Sometimes an announcement succeeds in being both unsurprising and shocking. It had long been evident that China’s Xi Jinping would not — indeed, could not — step down from power. He has made too many enemies, particularly through his anti-corruption campaign, even if he wanted to go, which seems unlikely.
Yet the announcement that the two-term limit on the presidency is to go, is still shocking. What seemed likely is now a fact. Mr Xi has discarded the attempt by Deng Xiaoping to institutionalise checks on the power of China’s leaders — itself a reaction to the wild excesses of the era of Mao Zedong. What is re-emerging is strongman rule — a concentration of power in the hands of one man…..
From Joseph S. Nye, Professor, Harvard University:
As US President-elect Donald Trump prepares his administration’s policy toward China, he should be wary of …. the “Kindleberger Trap”: a China that seems too weak rather than too strong.
Charles Kindleberger, an intellectual architect of the Marshall Plan who later taught at MIT, argued that the disastrous decade of the 1930s was caused when the US replaced Britain as the largest global power but failed to take on Britain’s role in providing global public goods. The result was the collapse of the global system into depression, genocide, and world war.
Today, as China’s power grows, will it help provide global public goods?
In domestic politics, governments produce public goods such as policing or a clean environment, from which all citizens can benefit and none are excluded. At the global level, public goods – such as a stable climate, financial stability, or freedom of the seas – are provided by coalitions led by the largest powers.
Small countries have little incentive to pay for such global public goods. Because their small contributions make little difference to whether they benefit or not, it is rational for them to ride for free. But the largest powers can see the effect and feel the benefit of their contributions. So it is rational for the largest countries to lead. When they do not, global public goods are under-produced. When Britain became too weak to play that role after World War I, an isolationist US continued to be a free rider, with disastrous results.
Some observers worry that as China’s power grows, it will free ride rather than contribute to an international order that it did not create.
So far, the record is mixed. China benefits from the United Nations system, where it has a veto in the Security Council. It is now the second-largest funder of UN peacekeeping forces, and it participated in UN programs related to Ebola and climate change.
China has also benefited greatly from multilateral economic institutions like the World Trade Organization, the World Bank, and the International Monetary Fund. In 2015, China launched the Asian Infrastructure Investment Bank, which some saw as an alternative to the World Bank; but the new institution adheres to international rules and cooperates with the World Bank.
On the other hand, China’s rejection of a Permanent Court of Arbitration judgment last year against its territorial claims in the South China Sea raises troublesome questions. Thus far, however, Chinese behavior has sought not to overthrow the liberal world order from which it benefits, but to increase its influence within it.
If pressed and isolated by Trump’s policy, however, will China become a disruptive free rider that pushes the world into a Kindleberger Trap?
Basically what Kindleburger described is a power vacuum, where previous hegemons — such as Britain before WWI or the US post WWII — grow too weak to enforce global standards under which the system operates. That could be trade, respect of international borders, the financial system, international law, or freedom of the seas. There is no smooth transition. When the old order breaks down, the system is likely descend into chaos for a time until a new order, with new players, is established.
The King Midas problem with artificial intelligence (AI):
“We had better be quite sure that the purpose put into the machine is the purpose we really desire.” ~ Norbert Weiner (1960)
How can we harness the power of super-intelligent AI while also preventing the catastrophe of robotic takeover? As we move closer toward creating all-knowing machines, AI pioneer Stuart Russell is working on something a bit different: robots with uncertainty. Hear his vision for human-compatible AI that can solve problems using common sense, altruism and other human values.
“These companies (Facebook, Google and other social media giants) advertise that their products are free ….but we are the products being sold.”
We’re building an artificial intelligence-powered dystopia, one click at a time, says techno-sociologist Zeynep Tufekci. In an eye-opening talk, she details how the same algorithms companies like Facebook, Google and Amazon use to get you to click on ads are also used to organize your access to political and social information. And the machines aren’t even the real threat. What we need to understand is how the powerful might use AI to control us — and what we can do in response.
The CDU/CSU under Chancellor Angela Merkel has again emerged from Sunday’s general election as Germany’s strongest party. The victory looks more like a crushing defeat, however, as its 33 percent support in the early returns would be the party’s worst result since 1949. The CDU/CSU’s partner in the grand coalition, the Social Democrats, fared just as poorly, polling 20.5 percent, the lowest in their postwar history.
….The AfD was founded in 2012 by a group of free-market economists critical of the way the euro area handled its fiscal crisis. While the original party leadership was very sensible and ideologically neutral, Ms. Merkel immediately branded them as right-wingers. As a result, the original founders were ousted, and the AfD turned rather nationalistic. Now, with 12.6 percent of the vote, it will be the third-largest party in parliament.
….The AfD’s success does not mean that Germans have become nationalistic, populist or antidemocratic. It is a sign of popular frustration with the Christian Democrats and the Social Democrats. Both parties have abandoned their principles in favor of expediency, as became painfully obvious during the Merkel-Schulz debate. The Christian Democrats have abandoned Christians, and the Social Democrats have betrayed working people, both blue-collar and white-collar.
The AfD, with its 12.6 percent support, poses no threat to democracy. It can rather be seen as an opportunity to make Germany’s parties stick to their principles. The real danger to German democracy and to the rule of law is the lack of courage, vision and statesmanship in the country’s two establishment parties.
China has a long history of “state consequentialism.” According to this philosophy, all actions that make the state stronger are morally good. It even makes it the moral task of the state and its servants to take actions that make it stronger. While such thinking is not particular to China, the most ancient form of state consequentialism is Mohism, a philosophical movement that emerged there around the fifth century BC.
Two hundred years later, Chinese Legalism pushed state consequentialism to the next level. Han Fei, its chief proponent, was opposed to domestic markets with the free exchange of goods. His ideal was a central planner that determined input and output and prices. However, he loved the idea of export – if controlled by the state. In chapter 46 of his Han Feizi text, he wrote: “If people attend to public duties and sell their produce to foreigners, then the state will become rich. If the state is rich, then the army will become strong. In consequence, hegemony will be attained.”
Hegemony is usually the political goal of state consequentialism. With such a rich tradition in this philosophy, it may be that Xi Jinping’s China is only embracing free trade to become a new hegemon.
There are three reasons to believe this hypothesis. First, state consequentialist thinking is very much alive in China (and elsewhere). Second, Mao Zedong, the founder of the People’s Republic, was a great admirer of Han Fei. Third, the Legalists’ texts are widely read in the Communist Party’s cadre schools.
My grandfather was fond of saying “If you buy cheap, you pay dear.” The real price of cheap imports from non-democratic countries like Russia, China, North Korea or Iran is that you are funding their military expansion. Democracies, with the arguable exception of the US, tend to have other priorities.
Yesterday’s solid blue candle on the gold chart [XAUUSD] confirms my view of the precious metal as a form of “Trump insurance”. After Trump and North Korea exchanged threats suggesting nuclear retaliation, gold gained 1.32%, breaking resistance at $1275/ounce. Follow-through above $1300 would signal a primary advance, with a target of $1400*.
U.S. Secretary of State Rex Tillerson said on Friday there would not be many good options left on North Korea if the peaceful pressure campaign the United States has been pushing to curb Pyongyang’s nuclear and missile programs failed….
The United States, Japan and South Korea agreed on Friday to push for a quick U.N. Security Council resolution to apply new sanctions on North Korea. U.N. diplomats said the United States had given China a draft sanctions resolution.
But Washington faces an uphill struggle to convince Russia and China to give quick backing to new U.N. sanctions.
Experts say North Korea’s ICBM launch on Tuesday was a major step forward in its declared intent to create nuclear-tipped missiles capable of hitting the United States. Some U.S. experts say the missile appeared to have the range to hit Alaska, Hawaii and parts of the U.S. Pacific Northwest.
Washington has warned it is ready to use force if need be to stop North Korea’s weapons programs but the consequences of that could be catastrophic and it prefers global diplomatic action.
….As long as we know our history, we will know how to build our future. Americans know that a strong alliance of free, sovereign and independent nations is the best defense for our freedoms and for our interests. That is why my administration has demanded that all members of NATO finally meet their full and fair financial obligation.
As a result of this insistence, billions of dollars more have begun to pour into NATO. In fact, people are shocked. But billions and billions of dollars more are coming in from countries that, in my opinion, would not have been paying so quickly.To those who would criticize our tough stance, I would point out that the United States has demonstrated not merely with words but with its actions that we stand firmly behind Article 5, the mutual defense commitment. (Applause.)
Words are easy, but actions are what matters. And for its own protection — and you know this, everybody knows this, everybody has to know this — Europe must do more. Europe must demonstrate that it believes in its future by investing its money to secure that future.
That is why we applaud Poland for its decision to move forward this week on acquiring from the United States the battle-tested Patriot air and missile defense system — the best anywhere in the world. (Applause.) That is also why we salute the Polish people for being one of the NATO countries that has actually achieved the benchmark for investment in our common defense. Thank you. Thank you, Poland. I must tell you, the example you set is truly magnificent, and we applaud Poland. Thank you. (Applause.)
We have to remember that our defense is not just a commitment of money, it is a commitment of will. Because as the Polish experience reminds us, the defense of the West ultimately rests not only on means but also on the will of its people to prevail and be successful and get what you have to have. The fundamental question of our time is whether the West has the will to survive. Do we have the confidence in our values to defend them at any cost? Do we have enough respect for our citizens to protect our borders? Do we have the desire and the courage to preserve our civilization in the face of those who would subvert and destroy it? (Applause.)
We can have the largest economies and the most lethal weapons anywhere on Earth, but if we do not have strong families and strong values, then we will be weak and we will not survive. (Applause.) If anyone forgets the critical importance of these things, let them come to one country that never has. Let them come to Poland. (Applause.) And let them come here, to Warsaw, and learn the story of the Warsaw Uprising….
The UK has a hung parliament, with Theresa May’s Conservative Party losing seats and likely ending up 8 short of an overall majority. It looks as if young people voted in large numbers, mainly for Jeremy Corbyn’s Labour Party. The Conservatives remain the single largest party however, and together with the Conservative-leaning DUP on 10 seats, they will likely form the new government. The Prime Minister is holding a press conference at 10am – it is possible that she resigns at that time. This is an extremely poor result for her personally, having gambled that another General Election would significantly boost her majority. For an election designed to deliver a “Strong and Stable” government, we face the possibility of a new Conservative Party leadership battle (perhaps beginning later today) and even another General Election later this year.
This renewed uncertainty seems likely to be unhelpful to the UK’s Brexit negotiations, due to start on 19th June. The Conservatives did especially badly in “Remain” constituencies…… Finally, some good news for those fed up with election campaigns: the poor performance of the SNP in Scotland reduces the likelihood of a new Scottish independence referendum in the next few years.
Investors remain highly focused on global political issues. Emmanuel Macron’s victory in France has reduced some political risk in Europe, but investors are growing increasingly skeptical about President Trump’s ability to deliver on his pro-growth agenda. The growing scrutiny over White House ties to Russian operatives, escalating risks of global terrorism and rising uncertainty around North Korea are all negatives for investor confidence.
But these negatives have not offset positive global macroeconomic conditions. Global economic growth is hardly robust, but looks better than it has in several years, especially in Europe. Manufacturing activity is improving and global trade appears to be recovering. Corporate profits are also trending higher across most markets and industry sectors. Financials remain a weak spot in many areas of the world, but we expect global bond yields will rise as economic growth solidifies, which should help this sector. Finally, monetary policy remains growth- and equity-friendly. The Fed is in the midst of a rate-hiking campaign, but should continue raising rates slowly and predictably…..
Philip Parker – veteran fund manager decides to sell all shares in Altair’s Trusts to hand back cash and hands back mandates for SMA/IMA’s and also sells MDA family office mandates to cash from shares.
AUSTRALIAN EAST COAST PROPERTY MARKET BUBBLE AND THE IMPENDING CORRECTION
CHINA PROPERTY AND DEBT ISSUES LATER THIS YEAR
THE OVERVALUED AUSTRALIAN EQUITY MARKETS AND
OVERSIZED GEO-POLITICAL RISKS AND AN UNPREDICTABLE US POLITICAL ENVIRONMENT
The underlined above are some of the more obvious reasons to exit the riskier asset markets of shares and property – in my opinion.
As a result of the above and after 25 years as a fund manager and 30 years in this industry I am taking around 6 to 12 months off. The main reason is in my opinion that there are just too many risks at present, and I cannot justify charging our clients fees when there are so many early warning lead indicators of clear and present danger in property and equity markets now….
As a psychologist researching misinformation, I focus on reducing its influence. Essentially, my goal is to put myself out of a job.
Recent developments indicate that I haven’t been doing a very good job of it. Misinformation, fake news and “alternative facts” are more prominent than ever. The Oxford Dictionary named “post-truth” as the 2016 word of the year. Science and scientific evidence have been under assault.
Fortunately, science does have a means to protect itself, and it comes from a branch of psychological research known as inoculation theory. This borrows from the logic of vaccines: A little bit of something bad helps you resist a full-blown case. In my newly published research, I’ve tried exposing people to a weak form of misinformation in order to inoculate them against the real thing – with promising results.
Two ways misinformation damages
Misinformation is being generated and disseminated at prolific rates. A recent study comparing arguments against climate science versus policy arguments against action on climate found that science denial is on the relative increase. And recent research indicates these types of effort have an impact on people’s perceptions and science literacy.
A recent study led by psychology researcher Sander van der Linden found that misinformation about climate change has a significant impact on public perceptions about climate change.
The misinformation they used in their experiment was the most shared climate article in 2016. It’s a petition, known as the Global Warming Petition Project, featuring 31,000 people with a bachelor of science or higher, who signed a statement saying humans aren’t disrupting climate. This single article lowered readers’ perception of scientific consensus. The extent that people accept there’s a scientific consensus about climate change is what researchers refer to as a “gateway belief,” influencing attitudes about climate change such as support for climate action.
At the same time that van der Linden was conducting his experiment in the U.S., I was on the other side of the planet in Australia conducting my own research into the impact of misinformation. By coincidence, I used the same myth, taking verbatim text from the Global Warming Petition Project. After showing the misinformation, I asked people to estimate the scientific consensus on human-caused global warming, in order to measure any effect.
I found similar results, with misinformation reducing people’s perception of the scientific consensus. Moreover, the misinformation affected some more than others. The more politically conservative a person was, the greater the influence of the misinformation.
This gels with other research finding that people interpret messages, whether they be information or misinformation, according to their preexisting beliefs. When we see something we like, we’re more likely to think that it’s true and strengthen our beliefs accordingly. Conversely, when we encounter information that conflicts with our beliefs, we’re more likely to discredit the source.
However, there is more to this story. Beyond misinforming people, misinformation has a more insidious and dangerous influence. In the van der Linden study, when people were presented with both the facts and misinformation about climate change, there was no net change in belief. The two conflicting pieces of information canceled each other out.
Fact and “alternative fact” are like matter and antimatter. When they collide, there’s a burst of heat followed by nothing. This reveals the subtle way that misinformation does damage. It doesn’t just misinform. It stops people believing in facts. Or as Garry Kasporov eloquently puts it, misinformation “annihilates truth.”
Science’s answer to science denial
The assault on science is formidable and, as this research indicates, can be all too effective. Fittingly, science holds the answer to science denial.
Inoculation theory takes the concept of vaccination, where we are exposed to a weak form of a virus in order to build immunity to the real virus, and applies it to knowledge. Half a century of research has found that when we are exposed to a “weak form of misinformation,” this helps us build resistance so that we are not influenced by actual misinformation.
Inoculating text requires two elements. First, it includes an explicit warning about the danger of being misled by misinformation. Second, you need to provide counterarguments explaining the flaws in that misinformation.
In van der Linden’s inoculation, he pointed out that many of the signatories were fake (for instance, a Spice Girl was falsely listed as a signatory), that 31,000 represents a tiny fraction (less than 0.3 percent) of all U.S. science graduates since 1970 and that less than 1 percent of the signatories had expertise in climate science.
I found that explaining the misinformation technique completely neutralized the misinformation’s influence, without even mentioning the misinformation specifically. For instance, after I explained how fake experts have been utilized in past misinformation campaigns, participants weren’t swayed when confronted by the fake experts of the Petition Project. Moreover, the misinformation was neutralized across the political spectrum. Whether you’re conservative or liberal, no one wants to be deceived by misleading techniques.
Putting inoculation into practice
Inoculation is a powerful and versatile form of science communication that can be used in a number of ways. My approach has been to mesh together the findings of inoculation with the cognitive psychology of debunking, developing the Fact-Myth-Fallacy framework.
This strategy involves explaining the facts, followed by introducing a myth related to those facts. At this point, people are presented with two conflicting pieces of information. You reconcile the conflict by explaining the technique that the myth uses to distort the fact.
We used this approach on a large scale in a free online course about climate misinformation, Making Sense of Climate Science Denial. Each lecture adopted the Fact-Myth-Fallacy structure. We started by explaining a single climate fact, then introduced a related myth, followed by an explanation of the fallacy employed by the myth. This way, while explaining the key facts of climate change, we also inoculated students against 50 of the most common climate myths.
For example, we know we are causing global warming because we observe many patterns in climate change unique to greenhouse warming. In other words, human fingerprints are observed all over our climate. However, one myth argues that climate has changed naturally in the past before humans; therefore, what’s happening now must be natural also. This myth commits the fallacy of jumping to conclusions (or non sequitur), where the premise does not lead to the conclusion. It’s like finding a dead body with a knife poking out of its back and arguing that people have died of natural causes in the past, so this death must have been of natural causes also.
Everyone should read this as a reminder of the brutality that states may employ for political ends, whether Ethiopia (1935), Chechnya (1995), Iraq (1998) or Syria (2017). Chemical weapons such as sarin or mustard gas leave horrific injuries, but any deliberate targeting of civilians — such as bombing of hospitals and residential neighborhoods — should IMO be treated as a war crime.
Luke O’Brien is a U.S. Army officer assigned to Aberdeen Proving Ground and is currently a Countering Weapons of Mass Destruction Graduate Fellow at National Defense University:
…..Perhaps the most notorious example of this from recent memory, however, was the Iraqi chemical attack on the Kurdish town of Halabja in March 1988, as part of the Anfal Campaign at the end of the Iran-Iraq War. This attack struck the small Kurdish village with both conventional and chemical bombs, including sarin, just as Assad’s forces would nearly 30 years later. The first attacks used normal high-explosive bombs, which both drove civilians into basement shelters as well as broke open the villages windows and doors. These initials attacks were then followed up with chemical munitions, which quickly filled the basement shelters and killed their occupants.
Such brutality was intentional. The attacks were intended to break the back of the Kurdish peshmerga militia by depopulating its support. Commenting on the matter at the time, Iraqi Gen. Ali Hassan al-Majid bragged that he would “kill [all the Kurds] with chemical weapons.” The chemical bombardment of Halabja had its desired effect, with a stream of surviving civilians abandoning the town and fleeing to nearby Iran. This use of chemical weapons, moreover, had another added benefit: driving away civilians and insurgents who had become numb to the effects of conventional weapons…..
Michael Kofman is an Analyst at CNA Corporation and a Fellow at the Wilson Center’s Kennan Institute:
….Past American attempts at coercive diplomacy with Russia have typically lacked actual coercion, and a theory of how to gain leverage over Moscow. It will be rather startling if 59 cruise missiles turn out to be the answer to this problem. Thankfully, the previous administration tested a lot of theories that didn’t work, from empty threats at the United Nations, to disproven assumptions on what influences Russian behavior, to narratives about quagmires. It would be best for Trump’s White House not to set us on this journey, mounted on that very same broken wheel (or one just as broken in a different way).
In a contest of wills, Trump needs a plan to establish coercive credibility rather than hoping to scare the Russians with expensive fireworks. The number one mistake previous administrations made with Moscow is that, rather than deal with the Russia that is, they all imagined a Russia that suited them more, and then tried to have relations with that imaginary country.
The reality is, this administration’s only current leverage with Russia is the notion inside the Kremlin that a cooperative agenda with the United States is still possible. That’s a dubious proposition which offers the U.S. some advantages. Russia still hopes that there are carrots the United States might offer, or at the least it could get respite in the current confrontation and consolidate gains. If the administration is able to drag out this perception, rather than demonstrating that the White House is rapidly reverting to classical archetypes that Moscow anticipates, then there is an opportunity to obtain concessions.
Given that a cooperative agenda between the United States and Russia is well-nigh impossible, where does that leave us?