Biden vs. Sanders: The view from New Delhi

After Joe Biden’s remarkable performance on Tuesday, March 3, 2020, where he won 10 states, Wall Street surged on Wednesday. Many argue that the former Vice President, with his centrist economic views as compared to Senator Bernie Sanders, would be more acceptable not just to centrist supporters of the Democrats, as well as US corporates, but interestingly even some Republicans who are not comfortable with Trump’s economic policies. Donors of the Democratic Party are also rallying behind Biden, and Sanders is trying to use this point in his favor, saying that the ‘political establishment’ is not happy with his rise. The Vermont Senator, with his radical economic policies, has based his campaign on challenging the current status quo (where a section of the elite have disproportionate influence).

If one were to look at Biden’s key stand on foreign policy issues, his remarks on Afghanistan were criticised not just by Afghan leaders but also strategic analysts. Biden stated that US should not be concerned with ‘nation building’ in Afghanistan, but rather with countering terrorism. Reacting to his remarks, spokesman for Afghan President Ashraf Ghani stated:

Afghanistan fought and stood as a whole nation to the face of tyrants such as the Soviet Invasion, Terrorism invasion and now, it is in the front lines so that the other nations are safer. ISIS [Daesh] & the Taliban, the major terror networks and the enemies of the world are defeated here.

Former Afghan President Hamid Karzai stated that Biden’s remarks were ‘unrealistic and immature’ and sent a message that US was not really concerned about nation building in Afghanistan. Other observers of Afghanistan were also surprised by Biden’s remarks (as number 2 in the Obama Administration, he played a key role in the formation of the Unity government in 2014).

On China, Biden’s approach seems to be more nuanced than Trump’s. In May 2019, he stated that while US needed to watch its own interests, excessive paranoia vis-à-vis China was uncalled for. A month later (in June 2019) he stated that “China poses a serious challenge to us, and in some areas are a real threat.”

At the same time, like the Republicans and Democrats, Biden has opposed the entry of Huawei into the United States’ 5G network, arguing that this would be a security threat (in a presidential primary debate, Biden alluded to this point along with other candidates). Interestingly, an article in China’s main English-language daily, Global Times, argues that Biden would be a better bet for China than Bernie Sanders given that he is more predictable and has experience in dealing with China.

One issue on which Biden has drawn flak from Bernie Sanders is the Trans Pacific Partnership (TPP), a brain child of former President Barack Obama (TPP was an important component of Obama’s ‘Pivot to Asia’ policy which sought to counter China’s economic and strategic influence in the Asia-Pacific region – now referred to as Indo-Pacific).

Sanders’ approach to TPP is identical to that of Trump (whose first decision was to pull out of the TPP). Sanders had praised Trump’s decision saying that this decision was in the interest of American workers.

The Vermont Senator has argued that Biden supported the TPP, which would be damaging to American workers. While seeing the popular mood, Biden has revised his stand and stated that he would go ahead with the deal but will renegotiate it (interestingly, Trump’s 2016 opponent Hillary Clinton also turned against the TPP even though as Secretary of State she had fervently backed the deal).

When in power, the approach to crucial policy issues changes and that could be the case as far as Joe Biden is concerned. On issues like China and TPP it is highly unlikely that Biden will take a fundamentally different position from the Republican Party given the current narrative prevalent in the US. Having been an insider, it is likely though that he will follow a more cautious approach and not upset the apple cart too much.

Nightcap

  1. The United States needs Chinese medical equipment Scott Sumner, EconLog
  2. How India is dealing with Turkey’s Kashmir stance Niranjan Marjani, Diplomat
  3. Cooking up a new constitution in Russia Lisa Gaufman, Duck of Minerva
  4. In praise of the Divided States of America Matthew Berry, Law & Liberty

Nightcap

  1. Gulf states and US hostility towards Iran Peter Henne, Duck of Minerva
  2. NAFTA 2.0 offers promise of stability Milton Ezrati, City Journal
  3. Free trade isn’t dead yet! Tyler Cowen, Bloomberg
  4. “All political careers end in failure” Scott Sumner, MoneyIllusion

Nightcap

  1. Bosnia’s mosques without Muslims Colborne & Edwards, Los Angeles Review of Books
  2. China and the Ricardian vice Samuel Hammond, National Affairs
  3. The closing of the conservative mind John Gray, New Statesman
  4. Europe, not America, is home to the free market Thomas Philippon, the Atlantic

A short note on Ethiopia and the African continent

Introduction

Ethiopian Prime Minister Abiy Ahmed was awarded the 2019 Nobel Peace Prize. He is the 12th winner from Africa. The Nobel Committee stated that Abiy had been awarded the Nobel for his efforts towards resolving the border conflict with Eritrea (in September 2018, Abiy and Eritrean President Isaias Afwerki signed a peace deal in Jeddah).

A border war in the years between 1998 and 2000 had resulted in the deaths of 100,000 people, and was responsible for the displacement of over one million people and the splintering of many families. The agreement has helped in reducing tensions between both countries and has led to a number of other important steps; it has paved the way for air connectivity (Ethiopian Airlines resumed its flight from Addis Abbaba to Asmara, the capital of Eritrea after two decades), resumption of communications between both countries (telephone lines had been disconnected in 1998), reduction of military hostilities, and most importantly reuniting of families.

Abiy’s reaction

While reacting to the Nobel Committee’s decision, the Ethiopian Prime Minister said that this reward was not merely for Ethiopia, but the whole of Africa, and hoped that leaders in the region would work towards peace-building.

Said the Ethiopian PM:

…It is a prize given to Africa, given to Ethiopia, and I can imagine how the rest of Africa’s leaders will take it positively to work on the peace-building process in our continent.

It would be pertinent to point out that, in recent years, the outside world has begun to take note of Ethiopia for its economic progress – in spite of numerous political challenges.

In recent years — almost a decade — the country’s economic growth has been a whopping 10% according to International Monetary Fund (IMF) estimates. In 2018, Ethiopia’s growth was estimated at well over 8% (8.5), and was the fastest growing economy in Africa. One of the key factors for Ethiopia’s impressive economic performance has been the shift from the agricultural sector to the industry & service sector and favourable demographics.

Reforms introduced by Abiy Ahmed: Political Sphere

Abiy’s election has generated immense hope, as he has seemed genuine in his commitment to political and economic reforms. During his tenure, a number of political prisoners have been released. There is also a reasonable amount of press freedom. There have been no arrests of journalists ever since he has taken over (2018 was the first year since 2004 when not a single journalist was arrested).

Abiy’s reforms – both political and economic – are significant because in many countries which have made economic progress, leaders have exhibited authoritarian tendencies. In many countries with economic promise, leaders have also failed to bite the bullet, as far as big bang economic reforms are concerned. Abiy, on the other hand, has reiterated his commitment to reforms.

Reforms introduced by Abiy Ahmed: Economic Sphere

In September 2019, Abiy unveiled his vision for economic reform titled ‘Home-Grown Economic Reform,’ which focuses on drawing greater public sector participation, reducing debts, and enhancing foreign exchange reserves. While speaking on the occasion of the launch of the roll out of his government’s agenda, Abiy emphasized on the fact that this approach is holistic: pro-job, pro-growth, and pro-inclusivity.

Privatization of a number of state run enterprises, such as Ethiopian Airlines, Ethiopian Electric Power Corporation, and the sole telecom provider, EthioTelecom, has also been high on the agenda of Abiy ever since he has taken over.

Challenges

This is not to say that all is well in Ethiopia. In June 2019, Ethiopia faced two attacks, one in the Amhara regional capital of Bahir Dar and the other in the federal capital of Addis Ababa. While Abiy has made efforts towards reducing acrimony in the country’s polity, there are still numerous ethnic divisions, and a large number of political players are seeking to cash in on these schisms.

Expectations from Abiy are sky high, and the country faces numerous debts. While his agenda for reforms is well-intentioned, and does represent a significant break from the past, it is rather ambitious and it remains to be seen whether stakeholders involved in the implementation will be in sync with the PM.

Africa no longer the Dark Continent

For very long, many Western commentators have consistently adopted a patronizing approach towards Africa. The Nobel Award to the Ethiopian PM comes at an interesting time. At a time when the whole world is becoming insular, 54 African countries have signed the AfCTA (African Continental Free Trade Area) agreement. AfCTA. This is the world’s largest free trade agreement since the World Trade Organisation).

AfCTA is a crucial step towards strengthening intra-regional trade linkages and overall connectivity. AfCTA has the potential of connecting over 1 billion people, creating a bloc worth over an estimated $3 billion and pushing intra-Africa trade by up to 15-25% by 2040 (as of 2018, intra-regional trade was less than 20%).

It would be pertinent to point out that the Ethiopian PM has on repeated occasions reiterated his commitment to Pan-Africanism, and has been one of the most fervent backers of AfCTA.

Africa is also being viewed as the world’s next manufacturing hub (China has already moved in a big way, though of course many countries are looking to other alternatives). Political stability and investor-friendly policies of course are imperative.

Conclusion

One hopes that other leaders in Africa follow Abiy’s footsteps in focusing on economic and political changes which could pave the way for sustainable growth and prosperity.

For long the world’s attention has been driven by a Western narrative, but in recent years Africa along with Asia has begun to draw attention due to high economic growth rates. If Africa can get its act together, and growth in countries like Bangladesh and Vietnam is sustained, we could witness the rise of new Non-Western groupings (consisting of developing countries from different regions). Such groupings will not be driven by geopolitical compulsions, geographic proximity, or sheer size, but by economic consideration and could play a pivotal role in shaping a new narrative, while promoting globalization, connectivity and free trade.

Nightcap

  1. Second World soft power Ken White, Asian Review of Books
  2. Alas my love, you do me wrong Roderick Long, Policy of Truth
  3. The great fear of 1776 Jeffrey Ostler, Age of Revolutions
  4. Will no one defend free trade? Shikha Dalmia, the Week

The long-run risks of Trump’s racism

hayekvstrump

This week, the United States and much of the world has been reeling from Trump’s xenophobic statements aimed at four of his Democratic opponents in Congress. But the U.S. economy continues to perform remarkably well for the time being and despite his protectionist spasms, Trump is widely considered a pro-growth, pro-business President.

This has led some classical liberals to consider Trump’s populist rhetoric and flirtations with the far right to be a price worth paying for what they see as the safest path to keeping the administrative state at bay. Many classical liberals believe the greater risk to liberty in the U.S. is inevitably on the left with its commitment to expanding welfare-state entitlements in ways that will shrink the economy and politicize commercial businesses.

In ‘Hayek vs Trump: The Radical Right’s Road to Serfdom’, Aris Trantidis and I dispute this complacency about authoritarianism on the right. In the article, now forthcoming in Polity, we re-interpret Hayek’s famous The Road to Serfdom in light of his later work on coercion in The Constitution of Liberty.

We find that only certain forms of state intervention, those that diminish the rule of law and allow for arbitrary and discriminatory administrative oversight and sanction, pose a credible risk of turning a democratic polity authoritarian. A bigger state, without more discretionary power, does not threaten political liberty. Although leftwing radicals have in the past shown disdain for the rule of law, today in the U.S. and Europe it is the ideology of economic nationalism (not socialism) that presently ignores democratic norms. While growth continues, this ideology may appear to be compatible with support for business. But whenever the music stops, the logic of the rhetoric will lead to a search for scapegoats with individual businesses in the firing line.

Several countries in Europe are much further down the 21st road to serfdom than the U.S., and America still has an expansive civil society and federal structures that we expect to resist the authoritarian trend. Nevertheless, as it stands, the greatest threat to the free society right now does not carry a red flag but wears a red cap.

Here is an extract from the penultimate section:

The economic agenda of the Radical Right is an extension of political nationalism in the sphere of economic policy. While most Radical Right parties rhetorically acknowledge what can be broadly described as a “neoliberal” ethos – supporting fiscal stability, currency stability, and a reduction of government regulation – they put forward a prominent agenda for economic protectionism. This is again justified as a question of serving the “national interest” which takes precedence over any other set of values and considerations that may equally drive economic policy in other political parties, such as individual freedom, social justice, gender equality, class solidarity, or environmental protection. Rather than a principled stance on government intervention along the traditional left-right spectrum, the Radical Right’s economic agenda can be described as mixing nativist, populist and authoritarian features. It seemingly respects property and professes a commitment to economic liberty, but it subordinates economic policy to the ideal of national sovereignty.

In the United States, President Trump has emerged to lead a radical faction from inside the traditional right-wing Republican Party on a strident platform opposing immigration, global institutions, and current international trade arrangements that he portrayed as antagonistic to American economic interests. Is economic nationalism likely to include the type of command-and-control economic policies that we fear as coercive? Economic nationalism can be applied through a series of policies such as tariffs and import quotas, as well as immigration quotas with an appeal to the “national interest.”

This approach to economic management allows authorities to treat property as an object of administration in a way similar to the directions of private activity which Hayek feared can take place in the pursuit of “social justice.” It can take the form of discriminatory decisions and commands with a coercive capacity even though their authorization may come from generally worded rules. Protectionism can be effectuated by expedient decisions and flexible discretion in the selection of beneficiaries and the exclusion of others (and thereby entails strong potential for discrimination). The government will enjoy wide discretion in identifying the sectors of the economy or even particular companies that enjoy such a protection, often national champions that need to be strengthened and weaker industries that need to be protected. The Radical Right can exploit protectionism’s highest capacity for partial discriminatory applications.

The Radical Right has employed tactics of attacking, scapegoating, and ostracizing opponents as unpatriotic. This attitude suggests that its policy preference for economic nationalism and protectionism can have a higher propensity to be arbitrary, ad hoc and applied to manipulate economic and political behavior. This is perhaps most tragically demonstrated in the case of immigration restrictions and deportation practices. These may appear to coerce exclusively foreign residents but ultimately harm citizens who are unable to prove their status, and citizens who choose to associate with foreign nationals.