Friday, April 21, 2017

The Very Tight, Very Unpredictable French Election

The top French candidates at a debate - Patrick Kovarik/Getty Images
European politics continue to be chaotic. Angela Merkel is now seriously in trouble, according to recent polls. Theresa May has decided to call a general election in the United Kingdom. The French election, however, is first. There has been nothing more unpredictable and unprecedented than this race. Each week brings something new.

For most of the race, Emmanuel Macron and Marine Le Pen have been leading to go into the second. With the first round on Sunday, it is expected that both candidates will make it and go head-to-head in the second, where polling initially shows Macron prevailing. The problem for both candidates is that Macron's support is quite soft while Le Pen is prone to gaffes. There are also two major threats to the front-runners who have not gone away.

Francois Fillon, the Republican nominee, simply isn't going away. The former prime minister has had to deal with scandals, but he has a solid fifth of the French electorate backing him. This coalition of Catholic traditionalists and the people in business community is very formidable. He also seems to have some sort of momentum as the first round gets closer. It might not be enough to get him into the next round, but it is enough to keep the free market reformist in the game. What matters for Fillon is how many voters he can convince at the last minute before voting.

What has happened in the French left is even more shocking. The incumbent Socialist Party is so unpopular that their candidate, former Minister of National Education Benoit Hamon, is polling under 10 percent. The French left is moving further way from the center and rally behind communist candidate Jean-Luc Melenchon, a member of the European Parliament. Melenchon is the exact opposite of the Thatcherite Fillon. He has proposed a possible withdrawal from the European Union, a departure from NATO, a 100 billion euro economic stimulus plan, nationalization of many sectors, and an (Good Lord) 100 percent income tax on people making 360,000 euros a year.

Melenchon has been a very good debater. Two debates have taken place and he has stood out in both of them. This has propelled him into a virtual tie with Fillon. Another factor in Melenchon's rise is just how innovative his campaign has been. He has used projection screens to give speeches at multiple locations.

As for now, Macron and Le Pen look like safe bets to enter the second round, but their leads are shrinking as Fillon and Melenchon make gains. With the race starting to get tight, there is a rising uncertainty about what to expect the night of the first round.

It really comes down to where the French they're going on the economy and the refugee crisis. Marine Le Pen is very popular because of her "France for the French" campaign rhetoric. She represents major change in French politics. Macron is basically representing the establishment even if he left the Socialist Party to form his own movement.

Saturday, March 25, 2017

Health Care Reform Collapses

It was one of the most central arguments made by Republicans for seven years. They said over and over again that Obamacare needed to be repealed and replaced. It was a winning issue with the American people, who gave the GOP victories in the two recent midterm elections before finally handing them the presidency in 2016. The moment to reform health care finally arrived.

Unfortunately, the best moment has been wasted. A proposal was put forward, but it sunk after being revealed in a few weeks. It sort of makes me feel that all those years of winning elections was useless.

In my opinion, no one bares more blame than members of the House Freedom Caucus. Contrary to their arguments, this was a market plan that would that had many improvements from the Affordable Care Act. However, this grand health care plan was destroyed by eighteen members of the House of Representatives because they claimed it was too liberal, while 199 (six Republicans and 193 Democrats) opposed it for being too conservative. The consequences are massive. Any new Republican proposal would require support from Democrats because moving further to the right would lead to a lack of support among GOP moderates (the so-called Tuesday Group).

I don't think this is the end for reform, but a new bill in 2018 is likely to have less meaningful changes. It is now even more likely that Obamacare will stay in place. President Obama is smiling because his policy is maintained and any concessions made by Nancy Pelosi would be embarrassing to them. They want to prove that the Affordable Care Act is working and that means ensuring that there are no chances. As you'd expect, Democrats were ecstatic with the results.

The biggest loser of the American Health Care Act's failure is the American people. Some Republicans, including CNN contributor Jeffrey Lord, just want Obamacare to crash. I think this is a mistake because more people will get hurt from the existing law and they can blame the GOP for doing nothing. A 2013 report from eHealth, Inc found that Obamacare regulations like the essential health benefits requirement raises premiums by 47 percent for individual insurance plans. A study from the Brookings Institution in the fall of 2014 covered a state by state impact. It concluded that the Affordable Care Act has only been more costly. The whole point of handing them the keys to Congress and the White House was because they supported change.

As for the Republicans in Congress, they have decided to move on to other issues like tax reform and immigration policy. There's no real reason to waste extra political capital on health care if it is just going to stall things. I'm worried that some Republicans might continue trying to stay pure, rather than go with the advise of Reagan (example: "A flat tax or we're voting no.") which could really endanger the GOP in the 2018 midterms and 2020.

Monday, March 6, 2017

How to Destroy a Political Party (Jeremy Corbyn Edition)

Jeremy Corbyn speaking after the Copeland defeat - Getty Images
When David Cameron resigned as prime minister following the British membership referendum in the European Union, he was replaced by a very capable leader in Theresa May. The new Conservative prime minister has proven become very popular as she pushes through with the Brexit agenda. She also enjoys a strong economy, thanks to the policies of the Conservative government since 2010 and is a skilled debater.

As a testament to her popularity, the Conservatives scored a shocking by-election win in Copeland. New MP Trudy Harrison has defied the odds. She won a constituency that was controlled by the Labour Party since the 1930s. This only proves how popular May is in the eyes of the public. In fact, if she were to call for a general election this year (the next is suppose to occur in 2020) the Conservatives would win by landslide over Labour. A projection shows May's party with a majority of over 100 seats!

Not all of this, of course, can be attributed to the prime minister. Following Labour's 2015 general election defeat, their party went further to the left by making Jeremy Corbyn their leader..They took the Bernie Sanders route and it has been a complete disaster. In fact, it sort of reminds of me of the general election in 1983, when Margaret Thatcher decimated the older Labour leader Michael Foot.

Corbyn, who has no problem praising Karl Marx, is miles away from the British mainstream. His power base comes from older socialist who want to return to the glory days of Britain before 1979 and young people (much like Sanders here), but I honestly wonder at times if his supporters realize how out-of-touch they are. During the leadership election, a poll from YouGov revealed the following:

It's about as far to the left as you can get in British politics. Though a lot can change until the next general election, it is obvious that the Labour Party is in a crisis. Rather than move to the center, as was successful with Tony Blair in 1997 (and British lefties can complain all the way, but he did win three elections), they're basically looking to become irrelevant to the national conversation.

Some in the Labour Party have started to realize the problem. Watch this video by Owen Jones, columnist for The Guardian:

Jones is correct to recognize that Labour is in a pickle, but he made a misdiagnosis. The British people don't want a move to the left, as can be obversed by the YouGov poll. That's a drag on them. Voters aren't interested in socialism anymore, they're interested in pro-growth free market policies and they are concerned with the refugee crisis. Labour doesn't seem to be listening.

Labour MP Rebecca Long-Bailey is worried that there might not be any safe constituencies anymore for her party. The Conservative win in Copeland only proves that. There won't be any safe Labour seats in the age of Corbyn.

Wednesday, March 1, 2017

Europe's Woes

While the American economy hasn't grown adequately for the last eight years, the Europeans are suffering even worse. Plagued with terrible growth and logistical challenge of supporting refugees from the Middle East, European nations need to make the necessary reforms to guarantee their safety. If that means leaving the European Union and the Eurozone, then so be it.

Not only are the British doing the right thing, but they also have the benefits of a flexible economy.  Advantages put into place during Margaret Thatcher's tenure will assist the United Kingdom if the Brexit road gets bumpy. Her deregulation of the City of London's financial sector and opening up the stock exchange to international firms have built an infrastructure that many bankers and investors will find difficult to leave. Most of the rest of Europe doesn't have the kind of market economy that the Brits have.

There have been periods in which some countries did follow the best route to enhance their economies. Despite all fawning that Bernie Sanders did during the campaign trail, Scandinavian countries like Sweden only propelled growth when they engaged in reforms that were market-oriented.

Economists Stefan Folster and Johan Kreicbergs explained Sweden's boom years in a 2014 paper published by the Reform Institute. During the 1980s, the country suffered from a weak economy while the British and the Americans enjoyed boom eras. During the late seventies and the eighties, GDP growth was only at 1.6 percent compared to substantially higher growth in other nations.

The reforms of the 1990s gave Sweden their boom. A supply-side strategy was implemented in 1990 and 1991. Before the tax cut, the top marginal income tax rate was 80 percent, but it would be reduced to 30 percent after the reforms were implemented. The size of the state was greatly reduced with the slashing of public spending.

Labor reforms ensured that workers wouldn't go on strike and demand skyrocketing higher nominal wages. Businesses suffered from these high demands, leading to little growth in the economy. A simplified mediation system for employers and employees has lowered the growth in nominal wages, but increased it in the growth real wages.

Lastly, deregulation played a massive role. This led to the collapse of many natural monopolies and the spurring of competition. The result has been higher GDP growth, higher labor productivity growth, higher private sector employment, a smaller tax burden, and a lower national debt. Sweden isn't as free as the United States and the United Kingdom, but it is not as socialist as people think.

Unfortunately, few European nations provide a free economic environment. Greece is an obvious choice, but Italy is posing major problems. The Italians are facing a multitude of problems. As resident fellow David Lachman of the American Enterprise Institute points out, the economy has stagnated and has a public debt of $2.5 trillion. Its economy is larger than Greece's which means a crisis coming out of Italy could be catastrophic. The populist Five Star Movement could pounce on a default and eliminate membership in the Eurozone and the European Union.

In France, I believe the ideal reform candidate is Francois Fillon, but it's increasingly difficult for the former prime minister to enter the second round. One of the problems I'm also finding with him is that he's pro-Russia, which could weaken western opposition to Vladimir Putin.

Fillon's main rival, the centrist candidate Emmanuel Macron, is set to enter it against Marine Le Pen. Macron, who is popular among younger voters with college degrees, is simply more of the same for France. While Macron opposes Russia, I don't think he can solve France's financial problems. He could do policies that provide small incentives for businesses,  but there isn't much to expect in terms of market reforms. He campaigns as an outsider because he formed a new political party, but he was an economic minister in Francois Hollande's administration for years.

Le Pen is someone who can genuinely shake up the establishment in her country and I don't have a problem with her departing from the failing European Union. I do have a problem with her wanting to leave NATO, which threatens global security in the west. Like Fillon, she also strengthens Russia.

In Brussels, Secretary of Defense James Mattis rightfully advised all members of NATO to raise military spending. Currently, only five of the twenty-eight meet the 2 percent of GDP requirement. It is worth asking many of these nations whether they care about defending the west anymore or would just prefer to spend more on their bloated welfare states.

The time to choose is now. Europe can change and regain lost strength or continue to plunge into the abyss of bad economics and bad international security.

Saturday, February 25, 2017

Will David Clarke seek another term?

David Clarke at the Republican convention - Fox 13
Few people might remember, but David Clarke has been the sheriff of Milwaukee county since 2002. Running as a Democrat, but identifying as a conservative, Clarke gained media attention from his interview with Piers Morgan after urging citizens to arm themselves. This led his popularity among conservatives to skyrocket. Simultaneously it made his Democratic primaries challenging (the general elections are simple victory laps). He managed to win the last one in 2014 by a narrow margin of 4 percent. Lately, I've wondered if Clarke is going to run again.

Clarke has swelling national attention. He was even given a speaking spot at the Republican National Convention in Cleveland. After the convention, Clarke's activities have been odd. He has become more active on social media and travels often. His recent controversies have been closely monitored by Daniel Bice, a watchdog columnist at the Milwaukee Journal Sentinel who seems to be obsessed over everything the sheriff does. 

Charlie Sykes, the former southeastern Wisconsin radio host, has begun to attack Clarke for not focusing enough of his time in Milwaukee anymore. This has led to a war of words between the two of them, especially on Twitter.

A January 2017 poll from Public Policy Polling found that only 31 percent of Milwaukee county's voters approve of how Clarke is doing as sheriff while 62 percent disapprove. In the next election, liberal organizations are going to be more determined than ever to defeat him. Michael Bloomberg, former mayor of New York City, had his political action committee spend $150,000 to support Lieutenant Chris Moews in the last primary. Bloomberg will likely be back. 

It seems to me that Clarke is going to leave politics and join the media. I'd can't see why he wouldn't become a Fox News contributor if he retired. He even has a book coming out with the help of ghostwriter Nancy French. If Clarke does run for another term, the only thing he will probably have going for him his low-turnout. Even with that, I'm not sure it will be enough to get him over 50 percent. 

As of now, I don't think Clarke will run for another term. There are simply too many mounting challenges. 

Monday, February 20, 2017

Are Democrats going to help Trump win?

It's early to discuss 2018 and 2020, but those two elections cycles practically begin after November 8, 2016. Many Democrats have started a strategy to take back the White House, but I don't think strictly keeping keeping same progressive ideals while freaking out over everything President Trump wants to do isn't a winning strategy.

Ever since he won the presidential election, riots and protests have occurred across the entire United States. People have been beaten up and tortured over his victory. Celebrities in Hollywood are taking shots at the new president. In Congress, Democrats are on the verge of blocking everything and anything. Activists on the left want the Democratic Party to move even further way from the center.

The problem with the current strategy on the left is that it makes them look worse than their opponents. At the Democratic National Convention, First Lady Michelle Obama declared, "When they go low, we go high." When the FBI launched another probe that threatened Hillary Clinton's campaign in the last weeks of the campaign, that dictum was abandoned in favor of more attack ads on Trump. That tactic failed to bring out enough voters and it will fail again, assuming conditions are good in America when the president seeks a second term.

There's a significant difference between the Tea Party protests of late 2009 and 2010 and the protests occurring right now. The Tea Party was largely a response to President Obama's economic stimulus policies, which led to disappointing results. This caused a Republican wave in the midterms of 2010.

Current protests are in primary in response to the election results. Even worse, riots have ignited. Over 200 people were arrested in Washington DC on the day of Trump's inauguration. The more civil and powerful women's march was held the day after, but it is important to note that there has not been any rollback of women's rights at the moment. There were some dark moments in the demonstration, like when Madonna claimed she thought about bombing the White House.

After Trump's victory, there were incidents of violence and vandalizing against Trump supporters. A man was assaulted in Chicago on November 10. A mentally disabled man was tortured with his captors yelling "fuck Trump" and "fuck white people" live on Facebook. A college student had his car keyed because he put a Trump bumper sticker on it. A teenage boy was attacked by a group at a high school for wearing a Trump hat. Violence and vandalism, whether instigated by the right or the left, has never worked and will never work to push an agenda in a democracy. Acting in such a crude way is highly counterproductive.

As if things couldn't get even more reprehensible, lies have been created of alleged acts caused by Trump supporters. A Muslim girl who claimed harassment has been charged for filing a false report. Anti-Latino graffiti at Elon University in North Carolina was actually written by a Latino who was upset over the election results. A racist banner on a house was thought to be set up by Trump supporters, but it now turns out that the black homeowner had actually hanged it and it had nothing to do with the election.

Hollywood has proven to be more elitist than ever. Meryl Streep is a good actress, but her speech at the Golden Globes was very out-of-touch. "Hollywood is crawling with outsiders and foreigners and if we kick them all out, you'll have nothing to watch but football and mixed martial arts, which are not the arts," Streep said to much applause at the event. It might sound meaningful to someone on the coast, but middle America found it condescending.

If the Democrats want to block Trump's agenda, then they will pay a heavy price. When the Republicans attempted to do so with a government shutdown, their poll numbers plunged in the fall of 2013. It was only until after the disastrous Obamacare rollout that their numbers went up again, leading to the 2014 midterm victories. It is better to compromise, than to quarrel.

Moving further from the center only hurts Democratic candidates who need to expand their constituencies. It might be hard to believe, but the Democratic Party today didn't have the same voting groups and coalitions as it did twenty years ago. The most important example of this is what happened to the Midwest in 2016.

Hillary Clinton tried to repeat the Obama coalition and failed. It has been revealed that Obama's victories were anomalies rather than the new normal in the United States. He could rely on high turnout from enthusiastic minorities, but Clinton could not. The famous "blue wall" was torn down when she tried to repeat 2008 and 2012.

When Bill Clinton ran for president, he had broaden his appeal across the Midwest. While Wisconsin has always been a battleground state, part of the reason Republicans hadn't won it between 1984 and 2016 was because the Democrats had a powerful edge in the northern part of the state where there were many rural voters.

The GOP of Wisconsin was confined to the Lake Michigan coast of the state, with its key base in the WOW counties. When the Democrats moved further to the left and engaged in identity politics as strategy to win elections, they started to lose these white rural voters and began to focus on big cities like Milwaukee and Madison. It hasn't just happened in the latest presidential election, but also in the last three gubernatorial races.

If the Democratic Party wants to succeed, then they need to be more centrist and erase identity politics as a tool in elections. This will start to win them back many of the rural centrist voters that they lost. Connections with these constituents will matter.

Above all, events will determine who wins in 2018 and 2020. If Trump mismanages a crisis and the Democrats respond effectively, then they have an easy opportunity to recover from their losses. The problem with waiting, however, is that it is a matter of rolling the dice rather than eliminating the negative aspects of their platform. Candidates and parties cannot rely on events alone. They need a vision that a majority of voters can connect with.

The only question left is if the Democrats will understand that they are engaging in a failing strategy. What happens if Trump is successful? That would be their biggest fair because it puts him in a advantageous position for a second term. Right now the Democratic Party should focus on a new vision with wide appeal rather than their narrow focus of their campaigns in 2016.

Saturday, February 11, 2017

Can Francois Fillon Recover?

Francois Fillon addresses his scandal  - Getty Images
Once the frontrunner, Republican nominee Francois Fillon is now facing a scandal in the middle of his bid to become president of France. Fillon's wife Penelope (an Englishwoman) was paid $900,000 when she worked for her husband. It isn't illegal to work for a spouse, but that allegations are that she did no work at all. The country's financial prosecutor is launching an investigation.

Fillon's challenge is to get over these hurdles and win back enough public support to push him into the second round. Currently, his poll numbers have declined from over 20 percent in late January to now 17.5 percent. This is enough to eliminate him from the second round. Marine Le Pen, the nominee for the National Front, is currently in the lead. The candidate who has overtaken Fillon is Emmanuel Macron, who has founded a new political party called On the Move (En Marche in French). A former economic minister in Francois Hollande's administration, Macron is running as a centrist.

Fillon stood up like a man and apologized for his "error of judgement." He has promised to release his family's assets online. He has decided to stay in the race even with the scandal. The contest is wide open as Fillon's campaign loses supporters. He needs to get his scandal ahead of him and campaign fiercely to win.

There's an opportunity to turn any campaign around. Bill Clinton was able to do that in 1992. At the same time, Fillon does not want a Hillary Clinton dilemma with new information on the scandal released throughout these months. This rebuilding has to begin now.

Once, the election seemed easy for Fillon. His promises of Thatcherite economic reforms, taking on radical Islam, and the most powerful military in Europe within ten years. Now he is going to have to fight to get into the second round. There's still a few months before first round on April 23 and he needs to used all that time to his advantage.

Monday, February 6, 2017

Trump should continue Energy Expansion

I'm very happy to see that President Trump is going to continue the energy expansion our country enjoyed under the later years of the Obama administration. I think building more pipelines and keeping up with fracking boosts our economy and strategic position. In addition, I believe his corporate tax cut (once it is proposed and signed into law) will enable both the fossil fuels industry and green energy to prosper.

In posts from a couple years back I brought up the importance of the fracking revolution and the importance of pipelines to our energy infrastructure. While environmentalists want to take a sharp turn from fossil fuels to green energy, the reality is that we won't be losing oil anytime soon. I believe that alternatives will gradually replace traditional energy. It would be economically catastrophic to take a hardline stance on energy usage.

To understand the importance of fracking, just look to trade. Japan has recently purchased its first shipment of American liquefied natural gas. In the past, the United States has been crippled with high gas prices as a result of international crises abroad. The geopolitical benefit of American energy renaissance is prices remain lower while the new energy sources on our continent remain safe. From 2012 to 2016, oil output increased from under 6 million barrels per day to over 9 million barrels per day.

There has been some negatives effects to the fracking revolution. The boom of oil production has led companies to shut down most of their rigs, leaving many workers without anything to do. If they kept over 1,400 rigs online (there were that many near the end of 2014), then prices would have fallen so rapidly that financial damage would have inflicted the companies.

What is beneficial, however, is the reduction in C02 emissions that no even the staunchest of environmentalists can't ignore. They have plunged under 3 billion metric tons, which according to economist Mark Perry means that we have met the Kyoto protocol without even signing the agreement. Natural gas generates more than coal in this new era of energy production.

As for the Keystone XL and Dakota Access pipelines, the United States needs efficient energy infrastructure. The idea that Dakota Access would run over Native American burial grounds is untrue according to state archeologists. It also does not run through any part of reservation.

No one can that incidents don't happen, but no one can also say that pipelines are not safe. The Heartland Institute's Isaac Orr has done some research into this topic. There are an average of 216 oil spills from pipelines per year spilling 35,317 barrels. That's nothing compared to the 9.8 billion barrels transported a year, meaning that 99.99 percent of oil in the pipelines safely arrived to their destinations. According to a report from the Fraser Institute, moving oil and gas by pipeline is 4.5 times safer than rail, which would be an alternative form of transportation if we halted pipeline construction.

It would be a nightmare if we did not stop using pipelines immediately. A report from the Consumer Energy Alliance found that 31 percent of American energy generation capacity would be removed by 2030. Here's more:
The losses from this rejected infrastructure would equal the power generation of a dozen states (or 1,450.25 gigawatts). Since one gigawatt powers roughly 750,000 homes, that’s equal to the power generation needs of California, Florida, New York, Texas, Ohio and all of New England combined. 
This projected shortfall would create more economic hardship via skyrocketing electric rates for industrial, commercial and residential users, particularly the 43 million people living on a fixed income or below the poverty line who lean on daily access to affordable energy supplies. Denying pipeline expansion will further increase pressure on households facing energy poverty; approving projects will help relieve financial constraints by delivering resources more cost-effectively. 
Furthermore, these scenarios would negatively impact jobs in manufacturing, energy, transportation, mining, agriculture and other industries, the report says. Corresponding impacts would include competitive disadvantages for U.S. businesses and a minimum loss of $15.38 billion in private capital expenditures and economic development.
Trump knows that the country needs to keep it up with expanding our energy sector. As of now, I like what he's been doing on this issue.