The end of globalization as we know it? Larry Fink, CEO of BlackRock’s annual letter to shareholders stirred a flurry of debate last week about Putin’s invasion of Ukraine, the future of globalization, supply-chains, inflation and its implications for investors.
A more balkanized word, potentially split along a democratic/authoritarian axis???
The world's three leading democracies are Switzerland, China, and Singapore, judged on six democratic axes: formal, elective, popular, procedural, operational and substantive.
Looking closer, we find that the US fails to score in any category, while China scores well in all.
1. Formally, the US Constitution never mentions ‘democracy’ (the Founders hated it) and China’s Constitution mentions it 32 times.
2. Electively, China has bigger, more transparent elections than the US. China’s are supervised and certified by The Carter Center, which also runs China’s election website.
3. Popularly, China has a twenty percent higher voter participation than the USA (62% to 52%), suggesting that more Chinese voters think their vote counts.
4. Procedurally, China uses a public, democratic process to appoint senior officials and approve all legislation. (American presidential candidates are chosen by wealthy backers and appointed by an unelected group of people called the Electoral College which nobody understands).
5. Operationally, American presidents operate like like medieval monarchs. They hire and fire all senior officials and frequently order citizens kidnapped, tortured, imprisoned and assassinated without consulting anyone. They can secretly ban 50,000 people from flying on airlines without explanation and take the country to war at any time, for any reason. No Chinese leader–including Mao–could do any of those things. They have to vote on everything, democratically.
6. Substantively, China’s government policies produce democratic outcomes. Ninety-six percent of Chinese voters approve the government’s policies and eighty-three percent say China is being run for their benefit rather than for the benefit of a special group (only thirty-eight percent of Americans think this of their country).
Making matters worse is the fact that the US is the world's leading authoritarian nation. Where else but in an authoritarian country does the leader have the sole power to:
* Hire and fire the country's 5,000 top officials.
* Declare war. Frequently.
* Issue 300,000 national security letters (administrative subpoenas with gag orders that enjoin recipients from ever divulging they’ve been served);
* Control information at all times under his National Security and Emergency Preparedness Communications Functions.
* Torture, kidnap and kill anyone, anywhere, at will.
* Secretly ban 50,000 citizens from flying–and refusing to explain why.
* Imprison 2,000,000 citizens without trial.
* Execute 1,000 citizens each year prior to arrest.
* Kill 1,000 foreign civilians every day since 1951
* Massacre its own men, women and children for their beliefs
* Assassinate its own citizens abroad, for their beliefs.
The last time we were told to “Sell Hubris; Buy Humiliation” it was 2016 and that would have been an absolutely awful investment strategy.
Not saying it’s wrong this time, too, but is it really now different enough to stick?
And why should the implications of higher inflation, less globalization, etc. support the “Buy Humiliation” strategy? I can think of many reasons why EU, Japan, and EM equities won’t outperform (as they haven’t been) in such an environment, for example, despite overvaluations in the US.
The history of “big business” and ethics are not to be looked at for guidance. Coca-cola still sought to do business with Nazi Germany (Fanta) as did IBM. Highly improbable that Blackrock et al. can be trusted to be guardians of decency… incongruent on so many fronts, choosing to disinvest from Russia, but buying the debt of kleptocratic African countries and enabling child labour in a variety of mining endeavours to suit the Green Energy narrative means the words are empty and hypocritical… Perhaps the overproduction of elites, competing for limited places is what is the true cause of the breakdown of the current social order…
In the first sentence of the body of this comment, there is a seemingly innocuous word that needs definition. To quote the sentence: "Last August, in the context of the “is inflation transitory” debate, Rob wrote that, “determining whether we are entering a new regime or returning to the old one is above my pay grade (it may be above everyone’s).”
The word that needs defining is "we". And in asking this question, the best authority I can borrow from is Gauguin. A few years after arriving in 'another world' - Tahiti 1891 - he was moved to paint the extraordinary and deeply philosophical triptych entitled (translated from the French) "Where Do We Come From? What Are We? Where Are We Going?". (It is now in the Museum of Fine Arts in Boston.)
The word "we" is bandied about so often these days, readers tend to assume they know precisely what it means and in particular to whom it refers. But question almost anyone to define it and the detail with precision the group it represents and most will flounder with a sort of 'you know what I mean" answer.
A couple of decades ago, this may have been acceptable. Not now. The fragmentation that you speak of is happening even within the world that was 'we'. It is certainly all-too-evident in the 'West'.
And today, the term seems to be finding, as a last redoubt, refuge in the vested interests of Anglo American finance. Is that what you mean by 'we'? If so, it is a very narrowly defined group.
A fascinating exchange... As a Canadian there are no two countries that I fear more, and (ironically) have a need to do business with more, than China and the United States.
As to the value of "democracy," I'm with Sam Clemens.
A more balkanized word, potentially split along a democratic/authoritarian axis???
The world's three leading democracies are Switzerland, China, and Singapore, judged on six democratic axes: formal, elective, popular, procedural, operational and substantive.
Looking closer, we find that the US fails to score in any category, while China scores well in all.
1. Formally, the US Constitution never mentions ‘democracy’ (the Founders hated it) and China’s Constitution mentions it 32 times.
2. Electively, China has bigger, more transparent elections than the US. China’s are supervised and certified by The Carter Center, which also runs China’s election website.
3. Popularly, China has a twenty percent higher voter participation than the USA (62% to 52%), suggesting that more Chinese voters think their vote counts.
4. Procedurally, China uses a public, democratic process to appoint senior officials and approve all legislation. (American presidential candidates are chosen by wealthy backers and appointed by an unelected group of people called the Electoral College which nobody understands).
5. Operationally, American presidents operate like like medieval monarchs. They hire and fire all senior officials and frequently order citizens kidnapped, tortured, imprisoned and assassinated without consulting anyone. They can secretly ban 50,000 people from flying on airlines without explanation and take the country to war at any time, for any reason. No Chinese leader–including Mao–could do any of those things. They have to vote on everything, democratically.
6. Substantively, China’s government policies produce democratic outcomes. Ninety-six percent of Chinese voters approve the government’s policies and eighty-three percent say China is being run for their benefit rather than for the benefit of a special group (only thirty-eight percent of Americans think this of their country).
Making matters worse is the fact that the US is the world's leading authoritarian nation. Where else but in an authoritarian country does the leader have the sole power to:
* Hire and fire the country's 5,000 top officials.
* Declare war. Frequently.
* Issue 300,000 national security letters (administrative subpoenas with gag orders that enjoin recipients from ever divulging they’ve been served);
* Control information at all times under his National Security and Emergency Preparedness Communications Functions.
* Torture, kidnap and kill anyone, anywhere, at will.
* Secretly ban 50,000 citizens from flying–and refusing to explain why.
* Imprison 2,000,000 citizens without trial.
* Execute 1,000 citizens each year prior to arrest.
* Kill 1,000 foreign civilians every day since 1951
* Massacre its own men, women and children for their beliefs
* Assassinate its own citizens abroad, for their beliefs.
* Repeatedly bomb and kill minority citizens from the air. (https://www.theguardian.com/world/2001/mar/02/duncancampbell) (https://www.theguardian.com/us-news/2020/may/10/move-1985-bombing-reconciliation-philadelphia).
The last time we were told to “Sell Hubris; Buy Humiliation” it was 2016 and that would have been an absolutely awful investment strategy.
Not saying it’s wrong this time, too, but is it really now different enough to stick?
And why should the implications of higher inflation, less globalization, etc. support the “Buy Humiliation” strategy? I can think of many reasons why EU, Japan, and EM equities won’t outperform (as they haven’t been) in such an environment, for example, despite overvaluations in the US.
Quite the interesting annual letter from BlackRock. They've been quietly pushing this message the past year.
The history of “big business” and ethics are not to be looked at for guidance. Coca-cola still sought to do business with Nazi Germany (Fanta) as did IBM. Highly improbable that Blackrock et al. can be trusted to be guardians of decency… incongruent on so many fronts, choosing to disinvest from Russia, but buying the debt of kleptocratic African countries and enabling child labour in a variety of mining endeavours to suit the Green Energy narrative means the words are empty and hypocritical… Perhaps the overproduction of elites, competing for limited places is what is the true cause of the breakdown of the current social order…
In the first sentence of the body of this comment, there is a seemingly innocuous word that needs definition. To quote the sentence: "Last August, in the context of the “is inflation transitory” debate, Rob wrote that, “determining whether we are entering a new regime or returning to the old one is above my pay grade (it may be above everyone’s).”
The word that needs defining is "we". And in asking this question, the best authority I can borrow from is Gauguin. A few years after arriving in 'another world' - Tahiti 1891 - he was moved to paint the extraordinary and deeply philosophical triptych entitled (translated from the French) "Where Do We Come From? What Are We? Where Are We Going?". (It is now in the Museum of Fine Arts in Boston.)
The word "we" is bandied about so often these days, readers tend to assume they know precisely what it means and in particular to whom it refers. But question almost anyone to define it and the detail with precision the group it represents and most will flounder with a sort of 'you know what I mean" answer.
A couple of decades ago, this may have been acceptable. Not now. The fragmentation that you speak of is happening even within the world that was 'we'. It is certainly all-too-evident in the 'West'.
And today, the term seems to be finding, as a last redoubt, refuge in the vested interests of Anglo American finance. Is that what you mean by 'we'? If so, it is a very narrowly defined group.
Well you can’t be sure about what sort if world is being born but you can certainly see it from here, no?
To quote an author I admire “ The four prices of money are managed via Basel III and central banks as Dealer of Last Resort.
The four pillars of commodity trading are shaped by war, hopefully not WWIII.”
Commodities struggles, unlike social media hashtag fads are casus belli. Try being hungry or cold for a couple of days and see? Or years.
If you want to see the future look into the past.
Perhaps the future could be called “Deluge of Destruction”?
A fascinating exchange... As a Canadian there are no two countries that I fear more, and (ironically) have a need to do business with more, than China and the United States.
As to the value of "democracy," I'm with Sam Clemens.