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The Global Bear Market In Freedom

Submitted by Erico Matias Tavares via Sinclair & Co.,

Americans will be celebrating Memorial Day this weekend, to honor those who fought and died for the values they have traditionally cherished the most as a nation: life, liberty and the pursuit of happiness.

The world has changed dramatically in recent decades. The geopolitical situation is much more complex, with rising powers challenging America's supremacy. The intractable war on terror seems interminable. Old foes appear to spring back to life even more powerful than before. And things at home look dicey in terms of politics and economics.

As we reflect upon the ultimate sacrifice that others have made‎, it is an opportune moment to consider a very important question: is the US winning the fight for freedom?

More than other dictatorial regimes, “totalitarianism” represents the opposite of everything America is supposed to stand for. For most people it conjures images of a repressive leader and his minions having total control of a society with very limited freedoms. That’s not too far off from reality, but there’s more to it and a process to get there.

The term was first coined by Giovanni Amendola in 1923 to describe the emergence of Italian fascism (which was different from other dictatorships). However, it only gained traction in academic research during the 1960s largely based on the work of political scientists Carl Friedrich and Zbigniew Brzezinski. They reformulated the definition to account for the Soviet Union as well as the fascist regimes of the 20th century, where a totalitarian system featured the following mutually-supportive defining characteristics:

  1. An elaborate guiding ideology;
  2. A single mass party, typically led by a dictator;
  3. A system of terror, using such instruments as violence and secret police;
  4. A state monopoly on weapons;
  5. A state monopoly on the means of communication; and
  6. Central direction and control of the economy through state planning.

As far as we can tell this definition has not been materially updated since it was first proposed, perhaps because the topic has lost academic interest following the collapse of the Soviet Union. One critique is that many totalitarian regimes do not exhibit all these characteristics at‎ the same time, and not with the same intensity. Initially they may even be welcomed and perceived as necessary by the general population, only to become more radical and pervasive over time, particularly as a result of a political or economic crisis.

We could also argue that in today’s globalized world the ability to restrict the emigration of citizens has become an important component. After all, the “total” aspect of it becomes less relevant if everyone can get out of Dodge.

Be that as it may, we will broadly employ these six characteristics to summarily analyze the shifts that have been occurring in the main geopolitical blocks across the world.

The pattern that emerges should concern freedom lovers everywhere.

The Islamic World

“Muhammadan [Islamic] law did not derive directly from the Koran but developed... out of popular and administrative practice under the Umaiyads, and this practice often diverged from the intentions and even the explicit wording of the Koran.... Norms derived from the Koran were introduced into Muhammadan law almost invariably at a secondary stage.” -Joseph Schacht, The Origins of Muhammadan Jurisprudence

Centuries ago Muhammad founded Islam, which translated from Arabic means “submission”. The literal interpretation of that word, his life and his teachings, at times taken to extremes, historically has created societies with a bias towards the restriction of freedoms. For one, slavery (white but especially from Africa) had been a recurring feature of Islamic commerce and society, even well after it was abolished in the West.

All this was aggravated with the collapse of the Ottoman Empire after World War I, the subsequent (disastrous) redrawing of the Middle East map by the victors, the power vacuum left behind post European colonialism and the never ending sectarian conflict within Islam.

Despite several attempts at secularism and democratic reform, today the Arab world is a wasteland of freedom. Add Iran and virtually all major Islamic states in the region operate under the definition of totalitarianism, especially when political Islam (sharia) is adopted as the law of the land.

Out of the 157 countries surveyed by the Cato Institute in its 2013 Human Freedom Index study, no country with a Muslim population greater than 60% ranked in the top-50. Turkey, the first one on the list, ranked #61 (more on that shortly), followed by tiny Brunei at #64 and Indonesia at #70. Twelve of the bottom-20 countries fitted this criterion, with major Islamic countries like Saudi Arabia, Egypt and Iran ranked #144, #146 and #155, respectively.

In several instances this race to the bottom has been a relatively recent phenomenon, going back a generation or so. Compare the pictures of women in Afghanistan and Iran in the 1970s, indistinguishable from their peers in the West, to today, where many are covered up from head to toe. Do the same for the graduation ceremony at Cairo University in Egypt over the most recent decades.

The Arab Spring which started in 2011 as a protest against this lack of freedom unfortunately led to more radicalization, violence and war in many countries (the West shares some of the blame). At one point the nefarious Muslim Brotherhood was even elected to power in Egypt, immediately striving to turn the country into a hardcore Islamic state complete with full sharia law. Only the emergence of yet another military dictatorship was able to put a stop to all the mayhem and murder that followed.

The most recent example in this shift towards fundamentalism is Turkey, once considered an inspiring example of a successful transition from an Islamic into a secular democratic society. After narrowly securing the majority of the votes in a tight election months ago, President Recep Tayyip Erdogan has been busy rolling back these reforms to create a fully-fledged Presidential system with a clear Islamic inspiration.

In today’s Turkey, minorities are persecuted and in the case of the Kurds killed or placed under curfew, journalists and political opponents are jailed indefinitely, the media is being brought under state control, the military (the most powerful in the Middle East) is gaining political prominence under the pretext of the “fight against terrorism” and war refugees are used as a bargaining chip against Europe.

All these are hallmarks of totalitarianism. Perhaps revealing his true intentions, Erdogan even went as far as praising Adolf Hitler’s governance model. The freedom loving part of Turkish society now has a real problem on its hands, along with Europe given the deepening commercial, financial and even political ties between the two regions.

Astonishingly, some geopolitical analysts view Erdogan’s policies as a positive development, providing the muscle and determination to ensure stability in a very volatile part of the world. It is worthwhile remembering that Hitler too was propped up by the West in the 1930s as a deterrent against the Soviet Union.

We sincerely hope that people in Muslim nations can find the peace, freedom and prosperity that they have aspired for so long. But the trend in this case is clearly not their friend.

The Sino-Russian Axis

“Everyone imposes his own system as far as his army can reach.” -Joseph Stalin

Up until the 1980s both China and Soviet Russia were clearly totalitarian regimes, easily fulfilling all six characteristics.

In the case of China, the world was reminded of this political reality during the tragic events of Tiananmen Square in 1989, when a popular uprising protesting for democracy was brutally crushed by the military. However, the leadership at the time recognized that things did need to change, especially if they wanted to generate a minimum level of prosperity for their citizens to avoid future unrest.

Soon after private enterprise was encouraged to take a greater role in the economy; critical foreign investment and know-how were welcomed in certain areas of the country; the leadership proclaimed that “to get rich is glorious”. We all know the rest of the story: China has achieved unprecedented growth over a relatively short period, and is now a major player in global economic and political affairs.

But has China abandoned totalitarianism?

Terror may no longer be an obvious state tool, but it still lurks in the background, especially when persecuting religious minorities or those who do not follow the prevailing ideology – which at least on the outside is state supremacy under a modified Marxist ideology. Means of communication are broadly controlled, including censorship of the internet. Control of the military has been tightened under President Xi Jinping. And many parts of the country operate under a de facto police state.

So other than private enterprise gaining a greater degree of freedom, more work is required to spread these gains across Chinese society. And in international affairs China certainly favors pragmatism over human rights. North Korea, its propped-up regional minion, remains undoubtedly under totalitarian control, even after the rise to power of Western educated Kim Jong-un.

Russia had a rather more tumultuous transition to its current governance model. By the end of the 1990s it was clear that the market reforms adopted after the collapse of communism failed to produce the desired outcome, to put it mildly. A series of events – including a disastrous financial crisis in 1998 – eventually led to Vladimir Putin rising to power, who promptly tightened his grip over political and economic affairs. He still calls the shots to this day, we could say irrespective of his political title and election results.

Despite this concentration of political power the Russian state has adopted a more conciliatory position towards its citizens, at least on the surface. There’s a good reason for this: Russia’s population is projected to decrease significantly over the next thirty years. And a serious repression of personal freedoms is not exactly conducive to having babies (unfortunately for Putin, Marx did not proclaim “workers of the world, reproduce!”)

As an example of a shift towards a more tolerant and open society, Orthodox Christianity, which had been virtually eradicated after the Bolshevik revolution, has been making a comeback. The atrocities which took place under the Soviet regime are also the topic of public debate.

But serious challenges remain. Corruption at all levels of government remains pervasive. Local and regional mafias tend to absorb any power that is relinquished by the state over such a vast territory. And Putin’s confrontation with the West, which has led to the imposition of economic sanctions by the international community, means that the influence of the military apparatus is likely to remain strong over the years to come.

As such, based on the foregoing we could say that Russia today is much more autocratic than totalitarian, certainly much more than democratic, although its governance model incorporates elements of all three.

Here’s an important note about communist totalitarianism. Only one former communist country successfully prosecuted its communist leaders for their crimes, and that’s Cambodia (against Pol Pot’s Khmer Rouge). Everywhere else they got a free pass, despite enforcing directly or indirectly an ideology which caused the death of hundreds of millions of people worldwide.

The fascists on the other hand were put on trial for the entire world to see. This may explain why they are readily demonized, while communists still manage to get elected in many parts of the world (especially in Europe and as we shall see, Latin America). Communism did not die; it is alive and doing very well.

The Western Hemisphere ex-US

“And that," put in the Director sententiously, "that is the secret of happiness and virtue — liking what you've got to do. All conditioning aims at that: making people like their unescapable social destiny.” ?Aldous Huxley, Brave New World

Old Europe is the cradle of Western civilization. It has made an undeniable contribution to human progress over the centuries: democracy, human rights (including being the first to abolish slavery, that stain on humanity), widespread education, healthcare and agricultural + industrial revolutions to boot.

It also came up with some really bad ideas – basically all the social “isms”: communism, fascism, socialism, anti-Semitism and of course totalitarianism. Some brutal wars were fought as a result of these bad ideas.

The European Union (EU) in large part was created to prevent their reoccurrence, as well as establish a more influential global player by pooling 28 European nations together. Some even view it as an inevitable evolution of the fragmented nation states which had formed the bedrock of Western civilization for centuries.

With this context, it would seem rather silly to ask if the EU is also a totalitarian state… until we look at the evidence.

Take Greece. The country went bankrupt in 2010, when unsustainable fiscal policies and inherent flaws in the design of the Euro currency were painfully exposed. Since then that society was turned upside down by successive policies and reforms to rehabilitate the economy.

The result? Virtual totalitarianism, at least under the definition we’re using: the social and economic policies adopted by the government are the same irrespective of who’s elected or the outcome of any popular referendum; there’s no state terrorism per se, but it’s not exactly pleasant to live under the constant threat of savings and pensions being wiped out if such policies are not duly followed; Greeks, like most other Europeans, are not allowed to contest their government’s monopoly on weapons; and there’s only one accepted guiding ideology – “European Unionism”. Only the great leader is missing (or is that Angela Merkel?)

The same analysis can be extended to Portugal and other member states that are in a fiscal pickle. Those that aren’t may still breathe some freedom – provided they follow the political orthodoxy from Brussels, or else. Poland and Hungary recently found this out the hard way, as they may be forced to pay heavy fines as a result of their fierce opposition to the EU’s refugee resettlement program.

Remember that totalitarianism can be a gradual process, and not necessarily overtly repressive at first. In the case of the EU, the political hardening from Brussels appears to be a more recent phenomenon (despite the historical disregard for national referendums and protestations) in light of some pretty obvious failures in dealing with serious issues since 2008. The bigger political integration project needs to stay on track, no matter what. It’s no wonder that in June the UK is voting on a referendum to get out of the EU. And it’s reasonable to assume others might follow suit.

Latin America, where communism has always had deep roots, has been working at it for longer.

Shocked by the fall of the Berlin Wall in the late 1980s and the apparent triumph of neoliberal policies across the region, Luiz Inácio Lula da Silva, leader of the Brazilian Workers' Party, and Cuba’s Fidel Castro approached other regional leftist organizations to create a countermovement and eventually bring communism back to power. The result was the creation of the Forum of São Paulo.

Its first meeting took place in 1990, attended by no less than 48 parties and organizations. Since then, they have implemented their agenda very diligently by gradually infiltrating the media (traditionally left-leaning, and which only publicly acknowledged the existence of this Forum relatively recently), the education system, workers’ unions, politics from the local to the federal level and even the Catholic Church.

The result was the rise to power in the 2000s of a multitude of “populist” leaders all over Latin America, including Lula in Brazil, Néstor Kirchner in Argentina, Hugo Chavez in Venezuela and Evo Morales in Bolivia – at a time when communism was considered all but dead. All that work to condition the masses, the promise of a more equitable distribution of resources via socialism and a rising wave of anti-Americanism proved irresistible to the electorate in these countries.

The illusions of renewed prosperity and more equality quickly faded. Not even the bonanza brought about by the spectacular commodities boom could disguise the failure of the leftist economic policies, with indebtedness rising rapidly. When that boom turned into a bust post 2011, confidence in the political system quickly evaporated, compounded by a string of shocking corruption scandals (allegedly committed by those who came to power denouncing them).

The legitimacy of those governments was quickly called into question, in most cases before they could at long last establish their coveted socialist utopias. Argentina narrowly voted out the leftist government, led by Cristina Kirchner. After many months of vigorous popular demonstrations, Brazil finally impeached Dilma Rousseff, heir apparent (placeholder?) of Lula, a few weeks ago (disentangling her party’s influence in Brazilian society may prove to be rather more difficult).

But the Venezuelans were not so lucky, and are now facing the totalitarian boot of the government of Nicolás Maduro, the successor of Chavez: political assassinations and intimidation, banning of private gun ownership (already in 2012), media blackouts, loss of individual and economic freedoms, increased military control and all the rest. All this in the country with the largest oil reserves on the planet.

Cuba of course remains firmly a totalitarian state, despite the recent overtures of US President Barak Obama. No respite for its citizens there either.

The US

“If we lose freedom here, there is no place to escape to. This is the last stand on Earth.” – Ronald Reagan

When it comes to individual freedoms Americans are in a league of their own. Their country was founded by people seeking refuge from persecution, whose leaders were allergic to the concept of big government. Successive generations have fought very hard at home and abroad for the sake of liberty.

If it were not for the US, Europe would have almost certainly succumbed to fascism or communism. The US Constitution, a marvel on how to limit the power of big government – by definition anti-totalitarian/authoritarian, is older than the constitutions of most advanced European nations.

All that being said, it is undeniable that personal liberties took a big hit after 9/11, justified by the “war on terror”. And it’s not just from increased government surveillance, as one would immediately think. Today there is a set of powerful dynamics in motion that may fundamentally alter the relationship between Americans and their government.

Here are a few examples:

Growing dependency on the government: Self-reliance was once a hallmark of American life. But today the largest single employer in the US is the government. One in seven Americans receive food stamps, meaning that without the government they would go badly hungry. The US bureaucracy spent over $3.6 trillion in 2015, making it the largest enterprise on the planet. As the cost of staples like food, healthcare and education skyrocket, more and more people will push the government to pitch in via the ballot box.

 

All this creates a self-perpetuating machine increasing the size of government to provide for all these needs. As Milton Freedman warned us, one of the costs of bigger government is the loss of freedom. But some Americans do not seem to care. The following Gallup poll shows the progressive embracing by the younger generations of the role of government and socialism (as of May 4, 2016):

 

 

The ever expanding government debt: Maintaining this expanding machine costs a bundle. Even if taxes collected have been rising, the US government still comes up short, so borrowing goes up. In the last fiscal year, just the federal debt totaled over $18 trillion, more than 100% of GDP and almost $60,000 for every American adult and child. What is striking is how fast it has been growing, almost doubling over each of the last two presidencies. The graph below shows this staggering increase since 1950 in real terms.

 

US Federal Debt in Real Terms ($2015): fiscal1950-fiscal2015

 

Somebody will have to pay for all this at one point, and that’s you dear American reader. Also remember that unlike other developed countries you are taxed on your worldwide income, so there is no escape even if you leave the country. And the more the government owes today the more it will come after you at some point in the future, by whichever means, benevolent or otherwise.

 

State allocation of resources: As the size of government expands, its influence over the economy and allocation of resources grows with it. And it can do so either directly using public entities or indirectly via big business, meaning large corporations favored by the government (which in turn have every incentive to try to influence that big government in their favor). The fascist dictatorships of Europe in the 20th century provided an extreme example of how this close alliance between politics and corporations controlled society.

 

According to the findings of Martin Gilens and Benjamin Page at Princeton University, published in 2014, “economic elites and organized groups representing business interests have substantial independent impacts on US government policy, while average citizens and mass-based interest groups have little or no independent influence”. On top of that, a hybrid public-private entity controls US monetary policy, becoming particularly interventionist since the 2008 financial crisis.

 

If you think all of this is theoretical, try this one for size. Executive Order 13603 was signed with little fanfare by President Barack Obama in March 16, 2012, authorizing the President to requisition property, force industry to expand production and the supply of basic resources, impose wage and price controls, settle labor disputes, control consumer and real estate credit, establish contractual priorities and allocate raw materials towards national defense; in other words, to obtain absolute control over the economy if deemed necessary (by who?) to protect the nation.

 

The gun control debate: If you read the daily news you might think that the US has turned into the Wild West, with fanatical gunmen riding into town and shooting everything in sight. While the loss of life from any type of violence is regrettable, the reality is that gun homicides per capita are at generational lows. And yet many politicians and much of the mainstream media portray this as a core problem of American society that can only be fixed by restricting access to guns. If the majority of Americans feel that way obviously it should be subject to a debate. But what is unquestionable is that a state monopoly of weapons, if that is the desired outcome, is a key component of a totalitarian society.

 

Growing intimidation: Some media commentators have denounced the current Administration’s harassment of the press. We really can’t say much about this, other than it seems to fit into a growing pattern of government intimidation, be it against whistleblowers or using agencies to target certain political groups. But this actually goes beyond the government. There appears to be state-sponsored “consensus” or even ideology forming around certain social and economic issues, which is heavily guarded by social justice warriors (reminiscent of the ideological “brown shirts” in Nazi Germany). Try challenging climate change, open border policies, multiculturalism, transgender bathrooms and a range of other issues and you may find yourself in court and/or being physically attacked.

 

A Revealing Flyer Recently Posted in Boston, MA

 

An imbalanced Supreme Court: Here’s a seldom discussed yet hugely important outcome of the 2016 Presidential Election. Commentators who say that Hillary Clinton or Donald Trump might become dictators display a very shallow understanding of how the US political system works. The US Constitution was designed to prevent this, and political representatives along with millions of patriots have sworn to defend it. But ultimately it’s the Supreme Court that decides what’s constitutional and what’s not. If the majority decides that the President should have dictatorial powers during an event like a terrorist attack or war, then all bets are off.

 

Until the death of Justice Antonin Scalia, the Supreme Court was fairly balanced between conservatives and liberals, in a sense reflecting the broader views of society (in theory the political orientation should not matter, but in practice we are all human). Now Democrats have a unique chance in November to shift key rulings in their favor by appointing one and possibly more Justices who have a more liberal interpretation of the Constitution. Since they are appointed for life, this imbalance will deeply impact a generation if not more of American politics and in our view represents a serious risk to constitutional liberties.

If we go back to that Cato Institute study on human freedoms, we find something very striking: the US did not make it to the top-10 freest countries in 2013. In fact it barely made it to the top-20, ranking #19 (paradoxically, where the land of the free still leads the world is in putting its citizens behind bars).

We quickly dismiss and forget trends and statistics like this. After all, the US’ governance model will never change… right? Not quite. The US can become (and in many ways already is) less free.

This means that citizens all over the world should be concerned. Why? Because Ronald Reagan was right: there is no more freedom if the US loses it.

Think about it. Who else will lead the fight for individual liberties? Not the Eurocrats, based on the track record of the EU (they aren’t even capable of protecting their own women). Neither will the Russians nor the Chinese, whose patriarchies think they know better than the average citizen. The major Muslim countries are busy dismantling what’s left of freedom at home, while in some cases exporting fundamentalism abroad. And Latin America has a lot of cleaning up to do domestically.

***

In 1630, before setting sail to the Americas, English Puritan leader John Winthrop admonished his fellow future New England colonists that their new community would be “the light of the world as a city upon a hill”, setting an example of communal charity, affection and unity to all other nations. The concept became central to the US’ conception of itself as an exceptional and exemplary nation.

So far in early innings of the 21st century the US does not appear to be winning that fight for freedom – internationally, and even more disturbingly at home. That light is dimming pretty rapidly.