talking about hot topics, such as the “Iron Chain Woman” human trafficking scandal, the “nightmare” lockdowns in Shanghai, the Tangshan women-beating incident, and the Zhengzhou bank depositor incident.

“Any topic that concerns the ordinary citizen are suppressed, and inappropriate comments are filtered out, taken down, or attached with warning labels. People are deprived of freedom and labeled criminals for ‘picking quarrels and provoking trouble,’” Lu added.

“Meanwhile, the ‘legal’ Internet navy is paid for by the Chinese Communist Party. They are reportedly paid ‘fifty cents’ for every pro-CCP remark or in exchange for a reduced jail sentence.”

The Urban exodus documents here extensively over the past two years has had profound consequences on the US economy.

Starting with the pandemic, and subsequently accelerating due to the historic riots, unprecedented lawlessness and historic crime rates unleashed by democratic administrations in major US metroareas, urban exodus has had a “Donut Effect,” causing greater domestic migration out of urban counties and into the surrounding suburbs. At the same time, increased adoption of hybrid work and remote work have shifted the geographic location of demand for food and other services. The resulting temporary geographical mismatch in labor demand and supply could take time to resolve.

Addressing the topic of economic implications from urban exodus, a recent note from BofA economist Stephena Juneau writes that the labor market is in the midst of one of the most rapid recoveries in history. After falling by more than 21M from February 2020 to April 2020, private payrolls are now just about 200k below pre-pandemic levels. But this labor market recovery has been marked by substantial geographical variation. The growth in private employment has been much lower in bigger city centers compared to the surrounding suburbs. 

In its note (available to professional ZH subscribers), BofA digs deeper into this geographic variation by focusing on 11 of the largest Metropolitan Statistical Areas (MSA)—New York, Los Angeles, Chicago, Boston, Dallas-Fort Worth, Houston, Miami, Philadelphia, Washington DC, Atlanta and San Francisco. The recovery of private employment in these city centers has lagged behind the recovery in the surrounding suburbs (yet another failing by mostly Democratic cities). Indeed, BofA finds that aggregate private payrolls in the urban counties are down 3.8% from the pre-pandemic level in 2019 Q4 (Exhibit 1). Meanwhile, the surrounding suburbs have seen only a 1.5% drop in private employment.

The scientific name for the migration from cities to suburbs was given by Ramani and Bloom (2021) as “the Donut effect.” Data from William H. Frey at the Brookings institute on the basket of 11 MSAs lends support to this effect. It shows that urban counties have seen a significant decline in domestic migration and a decline in overall population.

Suburbs, on the other hand, experienced an increase in domestic migration based on change of address data from USPS. One of the main reasons for this is that businesses are adopting official remote work or hybrid work policies (the other big reason(s) is that most big cities have become socialist hellholes “worse than Afghanistan”, as even Ken Griffin recently declared before fleeing the Democratic bastion of Chicago for Miami).

This has led to both changing residences and a slow and incomplete recovery in office occupancy. More densely populated city centers like NY and SF are seeing a much slower recovery as compared to less densely populated city centers like Houston and Dallas.

The population shift and the drop in full time commuters has led to decreased mobility towards “retail & recreation” in the city centers as compared to the suburbs. To a large extent, businesses in the leisure/hospitality sector in the city centers like restaurants, cafes, retail stores depend on the workers who commute there during the week. Additionally, revenue from tourism that feeds into these sectors hasn’t picked up to its pre pandemic trend yet. This has caused a shift in labor demand from the city centers to the suburbs, helping cause a weaker job recovery in cities. Combine this with workers leaving the labor force and the labor shortage is particularly high in the suburbs.

Mismatches in the labor market add to the supply constraints on the economy. Hence they are part of the ongoing supply-driven inflation. In economic jargon, if they persist they raise the inflation neutral unemployment rate. In BofA’s view, this could take some time to resolve. It is hard for low wage workers to follow jobs into the suburbs because of limited low cost housing. As workers start spending a bit more time in the office, that will help ease the imbalance, but a return to the old living and commuting patterns is highly unlikely.

This geographical shift will eventually cause the businesses in the leisure and hospitality space in the city centers to either downsize/close or shift operations to the suburbs to meet the increased demand there.

The broader mismatch between labor supply and demand should also slowly improve. A recent survey conducted by Indeed shows that job seeker interest in high-touch jobs is in fact rebounding. This should help in resolving the geographical labor demand-supply mismatch. So the Fed will get some help in rebalancing the labor market, but they still need to bring job growth down below 100k and engineer a moderate upward shift in the unemployment rate. Then again, with even Zuck warning that mass layoffs are coming, we may be just a few days away from a “shock” negative jobs print.

Authored by Jonathan Turley,

In a rare move, Supreme Court Marshal Gail Curley has sent letters to Maryland Gov. Larry Hogan, Montgomery County Executive Marc Elrich, and Virginia Gov. Glenn Youngkin demanding that authorities put an end to picketing and “threatening activity” outside the homes of SCOTUS justices.

The letter seeks to use state laws to achieve what the Justice Department has clearly rejected under federal law. If the letter prompts arrests, we could see a major free speech challenge in the courts. The timing of the letter, however, is particularly interesting and may reflect a recognition of the limits of the federal law.

Like most Americans, I have denounced these protests targeting the homes of justices as excessive and reckless (though one law professor actually suggested that such protests could be more aggressive). However, I have also questioned the use of a federal law to arrest protesters.

Under a federal law, 18 U.S.C. 1507, any individual who “pickets or parades” with the “intent of interfering with, obstructing, or impeding the administration of justice, or with the intent of influencing any judge, juror, witness, or court officer” near a U.S. court or “near a building or residence occupied or used by such judge, juror, witness, or court officer” will be fined or “imprisoned not more than one year, or both.”

I believe that a court would declare the use of the law against protesters on public sidewalks to be unconstitutional under the First Amendment. Indeed, if you apply the broad interpretation of the law, even protests outside of the Supreme Court building could result in arrests since courthouses are also included.

However, the timing is particularly interesting. After the release of the decision in in Dobbs v. Jackson Women’s Health Organization, I noted that it would be even harder to use this law because the statute refers to “interfering with, obstructing, or impeding the administration of justice, or with the intent of influencing any judge … in the discharge of his duty.” With the release of the decision, there is no chance that the protesters are interfering, impeding, or influencing the decision. Thus, even if the constitutional arguments were rejected, a court could question whether the law can be read as applying to protests generally against the justices for their views.

That is what makes the date so interesting. Dobbs came out on June 24, 2022. One week later, Curley sought enforcement of state laws as an alternative to federal enforcement. It may reflect the view that, even if the law is constitutional to arrest protesters, it would be narrowly construed in light of the fact that Dobbs is now on the books. Since it was clear for weeks that the Justice Department would not enforce the law to arrest protesters outside of these homes, the timing of the letter could reflect a dwindling likelihood of enforcement in light of the end of the term.

Curley wrote Gov. Hogan: “I would respectfully request that you direct the Maryland State Police to enforce Maryland and Montgomery County laws that squarely prohibit picketing at the homes of Supreme Court Justices who reside in Maryland.”

The state laws, however, would still face the same constitutional challenges. While noise and other non-content-based regulations can be enforced, barring any protests that do not block streets could be difficult to maintain.

Both the Maryland and Virginia governors responded by calling on Attorney General Merrick Garland to use his authority under federal law to stop the protesters.

There is an interesting question of whether Curley consulted with Chief Justice John Roberts. There is usually considerable coordination with the Chief Justice, but the approval of Roberts could cause later ethical issues if a challenge comes to the Court on appeal. If Roberts green lighted the letters, he is directly involved in the decision and effectively endorsed the underlying interpretation (and use) of the state laws. In such a case, he should recuse himself from any appeal.

Roberts would not be the only one with conflict issues. All of the justices would be beneficiaries of such enforcement, but the six conservative justices are the subject of these specific protests. They could effectively resolve such conflicts by simply denying review in any challenge and allow the lower courts to be the final word on the constitutionality of such enforcement.

Yet, some justices might not be pleased by the Marshal essentially advancing such a legal claim in calling for this crackdown on protesters. By sending the letter, Curley is speaking as a high-ranking official in the Judicial Branch. She is clearly not just encouraging the use of these laws, but implicitly saying that these laws can be used in this way to stop any further protests at these homes.

What is striking about this effort is that Curley has reportedly not reached out to FBI for assistance in catching the leaker of the Dobbs decision. The Supreme Court is just a few blocks away from the leading expert agency in the world on computer and forensic investigations. Yet, Roberts and Curley have kept this investigation confined to their relatively small and inexperienced staff. That has left many of us perplexed since this is one of the greatest attacks on the internal operations and integrity of the Court in its history.

The letter could well prompt a crackdown on the protesters. We could then watch these constitutional issues play out in court soon.

Here is the Maryland letter: July-1-2022-letter-to-Hon.-Larry-Hogan

As the world still grapples with supply-chain backlogs (partially) caused by China’s strict Covid-19 policies, it has become painfully obvious how vulnerable the global economy is to national or even regional disruptions, especially if they happen in China, the world’s number one supplier of goods.

In fact, as Statista’s Felix Richter explains below, over the past few decades, China has grown to become the world’s manufacturing hub and largest goods exporter by a significant margin, turning it from emerging market into economic superpower. According to estimates from the IMF’s latest World Economic Outlook, the country will account for 18.8 percent of the world’s GDP based on purchasing power parity (PPP). That’s up from just 8.1 percent two decade ago, when both the United States and the EU were miles ahead of China’s economic output.

You will find more infographics at Statista

Over the past 20 years, both the U.S. and the European Union have seen their economic superiority challenged, as new powers, such as China, India and others have emerged. While the U.S. saw its share of global GDP decline from 19.8 to 15.8 percent between 2002 and 2022, the EU’s share dropped from 19.9 to 14.8 percent of the same period.

The gap between China, the U.S. and the EU will likely widen over the next few years, as the economic outlook for the latter two is cloudy with a chance of recession, while China is expected to continue growing at mid-single-digit growth rates.

Authored by Tuomas Malinen via The Epoch Times,

In March 2019, we published an ominous special report, entitled: Why the global growth model is broken. In it, we explained a troubling phenomenon: productivity growth in the world economy had stalled in 2011 and started to decline.

We first noticed this in September 2017, and the situation has remained the same ever since. We named the period as the “Great Stagnation.”

A figure presenting the growth of total factor productivity (TFP) in the regions of the world from 1990 to 2021. (GnS Economics, Conference Board)

The total factor productivity, or TFP, presented in the figure above measures the share of GDP growth that cannot be accounted for by capital investment (in equipment and machinery) and the quantity and the improved quality of the labor force (skills and training). Effectively, TFP is the “unexplained” element of economic growth.

Solow Model of Economic Growth (1956) first suggested that one can find the value of TFP by collecting data from observed factors for capital, labor, and economic growth, and then, by applying some basic statistical estimation techniques to the growth model, calculate TFP, or “Solow Residual” as the remainder. It was also discovered that a large part of GDP growth was explained by technological innovations rather than purely by capital and labor, which the “residual” or TFP represented (see, e.g., our blog for more info).

In the December 2020 forecasting report, we postulated the perplexing problem of stagnated productivity growth as: “Stagnating global productivity growth is extremely worrying, because it implies that if firms are unable to increase their productivity, they will be unprofitable as well. And when their indebtedness grows yet profitability stagnates or falls, their ability to service debt will also diminish over time.”

And we continued: “Decreasing productivity growth thus implies that the ability to increase profitability and service debt has diminished for several years—at the same we have become ever more indebted! Global debt is expected to reach an astonishing $277 trillion U.S. dollars, or around 350 percent of global GDP by the end of the year.”

How did we end up here?

It turns out—or we consider it the most plausible explanation—that the continuous monetary and fiscal stimulus by central banks and governments has destroyed or seriously damaged two main forces behind economic growth: creative destruction and the risk-and-reward relationship.

Long-term economic growth is driven by technical innovations, which increase productivity. What this means is that innovations, from the spinning-jenny (practically a first actual industrial machine) to industrial robots (and beyond), grow the productivity of a human worker. This also increases his or her wage and makes products cheaper. This process, i.e., the growth of productivity, is behind the spectacular rise in living standards since the 18th century.

However, this process assumes a crucial element dubbed as creative destruction due to its dual nature. It implies, simply, that more efficient (more productive) methods will replace the old and inefficient. This requires that old firms fail (go bankrupt) and new firms take their place. This process is at the heart of the capitalist market economy.

Both gains and failures in the private sector drive economic progress. The former accumulates income and capital, while the latter uncovers sustainable businesses, setting the stage for creative destruction. Government plays an important role by setting laws, governing human and property rights, and guaranteeing income through social security, but it is, ultimately, the private sector and markets that drive progress. Do not let the MMT (Modern Monetary Theory) crowd tell you otherwise! As socialist market economy experiments have recurrently shown throughout history, this risk-and-reward relationship is essential for this creative destruction to work and for the economy to grow, dynamically.

The reason that our economies have grown, relatively decently, after the Panic of 2008, is presented in the figure below.

A figure presenting the ratios of debt to gross domestic product between main sectors of the economy in advanced countries from 1990 Q4 to 2021 Q3. (GnS Economics, BIS)

It shows especially that government debt has grown quite a bit faster than GDP since 2008 in advanced (rich) economies. Without the massive growth of government debt, the world economy would not have grown at this speed. We have been in constant resuscitation since 2008!

This has also made our economies fragile. Currently, they tend to succumb without constant support or at least when there are efforts to withdraw it. I have explained in my previous column why central banks have been forced to bail out the global economy and markets several times during the past five years. Now, with the aggressive rate hikes and balance sheet run-off (QT) of the Federal Reserve, we are fast approaching another breaking point, which is likely to require a full-scale bailout of the world economy.

The European Central Bank is way ahead of the Fed. They are already planning an anti-fragmentation tool for the eurozone. In it, they plan to support the sovereign debt markets of the weakest members of the eurozone. Socialization of Europe is proceeding fast.

There are also rumors of an another, considerably large “bailout” fund of the EU in the making. Just two years ago, EU members agreed on a 750 billion euro Recovery Fund.

Back in 2020, Dr. Peter Nyberg, a retired director general of the Financial Markets Department at the Finnish Ministry of Finance, and I warned about the Stealth Federalization of the EU. The sovereignty of EU member states had been eroding slowly, but with the Recovery Fund, it took a massive leap forward. Another such a common-debt-scheme would effectively seal our fate.

Alas, we have lived in a “mirage” of an economic recovery since the Great Financial Crisis. Our leaders on both sides of the Atlantic have not allowed the normal economic process, especially bankruptcies and failures, to clean our economies from unproductive, “parasitic” activities, over-indebtedness, and (zombified) companies.

This is why our economies are so weak, and this is why we are heading either to a complete socialization of the world economy or an epic economic collapse. We, the people, have let our political leaders to “sleepwalk” us into this cataclysmic watershed. Now would be an excellent time to wake up.