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      Is China the New Champion of Globalization?

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      On January 25, addressing a virtual World Economic Forum, China’s President Xi Jinping not only strongly advocated for a multilateral approach to the COVID-19 pandemic but insisted on the virtues and systemic benefits of free trade and globalization. Jeopardizing those elements may introduce conflict into the international system, Xi warned, clearly referring to, although not mentioning, the United States. This is not the first time Xi has credited himself as the “champion of globalization,” in particular when attending meetings in Davos. In 2017, in the early days of Donald Trump’s presidency, with the long shadow of barriers to trade and isolationist policies just starting to appear on the horizon, China’s president made important remarks encouraging free trade and opening up the markets.

      However, with Trump out and Joe Biden now in the Oval Office, there seems little to suggest any substantial change in US policy, at least in the foreseeable future. If the US isn’t particularly eager to work with China toward free trade and multilateral cooperation, the European Union, and Germany in particular, quickly opted for a completely different approach, signing a key investment deal with Beijing at the end of last year. The Comprehensive Agreement on Investment (CAI) will grant a greater level of market access for investors than ever before, including new important market openings.

      Forecasting the US-China Relationship

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      Washington did not miss the opportunity to express its concerns about a deal that suddenly and unexpectedly sidelined the United States at a moment when, after four years of relative anarchy and opportunism, restarting transatlantic relations should be a priority. Writing in the Financial Times, Gideon Rachman recently pointed out how little sense it makes to rely on a US security guarantee in Europe while undermining its security policy in the Pacific, considering how much Europe has benefitted from the fact that for the past 70 years, the world’s most powerful nation has been a liberal democracy. Germany, in fact, was able over the last decades to exercise a sui generis role of Zivilmacht (civilian power) by framing its national interest in geoeconomic terms, encouraging German exports worldwide while outsourcing its defense to the reassuring presence of US troops.

      To better understand Xi’s quasi-imperial stance at the World Economic Forum, it has to be placed not only against the backdrop of the recent investment deals with the European Union or with the 15 countries of the Asia-Pacific region, but on the big news that China is on course to overtake the US as the world’s biggest economy by 2028, five years ahead of earlier predictions, mainly due to the asymmetric impact of COVID-19. While it is clear that China has successfully contained the Sars-Cov-2 outbreak and the Chinese economy is now recovering at a higher speed than other countries, it is also true that a lack of transparency and delays in sharing information with the international community about the virus have contributed to an acceleration of the pandemic at a global level.

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      Nonetheless, in the current debate over shaping more efficient emergency policies, China is still emerging as the model to follow and imitate, despite being unpopular. There is little doubt that in the “social imaginary” of liberal societies, as reports from Europe and the US suggest, authoritarian regimes are seen by many as more efficient and better prepared to deal with crises than democracies. Yet we must not forget that this efficiency comes at the inevitable cost of political and civil rights.

      Xi Jinping is well aware that the Biden administration can finally change course for the US and its allies, forging a united and progressive front after years of populist, nativist and authoritarian politics. Perhaps this element can help understand Xi’s assertiveness at the World Economic Forum better than the recent economic successes. After all, political and civil rights are China’s Achilles’ heel. Criticism of the Communist Party, let alone advocating for basic human rights such as freedom of speech or the rule of law, inexorably leads to repression that falls with equal severity on the rich metropolis of Hong Kong and the poor areas of Xinjiang, sweeping up ordinary citizens and billionaires alike, from Joshua Wong to Jack Ma.

      Can China credibly profess the virtues of globalization to achieve harmony and balance in an international system if it doesn’t adhere to international law? Can Beijing speak of cooperation to solve global problems when it has withheld vital information about the threat of the COVID-19 pandemic? As Xi Jinping continues to steer the Middle Kingdom out of its historical isolation, avoiding challenging the United States for the position of world leader will be difficult, given China’s demographics and economic status. Will these two Weltanschauungen, two comprehensively different conceptions of the world, sooner or later present the international community with a choice?

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      in US Politics

      The Guardian view on Covid relief: ideologies matter in democracies | Editorial

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      When Covid struck, it was governments that decided people could not go to work and governments that took people’s money away. It is now down to governments to decide whether or not to return that money and when to open up the economy. In the US, Democrats want to give generously. While $1.9tn dollars is a lot of money – about the size of Canada’s GDP – it probably is not enough.As Randall Wray of the Levy Institute has pointed out, the US government is engaged in relief, not stimulus, spending. It is offering much-needed assistance to the devastated balance sheets of households, school districts and local governments. Rescuing public services, making sure people don’t starve and building Covid-testing systems is not an economic stimulus but a necessary antidepressant. Reducing the size of the relief package would prolong the recession, which, given the virus’s capacity to surprise, may last longer than the experts predict. President Joe Biden was right to rebuff criticism that Democrats risked overheating the economy, saying the problem was spending too little, not too much. There is slack in the US economy: 400,000 Americans left the labour market in January.Mr Biden aims to control the virus and then create jobs with infrastructure investments to reinvent the post-crisis economy for a zero-carbon world. Call it a spend-then-tax policy. If he succeeds, Mr Biden will go some way to repudiate the conventional economic wisdom that argues that if governments keep borrowing too much, they risk defaulting, will end up printing money and be forced in a panic to put up interest rates. The pandemic revealed this to be bunk. Central banks can keep interest rates low by buying government bonds with money created from thin air. Last year, they bought 75% of all public debt.Within days of assuming power, Mr Biden had a plan, and new thinking, to rebuild a Covid-scarred country. Boris Johnson has little to show after months. His government intends to cut universal credit, raise council tax bills and freeze public-sector pay, weakening household finances. Given this mindset, which has dominated policy since 2010, it is hardly surprising that the £900bn of Bank of England “quantitative easing” money sitting with banks can’t find profits in the real economy. The Bank has “knowledge gaps” about QE. Yet there is truth in the quote attributed to Keynes that “you can’t push on a string” – when demand is weak, monetary policy can do little about it.With interest rates low, no recovery to invest in and no new regulations, UK banks will turn inwards, not outwards. Instead of the City contributing to the productive economy and a just green transition, expect speculation and Ponzi-like balance sheets. It is lobbying to expand lucrative but socially useless activities. In January, Tory peers with City interests argued for a new finance regulator with a “competitiveness” objective – a Trojan horse for deregulation.Central banks are creatures of their legislatures, but have been permitted, for ideological reasons, to work without a social contract. In her recent paper, Revolution Without Revolutionaries, the economist Daniela Gabor warned that unelected technocrats must not be allowed to hand politicians reasons to adopt external constraints that can be blamed for unpopular policies. It is timely advice. The UK will have record peacetime levels of debt. Rishi Sunak says such borrowing is “unsustainable”. Yet UK gilts are a risk-free financial asset, which is why banks crave them.The inequality, financial instability and ecological crises have multiple causes, but their existence is built on radical, free-market economics. It is not the case that the government’s ability to spend is temporary while interest rates remain low, as Mr Sunak claimed. Bond-purchasing programmes can control yields. A system that benefits private finance but subordinates the state and threatens to expose it, post-pandemic, to austerity and elevated levels of unemployment must be resisted. Only those unable or unwilling to believe the evidence of their own eyes would say otherwise. More

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      US economy adds 49,000 jobs as Biden aims for further Covid relief

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      The US economy added back 49,000 jobs last month as coronavirus restrictions eased and fiscal stimulus from Washington goosed up the economy, the labor department announced on Friday.The unemployment rate dropped to 6.3%, down significantly from its pandemic high of 14.7% in April. While January’s figure marked a return to growth after job losses in December, the number was weak and big problems remain.On Thursday, the labor department said 779,000 people filed new unemployment claims last week, down from the week before but still close to four times pre-pandemic levels. The latest figures showed some 17.8 million Americans are still claiming unemployment benefits.In December the US lost 140,000 jobs as the latest wave of Covid-19 infections led to more shutdowns across the country and a slowdown in economic activity. That figure was revised to a loss of 227,000 jobs on Friday.Professional and business services (up 97,000 jobs) and local government (up 49,000) saw the largest gains over the month. The US is still losing huge numbers of jobs in leisure and hospitality (down 61,000) and retail (down 38,000) and the stark gap in racial unemployment rates remains.The unemployment rate for white Americans was 6% while for Black Americans it was 9.2% and for Latinos it was 8.6%.The jobs figure come as the Biden administration is trying to push through a $1.9tn stimulus package which would send $1,400 cheques to many Americans and provide fresh aid for struggling businesses. It would also increase the federal minimum wage from $7.25 to $15 – the first increase since 2009.The plan has widespread support from voters, with a Quinnipiac survey showing more than two-thirds of respondents in favor of the plan. But it has met with opposition from Republicans in Congress, who have balked at the size of the stimulus and proposed a far smaller package. Biden’s plan was approved in the Senate early Friday by a 51 to 50 vote, with the vice-president casting the tie-breaking vote, but still faces hurdles and is not expected to become law before mid March.The recovery in the jobs market may embolden opponents but some economists warned that the economic toll of the virus is far from over.Jason Reed, assistant chair of finance at the University of Notre Dame’s Mendoza College of Business, said: “We shouldn’t forget that the economy is still down about 10m jobs since the start of the pandemic. We aren’t anywhere close to where we were this time last year.“The rollout of the vaccine will surely help Americans get back to work, but we shouldn’t expect a return to normal until late 2021 or early 2022.” More

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      Tunisia: The Pending Goals of the Revolution

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      A decade after the Arab Spring, Tunisians have made significant progress in the field of democratization with respect to the constitution and the guarantee of public and private freedoms. However, economic performance remains modest, and many of the demands of the Tunisian Revolution are still pending.

      Tunisia commemorated the 10th anniversary of the revolution with violent youth protests alongside peaceful demonstrations in major cities like Tunis, Sousse and Nabeul, and inland cities of Siliana, Kasserine and Kairouan. The protesters demanded employment and comprehensive development. They expressed their discontent with high prices, monopolies and the deterioration of the purchasing power of citizens. There was also consternation about the increasing number of COVID-19 victims and the mishandling of the pandemic.

      What Is the Key to Tunisia Successfully Beating COVID-19?

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      The reality is that the demands for employment are stagnating, ending the isolation of marginalized areas is still a distant dream, and achieving transitional justice is at a stalemate. While the population of Tunisia suffers, many members of the former regime who opposed the revolutionary struggle are still there at the forefront of the media, clinging to impunity.

      The Youth Unemployment Problem

      Tunisia has not yet succeeded in developing effective solutions to the unemployment problem that first sparked protests in December 2010. According to the National Institute of Statistics, the unemployment rate in the country during the third quarter of 2020 was 16.2% of the total active population, translating to approximately 6,766,000 people. This figure includes no fewer than 225,000 university graduates, with the rate rising to between 30% and 40% in several inland governorates.

      The youth population in Tunisia is the most vulnerable to joblessness. The latest field survey on employment by the National Institute of Statistics showed that around 70% of all those unemployed are below 30 years of age. Unemployment is effectively marginalizing youth in Tunisia and is among the main reasons behind both the 2010 revolution and the current protests. The continuing absence of employment opportunities for young people, the spread of favoritism among government and business elites, the rampant administrative and financial corruption and nepotism resulted in a perception of injustice that fueled discontent among many of those who have been unemployed for a long time.

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      While some impacted by the unemployment crisis attend sit-ins or demonstrate, others risk death on the high seas in search of work that guarantees dignity. In 2020, nearly 10,000 Tunisians arrived in Europe illegally. According to Romdhane Ben Amor, spokesman for the Tunisian Economic and Social Rights Forum, between 150 and 200 families have left Tunisia to Europe clandestinely over the last year, evading the Tunisian coast guard.

      A report by the forum found that “most of the illegal immigrants, aged between 18 and 30, share a fundamental characteristic as they lived the ‘school failure experience’ through early drop-out. They refer such drop-out to several reasons ranging from economic difficulties, and reluctance to continue to study, because the school, in their view, is no longer useful in light of the high unemployment of high-ranking people.” In addition, many who give up hope either take the path of organized crime or get involved with international terrorist networks.

      There is an urgent need to develop inclusive strategies aimed at empowering youth in the labor market. This is possible through the development of educational programs, vocational services and training courses to enhance the social investment role of the state by creating new productive projects directed at the domestic or foreign consumer market that would create jobs for the young.

      Marginalized Regions Remain Isolated

      A decade after the revolution, the inland and remote governorates have not yet gotten their share of comprehensive development. Rather, they are still suffering from marginalization, the ravages of high rates of illiteracy, poverty, unemployment and school dropouts. They lack basic facilities such as infrastructure, health services and educational institutions even though the new constitution stipulates the necessity of implementing a policy of positive discrimination concerning these underprivileged areas. It is not known where the financial allocations and in-kind assistance that the successive governments, the European Union and the Gulf states have allocated to those governorates have gone.

      It is worth noting that, according to the European Commission, “Since 2011, EU assistance to Tunisia has amounted to almost €3 billion (over €2 billion in grants and €800 million in macro-financial assistance).” With an average of €300 million ($360 million) per year between 2017 and 2020, these funds go toward the “Promoting good governance and the rule of law,” “stimulating a sustainable economic growth generating employment” and “Reinforcing social cohesion between generations and regions.” It is likely that these marginalized areas suffer locally from financial corruption and administrative misbehavior and are dominated by bureaucratic lobbies. Such underprivileged areas are often exploited politically by party and trade union elements to serve as a reservoir of popular protest against government policies.

      Likewise, ruling parties only pay attention to these marginalized regions during election campaigns. This has made the residents suffer the brunt of inequality and injustice. It leaves them with a difficult choice: to continue staying in neglected regions despite dire conditions or to leave their lands for major cities or to board migration boats to Europe. There is a definite need to improve the living conditions of the inhabitants of these regions, to provide them with resources for a decent living, to encourage greater investment in these regions and to revive the spirit of citizenship that will help regain confidence in the state.

      No Truth or Dignity

      In another context, the demand for justice for the victims of tyranny that the revolutionaries called for back in 2010 has not yet been fulfilled in an atmosphere where the transitional justice process is still stumbling. This includes the many obstacles that the Truth and Dignity Commission, which carries the mandate of investigating human rights abuses by the state, has faced — a lack of cooperation from state agencies and executive institutions being one of them. Observers have noticed that the perpetrators of violations did not attend the hearings and did not respond to lawsuits by judicial departments.

      This failure reinforces the culture of impunity and intensifies the suffering of the victims of the dictatorial regimes of President Habib Bourguiba (1956-1987) and his successor, Zine El Abidine Ben Ali (1987-2011). The state must make use of its authority to bring to justice the perpetrators, apologize to the victims and authorize reparations for their material and mental suffering so that they can resume their lives as part of the Second Republic.

      It is true that the revolution has, to some extent, removed the fear of the government and led to a decline in repression and the power of the president, the censors and the police. Critics were also released, the culture of protest spread, politics became a public affair and governance an ordinary exercise in which competing parties maintained an atmosphere of peace and democracy, with no single party having a monopoly.

      However, it is evident that some of the revolution’s goals have not been implemented. What is required is to make those goals not just promises and slogans, but a reality. The need of the hour for Tunisia is to further reform the judicial and government systems, ensure decentralization and comprehensive development to win citizens’ trust in the state, the revolution and the project of democratization.

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      Sovereign Wealth Funds Bet Big on India

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      Since the outbreak of COVID-19, bad news has dogged India on the economic front. By the end of the 2020-21 financial year, which begins on April 1 and ends on March 31, the country’s GDP is estimated to shrink by 7.7%, the biggest contraction since 1952. In the first quarter of the 2020-21 financial year, the economy contracted by a historic 23.9%.

      To put things in perspective, India has suffered its first contraction since the 1979-80 financial year. Then, India’s GDP shrunk by 5.2% because of a double whammy. First, the 1979 Iranian Revolution led to a doubling of crude oil prices, hurting an energy importer like India. Second, a severe drought led to crop failure, falling incomes and declining demand. The 2020-21 recession is worse than that of 1979-1980. In fact, India’s contraction is the second-worst in Asia after the Philippines, whose economy has contracted by 8.5%-9.5%.

      Green Shoots of Recovery

      In 2021, better news has trickled in. India’s manufacturing sector is rebounding. The Nikkei Manufacturing Purchasing Managers’ Index, compiled by IHS Markit, rose to 56.4 in December 2020, up from 56.3 in the previous month. Any figure over 50 signals growth, and manufacturing has now been increasing for five months. More importantly, India’s agricultural sector is expanding strongly. In fact, it grew even during the peak of the COVID-19 pandemic. 

      Deloitte estimates that “India may have turned toward the road to recovery.” It bases its judgment on recent high-frequency data. India has been fortunate to have lower infection and fatality rates than countries like the US or the UK. It has also launched the world’s biggest coronavirus vaccine drive. This should improve consumer and business confidence and boost economic recovery.

      Why Is Foreign Investment Flooding Into India?

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      The International Monetary Fund (IMF) is predicting a return to growth in 2021 as are investment banks and large funds. The Indian government is bullishly claiming that India can achieve double-digit growth through increased digital services and the expansion of its manufacturing base. This would be driven by growing demand in the rural sector, the youth and India’s aspirational middle class.

      Even if the government claims might be optimistic, many companies and investors have bought into the India growth story. In particular, sovereign wealth funds (SWFs) have been betting on India. In 2020, they invested a record $14.8 billion in the country. In the same period, they invested only $4.5 billion in China, meaning that SWF investment in India is three times that of China. What is going on?

      Dark Clouds in Sunny Skies

      To understand why SWFs are turning to India, we have to understand their incentives. These funds do not answer to investors who crave quarterly or yearly or even five-year returns. As custodians of a nation’s wealth, SWFs are long-term investors. In their view, India is operating from a lower base than China. So, India’s growth prospects are higher than China’s as it plays catch-up. 

      Furthermore, unlike venture capital or private equity players, SWFs place a high premium on the long cycle factors like political stability, social cohesion and geopolitical importance. As a robust democracy with many decades of experience in the peaceful transfer of power, India is increasingly attractive in a volatile, complex and ambiguous world. China’s actions in Hong Kong and Xinjiang have shaken up many SWFs that are choosing to park their money in India.

      There is another reason for SWFs to invest in India. They agree with IMF Managing Director Kristalina Georgieva, who praised India for taking “very decisive action, very decisive steps to deal with the pandemic and to deal with [its] economic consequences.” Like her, they are impressed by New Delhi’s appetite for structural reforms and the surprising competence India’s much-maligned government has demonstrated during the pandemic.

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      On December 31, India’s health ministry revealed that the country’s COVID-19 recovery rate was an astonishing 96.04%. This is one of the highest recovery rates in the world. Despite the economic contraction, the government has fed hundreds of millions, brought in much-needed economic reforms and kept the budget deficit down to reasonable levels. At a time when countries have sunk into unsustainable debt traps, India presents a relatively better investment opportunity for SWFs with strong prospects of sustainable, long-term growth.

      There are two dark clouds threatening this sunny economic scenario. First, India faces the twin external threat of China and Pakistan. Both these nuclear powers make territorial claims against India. They have been ratcheting up rhetoric, and tensions are running high. Even at the height of a bitterly cold winter, Indian and Chinese troops have clashed yet again on the border. Once the Himalayan snows start melting in late spring and early summer, troops could start clashing and a military conflict might ensue. This would inflict a tremendous economic setback in the short run. If India is able to defend its territory, then its economy would benefit in the long term. However, there is no guarantee how such a conflict might play out, and this remains a great risk to the economy.

      Second, India faces the threat of domestic unrest. The ruling Bharatiya Janata Party has had to deal with numerous protests since its reelection in 2019. The Citizenship Amendment Act triggered protests in many cities across the country. They died down as the pandemic spread. Currently, farmer protests are rocking New Delhi on Republic Day. In a country as large and diverse as India, threats of more protests and unrest are never far away. As long as the government can contain protests, they remain immaterial. However, a breakdown in social cohesion would damage India’s growth story.

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      Biden executive orders target federal minimum wage and food insecurity

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      Joe Biden on Friday will sign a pair of executive orders aimed at providing immediate relief to millions of American families grappling with the economic toll of the Covid-19 pandemic and expanding safety protections for federal workers.Sign up for the Guardian’s First Thing newsletterPressing ahead with an ambitious set of executive actions, the new administration is seeking to marshal an “all-of-government” effort to combat hunger as tens of millions of Americans face food insecurity amid historically high unemployment rates.“The American people can’t afford to wait,” said Brian Deese, the national economic council director, on a call with reporters. “So many are hanging by a thread.”The measures, he said, were a “critical lifeline” for American families, but were “not a substitute” for the nearly $2tn relief package Biden has called on Congress to pass.Biden will direct the Department of Agriculture increase a Covid-19 food program that helps families with children who would normally receive free or reduced-price meals at school, as well as expand the emergency increases approved by Congress to the Supplemental Nutrition Assistance Program for low-income Americans.He will also ask the Department of Treasury to update its process for delivering stimulus checks to millions of eligible Americans who reported issues or delays with the first rounds payments. And Biden will the Department of Labor to make clear that out-of-work Americans who refuse employment that could jeopardize their health would still qualify for unemployment benefits. Until now, workers who refused offers to return to their jobs out of concern for their safety no longer qualified for unemployment aid.The second order is aimed at expanding protections for federal workers by restoring collective bargaining powers and lay the groundwork for the federal government to implement a $15 federal minimum wage. As a first step, Biden will direct federal agencies to conduct a review of federal workers earning less than $15 an hour and develop recommendations for raising their wages.The latest executive actions come one day after a labor department report showed that unemployment claims remained at historically high levels, with 900,000 Americans filing for unemployment benefits last week. The figures reflected the magnitude of the economic challenges Biden inherited, amid a resurgence of the coronavirus this winter.Friday’s actions are part of a blitz of executive orders and directives Biden has taken since assuming the presidency.Hours after his inauguration, Biden signed an executive order extending a federal pause on evictions through the end of March, a move that will shield millions of Americans struggling to pay rent amid the pandemic. He also directed federal agencies to extend their moratorium on foreclosures of federally guaranteed mortgages and asked the education department to prolong its freeze on federal student loan payments through the end of September.On Thursday, he unveiled a “full-scale wartime” national Covid-19 strategy aimed at growing the production of vaccines, creating guidelines to reopen schools and businesses and imposing new requirements on mask-wearing.Biden has long argued that economic recovery is tied to combatting the coronavirus, a starkly different approach to his predecessor who urged states to lift restrictions even as infections rose.The centerpiece of Biden’s plan to address fallout from the pandemic is a $1.9tn relief package called the American Rescue Plan, which includes $1,400 direct payments to Americans, more generous unemployment benefits and billions of dollars for a national vaccination program.Already Republicans are objecting to the cost of the legislation, raising doubts about whether Biden will be able to attract bipartisan support as he had hoped. Several Republicans have questioned the need for an additional relief package weeks after they passed a $900bn coronavirus relief bill.Stressing that urgent action was needed, Deese declined to say how long the White House planned to court Republican support before potentially moving to a process that would allow Democrats to move the legislation forward without them.His team plans to hold a conference call with a bipartisan group of senators on Sunday to make the case for another round of stimulus, without which he said the nation’s economy would plummet further into “a very serious economic hole”.“When you’re at a moment that is as precarious as the one we find ourselves in,” he said at a White House press briefing on Friday, “the risk of doing too little the risk of undershooting far outweighs the risk of doing too much.” More

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      We're on the verge of breakdown: a data scientist's take on Trump and Biden

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      Peter Turchin is not the first entomologist to cross over to human behaviour: during a lecture in 1975, famed biologist E O Wilson had a pitcher of water tipped on him for extrapolating the study of ant social structures to our own.It’s a reaction that Turchin, an expert-on-pine-beetles-turned-data-scientist and modeller, has yet to experience. But his studies at the University of Connecticut into how human societies evolve have lately gained wider currency; in particular, an analysis that interprets worsening social unrest in the 2020s as an intra-elite battle for wealth and status.The politically motivated rampage at the US Capitol fits squarely into Turchin’s theory. In a 2010 paper, Dynamics of political instability in the United States, 1780-2010,Turchin wrote that “labour oversupply leads to falling living standards and elite overproduction, and those, in turn, cause a wave of prolonged and intense sociopolitical instability.”Turchin’s Cliodynamics, which he describes as “a more mature version of social science”, rests upon 10,000 years of historical data, as such there is, to establish general explanations for social patterns. He predicts that unrest is likely to get worse through this decade, just as it has in roughly 50-year cycles since 1780.Historians don’t necessarily like the proposal, he acknowledges. “They bring general theories through the back door. Our job is to be explicit.”Explicitly, then, Turchin explains current political warfare as a battle between an overpopulation of elites to some degree exacerbated by a decline in general living standards or immiseration, and financially overextended governments. Initially, Turchin applied the theory to pre-industrial societies, but a decade ago he travelled forward in time, predicting unrest –Ages of Discord– that would intensify in 2020 and endure until reversed.“Societies are systems and they tend to change in a somewhat predictable way,” Turchin told the Observer. “We are on the verge of state breakdown where the centre loses hold of society.”In the US, he points out, there are two political chief executives, each commanding his own elite cadre, with nothing yet being done at a deep structural level to improve circumstances. “We’ve seen growing immiseration for 30 to 40 years: rising levels of state debt, declining median wages and declining life expectancies. But the most important aspect is elite overproduction” – by which he means that not just capital owners but high professionals – lawyers, media professionals and entertainment figures – have become insulated from wider society. It is not just the 1% who are in this privileged sector, but the 5% or 10% or even 20% – the so-called “dream hoarders” – they vie for a fixed number of positions and to translate wealth into political position.“The elites had a great run for a while but their numbers become too great. The situation becomes so extreme they start undermining social norms and [there is] a breakdown of institutions. Who gets ahead is no longer the most capable, but [the one] who is willing to play dirtier.”Turchin’s analysis, of course, is readily applied to Donald Trump who, spurned by mainstream elites, appealed to a radical faction of the elite and to the disaffected masses to forward his political ambition. A similar case could be made for leading Brexiteers.Similar circumstances, says Turchin, can be found with the Populares of first century Rome who played to the masses and used their energy to attain office – “Very similar to Trump, who created a radical elite faction to get ahead.”In the professor’s reading, the incoming administration, notwithstanding the diversity of its appointments, is representative of mainstream elite power. “Think of 2020 as the return of the established elite and separation of dissidents. What’s important is that the incoming administration recognises the root problem.”In recent weeks, Turchin has found himself profiled in the Atlantic (The Historian Who Sees the Future), portrayed as a mad prophet, and name-checked by the Financial Times (The Real Class War is Within the Rich).He has been uplifted by some, but pushed back against by others. “You have this veneer of complicated impressive science. But any analysis like this is only as good as the data upon which it rests,” says Shamus Khan, chair of Columbia University’s sociology department. “It’s easy to imagine that you’re a Cassandra, and forget about the million others who similarly claim that they are.”“I think he’s got a point, because a significant component of the reasonably far left are highly educated but with blocked opportunities,” says Mark Mizruchi, author of The Fracturing of the American Corporate Elite. “Where you have disjunctures is where you get political extremism. If Turchin is right, you’re going to get a lot more highly educated people facing limited career prospects. Most of those will turn left rather than right.”Dorian Warren, one of the authors of The Hidden Rules of Race: Barriers to an Inclusive Economy, says elite warfare is only one way to describe the circumstances. “Frustrated elite aspirants gets radicalised when their expectations meet the reality of a rigid hierarchy. They perceive the system as unjust, but the source of injustice is elite overproduction and too much competition.Warren points to Occupy Wall Street, which was not a working-class movement. “It was mostly disaffected, white college graduates. That was a preview of what we’re seeing now.” In the American context, Warren says, “it’s mostly white elite fighting among each other, while the elites of colour are trying to break into the hierarchy.” For the most part, Warren points out, black elites in the US refuse to participate in white elite warfare.”But the hard science of Turchin’s approach cannot explain all things. After the Great Depression in what some might call a negotiated settlement, elites negotiated a unionised settlement with the masses in a moment of enlightened self-interest.“There was an elite consensus to accept the legitimacy of unions. In the last 40 years, we’ve seen a re-fracturing of that consensus with no worry for peasants with pitchforks who might come.”Without Trump as a unifying villain, elite fracturing is likely to enter a period of multi-dimensional refracture. “The left was always fighting among itself, so in some ways, it’s reversion to normal. There’s a reckoning coming in the Republican party, too, as it turns in on itself again over how it lost power. I think we’ll see intra-elite warfare on both sides.”Warren believes we’re at a critical juncture over a new elite settlement. One reason for optimism can be found in the battle for a minimum wage or corporate support for the social justice movement – “seeds of a new settlement”.Turchin says he feels “vindicated as a scientist who proposed a theory, but I have some consternation that we have to live through this. It may not be very pretty. I’m worried about a state breakdown. Mass shootings and urban protests are the warning tremors of an earthquake. Society can survive, but problems are likely to escalate.” More