Political Issues

Demystifying the rule of law

Posted on by j.giglio

America’s constitutional order is under great stress and foundational principles such as free speech and the rule of law are under attack. The breakdown in respect for American institutions has helped instigate a season of violence and unrest.

The rule of law (ROL) is an expression most Americans are familiar with. It is a popular but vague term often used in political and economic contexts. Americans routinely hear politicians, judges, legislators and prosecutors mention the ROL right up there with freedom and democracy.

Few have paused to say what they actually mean by it. The concept is defined in many ways. For starters the ROL is an ideal, something to look at as a standard, a criterion. It is another way of saying that laws as written are applied equally to everyone. The ROL in its most basic form is captured in the popular quote “no one is above the law.”

It also means that laws should govern a nation and its citizens, as opposed to power resting with a few individuals. In theory, the law of the land is owned by all, made and enforced by representatives of the people.

The notion of the ROL comes with a host of concepts, like the law should be clear, known, and enforced; people are presumed innocent until proven otherwise; the police cannot arbitrarily arrest or detain people without good reason. Laws are interpreted by an independent judiciary which provides for the peaceful settlement of disputes.

The ROL requires that the law be enforced equally.  The most marginalized people in our society are entitled to be treated exactly the same way as anyone else.  It also requires that laws should not discriminate against people for no good reason, such as the color of their skin, their nationality or gender.

The concept of the ROL dates back thousands of years.  For example, the ancient Greeks started democratic law courts back in the 4th and 5th century BC with juries that had hundreds of members.  At Runnymede in 1215, English leaders signed the Magna Carta (Latin for Great Charter).

One might argue that the exalted Magna Carta was the beginning point of English-speaking peoples’ understanding of the ROL.  It was a document in which, for the first time, monarchs and government leaders agreed to subject themselves to the law, recognized that people were entitled to equality before the law and had a right to a jury trial.  The immediate practical consequence of Magna Carta was the establishment of an elected assembly to hold the monarchy to its side of the bargain.  These were momentous new concepts.

In the U.S., the most visible symbol of the ROL is the constitution, which was drafted by a special convention in Philadelphia in 1787.  It is the framework for effective and limited government and the supreme law of the land.  A congressman once delivered one of the truest statements of American political theory: “There is a straight road which runs from Runnymede to Philadelphia”.

The American effort to make good on the promise of the ROL has been difficult and sometimes bloody.  There is no getting around it – America has struggled to create a legal system that is fair to all its people.

The most glaring example is that the U.S. Constitution did not address the problem of slavery, despite the words in the Declaration of Independence that “all men are created equal”. This was the great flaw in American constitutional history.

America and other countries subscribing to the notion of the rule of law have considerable hard work to do to negotiate the distance between the ideal and the reality on the ground.

The forgotten tribe: America’s working class

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Countless working-class Americans of all races and ethnicities, who work hard and play by the rules, are fed up with the extreme partisanship that permeates the country, and with meaningless acts of violence, including the storming of the capitol. These people are the forgotten tribe in America.

In general, working class people are those with a high school diploma but less than a four-year college degree who live in households with annual incomes roughly between $30,000 and $70,000 for two adults and one child. They are somewhere between the poor and the middle class.

Americans by some measures are more deeply divided politically and culturally than ever before. We live in a period of competing moral certitudes, of people who are sure they are right and prepared to engage in violence to make their point.

For the last many years, political correctness; cancel culture; social justice; multiculturalism; the all-pervasive claim to victimhood; judging people on their ethnicity, gender and race rather than the merits of their work; and the politicization of just about everything has generated more heat and fumes than light. For all their rosy rhetoric on the subject, the ruling elites have less experience with ethnic and racial diversity than the working class.

These factors, and probably dozens of others, are contributing to the breakdown in the American genius for reaching compromises that meet the real social and economic needs of the working class.

Both the extreme right and the extreme left are corroded by ideology. Extremists on the right label their counterparts on the left socialists, and the left calls the right fascists. Each faction takes the law into their own hands while politicians see which way the wind is blowing and refuse to intervene. The growing divisions help explain why the nation’s political center is shrinking.

At the same time, the media, both traditional and social media, have accelerated the fragmentation of cultural and political identities. Conservative and liberal TV networks only highlight information that confirms their audiences’ biases, creating ideological echo chambers.

The worst of the fallout from this polarization will be felt by the forgotten tribe. These issues have done little to help them make ends meet and keep their families safe from COVID. Is it any wonder when they walk past a statue of that schnorrer Thomas Jefferson they don’t experience any trauma? Working people, after all, have to work.

America’s working class doesn’t have the luxury of engaging in ideological pursuits; they have to take care of their families, paying for groceries, medical bills, making mortgage or rent payments. The pampered and self-consciously fortunate regard the working class as “deplorables,” half of whom believe Elvis is still alive. Their understanding is the comic book version of diversity. They live in white neighborhoods, send their kids to private schools, and summer in the Hamptons.

These ruling elites don’t have to live with the unintended consequences of their decisions. The working class are the ones who have to work. As long as they do, it hardly matters what color their skin is or what accent they have. All the while, the economic system directs food, shelter, energy away from those who need it most and toward those who need it least.

The causes of the forgotten tribe’s problems have been well documented: The rate and speed of technological changes, growing monopoly power and concentration, and globalization. Is it any wonder why the working class is losing hope in a better future (get real, they are not Bill Clinton)? They are an endangered species, living paycheck to paycheck.

Despite copious amounts of cash provided to families and unemployed workers, COVID-19 rescue plans don’t provide long-term solutions for making work pay, giving the working class the education and skills needed to get better work, and to strengthen families and communities to support work. These omissions only exacerbate the fraying cohesion of America’s society and political fabric.

Powell manifesto addressed American economic system under attack

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History often has a hidden beginning. Since the 1970s, people who are already well off have enjoyed a rising percentage of income and wealth. Meanwhile, ordinary Americans face declining social mobility, a shrinking middle class, widening income inequality and crumbling infrastructure. There is plenty to be mad about and plenty of blame to go around.

The economic struggles of the American working class since the late 1970s were not just the result of globalization and technology changes. A long series of public policy changes favored the wealthy. Some argue these changes were the result of sophisticated efforts by the corporate and financial sectors to change government policy, from tax laws to deregulation, to favor the wealthy.

In August 1971, less than two months before he was nominated to serve as an associate justice of the Supreme Court, Lewis F. Powell Jr. sent a confidential memorandum to his neighbor and friend Eugene B. Sydnor Jr., chair of the Education Committee of the U.S. Chamber of Commerce. Powell was a leading Virginia corporate lawyer, a former president of the American Bar Association and served on 11 corporate boards.

The 34-page memo was titled “Attack on American Free Enterprise System.” It presented a bold strategy for how business should counter the “broad attack” from “disquieting voices.” The memo, also known as the Powell manifesto, did not become available to the public until after he was confirmed.

He began the memo this way: “No thoughtful person can question that the American economic system is under broad attack.” He went on to write that the assault was coming from “perfectly respectable elements of society: the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences, and from politicians.” American business believed it was facing a hostile political environment during the late 1960s and that it was under attack with the growth of government authority under the Great Society and an increase in regulations ranging from the environment to occupational safety to consumer protection.

The memo outlined a bold strategy and blueprint for corporations to take a much more aggressive and direct role in politics. Powell was following the Milton Friedman argument that it was time for big business to focus on the bottom line; it was time to fight for capitalism. Powell proposed waging the war on four fronts: academia, the media, the legal system, and politics.

The memo influenced, for example, the creation of new think tanks such as the Heritage Foundation, the Manhattan Institute, and other powerful organizations. As Jane Mayer wrote, the Powell Memo “electrified the Right, prompting a new breed of wealthy ultraconservatives to weaponize their philanthropic giving in order to fight a multifront war of influence over American political thought.”

The venerable National Association of Manufacturers moved its offices from New York City to Washington. Its CEO noted: “The relationship of business with business is no longer so important as the interrelationship of business with government.” The number of corporations with public offices in Washington grew from 100 in 1968 to over 500 in 1978. In 1971, only 175 firms had registered lobbyists in Washington; by 1982, nearly 2,500 did.

When it comes to lobbying, money is the weapon of choice. It looms over the political landscape like the Matterhorn.  The number of corporate political action committees (PACs) increased from under 300 in 1971 to over 1,400 by the middle of 1980.  The money they spread around gave lobbyists the clout they needed.  The growth of super PACs and lobbyists ensured that any piece of relevant regulation would be watered down, first in Congress and then during implementation.

The Powell memo galvanized Corporate America and enlarged the influence of big business over the political landscape.  It encouraged business to play a more active role in American politics. Corporate America and the 1 percenters got the memo.

Anti-Catholic bigotry

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When President Trump nominated Seventh Circuit Judge Amy Coney Barrett to the Supreme Court last month, some media outlets and politicians suggested she would bring her Catholic faith onto the bench when deciding matters of law.

The roughly 51 million Catholic adults in the United States are racially and ethnically diverse. Politically, registered Catholic voters are evenly split between those who lean toward the Democratic Party (47 percent) and those who favor the Republicans (46 percent).

For a long time, many Americans have seen Catholics as taking their cues from Rome and not the U.S. Constitution. In the mid-19th century nativist groups combined to form the Supreme Order of the Star-Spangled Banner, which was obsessed with a hatred of Catholics. Ultimately members of the movement were labelled the “Know-Nothings”. Among their demands were to ban Catholics from holding public office and fears that the growing Irish population was making the church a force in American government.

For years, American politics remained plagued by widespread anti-Catholic sentiment, especially in the South. The Irish bore the brunt of tensions that sometimes erupted into violence between Catholics and the Protestant majority. It was another instance of where white privilege was not equally distributed.

Today Catholics are fully assimilated into society. They inhabit an increasingly secular world in which theological dictates from the church carry far less weight than in earlier generations. Catholics, like members of any faith, pick and choose which teachings to follow. For instance, many U.S, Catholics want the church to allow priests to marry, allow women to become priests and come down hard on child abuse by priests and the church’s shameful cover-up of it.

The nomination of then-Professor Amy Coney Barrett to the Seventh Circuit Court of Appeals in 2017 stirred up an awakening of anti-Catholicism. California Senator Dianne Feinstein, who has the kind of voice that makes you wish you have remote control, tried to undermine the candidate’s legitimacy because she was a Catholic. Feinstein, the top Democrat on the Senate Judiciary Committee, told Professor Barrett, “When you read your speeches, the conclusion one draws is that the dogma lives loudly within you. And that’s of concern”.

Senator Feinstein’s brand of bigotry is less like old-fashioned anti-Catholicism and more about the failure of Catholicism to distinguish between public and private moral duties, such as when the Little Sisters of the Poor fought the Affordable Care Act’s contraception mandate all the way to the Supreme Court and won, or the church’s opposition to capital punishment. Of course, there was no mention of how some governors and mayors are keeping houses of worship closed because of the coronavirus while opening schools, businesses, and even athletic events. Hypocrisy is alive and well.

Ironically, it was because of the questioning of Judge Barrett during her previous confirmation hearing three years ago and the subsequent blowback that Senate Judiciary Committee members avoided obsessive and nauseating spritzing about Judge Barrett’s Catholicism. Republican senators were smart to repackage questions about the Judge’s religious beliefs into bigotry, hoping the Democrats would alienate Catholic voters just before the Nov. 3 election.

Democrats avoided the trap. While arguing that a Justice Barrett would jeopardize Roe vs. Wade and the Affordable Care Act, they bent over backward to make clear that they did not oppose the nomination because of her Catholicism. Other senators asked probing questions such as do you support white supremacy, have you ever committed a sexual assault, who does the laundry in the Barrett household, and do you play a musical instrument.

The rest, as they say, is pure commentary.

The rise of the new left

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When 2020 began, seemingly a century ago, Americans could not have anticipated the year to come: a tenacious pandemic that has killed over 200,000 people, a faltering economy, heightened social divisions and violent street battles.

Much has been said and written about our divided society, in which there appears to be more tension than ever. The nation is angry, and America’s polarized discourse leaves many Americans rightfully fearing for the future.

Some claim the contemporary ideology underlying this division derives from cultural Marxism, a contentious term that refers to the strategy propounded by new left-wing theorists in the last century to use the institutions of a society’s culture to bring about revolution.

Cultural Marxism had its roots in the political philosophy propounded by far-left thinkers known as the Frankfurt School. Founded in Germany in 1923, the “Institute for Social Research” was the official name for a group of intellectuals who would play an important role in Europe and the U.S. Among their ideas was to dismantle and undermine the totality of a capitalist society.

Fleeing Hitler in the 1930s, these German academics first set up shop at Columbia University in New York City and then, beginning in 1940, in California. They identified popular culture as wielding a pervasive influence that conditioned the masses into acceptance of capitalist society.

From the 1960s onwards, the strategy was to infiltrate and eventually dominate social and cultural institutions, and thereby achieve cultural hegemony. Rather than the class warfare and the plight of workers, which was the focus of classical Marxist thinkers, they concentrated on areas such as racial, ethnic, and gender warfare, and identity politics.

The Frankfurt School’s new-left intellectuals realized that a Soviet-style revolution was not attractive to democratic Western societies and was unlikely to succeed. Conditions for the working class were improving due to trade union representation and an expanding franchise, among other things. Communism held little appeal to the industrial working class in whose name it had been invented.

Rather than expecting workers to seize control of the levers of political and economic life, they believed the way to bring about revolutionary change was to seed radical ideas within core institutions of society such as the media, arts, and universities.

They understood that culture mass produces consent for the West’s political system, and political revolution would be impossible without a cultural revolution. A successful revolution requires not just seizing political and economic power, but also conquest of the culture, broadly defined as everything from art and entertainment to social and sexual norms. The 1960s radical left-wing German student leader Rudi Dutschke described the strategy of capturing society’s commanding heights as the “long march through the institutions.” A cultural revolution to be achieved by using existing institutions, not overthrowing them.

The outcome of the culture war, like all wars, is wholly uncertain. But what is certain is that the late great Sen. Daniel Patrick Moynihan was right when he said “The central conservative truth is that it is culture, not politics, that determines the success of a society. The central liberal truth is that politics can change a culture and save it from itself.”

In plain terms, if you capture culture, politics will surely follow.

Financialization of the economy

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Financialization refers to the increase in size and importance of the financial sector relative to the overall U.S. economy. Simply put, it is the wonky term used to describe the growing scale, profitability, and influence of the financial sector over the rest of the economy. Combine it with deregulation, less antitrust enforcement, and easy monetary policy from the 1980s onward and you get financial institutions that were too big and too speculative in the years leading up to the financial crisis in 2008.

Today, Wall Street buccaneers don’t just exert great influence over the economy; they are also a major influence in politics and government policy. The financial industry spends millions annually in Washington promoting the Panglossian view that the financial markets promote economic growth and contribute to economic well-being. It would be more accurate to say they contribute to economic inequality and the decline of U.S. manufacturing.

According to data from the Center for Responsive Politics, seven banks spent over $13 million on campaign contributions in the 2018 election cycle and over $38 million on lobbying during the 2017-2018 Congress. Not surprisingly, the top five campaign donors were Bank of America, Goldman Sachs, Morgan Stanley, JPMorgan Chase, and Citigroup.

Any wonder why the Washington crowd favors Wall Street over Main Street? Only the health care industry spends more.

For many Americans, the stock market acts as a barometer for the economy. U.S. financial markets are the largest and most liquid in the world. In 2018, the finance and insurance industries (excluding real estate) represented 7.4 percent or $1.5 trillion of the U.S. gross domestic product. In 1970 the finance and insurance industries accounted for 4.2 percent of GDP, up from 2.8 percent of GDP in 1950. In contrast, manufacturing fell from 30 percent of GDP in 1950 to 11 percent in 2019.

Prior to COVID-19, finance and insurance industry profits were equal to a quarter of the profits of all other sectors combined, even though it accounted for just 4 percent of jobs. These data are evidence of the industry’s growing weight within the American economy.

The figures do not reflect the extent to which non-financial firms derive revenues from financial activities, as opposed to productive investments in real assets. For instance, prior to the 2008 market crash and meltdown, GE Capital generated about half of General Electric’s total earnings. GE became an example of the financialization of American business. In the years leading up to the financial crisis, It became one of the world’s largest non-bank financial services companies, meaning it avoided the level of regulatory scrutiny official players like Wall Street banks face. After it crashed and burned in 2008, GE Capital got a whopping $139 billion taxpayer bailout.

Another example of corporate America moving to the rhythm of Wall Street is the case of Boeing’s 787 Dreamliner aircraft, which famously encountered delays and massive cost overruns due to its incredibly complex supply chain, which involved outsourcing 70 percent of the airplane’s component parts to multiple tiers of suppliers scattered around the world. The Dreamline supply chain reflects the pressure to maximize return on net assets. and was consistent with Wall Street’s approach.

Return on net assets is a key measure financial analysts use to evaluate how effectively management is deploying assets. The goal is to make the most money with the fewest possible assets. In the end, the Dreamliner became an embarrassing failure that cost billions more than it should have. In such instances, financialization reduces the dependence of corporate America on domestic workforces, which leads to offshoring manufacturing jobs.

The financial sector has amassed great power since the 1980s and contributed to the decline of U.S. manufacturing as well as income and wealth inequality. As Supreme Court Justice Brandeis allegedly said in 1941 with great foresight: “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”

Models aren’t crystal balls

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Every day, while folks are stuck at home, politicians, public health officials, and slick talking heads point to charts showing the latest statistics on the coronavirus pandemic as they attempt to predict what might happen next in your neck of the woods. Underlying these graphics are various forecasting models, which you should approach with a healthy dose of skepticism.

It is tempting to view the models as oracles that will help predict how the disease will spread, tell you what to do and when to do it. But these models are simplified versions of realty. Reality is reality. Models should be read with the greatest care. They are not a substitute for controlled scientific experiments that generate relevant data.

Models certainly provide information that can create a framework for understanding a situation. But models, including those used to predict COVID-19′s trajectory, aren’t crystal balls. A model is simply a tool. It consists of raw data, along with assumptions based on our best guesses at the time, that together shape an overall forecast.

A model is only as good as its underlying data, which is in short supply. For example, there is still plenty of uncertainty about how many COVID-19 deaths may occur over the next six months under various social distancing and mask wearing scenarios. Also, a model’s accuracy is constrained by uncertainty about how many people are or have been infected.

Assumptions aren’t facts. Put another way, models are constrained by what is known and what is assumed. Understanding these underlying assumptions helps explain why some forecasts have a sunny disposition, while others can’t be pessimistic enough.

There are also economic models. Financial mavens develop them to take stock of how the pandemic has impacted the economy and where they see it and markets heading. With so many countries experiencing sharp declines in gross domestic product, there is a lot of forecasting about what shape the recovery will take. Will there be a quick V-shaped recovery or will it be U-shaped? Or maybe a little bit of both?

These models also have their limitations. Recall how Long-Term Capital Management, an industry-leading hedge fund run by a renowned team of mathematical experts that included two Nobel Prize winners, developed complex quantitative models to analyze markets and placed huge bets on the assumption, among others, that Russia would never default on its bonds. They did a lousy job of stress testing their assumptions and they bet wrong. In September 1998, the firm had to be bailed out by a consortium of Wall Street banks to prevent the bottom dropping out of the financial system.

This episode was a coming attraction for the harrowing financial crisis a decade later in September 2008, which was perhaps the biggest event of the 21st century until COVID-19. Prior to the 2008 crisis, a key assumption in many models was that housing prices would always go up. Indeed, one cause of the meltdown was the quant movement: the proliferation of quantitative models for designing and analyzing financial products as well as for risk management. Many finance professionals mistakenly believed that quantitative tools had allowed them to conquer risk. Products such as derivatives, subprime mortgage-backed securities and activities that relied heavily on quantitative models were at the heart of how financial firms expanded their activities to take more and greater risks.

And of course, with the presidential election just months away, Americans still remember how 2016 election models forecast Hilary Clinton waltzing into the White House. Between now and Nov. 3, many people will take election forecasts with an extra grain of salt or three.

Given the events of the last several months, people should keep a simple fact in mind: Models should not be asked to carry any more than they can bear. So when you hear about models put on your hmmm face.

The economy and COVID-19, Part 2

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Americans are struggling to adjust to a pandemic whose future progression is uncertain. They have not seen an economic downturn of quite such scale or scope, and people are unsure about how the United States can pull out of the crisis.

Righting the economic ship will require a delicate balance of managing debt and encouraging growth. A large infrastructure investment program that includes private contributions is a feasible way to achieve that goal.

Governments are struggling to prop up economies while confronting the serious and immediate public health challenges of COVID-19, resulting in unprecedented emergency spending and huge budget deficits throughout the world. In the United States, Congress has passed huge spending bills to help businesses and households that have swollen the national debt by about $2.4 trillion. The Congressional Budget Office numbers for its Doctor Doom scenario recently projected a budget deficit of more than $3.7 trillion for the current fiscal year.

Outstanding national debt now exceeds $25 trillion. Additional outlays in response to a second wave of COVID-19 outbreaks could further increase the debt and add to sovereign risk. Even in a low interest rate environment, higher debt service costs will crowd out other government spending. Trying to explain to the average politician that debt is a drag on future growth is a waste of time. Spending today and making a suitcase of promises is what helps them get reelected tomorrow. The future is someone else’s concern.

The Federal Reserve Bank has taken emergency measures to make credit easier to obtain with a bigger money supply and lower interest rates. Additionally, the Fed is lending more than $2 trillion to businesses and state and local governments. There is concern that the Fed’s actions risk future price inflation which would decrease the purchasing power of the dollar. The era of the dollar as the world’s primary reserve currency may also come to an end. In that case the U.S. would no longer benefit from the typical safe-haven demand from foreign investors as the value of the dollar collapses.

Policymakers note that these concerns must take a backseat to addressing the immediate crisis. The present commands their attention, but they may insufficiently appreciate that the future may be more of the present.

Going forward, the U.S. will have to manage the debt, deficits, and debt service payments, and at the same time find ways to support economic recovery to grow its way out of all this debt. While fiscal consolidation—raising taxes, cutting spending, or both—is the tried and true method for tackling debt challenges, it is likely to encounter some major tactical problems.

Raising taxes is politically difficult given the perception among many in Congress that voting for tax increases is tantamount to announcing your retirement from elective politics. Similarly, cutting high-dollar payment programs like Social Security, and Medicare is bound to be strongly opposed by legions of elderly voters.

Another approach is to focus and allocate resources to areas that create the most jobs. The time is long overdue for a bipartisan infrastructure investment package that rebuilds America’s crumbling roads and bridges, invests in future industries, and promotes increased productivity while immediately employing people whose income would give the American economy a shot in the arm. There is a broad consensus among mainstream economists that infrastructure investment has a large multiplier effect through the economy.

The problem is where the actual dollars can come from to fund such an ambitious program. One solution is to recruit private firms to help start, fund, and run as many of these infrastructure projects as possible. If properly structured, such public-private partnerships could tap into the billions of dollars in private capital hungering for low-risk investment opportunities able to offer decent rates of return.

COVID-19 has introduced a host of new economic challenges. A robust infrastructure program that includes private participation would be an effective way to begin to address them.

The death of Hong Kong?

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Hong Kong’s reputation as an international business city may be finished. The Chinese Communist Party (CCP) is fixing to impose a sweeping national security law that bypasses Hong Kong’s own legislative process. The law would erode the city’s high degree of autonomy guaranteed under the “one country, two systems” formula.

The law would ban secession, foreign interference, terrorism and all seditious activities aimed at toppling the central government. Additionally, it is designed to “prevent, stop and punish” activities that endanger China’s national security. It also reveals plans to establish new national security agencies for the first time in Hong Kong. In sum, Hong Kong loses the rule of law and it is replaced by the rule by law with the courts, police, and prosecutors controlled by the CCP.

The smart money knew this legislation was coming. To deal with last year’s protests in Hong Kong, President Xi Jinping, the most authoritarian Chinese leader since Mao Zedong, has to show he is boss by reasserting dominance over a piece of Chinese territory.

The CCP doesn’t play softball. While the international community is facing down the Covid-19 pandemic, dealing with its economic fallout, litigating the past, and reminiscing about the future, they made their move with all the finesse of German brown shirts in the 1930s. The CCP gives less than a tinker’s damn what other countries think.

This is the latest in a series of aggressive foreign policy moves by the CCP since the outbreak of the Covid-19 pandemic, including upping its presence in contested areas of the South China Sea. The CCP is intent on China becoming the regional hegemon in Asia, just as United States has been in the Western Hemisphere since the late 19th century.

The CCP is going to do what it wants in Hong Kong without fear of the consequences. Quite apart from reigniting the pro-democracy movement, they know full well that no one in the international community is going to war over Hong Kong. Political figures around the world have decried the new national security law for Hong Kong. They argue that the new law is a “flagrant breach” of the Sino-British Joint Declaration that returned Hong Kong to China in 1997 with the understanding that Hong Kong residents would enjoy basic freedoms until 2047.

Under the agreement, Hong Kong was to be governed under the “one country, two systems” principle which was meant to guarantee a high degree of autonomy for Hong Kong for 50 years. But the international community will not stand up to China or boycott Chinese goods. With the exception of the United States, the reaction will continue to be all rhetoric and no action. It is wishful thinking to expect St. George to come to the rescue and slay the dragon in the guise of the CCP.

Legislation has been introduced in the United States Senate that would sanction CCP officials enforcing the national security laws in Hong Kong. It would also penalize banks that do business with any entity enforcing the law. Secretary of State Mike Pompeo has threatened to revoke certain economic and trade privileges Hong Kong enjoys with the United States that do not extend to China as a whole. Such an action might result in the city losing its status as a major hub for global finance.

For the other Asian countries, this move is the canary in the coal mine. They will have to fall in line and recognize China as the dominant power in the region while the rest of the international community is kept off balance as to their next move. For certain, Taiwan is in the CCP’s line of sight.

The passage of the National Security Law will be a game changer. With the passage of this law, Hong Kong will become just another Chinese city. Undercutting Hong Kong’s political autonomy and civil liberties will undermine the city’s attractiveness as an international business and economic center.

A strategy for dealing with China

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On Feb. 22, 1946, George Kennan, U.S. Chief of Mission in Moscow, sent the State Department a long telegram explaining the behavior of the Soviet Union and how best to deal with it. The gist of the telegram was that the Soviets, pressed by economic failure and bound by Marxist-Leninist ideology, found a perfect enemy in the United States and were uninterested in compromise.

This being the case, the best way for the U.S. to deal with the Soviet Union was to build up the still-free countries of Western Europe and do all it could to contain Soviet expansion. This policy became known as “containment” and its immediate result was the massive aid program to post-war Western Europe known as the Marshall Plan.

A year later in, writing under the byline “X” in Foreign Affairs, Kennan expanded upon these views. He was a realist who believed international relations ought to be “guided strictly by consideration of national interest,” not treaties and alliances. While often revised, Kennan’s containment strategy would largely define U.S. policy toward the Soviet Union until the end of the Cold War.

Now, more than 70 years later, the U.S. and its allies again face a communist rival that views the United States as an adversary, seeks global influence, and wants to supplant America as the world’s dominant power. The Chinese Communist Party’s (CCP’s) challenge is generational and cuts across economic, military, political, and social spheres.

The United States is at war. Don’t be deceived because soldiers of the People’s Liberation Army, a branch of the CCP, aren’t running down the street.

While America and the world are in the grip of the made in China COVID-19 pandemic, the CCP has launched a global disinformation campaign reminiscent of the Cold War, blaming others for the spread of the virus. Equally important, it is moving at warp speed as the first major world economy to end lockdowns and start up its economy. The CCP is acting to shape the pandemic narrative and geopolitical shifts in the post-COVID 19 world.

Ever since President Nixon’s opening to China in 1972, the U.S. has largely sought constructive engagement, which would supposedly help democratize China and integrate it into the American-led international economic order. As a “responsible stakeholder” in the international system, China would be highly motivated to maintain peaceful relations with other countries.

The integration strategy has not worked. Nor has the bipartisan support for China’s admission into the World Trade Organization. Recent events confirm that China is challenging the existing international order with impunity.

Look no further than its land reclamation efforts, claiming some 80 percent of the South China Sea as its sovereign territory, challenging Japan’s administrative control of the Senkaku islands, the “One Road, One Belt” new Silk Road Eurasian integration plan, and more.

While the United States has wasted decades in its dealings with the CCP, it is still not too late and George Kennan’s notion of containment remains relevant. The United States strategy should be to preserve and deepen relationships with Asian countries fearful of China’s power and aggressiveness.

China has few allies in the region. The United States should be working closely with India, Vietnam, Japan, Philippines, Australia, Taiwan, and others to contain China, and in the process advance America’s economic, political, and security interests in the Asia Pacific region. Closely related, the U.S. should be forging relationships with developing nations across the globe to counter China’s Belt and Road Initiative.

Today, George Kennan’s prescription that “the main element of any United States policy toward the Soviet Union must be that of a long-term, patient but firm and vigilant containment of Russian expansive tendencies” offers the best hope of containing China’s ambitions. The challenge is that Americans seek instant gratification, while China plays the long game. One thing is certain: Everyone will be feeling their age before this contest is played out.