Episode 61 Show Notes- The Post-Coronavirus World Order
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Episode Description
How will the international community look in a post-Coronavirus (COVID19) world? Viruses don’t care about borders and with over 180 countries now being impacted by the coronavirus, we are witnessing massive changes in the international world order. While most people, including the politicians and the news media, are fixated on the virus itself and the domestic side, we must begin to examine the long-term implications and prepare for the fallout. Utilizing the Levels of Analysis, I explain the possibilities, including the idea that wars begin as economies collapse and governments/leaders become desperate.
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Intro
Welcome to The P.A.S. Report Podcast. This is your host Nick Giordano and I hope you are having a good week.
This week, I want to focus on something really important. We are all fixated on the here and now when it comes to the coronavirus. We watch the media to get the latest updates within our communities and the nation as a whole. We are constantly checking our phones to see the news alerts. We worry about our health, our jobs, and our families. And rightly so. We have to focus on these things and be aware of what’s going on.
However, we can’t just examine the here and now. We can’t just be concerned with the present. We have to begin to plan for the post-coronavirus world. We will get a handle on the virus, and sooner or later, the lockdowns will end. What comes next will be anyone’s guess, but we have to begin planning because I believe we will be going through some difficult times. Every single one of us needs to be grateful that we are living in the greatest country that humanity has ever known. And I have listeners in Australia, the UK, Sweden, and Canada so a shot out to all of you because you live in great countries as well, and this episode is just as appropriate for those countries as it is for the United States.
But I begin to break down what I’m seeing out there, go to thepasreport.com to see the show notes, sign up for The P.A.S. Report Newsletter, and go see the post with Gordon Chang’s interview because he provided great insights.
Reminder
I do want to take a minute to remind everyone that while we are facing major difficulties here in the United States, and the situation will not improve overnight, I want to say it’s okay to turn off the news. To turn off electronic devices. To enjoy life and try to spend time with those you care about. The doom and gloom headlines and the endless coronavirus segments aren’t healthy for us. Remember to take a break, get outside, and enjoy life as much as possible.
With that being said, welcome to the doom and gloom program. Yes, I am a hypocrite, because I want you to listen, but at the same time, I’m not presenting the rosiest of scenarios. However, my job is to analyze information. It’s my job to actually explain things and I provide an analysis. Whether you agree or not is your right, but I don’t like it when I get information in 3.5 minutes soundbites without any context or in-depth explanations.
A crash course in international politics
For this episode, I’m going to give you a crash course in international politics and the Levels of Analysis. In order to understand my analysis, you need to know these concepts.
When it comes to international politics, remember it is the realist point-of-view that has prevailed. Realists accept a situation as it is and they are prepared to deal with it accordingly. According to realist philosophy, politics is power, and power is essential.
As realists, we understand that human beings are capable of really great things. We also recognize that human beings are flawed, and act within their own self-interests. It’s not to say that’s a bad thing or you’re a bad person, it’s simply the reality. Maybe you donate to the American Cancer Society. Well, why do you do that? Sure, you may be charitable, but why don’t you give to the Alzheimer’s Foundation instead?
The chances are you donate to an organization like the American Cancer Society because you or someone you know had cancer, and you want to help find a cure so that no one has to go through what you may have gone through. Well, isn’t that in your own selfish? Is the life impacted by cancer any different than the life impacted by another horrible disease? See, you do it because it’s in your own self-interests.
Let’s take this to the governmental and political level. Who creates nations and governments? Who engages in politics? Well, it’s people. So, if we’re flawed, anything we create is flawed including governments. If we operate in our own self-interests, governments do the same. We elect a President to be President of the United States not to be President of the World. We want our political leaders to do what’s in the best interests of the United States, not some far off country that most people never heard of.
Remember, in international politics power is essential, and as countries compete for power, their national interests conflict with each other. It is foreign policy that governs international relations and consists of self-interest strategies that are chosen by nations to safeguard their own national interests and achieve their goals on the world stage.
In order for a country to achieve foreign policy objectives, it must have some level of power. Power is the sum of a country’s capabilities politically, socially culturally, economically, and militarily.
Power is essential to the practice of statecraft. Statecraft is how a country applies its national power and capabilities to achieve their goals.
Power is an asset and the goal of nations.
Levels of Analysis
Now that you understand that, I am going to give you a brief understanding of the Levels of Analysis. The Levels of Analysis are a tool used by international relations specialists and political scientists. It’s not an exact science and there are multiple variables. These are more generalizations to help understand the highly complex problems the world faces.
The Levels of Analysis help us to determine why and how foreign policy is made. It allows us to examine the behaviors of countries and leaders. But more importantly, it allows us to see patterns in an attempt to make predictions. We can then develop policies that will be beneficial and potentially prevent catastrophe, but that’s only when the idiotic policymakers and so-called expert pundits actually listen.
There are three levels of analysis
International System-Level Analysis
The first Level of Analysis I want to focus on is the International System-Level Analysis focuses on how the international system as a whole influence the way in which a state behaves. The central question becomes how do/will states react to the changes in the international system?
This level of analysis focuses on external events where the international system is the cause and the countries react. Any changes in the international system cause changes in a nation’s behavior and there are several things that will cause countries to react.
Changes in the international system can include terror attacks, changes in the international economy, and things like we are seeing now with the coronavirus. Also, countries will react to changes in the power structure.
The distribution of power also plays a central role in the international system. When superpowers are losing power and influence, and others are acquiring that power and influence, which greatly alters the foreign policy of countries. This introduces instability into the system, and when we see shifts in power status, conflict is more likely when power transfers are occurring.
State-Level Analysis
The next Level of Analysis is the State Level Analysis. This level focuses on the nature of the state and the impact it has on the way it behaves internationally. It also allows us to try and predict how a state will react or what policies they may make.
When utilizing State Level Analysis, it’s important to look at the characteristics of the state. You need to examine the type of government. Is it a democratic government or an authoritarian government? Obviously, there are big differences in how these types of governments make decisions.
We also have to examine the geography, including their location, climate, natural resources, and other factors.
We have to understand the cultural characteristics of the country we’re examining, including their political culture, their history, as well as their religious and social traditions.
Another characteristic we examine is the economic conditions and their domestic policies.
Finally, we look at the situation a country is in. Are they in a crisis situation where they were surprised by an event, feel threatened, and believe they have limited time to act? Is there internal conflict? Is the government losing power, and if so, will they ferment a foreign crisis to spark nationalism, increase their popularity and retain their power?
Individual-level Analysis
The last Level of Analysis is the Individual Level Analysis. This is by far the hardest and takes the micro approach. The Individual Level Analysis focuses on leaders and the decision-makers within a country. We use this in an effort to seek an understanding of how and why leaders make the decisions they do. We also try to determine what types of decisions they make when confronted with different scenarios.
When using the Individual Levels of Analysis, we have to look at the individual character traits, their history, how they were raised, their desires and ideals. We have to try and understand their cognitive abilities, education, health and biological factors that may exist. This is what makes it so difficult. It’s impossible to know everything that’s occurred in one’s life to truly understand why they make their decisions.
Post-Coronavirus
So, now that you got this crash course, I am ready to jump into what a potential post-coronavirus world can look like. I utilize the Levels of Analysis and will point to the things that I am seeing that concern me. It’s important we keep our eyes open and stop just looking at the here and now. Unfortunately, most of us are fixated on the current challenges we face and are not paying attention to what’s going on around the world.
In fact, we’ve been told we cannot discuss anything else. If you bring up the economy or the reopening of it, or if you discuss a pathway back to some semblance of normalcy, you are shamed. They will say that you don’t care about people. They say you just want people to die. That your immoral and want to play the survival of the fittest. They say the economic damage is irrelevant when people are dying. It is astonishing how vicious these people are.
And remember, most of these people trying to shame others, many of them are still getting a paycheck. They haven’t felt the repercussions yet. So, I am going to quickly focus on the untied States and then move to the international system.
I do respect Dr. Fauci and think he’s a smart man. However, he is not an economist. I’m constantly hearing that we need to listen to the experts, and if you don’t listen to the experts, they will shame you. However, keep in mind that if you examine most major policy failures, it was the experts that forced the initiatives.
Dr. Fauci is not an economist and I don’t think he should be the one to ultimately decided economic matters. He is a public health expert. To him, you have to do everything you can to stop the virus. In an interview, he even stated that we should only reopen the economy when there are no new cases and no new deaths. Well, what if that’s in 3-months, 6-months, a year from now. Does anyone really think we can handle this type of shutdown for much longer?
As I stated last week, the economy of the United States is in shambles. We can minimize the damage if we start to do phased reopening on parts of the economy. Now, before the morons try an attack me saying that opening the economy is irresponsible, I want to make it clear that we have to have a phased reopening after all safety information is taken into consideration. It’s not like we are going to go from shutdown to a complete reopening of every locale and sector within the country. In addition, when we do begin the phased reopening, we may still have a measure in place for no large gatherings and cutting the occupancy of places like restaurants and movie theaters.
However, even if we do this relatively soon, a lot of economic damage has already been inflicted. We are going to see an enormous unemployment rate. We are going to witness small businesses going out of business, and we are going to see large companies shut their doors. It will take time to recover, but the longer we remain shut down, the more disastrous it will be.
And for those idiots who want to criticize and say it’s about public health, well, how do you think public health will be if people can’t pay their bills? How do you think public health will be if people can’t afford where they are living? How will public health be if people can’t afford food and become malnourished? How many suicides will we see as a result of people losing everything? We know that financial stress can be one of the unhealthiest forms of stress.
Also, while there is a large amount of focus on unemployment and businesses, many are not paying attention to the States and the local governments. New York State has a whopping $349 billion in debt, and that’s before the cost of this crisis is factored in. New York City has a debt of $91.5 billion as of 2019. In 2000 it was $39.5 billion. In fact, if we combine every state, they have a debt of $1.1 trillion. If we combine all the local government debt it totals a whopping $2 trillion. (US Debt Clock)
Now factor in all the spending they are currently doing, yet at the same time, they are collecting little in sales taxes. They are going to see a major shortfall in income taxes and property taxes as people lose their jobs. They are not collecting much on the tolls and the subway fares. No one is getting permits, and they are losing out on that revenue. Traffic violations have dropped dramatically as people stay indoors. How long do you think states and local governments can go on like this without declaring bankruptcy? And what would happen if a state had to declare bankruptcy? States and local governments are going to have to make massive cutbacks in a whole host of areas. It will be ugly and it will be painful at a time when most people will already be suffering.
And that doesn’t even take into account the Federal debt obligations where we currently have a nearly $24 trillion debt. The $24 trillion is pre-stimulus so add at least another $2 trillion and then factor in the $4 trillion the government has printed for the Federal Reserve to try and stabilize the markets and banking system. Also remember, that the $2 trillion stimulus package is only going to get us through a month or maybe two. They are now talking about a fourth stimulus package.
The economic realities are grim, and I am not going to sugarcoat it. If you think we are in bad shape, just think about other countries and be grateful that you live here. We are the wealthiest country in the world and if any country can pull through, it will be us.
Economics
However, we have an economic impact on the world and the world has an impact on us. To say this will be a short-term downturn, illustrates we do not understand the complexities of economies. Think back to 2007/2008, one sector of the economy collapsed, the real estate sector. That triggered a global recession. To put this in perspective, real estate accounts for about 6.2% of our economy and it was enough to impact every country in the world and put them in a recession.
The fact is all national economies are intertwined throughout the world. This isn’t the 1920’s/1930’s where most of the goods made in the United States were purchased in the United States. The European Union is our largest trading partner. Now, much of the world is on lockdown including most of Europe. Even if we begin to reopen our economy, many European economies are toast.
Most of the European nations are already riddled with unsustainable debt. Consider three major economies of Europe, France, Italy, and Spain. Italy has a 136.2% debt to GDP ratio, France has a 98.1% debt to GDP ratio, and Spain has a 97.5% debt to GDP ratio. There are some economists that believe the European economy may contract by nearly 7%. (The Telegraph) A -7% growth rate is a disaster. In Germany, the economic motor of Europe, many predict a 5.4% economic contraction. And estimates are that the European economy will contract about 10.3% this quarter alone. (CNBC)
Putting this in perspective, worldwide GDP dropped by 15% between 1929 and 1932. (Wall Street Journal) No matter what governments try to do, they will have a limited impact. In addition, it is really difficult to predict what will happen because we have never seen a dramatic shutdown like this all at once.
But it’s not just European countries and the United States that will feel the pain. All countries will, including China where the outbreak started. China’s economy relies on other people buying their stuff, and manufacturing products for the world. China’s economy was already sluggish because of the tariffs. In the first two months of 2020, China’s economy contracted by 13%. (Financial Times) Now, this is the information being provided by the Communist government of China who is constantly lying and misrepresenting what the truth is. If they say the economic decline was 13%, I would say it’s probably several points higher. Also, don’t forget that China didn’t go on lockdown until the end of January, and they are just starting to reopen. So, we have no idea what the decline is for March.
India is another country on the brink economically. India was having problems prior to the coronavirus. The financial system of India was already showing signs of collapse, and this will only compound the problem as India remains on lockdown. (Financial Times) India also has an infrastructure problem. A battle is the brewing of whether the Indian electrical grid can withstand the increase in demand and a call by Prime Minister Modi for everyone to shut down their power for a 9-minute period has led to fears that it can wreak havoc on power supplies with the sudden variation in voltage. (The Week) I can tell you, during a crisis, the last thing you want is a power outage. It would be a disaster.
An economic collapse of this magnitude certainly impacts the world order. And while governments race to inject capital into their economies, I don’t think we have any idea of how this plays out over the long-term including inflation.
What we do know is that as economies collapse, countries quickly begin to point fingers and blame others. Take the crisis in Greece about 10 years ago. As the Greek economy was teetering on the brink, Germany would impose draconian measures on money lent to the Greek government. Finland was calling for Greece to be kicked out of the European Union, and we started to see tensions flare. At one point Greece blamed German’s occupation in WWII for their financial woes. It got to the point where Vladimir Putin of Russia saw an opportunity. Seeing how the Greek government needed cash in 2015, he said that Russia would be willing to supply Greece with loans in exchange for infrastructure and transportation projects. (Independent)
Vladimir Putin understands world politics better than most. He understands the divide and conquer strategy. By flaunting this money in front of Greece, he is attempting to gain influence in European countries, and he saw Greece as a potential bridge.
We are already seeing the divisions occur. Italy and Spain have openly criticized Angela Merkel for a lack of unity, and Macron stated the Coronavirus could end the European Union if they don’t get it right. When talking about the economy and how the EU will handle it, Macron responded, “What’s at stake is the survival of the European Project.” (Express)
Using the Levels of Analysis, both the International System Level and the State Level, we are about to witness an economic domino effect throughout the world, and because economies are much more dependent on each other due to globalization, the results will have a much bigger impact than the Great Depression.
You cannot have major economies collapsing in such a rapid period and not expect there to be severe effects. It will certainly shake the world order.
Domestic Situation
As these countries grow more and more desperate because of continued lockdowns and economic strife, we can expect to see civil unrest increasing throughout the world. Using State-Level Analysis, the domestic situation in many countries is deteriorating. You can only keep human beings on lockdown for so long. It’s not natural to us. As I stated last week, we are social animals, and even though we have the luxuries of television, the internet, and other home-based entertainment, we still get agitated as time goes on. I have a newfound sympathy for animals in zoos. There will come a point when people will begin to openly defy lockdowns around the world. Business owners, with their backs against the wall, may decide they are going to open regardless of what the government orders. People may visit those establishments. People who have lost jobs will begin to feel desperate, and in search of food and employment, they will openly defy the government.
Governments will have to think about how they will push back. In an authoritarian country, it’s easy because they will just use brutality. However, in democratic countries, this is a much more difficult decision, particularly in a place like the United States where the concept of liberty is instilled within us. Democratic governments will have to make the tough decision whether they enforce laws or allow people to openly defy government orders. If they enforce the laws and begin major crackdowns, would government grant themselves more power by instituting martial law and will that aggravate the situation more? If they allow people to openly defy the law, would that be a recipe for anarchy? These are not easy decisions.
We are already seeing the rumblings of civil unrest in Southern Italy, and I told you a week or two ago to watch what happens in Italy. Soup kitchens are growing. Crime is increasing. Grocery stores have had to hire security guards. Basic supplies are dwindling. There are growing calls for mass protests about rents, mortgages and other bills. Italy is a powder keg and one little spark can lead to massive social unrest and rioting. (Bloomberg)
India is another country we worry about. While the U.S. Ambassador to India says that we are not seeing civil unrest at this moment, he worries and has concerns about the potential for civil unrest. In the world’s largest democracy, with a population of 1.2 billion people, civil unrest will prove to be a disaster. Protests against the lockdown are beginning to flare up particularly in the slums. Food is dwindling in supplies, and hard to come by for those with little to no money. (NY Times) As desperation kicks in, the backlash against the government could be fierce.
We are seeing more and more people in China, speak out against the communist regime, and more and more of those speaking out are vanishing. (NY Times) In fact, the Chinese government and the security forces are in hyperdrive. This illustrates that there is a real fear that outspoken critics pose a major threat to the regime’s power. We are also getting reports about protests erupting in China. While I cannot verify these reports because of the secrecy of the regime, it would not surprise me. There is clearly growing frustration inside China and other places such as Hong Kong.
Worldwide civil unrest can spread like a contagion nearly just as fast as the coronavirus spread. I have no doubt when this is all said and done, governments around the world will collapse. This will lead to increasing instability throughout the world.
Also, in order for authoritarian regimes to maintain their power, they will begin to lash out at their opposition and other countries in an effort to quell dissent and acquire more power. We witnessed this in 2014 with the Crimea. I probably spoke about this in a previous episode, but as I said earlier, Vladimir Putin understands the game better than most. In 2014, the Russian economy was starting to decline. As with any economic decline, the leader of the country usually starts to get the blame. As Putin’s poll numbers began to drop, he saw an opportunity as unrest began in Ukraine. In the name of protecting the Russian people, Putin decided to take Crimea. This resulted in some sanctions on Russia from the United States and Europe. In return, we got blamed for Russia’s economic decline, and Vladimir Putin’s poll numbers rebounded. Authoritarians know how to exploit these types of situations for their own gain.
History also tells us that when countries are in decline, they will begin to blame others for that decline. Scapegoating builds resentment towards others and as animosity grows, conflict can begin.
Military Moves
It’s also important to keep an eye out for military maneuvers throughout the world, especially for other countries. The United States has recalled the retired members of the military, which tells me that they worry about coronavirus affecting military readiness. (Washington Post) In addition, we have restricted military movements worldwide for thousands of military personnel and dispatched some to return from abroad. (NY Times)
And we are not the only ones. Canada orders all military members on leave abroad to return home and begin to self-isolate. (CBC) Israel has issued its own recall orders. Countries like India, South Africa, the Philippines, and many others, are using their militaries to enforce lockdowns. (al Jazeera)
Other countries are using their militaries for more nefarious purposes. Iran and its proxies have stepped up their attacks in Iraq. Since we have become distracted these attacks have increased, and President Trump even tweeted a warning to Iran that Iran will pay a heavy price if it tries to exploit the crisis and conducts a “sneak attack.” (Arab News) Iran’s government was already suffering a backlash from the Iranian people because of the weak economy. Factor in their handling of the coronavirus and the Iranian leadership may make a desperate decision in order to distract its population.
Russia and Turkey are other countries to keep an eye on. Russia and Turkey have been engaged in a tit-for-tat in Syria. (National Interest) Remember the so-called experts that were screaming Russia and Turkey would build closer ties following our withdrawal from Syria. I just want to point that out since we are constantly told to listen to these experts. While neither is seeking an all-out confrontation, the situation can quickly change. Erdogan is an authoritarian. If the coronavirus hits Turkey in a severe way, his government will surely face backlash. That’s where I worry that the Erdogan regime will make the calculus to potentially hit the Assad regime hard. Once again, similar to Iran, this would be a distraction measure designed to rally around the country in the name of Turkey and Turkish pride.
But China is the most important country we have to watch. I had on Victor Davis Hanson, Gordon Chang, and Steven Mosher last month. You couldn’t have asked for better timing to have these intellectual heavyweights on. If you haven’t listened to those interviews, I suggest you do so. All of them explained China’s vision for world domination, and Gordon Chang and Steven Mosher pointed out that China would like to accomplish this by 1949.
Right now, China is trying to expand its sphere of influence around the world. China has delivered an enormous amount of medical supplies to Italy, Serbia and other countries in Europe. In fact, China wants to export its model of governance to other countries. According to the South China Morning Post, China is using this as an opportunity in an article titled, “With coronavirus crisis, China sees a chance to export its model of governance.” It’s a great article that I suggest you read. (South China Morning Post)
China’s military is also becoming more aggressive. In a previous episode, I discuss one of China’s long-term goals is to recapture Taiwan. Since the world has been distracted with the coronavirus, China is routinely violating Taiwanese airspace. They have pressured the WHO, a truly pathetic organization, from even mentioning Taiwan.
They are building new military facilities in South China and West Philippine Seas. They claim they’re research stations, but everyone knows what they really are. China has increased its military footprint in the Pacific so much that Australia is now getting worried. Australian Prime Minister has announced a $1.1 billion upgrade to the Royal Australian Air Force base in Tindal. At a time when countries are shut down and reeling economically, to make this type of announcement and investment, illustrates how concerned Australia is at the threat China poses.
It’s also been announced that Australia is buying $1.4 billion worth of military hardware from the United States. This hardware consists of long-range anti-ship missiles. (National Interest) These two investments highlight the fact that Australia no longer views China as a potential strategic partner, and in fact, believes that China has hostile intent.
Closing
So, what does all this mean? It means we are about to see some major shifts in the international community. Every country is in a crisis situation meaning they were surprised by an event, feel threatened, and they also feel they have limited to act. When this happens, you cannot think of all policy options and all potential outcomes. This is when countries and leaders tend to make some really bad decisions. Factor in the increasing instability and it can be a recipe for disaster.
As power vacuums become apparent, nations will compete to fill the void. The chances for conflict are increasing, and that’s a fact. My fear is that the opportunity is ripe for war. The same elements that existed pre-WWI and pre-WWII are there. While some of the variables are different, there are always constants in international politics. Nations will rise and other nations will fall. Governments and economies will collapse and then wars begin. We cannot take our eye off the ball, and we need to look long-term.
I also worry that as people get more desperate, there will be a temptation to gravitate towards the concept of socialism. Even though many of us know that socialism is horrible and doesn’t work, the allure of the “collective” and “equity,” will be too hard to resist if you don’t have a job, money or food. People are willing to give up a lot when they are desperate, scared and afraid.
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We must stay vigilant against these calls. We must remember that our roots are founded on the concept of liberty. That freedom is essential to human existence, and without it hope is all but extinguished.
This is a period of uncertainty and no one can predict what’s going to happen.
As always if there is a topic or issue you would like me to focus on, send an email to podcast@pasreport.com.
Thank you for joining us, stay safe, and I’ll be back next week.
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