Welcome to the Bullshit Economy

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Welcome to the Bullshit Economy

The Iowa caucus disaster is a function of a broken economic structure that rewards con artistry over competence.

by David Dayen

 

February 4, 2020

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Charlie Neibergall/AP Photo

The story of Shadow, makers of the app that utterly failed to deliver in Iowa, is a perfect example of the bullshit economy.

In one sense, the Iowa caucus debacle will last just a couple of news cycles. We have the data on paper, tabulated in front of tens of thousands of witnesses, and it merely needs to be collated. Eventually it will, and though the damage to the news cycle is irreparable—Joe Biden’s disappointing outcome has been diluted in particular—the process will go on with an accurate count. Caucuses are horrible and probably a dead letter, but for different reasons than the delayed count; the real problems arise from the electoral college–style distortions between the initial percentages and the final delegates, and the tacit vote suppression from forcing people to attend a two-hour meeting on a weeknight when they might be working.

But the spectacle has highlighted a much more consequential problem in America, something I have called the bullshit economy. We’ve seen elements of it all over the place. When MoviePass offers unlimited screenings for ten bucks a month, when Uber gets an $82 billion valuation for a low-margin taxi business it has never made a dime on, when WeWork implodes after the slightest scrutiny into its numbers, that’s the bullshit economy at work. We have seen the farcical bullshit of Juicero and the consequential bullshit of Theranos.

Even at the highest levels, bullshit pervades, in fraudulent advertising metrics and fake numbers peddled to convince the world to siphon cash through Facebook and Google’s dominant platforms. So many counterfeit goods pass through Amazon that the site might get listed on the U.S. Trade Representative Office’s “Notorious Markets” list.

We have endured the more comprehensive bullshit of the financial industry marking corporate progress by manipulated stock prices and air rather than productive advances for society. We had a financial crisis based on bullshitters telling us housing prices would endlessly rise. We have the bullshit of the private equity industry extracting value from companies through the skillful use of debt and other financial engineering, without regard for whether the companies succeed or fail.

The story of Shadow, makers of the app that utterly failed to deliver in Iowa, is a perfect example of the bullshit economy. It starts by being a tech solution to a nonexistent problem. Iowa counties are compact; the largest one has a landmass of 973 square miles, and it’s close to twice the size of the average county in the state. Even there, no major city is more than a 30-minute drive from the county seat, Algona. Even with that ancient technology of the car, you could have each of the 99 counties report final results within a couple of hours of the end of the caucuses.

Somehow, the Iowa Democratic Party got sold that they needed to improve upon this, to “disrupt” the caucus reporting. Already, the party had to increase what they would keep track of and tabulate, reporting the first set of results before the 15 percent viability threshold, the second set afterward, and how that translated into delegate counts. It wasn’t clear why anyone needed to add another layer of complexity into this with the app. But the app’s backers must have been persistent, getting $60,000—really nothing for the purposes of app development—to design a tool to forward the results to a central repository.

Clearly there was no meaningful stress testing of the technology. But there also doesn’t appear to have been much training. Many caucus administrators simply didn’t bother to use the app, attempting to call a hotline to report results. That got overloaded as the app failed, with everyone from 1,600 caucus locations trying to report at once.

Shadow is a subsidiary of ACRONYM, a nonprofit with lots of connections to the Democratic consultancy, including veterans of Hillary Clinton’s presidential campaign and David Plouffe, the Obama campaign manager who sits on the ACRONYM board. MSNBC’s Chris Hayes asked Plouffe on a late-night panel about his participation, and as he swiveled in his chair uncomfortably he disclaimed any knowledge of Shadow or the app.

Similarly, ACRONYM issued a statement positioning itself as a mere investor in Shadow, without knowledge of their inner workings. But last year, ACRONYM announced it was “launching” Shadow, as part of an effort to help Democrats “win” the internet and run better campaigns. The head of ACRONYM, Tara McGowan, is married to a Pete Buttigieg strategist.

All this doublespeak is a hallmark of the bullshit economy. Your mind doesn’t have to travel to the nether regions of conspiracy, but you can hardly blame people for doing so. This is reflective of the rolling incompetence covered by confidence within the modern economy, especially when you sprinkle on the labor-saving promise of techtopia. When the bullshit economy fails, it robs people’s belief in the basic bargain of commerce, the idea that you get what you pay for, that companies operate in good faith to provide quality service. But when placed in contact with politics, it just demolishes faith in the system. The bullshit economy spurs distrust.

So there we have it: an unnecessary app that narrows the supply chain of votes to the central tabulator, and when the supply chain fails it creates chaos. We see this all over our economy: useless services, narrow supply chains, magnified fiascos. As long as confidence men lie to the right people, they can gain entry and take on enormous responsibility, until it all falls apart. We live in a country where you can spout New Age consultant speak, charm a large foreign investor, and make off to your guitar-shaped living room with over a billion dollars, paid effectively to go away. That’s WeWork guru Adam Neumann’s story, and increasingly it’s our story.

The Iowa disaster is a sign that our economic structures are breaking down, that private enterprise has become a shell game, where who you know matters more than what you can do. The bullshit economy has bled over into politics, with the perfect president but also the perfect amount of grifting and consultant corruption and unbridled tech optimism. This has long been part of politics—anything with that much money sloshing around will invite a little corruption—but the combination of political grift, the ardor for public-private partnerships, and the triumph of ambition over talent has created a fetid stew.

The voters have a rare choice in 2020 to put clamps on the bullshit economy, to end the froth in our financial markets, to put the needs of the people ahead of inflated stock returns and boasts about revolutionizing rental housing or food delivery or juice machines. We don’t have to live in the bullshit economy. We can reject it. Or we can wait for the app to work and find out who our leaders will be.Iowa Politics Election 2020 Big Tech

David Dayen

David Dayen is the Prospect’s executive editor. His work has appeared in The Intercept, The New Republic, HuffPost, The Washington Post, the Los Angeles Times, and more. His most recent book is ‘Monopolized: Life in the Age of Corporate Power.’

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https://prospect.org/politics/bullshit-economy-iowa-caucus-disaster/

 Matt Ford

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December 27, 2024

Vaporware

How the Silicon Valley Robber Barons’ New Tech Bubble Won 2024

The two major techbro obsessions—crypto and AI—have delivered mostly scams and hype. But this year, they managed to buy themselves a federal government.

  Marc AndreessEN             Steve Jennings/   Getty Images

The American economy seems to be doing pretty well right now, at least on paper. Unemployment is low. Stocks are up from last year. Inflation is slowing. Things aren’t great for everyone, of course, but they could be a lot worse. President-elect Donald Trump hopes to upend that status quo in the new year.

On the campaign trail and since election night, Trump has vowed to impose significant tariffs on some of the nation’s largest trading partners, which will make things more expensive for the American consumer. Trump’s mass deportation plans could cause economic chaos if carried out at enough scale, particularly in the agriculture and construction sectors. His administration’s plans to disrupt and dismantle the federal bureaucracy could take a toll as well.

Trump tends to overpromise and under-deliver, so some or most of this may not happen. If his policies do lead to a recession, however, I think Americans will make an unsettling discovery: A significant portion of the American economy is essentially fake. Some of the nation’s wealthiest people are going to great lengths to keep it propped up, even to the point of swaying the presidential election to help preserve it. If anything, 2024 may be remembered as the year that the bubble took over.

Two separate but related industries exemplify what some have called the “bullshit economy.” The American Prospect’s David Dayen memorably wrote about it after Iowa Democrats paid a curiously well-connected tech company to develop an unnecessary app called Shadow to more speedily report the results of the 2020 caucus. When the app crashed on caucus night, bedlam followed, and it took longer to find out the results than if they’d done it the old-fashioned way.

“This is reflective of the rolling incompetence covered by confidence within the modern economy, especially when you sprinkle on the labor-saving promise of techtopia,” Dayen wrote. “When the bullshit economy fails, it robs people’s belief in the basic bargain of commerce, the idea that you get what you pay for, that companies operate in good faith to provide quality service.”

Two examples exemplify this trend. One of them is “crypto,” a term that now encompasses cryptocurrencies, blockchains, NFTs, and so on. Until recently it has been a grim time in the crypto world. In my 2022 retrospective column, I described crypto as the “boondoggle of the year,” partly because many of its highest-profile figures and companies had collapsed or been disgraced, with ruinous consequences for their customers and employees, and partly because “boondoggle” is a great word that I rarely get to use.

“Hopefully Americans exit this year with a healthy dose of wariness toward the crypto ‘industry’ and a deeper skepticism of get-rich-quick schemes,” I wrote at the time. How naïve I was. Some of crypto’s leading figures went to prison for fraud, tax evasion, and more. But the ones who didn’t are now stronger than ever. Not because crypto’s creators and evangelists have finally fashioned a productive or efficient use for it. Perish the thought. You are no closer to being able to buy a loaf of bread from your local grocery store with tether or ethereum or dogecoin or whatever the latest “coin” is than you were two years ago.

Instead, crypto’s survival has come through betraying its original ambitions. Crypto advocates have been correct about one thing over the years: The United States dollar, like nearly all modern currencies, is a fiat medium of exchange that is intrinsically vulnerable to inflation, deflation, and other forms of government manipulation. By unmooring itself from government control, the original, Great Recession–era creators of cryptocurrencies hoped to create an alternative to the dollar that would benefit ordinary people instead of banks and politicians.

The difference—what makes the dollar “real” and crypto “fake”—is that the dollar has an army, a navy, and courts that can render legally binding judgments upon creditors and debtors. Crypto’s wealthy backers have responded to this counterpoint in a simple, brute way—by simply buying Congress and the White House. The crypto industry spent at least $135 million on congressional candidates from both parties during the last election cycle, hoping to maximize their influence in Washington. It now enjoys support from Trump and the Republican Party, as well as a considerable number of Democrats.

What do they expect to get in return for these campaign donations? A more favorable regulatory and law enforcement environment, for one thing. Leading crypto figures know that all those pesky regulators and investigators in Washington—the Securities and Exchange Commission, the Federal Trade Commission, the Justice Department, and so on—could bring their party to an end. Trump has even pledged to make the U.S. a “Bitcoin superpower,” whatever that means. For now, it means installing pro-crypto figures atop the SEC and other key agencies.

In cryptocurrency, scams are so common that there is a special lingo surrounding them. Early adopters will create a coin, promote it, and then sell their supply at the top in what is known as a “rug-pull,” meaning that they pull the rug out from under the feet of their putative investors. Those left behind are known as “bag-holders.” The most recent one involved a young woman who became famous for a viral two-second joke about oral sex. For some reason, thousands of people bought a cryptocurrency that she promoted and brought its value up to $500 million—which then plummeted back to earth when the creators apparently cashed out.

The crypto industry’s greater ambition may be to get the federal government—and, by extension, all Americans—to be the ultimate bag-holder by directly buying cryptocurrencies with taxpayer dollars. Wyoming Senator Cynthia Lummis, one of the industry’s leading allies, introduced a bill this summer titled the Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide Act of 2024, or Bitcoin Act of 2024. (I’ve previously given my thoughts on acronym bills.)

If enacted, Lummis’s bill would require the Treasury Department to purchase 200,000 Bitcoins every year for five years after it is enacted. At current market prices, that would amount to roughly $10 trillion in real money. Those Bitcoins would then be placed in a “strategic Bitcoin reserve,” from which the federal government could not sell them for 20 years. Other Bitcoins already held by federal agencies would be transferred into this “reserve” as well. And then they would just … sit there.

This is a dream scenario for early crypto adopters and no one else. Forget trying to time the market’s peak before people inevitably catch on to crypto’s weaknesses or they fall into an unfavorable regulatory environment. They can simply unload all these unproductive, intangible, nonfungible, and inexplicably expensive assets onto the federal government of the United States and get real money for them in return. Lummis described it as “our Louisiana Purchase moment,” but that only makes sense if we’re the French.

While crypto has failed to achieve widespread use, AI is making extraordinary inroads into everyday life. It’s important to distinguish “generative AI,” which is the term I’ll use for the modern form, from actual artificial intelligence, which only appears in science fiction. Generative AI programs cannot replicate human intelligence. They lack creativity, imagination, self-doubt, and emotion. Branding triumphs over everything, however, and “artificial intelligence” probably appealed more to investors than “generative language learning models,” so now we are stuck with that term.

One of AI’s fundamental flaws is that it “hallucinates,” the term used by developers for when it gives wrong information based on its corpus of accurate information. Lawyers who use ChatGPT to research precedents for a lawsuit have been sanctioned for giving fake case citations in court. BBC News criticized Apple this month after the tech giant’s AI software incorrectly summarized its news articles to say that the UnitedHealthcare CEO murder suspect had shot himself.

There are some differences between these two industries. Crypto does not do anything or solve any problems; generative AI can at least do things, even if it currently or inherently does them poorly. There is genuine scientific and technological advancement behind AI software and the hardware that fuels it. It’s possible, if not probable, that generative large language models might have productive use cases in the near future. Even if Silicon Valley can’t create Data from Star Trek, it might be able to create, say, the universal translator or something extremely close to it.

The other problem is that people are mistaking existing AI products for actual artificial intelligence and using them in self-destructive ways. Even if one assumes AI will someday play a positive role in society, that day is not today. Major companies are stumbling over each other to launch AI-driven products and AI-connected services with little care for what consumers want or desire. When Apple added Apple Intelligence to its newest phones, most users reportedly found it largely useless.

AI’s top boosters aren’t aiming for something more humble, however. What they are promising is nothing less than a fundamental shift in the human experience. Marc Andreessen, the co-founder of Silicon Valley’s most influential venture capital fund, wrote a manifesto in 2023 that illustrates how they promote the new technology and dismiss its critics. Apparently not one to set low expectations, he titled it, “Why AI Will Save the World.”

Some of Andreessen’s points have merit. He is skeptical of the claims from some AI critics—and even a few of its enthusiasts—that AI could present some sort of extinction-level threat to humanity, dismissing them as either flawed misunderstandings of the technology or self-interested promotions by its boosters. (His ally Elon Musk, another AI hype enthusiast, is sometimes guilty of this.)

“The idea that it will at some point develop a mind of its own and decide that it has motivations that lead it to try to kill us is a superstitious handwave,” he wrote. “In short, AI doesn’t want, it doesn’t have goals, it doesn’t want to kill you, because it’s not alive. And AI is a machine—[it] is not going to come alive any more than your toaster will.”

Some of his other defenses of AI were less persuasive. In one section, he dismissed fears that AI will eliminate jobs and industries by noting that technology has always done that, and it has eventually led to new jobs and new industries. “We’ve been through two such technology-driven unemployment panic cycles in our recent past—the outsourcing panic of the 2000’s, and the automation panic of the 2010’s,” he wrote, noting that despite these fears “the world had more jobs at higher wages than ever in history” before Covid-19.

This argument likely plays better in Silicon Valley C-suites than, say, among steelworkers in Pennsylvania or automakers in Michigan who saw their livelihoods shipped off to foreign countries with weaker labor laws by corporate executives focused on maximizing shareholder value. The problem is not just that AI boosters hope to eliminate entire professions and industries, but that they are replacing them with inferior, hackneyed, hallucinating substitutes. UnitedHealthcare, for example, reportedly used it to deny medically necessary claims from elderly patients.

It also did not help Andreessen’s case that he undercut it himself almost immediately. After making a fairly reasonable argument for why technological innovation doesn’t necessarily reduce a society’s overall wealth, he let the mask slip a bit and invited his audience to “think of what it would mean for literally all existing human labor to be replaced by machines.”

It would mean a takeoff rate of economic productivity growth that would be absolutely stratospheric, far beyond any historical precedent. Prices of existing goods and services would drop across the board to virtually zero. Consumer welfare would skyrocket. Consumer spending power would skyrocket. New demand in the economy would explode. Entrepreneurs would create dizzying arrays of new industries, products, and services, and employ as many people and AI as they could as fast as possible to meet all the new demand.

Suppose AI once again replaces that labor? The cycle would repeat, driving consumer welfare, economic growth, and job and wage growth even higher. It would be a straight spiral up to a material utopia that neither Adam Smith or Karl Marx ever dared dream of. We should be so lucky.

Consider me somewhat skeptical that AI actually could do any of that. To be as specific as possible, the problem here isn’t that AI programs will render entire industries and forms of human endeavor obsolete and redundant. It’s that a lot of wealthy, powerful people think and want AI to do that, and are willing to replace flesh-and-blood Americans who have mortgages to pay and kids to raise with sloppy, hallucinatory chatbots that won’t take sick leave or request PTO.

Those who think this might be a net negative for American society are described as “doomers” by Andreessen and other AI investors for their Luddite resistance to their utopia. The solution, he argued, is for the government to make it as easy as possible for AI companies to immanentize the eschaton by shredding any troublesome regulations that could stand in their way. Any obstacles raised by broader societal concerns are dismissed out of hand.

“Big AI companies should be allowed to build AI as fast and aggressively as they can—but not allowed to achieve regulatory capture, not allowed to establish a government-protect[ed] cartel that is insulated from market competition due to incorrect claims of AI risk,” he wrote as part of his conclusions. “This will maximize the technological and societal payoff from the amazing capabilities of these companies, which are jewels of modern capitalism.”

And if you don’t give the oligarchs of Silicon Valley what they want, well, then you’re just helping Beijing. “To prevent the risk of China achieving global AI dominance, we should use the full power of our private sector, our scientific establishment, and our governments in concert to drive American and Western AI to absolute global dominance, including ultimately inside China itself,” Andreessen wrote. “We win, they lose.”

Another way to put this manifesto is that the Silicon Valley oligarchs who have invested billions of dollars in AI programs want to maximize their potential market share and reduce regulatory costs. They appear to think they are the first capitalists in history to argue that if they can make as much money as possible with no guardrails, it would be beneficial to society as a whole. They would be the first ones to be correct.

The problem with overpromising and under-delivering is that it catches up to you. Some Wall Street firms and Silicon Valley funds are already raising concerns about whether AI companies can achieve a return on the hundreds of billions they have spent. Sequoia Capital, one of the nation’s most prominent tech funds, noted last year that there is a growing gap between the amount of investment into hardware and software and the revenue that it generates.

Consider the following: For every $1 spent on a GPU, roughly $1 needs to be spent on energy costs to run the GPU in a data center. So if Nvidia sells $50B in run-rate GPU revenue by the end of the year (a conservative estimate based on analyst forecasts), that implies approximately $100B in data center expenditures. The end user of the GPU—for example, Starbucks, X, Tesla, Github Copilot or a new startup—needs to earn a margin too. Let’s assume they need to earn a 50% margin. This implies that for each year of current GPU CapEx, $200B of lifetime revenue would need to be generated by these GPUs to pay back the upfront capital investment.

Sequoia’s original version of that analysis was written in September 2023. When it revisited the question this summer, that number had risen to $600 billion of revenue needed just to pay off the initial investment. In the September version, it estimated that companies were only $125 billion off in annual revenue to meet that goal. Investment costs brought that number up to $500 billion when they reran the calculations this summer. These are roughly hewn figures, but they illustrate the scale of the problem: Way, way more money is being spent on AI than is being made on AI at the moment.

As a result, the valuations of some AI companies—and, thus, the wealth of their investors—are starting to look a little wonky. OpenAI, the top AI firm in town, recently announced an additional $6.6 billion in funding, bringing it up to a whopping $157 billion valuation. That would make it as valuable on paper as nine-tenths of the S&P 500 combined. Even though OpenAI had a net loss of $5 billion this year, it expects to make $100 billion in revenue—but not until 2029. Nvidia, the world’s largest chipmaker and a key supplier for AI companies, surpassed Apple as the world’s most valuable company last month at a $3.57 trillion valuation.

Again, there are important differences between crypto and AI, between a scam and excessive hype. But there are also some striking similarities in how the tech industry is selling them to the American people. Their top backers emphasize the importance of buying in early and lean heavily into the fear of missing out. They claim to be able to provide utopian or near-utopian outcomes, either by preventing the next Great Recession with a stateless, bankless currency or by creating a post-scarcity society of all-knowing AI servants. And they claim that the only way to achieve it is by dismantling any potential obstacles in their way.

With Trump’s reelection, 2024 represents their capture of the federal government and the chance to put all their plans into effect—unless the bubble bursts first.

Matt Ford @fordm

Matt Ford is a staff writer at The New Republic.

https://newrepublic.com/article/189541/tech-bubble-trump-crypto-ai

How America First will transform the world in 2025

How America First will transform the world in 2025 

In different ways, the US, Russia and China have all become revisionist powers that are seeking radical change to the status quo

                Gideon Rachman in London 

DECEMBER 27 2024

 

The inauguration of Donald Trump as president of the US will take place on January 20 — the same day as the opening of the World Economic Forum in Davos. 

Since the end of the cold war, the annual Davos meeting — which brings together business and political leaders from all over the world — has become a symbol of elite-driven globalisation.

 But Trump is a sworn enemy of what he calls “globalism”. Davos-goers promote free trade; Trump says that “tariff” is his favourite word. The WEF hosts innumerable forums about international co-operation; Trump believes in “America First” nationalism.

 For three decades, the world’s major powers broadly embraced the Davos worldview. This was a period when economic interdependence drowned out geopolitical rivalries. Trump, President Xi Jinping of China and President Vladimir Putin of Russia have all spoken at the World Economic Forum in the past.

 What is at stake is the west’s monopoly [of power] which emerged after the collapse of the Soviet Union

 But now, in different ways, the US, China and Russia have all become revisionist powers that are seeking radical change to the current world order.

 When Putin launched a full-scale invasion of Ukraine in 2022, he sacrificed his country’s economic ties to the west in favour of his vision of Russian grandeur. Xi’s China has become more nationalistic and more menacing in its behaviour towards Taiwan. And Trump is demanding fundamental changes to the international trading system and to America’s relationship with its allies.

 It is not terribly surprising that Russia and China are demanding changes to the world order. Russia is a former superpower that is striving to rebuild its lost influence. China is a rising superpower that wants the world to accommodate its ambitions. It is American revisionism that is both most puzzling and most far-reaching in its consequences.

President Vladimir Putin visits a rehabilitation centre for soldiers wounded in Russia’s invasion of Ukraine. In choosing to launch the attack, Moscow sacrificed its economic ties to the west  © FT montage: Valery Sharifulin/Pool/AFP/Getty Images

The US is still the world’s most powerful country and the world’s largest economy. The dollar is the world’s reserve currency and the American alliance system underpins the security of Europe, Asia and the Americas. If the US is serious about fundamentally rethinking its international commitments, then the entire world will have to adapt.

 And yet that appears to be what is happening. According to John Ikenberry of Princeton University, a leading theorist of international relations, “a revisionist state has arrived on the scene to contest the liberal international order . . . it is the United States. It’s Trump in the Oval Office, the beating heart of the free world.” 

As Ikenberry sees it, Trump is poised to contest “almost every element of the liberal international order — trade, alliances, migration, multilateralism, solidarity between democracies, human rights”. 

As a result, rather than supporting the international status quo, the US is poised to become the leading disrupter. “Every talk I’ve ever given on the geopolitical risks that we face in the world started with China and Russia,” says Ivo Daalder of the Chicago Council on Global Affairs. “But the biggest risk is us. It’s America.” 

America’s traditional allies are among the countries that feel most threatened by a change in the way that the US exercises its power. Middle-power democracies such as the UK, Japan, Canada, South Korea, Germany and the entire EU have got used to a world in which American markets are open — and the US provides a security guarantee against threatening authoritarian powers.  

D

Dutch and German soldiers take part in a Nato military exercise in Pabradė, Lithuania. Trump’s recent comments have raised questions over whether the US would defend its Nato allies © FT montage: Andrey Rudakov/Bloomberg

But Trump is promising to impose tariffs on America’s closest allies and has called into question US security guarantees — including Nato’s Article 5, its mutual-defence clause. On one notorious occasion this year, the president-elect remarked that he would let Russia “do whatever the hell they want” with Nato countries that failed to meet their spending commitments on defence. 

The threat posed by Trump to allied interests is already leading to agonised debates in some of the countries that he is targeting. When Chrystia Freeland resigned as Canada’s finance minister this month, she accused Justin Trudeau, the prime minister, of failing to recognise the “grave challenge” posed by America’s “aggressive economic nationalism, including a threat of 25 per cent tariffs”. Canada, she suggested, needed to keep its fiscal powder dry to prepare for a “coming tariff war”. 

The question of whether and how to respond to Trump tariffs is exercising diplomatic minds across the western world. Finding an answer is all the more difficult because Trump’s true intentions remain unclear. Is the former and future president best understood as a dealmaker? Or is he a revolutionary — intent on blowing up the system, come what may?

 The EU’s initial response will be to hope that Trump’s tariff threats are simply a negotiating tactic — and that a reasonable deal can be reached, well before an all-out trade war breaks out. But if Trump goes ahead with his threatened tariffs for a prolonged period, Brussels is likely to hit back. 

A container ship is loaded at the port in Lianyungang, in China’s eastern Jiangsu province. Trump’s re-election has sparked fears of new trade wars © FT montage: STR/AFP via Getty Images

Other American allies such as Britain and Japan may respond differently. The UK government will hope that the Trump administration spares it from tariffs, perhaps because the US has a small trade surplus with the UK. Even if Britain is hit, the depth and importance of the security relationship between London and Washington will make any UK government think very hard before entering a trade war with the US.

Japan, which has a large trade surplus with the US, is a much more obvious potential target for Trump tariffs. But Japanese officials think it unlikely that Tokyo would hit back. Like the British, the Japanese would be very reluctant to do anything that tempted a Trump administration to put American security guarantees on the table — as Washington’s next chip in a negotiation. 

The need for America’s allies to balance trade priorities and national security reflects the fact that it is not just the global economic order that is under challenge. In Europe and Asia, the established balance of power is also under threat.

When it comes to security, Russia and China are the most dangerous revisionists — because they are the nations that are demanding changes to international borders and adjustments to the global and regional security order. 

Both Putin and Xi clearly see opportunities in the current global situation. In a recent speech to the Brics summit in Russia, Xi hailed the emergence of a new global era, “defined by turbulence and transformation”. Putin struck a similar note in a speech that he gave in Sochi on November 7, two days after Trump’s election, proclaiming: “Before our eyes, an entirely new world order is emerging.” 

President Xi of China, seated left, and German Chancellor Olaf Scholz, right, attend the G20 leaders’ summit in Rio de Janeiro last month © FT montage: Dado Galdieri/Bloomberg

At times, Putin and Trump sound like they are reading from the same anti-woke hymn sheet. In his Sochi speech, the Russian leader defined his enemy as “liberal and globalist messianism” — sentiments that Trump could easily have echoed. 

But while Trump believes that the new world order should increase America’s wealth and power, Putin’s central aim is to cut the US down to size. He told his audience in Sochi that “what is at stake is the west’s monopoly [of power] which emerged after the collapse of the Soviet Union”. 

Xi also sees the decline of western power as a central and desirable feature of the emerging new world order. The Chinese leader is fond of proclaiming that “the east is rising while the west is declining”. Both Russia and China are hoping to build up the Brics as a counterweight to the western-dominated G7. 

Beyond the generalities, both Putin and Xi have specific territorial demands in mind. In Washington and Brussels, it is now assumed that Russia is determined not just to hang on to the Ukrainian territory it has occupied, but also in effect to end the country’s independence by gaining a veto over Ukraine’s foreign and security policies, as well as setting up a Moscow-friendly government in Kyiv. 

A mother and daughter wait at an evacuation point in the eastern Donetsk region of Ukraine this month. Many believe the war will have made Russia’s president even more radical in his thinking © FT montage: Roman Pilipey/AFP/Getty Images

Western officials also note that Putin’s prewar demands extended well beyond Ukraine. In an ultimatum that the Kremlin issued in December 2021, Russian demands included the withdrawal of all Nato forces from the eastern European countries that joined the alliance after the collapse of the Soviet bloc. 

The assumption inside Nato is that the war in Ukraine — and the immense losses inflicted on Russian forces by the western-backed Ukrainian forces — will have made Putin even more radical in his thinking. One senior European official says: “We need to understand that Russia thinks it is already at war with us.” An American counterpart adds that a Russian victory in Ukraine would present a “huge threat” to Nato. 

A perceived Russian victory in Ukraine would also resonate around the world, and particularly in China. One obvious possibility is that it would embolden Xi to pursue his own revisionist ambitions in Asia. Professor Steve Tsang of Soas, University of London, argues that Xi believes “taking Taiwan” is fundamental to his “China dream”. For Xi, victory in Taiwan would mark “the advent of China as the pre-eminent power” in the Indo-Pacific and ultimately the world. 

Pedestrians in the Wanhua shopping area of Taipei, Taiwan. Unlike Trump, President Joe Biden promised that the US would defend the self-governing island in the event of an invasion © FT montage: An Rong Xu/Bloomberg

Beijing’s position is that Taiwan is internationally recognised as part of the People’s Republic of China. But the island is self-governing and its de facto independence could only be ended by intense Chinese pressure — or an invasion. In Beijing, Taiwan’s political leadership is portrayed as dangerous separatists. There has been much speculation in America that Xi has told his military to be ready to conquer the island by 2027. The date the Chinese leader himself has spoken of in public is 2050. On the other hand, Xi is now 71 years old. He may be tempted to try to secure his legacy relatively soon. 

President Joe Biden has said several times that the US is prepared to go to war to defend Taiwan from a Chinese invasion, though Trump has made no such commitment. And while the incoming president is surrounded by China hawks, he himself has campaigned as a peace candidate — and has frequently expressed his admiration for both Xi and Putin. 

The questions about how Trump will interpret his revisionist America First agenda are made even more complex by the fact that he will not be operating in an international vacuum. The US president will also have to respond to the actions and reactions of other foreign powers — in particular the revisionist leaders in Moscow and Beijing. 

 

Trump supporters participate in a caravan rally in Florida days before the US election. The former president’s victory is already leading to agonised debates among America’s traditional allies © FT montage: Giorgio Viera/AFP/Getty Images

Given all the elements involved, there can be no certainties about how the new world order will evolve, only scenarios. So here are five possibilities. 

A new great power bargain: Trump’s transactional nature, his determination to avoid war and his contempt for democratic allies leads the US to strike a new grand bargain with Russia and China. The US tacitly grants Russia and China spheres of influence in their regions. America concentrates on asserting dominance in its own region — pushing around Mexico and Canada, and seeking to take back the Panama Canal and gain control over Greenland. Trump forces a peace deal on Ukraine without accompanying security guarantees. Sanctions against Russia are relaxed and Putin is welcomed to Thanksgiving dinner at Mar-a-Lago. A possible bargain with China would involve the easing of American tech restrictions and tariffs on Beijing, in return for Chinese purchases of American goods and sweetheart deals in China for US companies such as Tesla. Trump would also signal his lack of interest in fighting to defend Taiwan. US allies in Europe and Asia would be left scrambling to provide for their own defence in a new atmosphere of insecurity. 

War by accident: The western allies have a trade war with each other. Political instability spreads in Europe, with the rise of populist forces sympathetic to both Trump and Putin. A ceasefire is agreed in Ukraine — but there is widespread fear in Europe that Russia will resume hostilities at some point. Trump himself repeatedly calls into question America’s willingness to defend its allies. China, Russia or North Korea — or some combination of these powers — decide to take advantage of western disarray by launching military action in Asia and Europe. But they miscalculate. Asian and European democracies fight back, and eventually the US gets drawn into the conflict, as happened twice in the 20th century. 

Anarchy in a leaderless world: The US, China, Russia and the EU avoid direct conflict. But Trump’s America First policies on trade, security and international institutions create a leadership vacuum. Economic growth is depressed across the world by Trump’s trade wars. Civil conflicts in countries such as Sudan and Myanmar intensify. The UN is debilitated by big power rivalry and is powerless to intervene. Instead conflicts are fuelled by competing regional powers that are seeking advantage and resources. More countries such as Haiti slide into violent anarchy. Refugee flows to the west increase. Populist parties, contemptuous of liberal democracy, flourish in an atmosphere of social and economic insecurity. 

Globalisation without America: The US retreats behind tariff walls and leaves the World Trade Organization. Prices rise in America and goods get more shoddy. The rest of the world responds to American autarky by accelerating economic interdependence. The EU ratifies its new trade deal with Latin America and signs new agreements with India and China. Europe also opens its market to Chinese electric vehicles and green tech, in return for the Chinese setting up factories across the EU and restraining Russian aggression against Europe. The global south’s integration with the Chinese economy deepens further and the Brics gain new members and influence. The use of the dollar as the global currency declines.

 America First succeeds: Trump’s faith in the irresistible nature of American power is vindicated. Investment is driven to the US, increasing America’s lead in tech and finance. The Europeans and Japanese sharply increase spending on their own defence and this is enough to deter Russian and Chinese aggression. American tariffs dramatically reduce Chinese growth, sending the Chinese system into crisis. The Iranian regime is finally felled by some combination of military, economic and domestic pressure. Trump’s prestige soars at home and abroad. American liberals are cowed into silence and some of Trump’s enemies are jailed. The stock market hits a new high.

The reality of the next four years is likely to be some strange amalgam of all of the above scenarios, plus several other unforeseen developments. As the Italian philosopher Antonio Gramsci, writing during the late 1920s, famously put it: “The old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.”

https://www.ft.com/content/d11fa816-0c8f-4c79-abb0-8523dd2ecfe4

 

Profile

He’s anti-democracy and pro-Trump: the obscure ‘dark enlightenment’ blogger influencing the next US administration

Key figures in the incoming administration follow Curtis Yarvin, who’s pushing for an autocratic takeover of the US

Jason Wilson

Sat 21 Dec 2024 12.00 GMT

Curtis Yarvin is hardly a household name in US politics. But the “neoreactionary” thinker and far-right blogger is emerging as a serious intellectual influence on key figures in Donald Trump’s coming administration in particular over potential threats to US democracy.

Yarvin, who considers liberal democracy as a decadent enemy to be dismantled, is intellectually influential on vice president-elect JD Vance and close to several proposed Trump appointees. The aftermath of Trump’s election victory has seen actions and rhetoric from Trump and his lieutenants that closely resemble Yarvin’s public proposals for taking autocratic power in America.

Trump’s legal moves against critics in the media, Elon Musk’s promises to pare government spending to the bone, and the deployment of the Maga base against Republican lawmakers who have criticized controversial nominees like Pete Hegseth are among the measures that resemble elements of Yarvin’s strategy for displacing liberal democracy in the US.

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One of the venues in which Yarvin has articulated the strategy include a podcast hosted by Michael Anton, a writer and academic whom Trump last week appointed to work in a senior role under secretary of state nominee Marco Rubio.

Although Yarvin once described Vance as a “random normie politician I’ve barely even met” in a July Substack post, in October the Verge reported that “no one online has shaped Vance’s thinking more”. The growing parallels between the incoming administration’s actions – especially Vance’s views – and Yarvin’s suggestions raise questions about his influence.

Robert Evans, an extremism researcher and the host of the podcast Behind the Bastards, recorded a two-part series on Yarvin.

“He didn’t fall out of a coconut tree. He emerged into a rightwing media space where they had been talking about the evils of liberal media and corrupt academic institutions for decades,” he said.

“He has influenced a lot of people in the incoming administration and a lot of other influential people on the right. But a lot of the stuff he advocates is the same windmills Republicans have been tilting at for a while,” Evans continued.

“What’s unique is his way of rebranding or repackaging old reactionary ideas in a way that appealed to libertarian-minded kids in the tech industry, and in eventually getting some of them to embrace a lot of far-right ideas,” he said.

“That’s the novelty of Yarvin and that’s his real accomplishment.”

‘A form of one-man rule’

Anton and Yarvin’s May 2021 conversation was recorded for the podcast of the American Mind, a publication of the powerful rightwing Claremont Institute, where Anton is a senior fellow, and whose growing influence during the Trump era has seen it described as the “nerve center of the American right”.

On 8 December, Trump’s transition team announced that Anton would be appointed director of policy planning at the state department. Anton also served in a communications role in Trump’s first-term national security council from February 2017 until April 2018, resigning the day before neoconservative John Bolton assumed the role of national security adviser.

After leaving the first Trump administration, Anton did not abandon Trump, but continued writing about US liberal democracy in bleak terms.

In Up from Conservatism, a 2023 anthology of essays edited by the executive director of Claremont’s Center for the American Way of Life, Arthur Milikh, Anton wrote that “the United States peaked around 1965”, and that Americans are ruled by “a network of unelected bureaucrats … corporate-tech-finance senior management, ‘experts’ who set the boundaries of acceptable opinion, and media figures who police those boundaries”.

Anton continued the discussion in sections headed “The universities have become evil”, “Our economy is fake”, “The people are corrupt”, “Our civilization has lost the will to live”.

His and Yarvin’s conversation was ostensibly about his 2020 book, The Stakes. That book was controversial even on the right for its prolonged consideration of autocratic “Caesarism” as a means of resolving American decadence.

In the book, he defined Caesarism as a “form of one-man rule: halfway … between monarchy and tyranny”.

He adds, though, that “Caesarism is not tyranny, which, strictly understood, is a regime that usurps a legitimate and functioning government”, whereas Caesarism implements “authoritarian one-man rule partially legitimized by necessity” – that is, “the breakdown of republican, constitutional rule”, adding that “a nation no longer capable of ruling itself must yet be ruled”.

He writes that a “Red Caesar” could be attractive to “the reds” in the Republican coalition, who he says are “under constant rhetorical, political, and, increasingly, physical attack, especially in blue states”, making them “more likely to turn to a Caesar”.

Anton stops short of openly calling for authoritarian rule, but in general, he writes that the advantages of Caesarism include “continuity and stability” and “the prospect of avoiding conflict”, and that it “tends to engender calm”.

‘This is what we’re going to do’

Yarvin is the originator of the neoreactionary or “dark enlightenment” movement, whose early ideas he developed on a blog called Unqualified Reservations in 2007 and 2008 under the pseudonym Mencius Moldbug. He now writes a Substack newsletter under his own name and the far-right imprint Passage Publishing recently published an anthology of his earlier writing.

The Guardian previously reported that Passage Publishing’s founder is Jonathan Keeperman, a former UC Irvine lecturer who had previously operated under the pseudonym “L0m3z”.

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For years, Yarvin has consistently held to a number of explicitly anti-democratic beliefs: republican self-government has already ended; real power is exercised oligarchically in a small number of prestigious academic and media institutions he calls the Cathedral; and a sclerotic democracy should be replaced by a strict hierarchy headed by a single person whose role is that of a monarch or CEO.

He also thinks that current liberal democracy contains the seeds of its own destruction.

As JD Vance put it in a 2021 podcast interview with far-right influencer Jack Murphy: “There’s this guy Curtis Yarvin who’s written about some of these things. One has to basically accept that the whole thing is going to fall in on itself.”

Vance added: “The task of conservatives right now is to preserve as much as can be preserved and then when the inevitable collapse comes you build back the country in a way that’s actually better.”

Vice-president-elect JD Vance has spoken approvingly about some of Yarvin’s prescriptions for political action. Photograph: J Scott Applewhite/AP

In 2022 Vox called Yarvin the “person who’s spent the most time gaming out how, exactly, the US government could be toppled and replaced”.

Yarvin suggests that a would-be American autocrat should campaign on and win an electoral mandate for an authoritarian program. They should purge the federal bureaucracy in a push Yarvin has anagrammatized as Rage (for “retire all government employees”).

They should simply ignore any court rulings that seek to constrain them. They should bring Congress to heel, in part by mobilizing their populist base against recalcitrant lawmakers. And liberal or mainstream media organizations and universities should be summarily closed.

Given the post-election period and Trump’s preparation for a return to the White House, Yarvin’s program seems less fanciful then it did in 2021, when he laid it out for Anton.

In the recording of that podcast, Yarvin offers a condensed presentation of his program which he has laid out on Substack and in other venues.

Midway through their conversation, Anton says to Yarvin, “You’re essentially advocating for someone to – age-old move – gain power lawfully through an election, and then exercise it unlawfully”, adding: “What do you think the actual chances of that happening are?”

Yarvin responded: “It wouldn’t be unlawful,” adding: “You’d simply declare a state of emergency in your inaugural address.”

Yarvin continued: “You’d actually have a mandate to do this. Where would that mandate come from? It would come from basically running on it, saying, ‘Hey, this is what we’re going to do.’”

Throughout the 2024 campaign, Trump promised to carry out a wide array of anti-democratic or authoritarian moves, and effectively ran on these promises. Trump has suggested he might declare a state of emergency in response to America’s immigration crisis.

Trump also promised to pursue retribution on individually named antagonists like representative Nancy Pelosi and senator-elect Adam Schiff, and spoke more broadly about dispatching the US military to deal with “the enemy within”.

Later in the recording, Yarvin said that after a hypothetical authoritarian president was inaugurated in January, “you can’t continue to have a Harvard or a New York Times past since perhaps the start of April”. Later expanding on the idea with “the idea that you’re going to be a Caesar and take power and operate with someone else’s Department of Reality in operation is just manifestly absurd.”

“Machiavelli could tell you right away that that’s a stupid idea,” Yarvin added.

While he has not yet assumed power, Trump has moved against media outlets, commencing lawsuits against some including the Des Moines Register, CBS and ABC, with the latter settling a $15m suit that legal experts believed to be winnable for the broadcaster.

Vice-president-elect JD Vance, meanwhile, and others in the broader Maga orbit like Christopher Rufo have identified universities as primary ideological enemies, with Rufo helping to remake New College of Florida in the image of Christian nationalism.

In 2022, Vance told Vanity Fair: “I tend to think that we should seize the institutions of the left and turn them against the left. We need like a de-Baathification program, a de-woke-ification program.”

The Guardian reported in August that Vance said in a podcast recording: “There is no way for a conservative to accomplish our vision of society unless we’re willing to strike at the heart of the beast. That’s the universities.”

Elsewhere in the podcast with Anton, Yarvin talked of the need to mobilise the base of the party – its ordinary supporters – in the service of the cause. Yarvin postulated this could be done with an app that supporters would download and take instructions from when opponents were identified.

Yarvin said the notional US autocrat would use the app “to re-create the Sons of Liberty style, quote-unquote, protest”, he said.

The Sons of Liberty is a name for underground cadres who pushed back on British rule in the lead-up to the American Revolution; one historian wrote that their methods amounted to “mob terror”.

Although no Trump app exists that parallels the one Yarvin postulates, the pro-Trump social media apparatus has already directed the Maga base’s ire against Republican lawmaker Joni Ernst, a self-identified sexual assault survivor who expressed scepticism about the nomination of Pete Hegseth, who has been accused of sexual misconduct.

In a story on Ernst’s backdown earlier this month, the New York Times reported that “her shift suggested that Mr. Trump’s MAGA base was ready, willing and able to bully Republicans into submitting to his desires”.

Yarvin’s recommendations for a president in power were for the sharp and sudden concentration of police powers.

“Essentially, you have to be willing to say, OK, when we have this regime change, we have a period of temporary uncertainty which has to be resolved in an extremely peaceful way. What that means is basically a state of emergency in the White House,” he said.

“It means the president is basically taking direct control over all law enforcement authorities, a state of emergency in basically every state,” he added.

In September, on the campaign trail, Trump said that “one real rough, nasty” and “violent day” of unrestrained policing would end crime “immediately.”

“One rough hour – and I mean real rough – the word will get out and it will end immediately, you know? It will end immediately,” Trump added.

https://www.theguardian.com/us-news/2024/dec/21/curtis-yarvin-trump