Modlin Global Analysis Newsletter

Welcome. Thank you for joining us for this edition of the Modlin Global Analysis Podcast. We regularly talk about international affairs as well as economics and politics, and it's always helpful to notice how much these themes often interact with each other. And we'll continue in that discussion throughout this year. And in all these episodes, but it is worth noting, specifically, we're going to go back in history and talk about Watergate and this interaction of international politics and the Watergate scandal that we're many of us are familiar with. I'm glad to be joined. In by Dan Modlin this week, we're going to twist the tables and I'll be asking and Dan questions. And it's particularly interesting because throughout his life he has been fascinated by the Watergate scandal. And as a student, he did extensive research on this question and his revisited—frequent times. So Dan, thank you for joining us on this. And our first question to you is although Watergate was generally considered to be a domestic story doesn't it have some international politics connections to it?DanYes, thank you, Kevin. It's something a lot of people don't realize that the roots of the whole Watergate scandal really go back to the Pentagon Papers incident in which a Rand analyst named Daniel Ellsberg was accused of leaking documents to the New York Times that became known as the. Pentagon Papers and these were internal documents from the Defense Department. Which had analyzed some of the mistakes made during the Kennedy and Johnson administrations in the war in Vietnam, Richard Nixon's name was not in the Pentagon Papers, but he was very concerned about the leaks. As it turns out, he and Henry Kissinger in that time were involved in some of the diplomacy that. Would later lead to. Opening some of the doors with China and they were very concerned that some of the information from the Pentagon Papers, even some of the documents that hadn't been released yet. Referred to some surveillance flights that the US had carried out over China and they were concerned that that could impede their progress in talking with Chinese leaders. So there was very definitely an international aspect to this. Another interesting side light of this was that Ellsberg, the person who's widely recognized as the person who leaked the Pentagon Papers, had actually had a mentor named Henry Kissinger in his past. Going to Garrett M Graff in his very interesting book, Watergate and New History, Kissinger was concerned that if that former student would continue to leak documents, that would reflect badly on him, and it would also obviously have an impact on some of their diplomacy. But according to graph. Kissinger then encouraged Nixon to take a hard stand on. Leaks and that hard stand was what led directly to some of the corruption and illegal activity that became known as the Watergate scandal.KevinYou know, this is fascinating because, well, you've spent a significant amount of time thinking about Watergate. I've been interested in the Cold War era of this same time period. And I've read biographies on Kissinger. And this was a very important mark both in the history of what we would know with Watergate, but also the relationship that Kissinger has throughout the administration. And this feeding of basically paranoia that comes from that and we see. The Nixon and Kissinger bond kind of strengthened through this paranoia, right? So they have a greater trust basically through developing distrust of others. And just as I mentioned earlier, you've had these interesting stories that you've shared with me throughout my life. Of being at the Watergate hearings, and in fact, you were there the day Attorney General John Mitchell. So I know all of us would enjoy hearing some of the macro pieces that you've heard, as well as what was it like being there?DanIt was a very interesting experience and to put it kind of in context, I don't know of anything that happens currently that had quite the attentional center. Watergate hearings had all three TV networks were devoting the entire day to carrying the testimony at those hearing. But I did have the opportunity. It's it's kind of a strange way I I got the. Chance but I. Did get to go to hear the first day, John Mitchell testified Attorney General John Mitchell. As it happened, I was a young agriculture reporter and my father worked for a TV affiliate in Indianapolis who had a Stringer. On the hill. And as it turned out, that Stringer wasn't going to be going to the hearing that day, so he loaned me his press pass. So I actually got to go in and sit through the entire day's hearings. And it was it was amazing. Author Norman Mailer was there. There were rumors that John Lennon was going to be there. I never saw him. But I would have.KevinI'm sure I'm sure if he.DanWas there when? You would know him.DanI would. Have noticed him, but it was. It was an amazing activity and really that particular day, Mitchell. Was very effective at not answering questions, and there wasn't anything that earth shattering that that came out the particular day I was there, but it was it was an amazing experience to be able to witness all all of this going on in, in the caucus room there and and that the Senate was dealing with it was it was really. It was like watching history being made.KevinAnd that caucus room? That meeting room is one that continuously they go to for major hearings because of the size and the media capacity they have for that room. So Garrett Graff, as you mentioned, has written a book that's garnered a lot of attention in recent years on Watergate, a new history. What are some of these key findings that you have from this both? In domestic politics, particularly, but maybe anything international.DanAs well, I think I think Graff did an excellent job of researching this story and a lot of the information that I found new was he went back and dug up the early abuses, the plans to bug offices. And again, a lot of this started with the idea of stopping leaks, but it it quickly. Grew to illegal activity and the graph lays that out and then points out that there was much more to the story than just the break in at the Democratic headquarters. He's also very quick to point out that a lot of the information that that came out through the Washington Post, again through reporters, Bob Woodward and Carl Bernstein. A lot of that information came from their source at the time. Was just known as. Deep-Throat, but that it was later revealed that that was Mark Felt and graph points out that a lot of the information that felt provided to those reporters was really pretty self-serving in that felt was hoping to take over the head position at the FBI after the death of J Edgar Hoover and so. Although in the movie all the president's men, we kind of get the in. To this interesting guy that meets reporters in the garage and he's trying to do something to help save the country from some kind of awful fate. In fact, he probably was giving them information that was helping him. At the same time, so that that was certainly one of the things and I think. Just in general Graff also was pretty tough on a couple of the key players in terms of how they work things around to try to make themselves look less culpable than they were. He was, I would say he was fairly tough on John Dean and Jeb Magruder. Both in terms of their role, their direct role in the cover up and their attempts to. Appear that they they really weren't as involved as they were.KevinSo it's interesting how self-interest came to play into these conversations. They're all by political actors that are thinking ahead about the environment they're in, seeking to move up in the world somehow created an institution that can internalize that and. Both see the challenges as well as some of the checks that can create throughout the Watergate committee proceedings, the White House tried to downplay investigations and call them a witch hunt. Did that strategy work?DanWell, obviously in the end it did not work. For a while. It helped. Helped to keep the president in office, probably looking back on it, they were able to continually use this approach that the investigators were it was a witch hunt or that the American people didn't care about this investigation and that we needed to get back to the business of the country and that. Argument was used repeatedly during the last months of the Nixon administration, but eventually the what I believe what happened and looking back on it, some of the. Key and a mid level figures who were involved in the White House and in the campaign to reelect the president started to get plea deals and the information started to come out and it became more and more difficult to maintain that line that there really was nothing to the case. And then of course the revelation that there was a taping. System in the White House was a real game changer in terms of the evidence that the investigators could eventually locate.KevinHow were the investigators able to get into this inner circle of the White House?DanI think that was really largely through the plea deals. I think these were a lot of these people were individuals who had certainly no criminal background, no criminal record. And as they began to feel more and more isolated as the conspiracy continued, some of those. Figures such as I mentioned John Dean and Jeb Magruder obtained plea arrangements to kind of absolve themselves of most of the charges against them in return for a relatively light sentence. And once those. Figures started to work with prosecutors. Really, the end was almost inevitable because of the information they provided implicated the higher ups, and so it was pretty much once the once the investigators were able to get people like Dean and Magruder to cooperate, I think it probably was just a. Matter of time.KevinSo one of the other things that I think is fascinating about this and it's something that you and I've talked about is how many individuals involved in this had no monetary gain from either their criminal activities or their advocacy or the support of. Of the break-ins, they didn't make money from this. They seemed to be either drawn to power or believing in something. I think it'd be interesting to think about how that dynamic intersects with these plea deals, right? So did these individuals who came to the plea deal. Was that some way they're accepting their role on this, but also maybe a shift in their optimism of what their purpose was.DanYeah, I think that's true. I I that's a good point. And as the plea deal started as we said, it's an interesting thing to note that. All the people who ended up with the plea deals, the people who did prison time for the Watergate break in with the exception of the people who actually broke into the building, most of them really did not do anything in terms of a physical act that would you would associate with the crime. Certainly, conspiracy cover up perjury, obstruction of justice or crimes. There's no doubt about that. But there really wasn't personal gain for most of them, as you said. Interestingly enough, Spiro Agnew, the vice president, who had to step down in 1973, was the only person really in that White House that lost his position because of corruption. In terms of making money on a kickback or a bribe, Agnew was, and Agnew really wasn't too involved in the Watergate. They didn't seem to include him in the discussions, but he he's the one that served time for or he's the one that gave up his had to lose his office. I should. For greed and corruption, the others were more. It was a belief that they were doing something to keep the president in office, or a belief that. They were helping. To protect national security, whatever, whatever their justification may have been at the time, it certainly the evidence mounted up and it was. Clear that they were doing illegal things.KevinYes, this is a fascinating topic and actually we have so much to cover on this we're going to do this as a two-part series. So we'll hear more about this in the following week. But again, Dan, thank you for talking about this with us. I've been fortunate throughout my life that to listen to somebody. He was fascinated by events, fascinated by people and fascinated by history that I get to hear these conversations and wanted to take this opportunity. Unity to highlight this with the broader audience and if you ever have questions, you're welcome to contact me e-mail at kevin@modlinglobalanalysis.com and again, thank you for your time. Thank You, Dan.DanThank you very much I enjoyed it, Kevin. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit modlinglobal.substack.com

Welcome. Thank you for joining us for this edition of the Modlin Global Analysis Podcast. This week we are focusing on inflation, what it means, and both inflation in the international sense, with a number of countries and regions we're going to focus on. As well as in the United States, again, we're going to be talking about this monetary phenomenon, what prices? Changing and what they mean for consumers and how we define that and we're not talking about inflated egos or the inflated value of my baseball cards. We're going to emphasize the consumer aspects and the costs that they experience through this, and this week, I'm glad to be joined again by Dan Modlin, who has a series of interesting questions on inflation.DanKevin, we hear a great deal of talk about inflation, obviously, and a lot of people when they're in the grocery store certainly feel they're seeing the effects of inflation, but. I wonder if it might be a good idea just to start with an actual definition of inflation.KevinGreat question. First off, I feel that sentiment as well. I'm one of those penny pinchers and I go through the grocery and I notice when butter and bread go up $0.10 and think about ways I can compensate for that. But inflation is about the increase in prices. And they're different people that have debates about what causes inflation. And everything, but it's first important to note that this is about the increase in price across the board. For consumers, so if. The price of gasoline, or the price of Wheaties increases dramatically. That is not inflation. That is a phenomena related to the supply and demand dynamics of those goods. This is an across-the-board phenomena where a large basket of goods. Have increased in price overtime and that it is noticing that. It's a distinct phenomena that has to do with the supply and demand for goods and services, but how this intersects with the quantity supplied of money and we know throughout history and we know throughout American history. Inflation is caused by a lot of extra money in the economy, so that individuals need to use more money to buy a similar amount of goods that they could buy a few months earlier.DanLet's talk a little bit about that. We hear obviously the partisan politics a lot discussing this. Your legislation causes inflation and your legislation causes inflation and these kinds of accusations float around a lot. But let's talk about the basic causes of it. What do we see as primary causes of this trend?KevinYeah, that's a great question. And what's important with that also is, is that there's a rich debate about this. And so it's not just a debate among policy actors. There's a debate amongst the academic classes and what they think about that. One of the things is it relates to the conversation, the points that we just had is people will associate increases in prices and say that that is all inflation when in fact it can be changes in supply and demand. If producers decide to dramatically reduce the supply of oil or reduce the supply of Wheaties. We can expect the price to increase, and that is related to. And to the global market, having the demand for those products, that is a very different question than the global supply of money and specifically the supply of money within the United States and now which is circulating throughout the economy. So our both our policy actors. In the Federal Reserve. We'll try to regulate the supply of money in an effort to control inflation, and we'll have to have a very serious conversation to explain what went off the rails in the last few years. But it is true that certain policies can contribute to inflation. Both the two big effects are how much a country is spending and how much are they taxing. So how much is basically being put out there in the economy and circulating around? What are the trillions of dollars doing that and how much is being taken in through taxes that also regulate that, so that perspective? Is an argument of what we call fiscal policies, so that taxing and spending of the federal government. The other arm that has very significant influence, is what they call monetary policy, and that is interest rates that are put on savings and the amount that we borrow throughout our economy, so the interest rates are going to influence how much money is circulated. So if it's more expensive for me to buy a house or to buy a car and everything, this has a way of taming down the amount of activity and economy and therefore taming down the circulation. So it's both the quantity of money and the amount that is circulating that both these instruments that we call fiscal policy, which again is congressional and presidential action and then Federal Reserve regulating the supply of money.DanOK, now we tend to focus on inflation domestically in a lot of our conversations with, as you say, when we go to the grocery store or buy Wheaties or whatever, we're buying. But what about the situation in Europe?KevinSo what's interesting in many regards is both the United States and the EU. We started to see an increase in inflation around the same time period, and we both continue to struggle with this problem. What's also fascinating is the policies chosen to address it have differed, and the policies around which may have contributed to it have differed. So it's very difficult to know all the causes of this, right. So if we really want to know what's going on. And not just what the arguments are, but to really unpack what's going on? It's more difficult. What we do know is that both areas, the European Union and the United States had as to the whole world experienced a pandemic, but many of those other regions don't seem to have had the same inflation effects, right? So that's a hard thing to control for, is it? The policies that both regions instituted during the pandemic that could be in place so. Particularly the amount of fiscal stimulus, meaning more government spending on a whole host of things. So we know that both in the healthcare sector, but especially providing relief for workers throughout the closure period and afterwards played a significant role in the federal balance sheet and maybe that is circulating a lot of money. It was kind of in excess to that. It meant a social need, but that didn't mean that it created extra money in the system, especially in a system where people were probably spending less money to begin with because they had fewer activities and social choices and opportunities to spend money. That is something that does mirror the European experience overall. That is a background, but Europe has had a much more difficult time taming inflation than even the United States had high single digit inflation. Throughout the last few years. Now it's tamping down to about 4%. Again, the goal is to have about 2%, so it is making some progress and the Federal Reserve came out and announced that they a few days ago that they were not going to raise interest rates, but in the announcement and another signals a lot of people anticipate at a quarter point increase will happen in the next time. So we're seeing the United States policy be incremental and measured and still, conveying a commitment to addressing inflation, whereas the European side has increased rates more slowly than the United States and they are being more cautious with this policy and they still have about 9% inflation across the board. Another challenge they have and they did raise rates recently as well is the experience that is going on in Germany or what's going on in Europe, or in Spain. All of these different countries are experiencing inflation differently. So you have one tool that has different effects throughout the European Union and this creates different pressure points that basically encourages incrementalism and increasing rates, which will likely sustain higher inflation, longer than maybe socially desired, and definitely not desired even by the policymakers. But again, this is really challenging to understand because I would argue that if you read the biographies of central bankers and you and academics. There was a sentiment that the economic class had figured out how inflation happened, so this was a complete surprise to all across the board in that regard. So it's both interesting to look at. Europe and the United States and compare the experiences and also notice how different their approach is, and I think Europe is going to have a much more difficult time climbing out of this inflation trap, whereas the US is slowly, maybe not as desired, but is getting to a place of maybe a more normal inflation rate.DanSo Kevin, if you could give us a summary here, what's going on economically in China?KevinSo just as it's important to know, the economic activity in the United States and in Europe. Other economic powerhouses are also not stagnant, and they're having effects on our global order, and there is increasing amount of reports. There was a story in the Wall Street Journal recently about expectations that economic slowdown is more persistent and maybe deeper than what some had anticipated for China. And there's talk of there being a greater fiscal stimulus program for China throughout. The system and this approach is expected to mirror what previous programs have instituted to try to boost up the economy. So a lot of this is going to involve borrowing, which is going to be problematic for the balance sheet throughout the Chinese system, both at the national level. And also importantly, at the provincial and the local. Levels how they will. Deal with this round of debt, but it's going to try to spur more employment and more spending through infrastructure projects and local initiatives like that. So it's kind of this confluence of many economists and. And China went to school in the United States, and they learned Canadian stimulus. But they're also adhering to the principles and the systems within China. What that will mean for China going forward is going to be really important again. China is this unique economic engine that seems to produce about 30% of the global products of the world. They're consuming a lot more of those that share and they are expected to consume more of that going forward through their dual circulation. But this slowdown is going to make it harder to hit those targets, hit those objectives going forward. So we're going to have to keep a close eye on. How that develops and we're going to have to keep a close eye on how these things affect policy going forward. I think everybody's going to ask more serious questions globally about what inflation looks like, because in fact, when I look at it, there were a number of mistakes made about what they expected. Inflation would be, maybe because it's confidence. And assuming what it looked like and what causes it, and we're going to have to revisit some of the ideas that academics that have had around this idea, they call fiscal dominance that even though we haven't a monetary arm, the Federal Reserve have some autonomy in decision making. It's always going to be subject to. What the federal government taxes and what they spend, it's the Federal Reserve always has to internalize. The choices and that's the idea of fiscal dominance. So we'll have to revisit those arguments as well as. Really try to see how that's going to affect policy. But I do think it's important to note just these distinct changes in each of these regions and how they're going to affect things going forward.DanVery interesting subject to taking a look at inflation, not only domestically but also in a global perspective. Kevin, thank you very much for giving. Us that update.KevinThank you very much for your time and thank you all for your questions.An analysis of the events in Russia from Dmitri Alperovitch. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit modlinglobal.substack.com

Thank you for joining us for this edition of the Modlin Global Analysis Podcast. This week, we're going to be focusing on Vladimir Putin and the bomb. We're going to consider the national discussion and global discussion on the ramifications of Putin's references to nuclear posture and what are perceived as nuclear threats and the war in Ukraine, and how we as a society grapple with that. But perhaps most importantly, how do we think through what Vladimir Putin as the singular actor may be considering these questions? I'm glad to be joined by Dan Modlin as always and some questions that he has on this important issue.DanAnd obviously this is an issue that concerns a lot of people, not just in the United States but around the world, obviously one of the changes that some people have remarked on in Putin's approach to the discussion of nuclear weapons or possible use of nuclear weapons is that in the Cold War. Era. Both sides tended to take the position they didn't want to be the first to use a nuclear weapon. How has Putin's approach changed?KevinYeah, that's a great point. And that goes right into the weeds of this question. Both sides during the Cold War, after they both acquired weapons, realized that they were better off not first using them because of the retaliatory nature of the weapons, especially the threat of retaliation, was so undesirable that both sides decided not to escalate tensions and a lot of times it may have helped quell some fears throughout the Cold War. So in a sense, even though weapons are very damaging and of course, deadly to some people analyzing it, it created a degree of stability because both sides had a sense of what the other side would do and a retaliation part of that aspect was an understanding by both sides that they would not be the ones to start a war. They would not be the ones to escalate it and that helps also contribute to some semblance of stability. Again, it's kind of contrarian to think that stability comes from these terrible, destructive weapons, but many people came to that conclusion when gaming out in various scenarios. Part of that has been a position that both sides, after the end of the Cold War. Reduce their nuclear stockpiles and in fact. Even Putin was part of the range of treaties that reduced weapons, but there is an evolution in discussion on what that doctrine looks like, and there's two components on that. One is the suggestion that they may escalate by their own decisions and that they have a mindset or an argument, especially people in the US think tank community emphasizes this idea that Russia may escalate a situation in order to deescalate. So they may uilized nuclear weapons, tactical or strategic, with the goal of using that as a way to get out of a conflict. This is troubling to a lot of analysts and therefore they emphasize this aspect, but I think what's important in this is also to realize that both of those components emphasize the singular decision making of a president. So a policy that is retaliatory or says that they will not be the first one to use that actually puts less responsibility and decision. By that country, right? That would just mean that they would have to retaliate if they were attacked. So that puts less decision weight on that. But this change in policy puts greater emphasis for us to consider how Vladimir Putin thinks, and I think this is very important as it. As a conversation, as you mentioned, because I hear a lot of people ask questions about this. This is when the war started. This was what a lot of people were concerned about, and I hear people continue to be concerned. Whether it be my students or friends I run into, they ask about this question. So it's important for us to think about what Putin is thinking about. But it's also important for us to pause. And recognize all of the flawed analysis that has preceded this conversation. A lot of people have basically baked in their own assumptions of how Putin thinks. is he rational? Is he hypermasculine? Is he insecure? Is he risk averse? Well, many of these assumptions have been shown to not hold up much weight. So how can we instead of try to package information of how we see Putin? How can we instead pull back and provide some analysis, and recently Foreign Affairs came out with an article by Rose McDermott, Polly and Slovic on Putin in the psychology of nuclear brinksmanship. And what they help us see is a different way of examining this instead of us trying to. Package Putin as how we see him, they instead look at the psychology and rationales that people in general look at questions around nuclear brinksmanship. And then use that to then contextualize how Putin may be. Thinking so, this is a very engaging article. I think it will be very helpful for us to look into.DanMaybe you can help to describe again what the significance of that article might be and what we should take away from the research by McDermott, Pauline slogan.KevinFirst off, it's available on the Foreign Affairs website, so you can pull it up to read. It's available for free on their site. So First off they emphasize the fact that people have difficulty with making decisions, and this is a broad statement, but the individuals have difficulty with that. And of course they have difficulty weighing nuclear decision. And because of the complexities involved, they will seek to simplify choices, right? So then that starts to narrow that choice, and then they start to not only simplify choices, they start to prioritizing what's most important. So is that the survival of a state, Is it the survival of the Person, is the survival of an idea? These become aspects that are most acute that so I think it's important for us to recognize that and that plays a lot into the conflict that we're seeing right now. Has not been successful in this military operation. In fact, it's been a disaster. Recently, Secretary Blinken made the remark that the Russian military was rumored or discussed to be the second leading military in the world. And then it's cutting statement after that was is it is actually the second leading military in Ukraine, they have not performed as expected, but what's important in thinking about this is that if Russia has objectives, and specifically Putin has objectives and is not able to meet those objectives, what tools will he consider? What options will he consider? In this so regardless if the whatever the West's posture is, if he doesn't achieve his objectives, what tool set will he consider when trying this? So it's this is very complicated for thinking about how the West may respond because. Even if he's defeating himself, that could still be escalatory. So this again, is it has presents some unique challenges in this situation.DanIt seems like it would always be difficult to get in someone's head and really understand exactly what they're thinking, but he's perhaps a more. Complicated figure then many other world leaders that people have tried to analyze in the past.KevinHe is complicated. It's also again worthwhile to note how many times our analysis of leaders is wrong. So our analysis of Putin is wrong. Our analysis of many leaders has been wrong, so it's probably good again to take this framework. That they apply with this and consider what they point to as the number of surveys done of the general public and of leaders and the trade-offs they're willing to. Take when considering nuclear actions and basically they find that individuals are. And be less willing to trade the lives of their own citizens. Versus others and the ratios in that death affected are pretty startling in these surveys. Now, are these sentiments held closer, are they not? But you have to consider that politicians would weigh the similar types of questions, and that would be just as startling what they would consider so. If a loss is too great for Russia. What would they consider it's also worth noting that Putin can always revisit what he defines his loss. He is in Exterritorial and is defending. In parts of what they occupy in Ukraine, is he going to claim that as a success and go forward with that with continuous fighting? On both sides. That's worth considering also. So again, it's really hard to know what's in that mental space of where he is, but it is worth noting. Because he is a centralized. Leader what unique role? That since plays in and of course his sense of Russian nationalism, and increasingly, when listening to Putin, the sense of victimhood he has when discussing these issues.DanAgain, the article that prompted today's discussion is in foreign affairs. It's titled Putin and the Psychology of Nuclear Brinkmanship, the war in Ukraine hinges on one man's thoughts and feeling by Rose McDermott, Reid Pauly and Paul Slovic. Kevin, in closing, any any comments you'd like to share?KevinYou know, there's two things that I think that are important. Again, building off of what the authors discuss here. And again, I encourage people to read the article is there is a growing perception in the West. This is a note of caution that because Putin has not escalated relative to NATO. Whenever the West provides assistance to Ukraine that the perception is because that has been not been seemingly escalatory, that each additional thing made is going to be less threatening or less problematic for them, when in fact it accumulates differently on Russia's side. So at one point it may actually be seen as unfeasible that it is threatening, so from different perspectives, how these incremental changes are weighed are very different and people are actually probably not looking at the lessons properly. Again, a few examples of one act should not be viewed as. Examples of how they will. Go forward the other thing that I think is really important when listening to Putin's speeches, whether it be around the annexation of territories or whenever he talks about the conflict, is both his rhetoric and how he portrays Ukrainians. That's very important but also the grievances that are expressed and how there is a mix of ideas that he is dealing with here and it is a hybrid approach of ideas that are this mix of nationalism. Even a mix of socialism and different ideas that are all coalesce around this Russian idea. But a lot of this is borrowed from Hagel. And Hegel talks about this link around these ideas if that it is moral for the survival of the state and in fact how history determines the superiority of a state or a race or people is how they survival, war and everything so that it may be that these spirits of destiny, if you will, with in Hegel's framework, are being played out right now. As we watch this puts a lot on the line for Russia and in these mindsets, so I think this is again important for us to think seriously through the weight of this situation. And also consider the effects of this again it may be very escalatory, but I think the most important thing for us as citizens is to recognize things haven't escalate, but that doesn't mean that things won't escalate. Putin's own failings could be viewed as rationales for him to escalate when even others are not playing a direct role in that. At the same time, things haven't escalated significantly and both sides. Have the capabilities to discourage the other one from escalating the nuclear realm and discouraging those actions. So it is true that the concern about the nuclear environment is higher than it was. Two years ago, that doesn't mean that it is imminent that there is a nuclear threat. Risk is still close to 0, but it is not as close to 0 as it was before. So be cautious. Think through what this means and think about the psychology of Putin and also be cautious and our assumptions around.DanVery important information about a very important subject, Kevin, thank you very much for giving us this update.KevinYes, thank you all for your time.https://www.foreignaffairs.com/ukraine/putin-and-psychology-nuclear-brinkmanship This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit modlinglobal.substack.com

Welcome. Thank you for joining us for this edition of the Modlin Global Analysis. I'm glad to be joined by Dan Modlin, and we were talking recently about how it would be helpful to do a post-debt ceiling negotiation wrap-up and explore what has transpired the last few days. As well as the ramifications and the content of those policies, so we will dive in both into the content as well as the politics involved.DanThis Kevin has certainly been an interesting last few days and something that has been rather fascinating to watch. Several people who listened to last week's podcast on the debt crisis that we posted pointed out that you seem to be pretty much right on the money on several things that came about. So I think it might be good for us to talk a little bit about some of the things we discussed that we might see happen. That actually did come to pass.KevinSo part of this goes to the point that I tried to emphasize is in politics, sometimes listening to language is not a good leading indicator. Of how policies will develop. So it's common for political actors to have disdain or say, even inflammatory things about their rivals, and then other people in the echo chamber reinforce those points, or even, say, wackier things. These are not strong indicators of anything. In the policy-making process, it's better to see what are the must-pass pieces of legislation, and again, from a Washington standpoint, what is must pass is not necessarily the things that individuals or groups think are most important, but what is the state find most important. And for a state money making money, spending bills and related item are the issues that are always going to be top of the list, so whether this be appropriations bills or tax bills or these related items, that is always part of the function of a state and was necessary. And then you start looking at the components of the negotiations and you think what is palatable to all people? Not what is the preference or what is desired by all people, though probably everyone in the room wanted to raise the debt ceiling. All of the other components we're trying to fill a space out for what is palatable. So for example, we're sending money from COVID-19 funds. It's very common for Congress to rescind spending for money from crises or other major events that has not been spent. And there's a lot of reasons for that. One is they're reasserting their authority over the spending, but also because it's open money that hasn't been spent. It's like families, budget for travel that they didn't spend entirely in one area that they decided to use that money and some other space. So Congress has this same mindset, and this was used basically to quote unquote, reduce the deficit through that, so that was seen as a way of leveling down the numbers for this coming fiscal year.DanLet's talk about some of the key provisions that are in the bill that passed. As you look at the bill, what were the major things people in the general public need to know that were in that bill?KevinRight. So there's a lot of the policy components and again this has to do with each side feeling its space to reach a palatable compromise, given what was an impermissible for each side. But what was became permissible for them. So they're our work requirement. Changes for individuals that are seeking food stamps program from 50 to now 54, but there are also some adjustments on that that gave more flexibility. Individuals that are veterans or homeless or have a history of being in the child welfare system. It is also has a cap on spending for this year and a 1% increase from this coming fiscal year into the next. The year as well as a reduction in domestic spending, but a a slight increase in defense spending in line with what the President proposed in his budget. It also changes some permitting rules that are interesting that will allow more energy projects and to go forward, it seems, or at least have a somewhat more streamlined process for evaluating those environmental rules. And of course, it raises the debt ceiling through January of 2025, which seemed desirable for both sides. DanNow in our discussions regarding the debt we try to avoid getting into the partisanship too much and just try to stick to the basic information and to understand what's going on. One of the more interesting aspects of this, I think, to some people was that in the House? There were actually more Democrats who voted for the bill than Republicans, even though it was largely seen as a victory for Speaker McCarthy to get that bill over the line.KevinRight. So both parties have factions that are not pleased with the bill and they weighed their sentiments on that through their vote and as well as the symbolism. So Democrats had, when you listen to the speeches being made throughout the day. They were wholeheartedly very disappointed with the compromise, but they found the palatable to support and a lot of this is interesting. The committee vote in the Rules Committee one by 7 to 6, which is usually they have larger margins, carry the bill on Rules. The vote on whether or not to consider the measure also had a more narrow margin than what ended being the case for the final passage of the bill, so this may be a way for these members to signal both their displeasure and how they'll explain that displeasure to their constituencies, but how they were. Overall satisfied to move on from the debt ceiling so members of Congress sometimes cast votes where they are divided on aspects, but find some way to explain it on that. A lot of that has to do again with just where the regular factions are within the group and some of your or far right, and you're more far left. Members ended up voting against the bill this time.DanOK, now for those of us watching all of this unfold again, it's been a rather interesting last few days, but what are some lessons maybe we can all learn from watching this develop?KevinSo one is again the value of parsing back the rhetoric and instead looking at what's going on. So sometimes rhetoric is not a helpful indicator. So whether that be how Biden is portrayed in the press or how McCarthy is portrayed in the press, that's not always going to tell us the direction of how things are going to go or even an analysis of individuals sometimes can be really problematic. So we know that McCarthy became Speaker through a very long series of ballots and considering the vote for speaker and a lot of people could reasonably assess that he didn't have much political capital in the House or anywhere else. But in fact he was able to get a lot of what he wanted in that package. So that is a kind of surprising outcome to a lot of people and reasonably so, but it again it helps for us to sometimes pause and instead think about the conditions in individuals are in, but also maybe not try to personalize politics too much. It's easy to personalize it because we are human and we are interested in politics at that level, but not to draw too many assumptions from that right. So just because I have an opinion of a political figure does not necessarily cause a certain outcome and political negotiations.DanKevin, in light of the experience of this debt crisis, vote and and all the political posturing that took place before it could be passed. How will all of this affect future debates? Will it have an effect on other things that are coming up?KevinYeah, there's some really important components to this. So because now the top line number for budget making has been agreed to, even if there is some grumbling about it, there's going to make the spending bills going forward this year a little easier for both. Needs to address I also think, especially with the deliberations that we saw in the Senate, that it's very likely that we will see a closer consensus being made around what the next defense spending bill comes out. There's expected to be a supplemental bill that provides funding for Ukraine, Taiwan, and frankly, there's basically a side deal being developed to include some other programs because the Senate Republicans are very unhappy with the caps. They agreed to in this package. So they're going to attach some things that they prefer and probably what this will mean is that a lot more individuals find various reasons to actually like this defense supplemental package that's developing that may have had some sticking points for your more radical members that didn't like the funding for Ukraine or wanted that to be slowed down, so that actually may create some accelerant. In this situation, we'll also see the Farm Bill on how that evolves. I think the politics of the farm bill have evolved to the point where there's the constituency that's more interested in the food stamp components, and then the others that thought that the farm components were most important and now that has created a tension. It used to be that they rode together and they created votes for each other, but now they are subtracting support from the other side. Now that this provision for the food stamps was added to the debt bill. It'll be very interesting to see how that feeds into the Farm Bill because normally those types of changes would be in there. So would people take another run at the FarmBill and add additional provisions related to what will they be? Satisfied with those changes? Or will this actually make the Farm Bill more difficult to solve? Highlight these divisions and that there's not an easy middle space to compromise on that that that's been taken off the table. I think it's also important to think about the political consequences of this. I think it probably has taken it's going to have an effect on inflation, probably a modest effect on inflation. But this coupled with Federal Reserve policy that looks like throughout the year is going to make some twenty-five point basis increases a few times this year and and probably a little bit next year. That coupled with this kind of flat budget provides a lot of predictability for markets and everybody else on where inflation is headed. That doesn't mean that inflation will return. Our recent experience before these last two years, so it's not probably going to be 2%, but it's somewhere between 3 and 4%. And I really think that that is going to be very beneficial to politicians and particularly to the Biden administration that's been taking a lot of the complaints on that front. If they're able to. Push that number down. That is a much more beneficial thing for them on the flip side, McCarthy benefits also from not having to deal with another debt ceiling vote. That's very divisive within his conference. It's very divisive among Democrats, so it's good for President Biden as well, said take this off the table and be able to address these going forward. Different pieces legislatively are affected by this, as well as political figures and what their outlook has now. At the same time, those outlooks are always subject to main change.DanWell, Kevin, it's certainly been interesting to watch this all unfold and it's been. Nice to be able to use the model and global analysis podcasts to provide updated current information on this. So thank you very much for your input.KevinYeah. Thank you for your time and I enjoyed discussing this and always glad to have people's questions. You can e-mail me anytime at. Kevin@modlinglobalanalysis.com. Thank you.Zenel Garcia and Kevin Modlin – Revisiting “Sino-Russian Relations and the War in Ukraine” Podcast with Conversations on Strategy This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit modlinglobal.substack.com

Thank you for joining us for this edition of the Modlin Global Analysis Podcast. I'm glad to be joined with Dan Modlin, who will be asking a series of questions. This week, he and I have been having a rich conversation that we wanted to bring you all in on China and some changes that were noted. Using about China and things that we think that are developing that are important to have a general conversation about, these are factors that particularly have economic ramifications, but I think these are important to consider.DanKevin, at your recent presentation at Lost River Cave, several people asked questions about the economic outlook for China. And it's kind of a mixed situation right now. Isn't it kind of a challenging situation for Chinese leaders?KevinChina does face a series of challenges. One of them was related to, of course, COVID and the policies that they had around closures. But even before COVID, there was a shift in policy outline where they call it a dual circulation economy, where they emphasize exports as much as they do on domestic consumption. When in previous time periods, they emphasized exports primarily. So when they speak of emphasizing 2 things, that is a way of elevating an emphasis on domestic consumption. And of course, that has been a component of their economy, but this is a new emphasis on where their consumers are headed with that, and we know from general economic studies that when countries start to emphasize their domestic consumption over export they will have generally slower economic growth compared to previous time periods. That does not mean that it is a recessionary condition or depression or anything close to that, but it is a slower growth model.DanOK, so China may actually not be growing as we've expected it to in the past.KevinThe pandemic, of course, interceded within this framework, so these are the general goals that China had in the pandemic with the closures and everything intervened and caused even probably greater slowdown than they hadn't planned for. But we can't anticipate that over the coming decade that there will be less global output from China. As far as general. Here we are seeing a lot of reshoring of facilities as well as moving to companies and regions outside of China and general Asia.DanOn the subject of growth, just recently in May, an American economist named Bob Lucas, a macroeconomist passed away, and I understand a lot of his studies really dealt with growth itself.KevinHe was fascinated by economic growth and in a way his passing is a contrast to what we may be seeing going forward in China. Again, we saw China growing at 8 and 9% year over year, for the last few decades, and I think it's important for us to really consider what that outlook may look like. Does that mean it's 3 or 4% growth, which is still again significant. But it is a different way to look at what China's economy will be producing as well as what the security outlook and capabilities look like for China over this coming decade. So Lucas provides a kind of a starting point in trying to understand why states grow, and they're the impetus behind these instruments, and we know that focusing more on consumption does usually produce lower economic growth.DanLucas dealt with a concept called rational expectations. What does that mean and what does it mean to those of us who don't work in economics?KevinSo rational expectations is basically kind of a challenge to the models at the time that he was looking at that were based on Keynesian economics. He asserted that people were simplifying some things or not assuming human beings would think through choices and make the weight of their own choices seen so that they people just skipped over the ramifications and the choices of individuals. Whereas he brought in this micro emphasis here that individuals have a weight in their own decisions. And that has to be accounted for in economic choices, and this is particularly relevant in our conversation with inflation. And it shows how challenging it is for countries to deal with inflation. But it also creates these guardrails and what I mean by that is, is that expectations start to become a big factor in economic policy making and what society generates, but that also that governments have difficulties in. Gain expectations, especially if there is expectations, are not in line with actual conditions. So in government may be able to utilize a policy that encourages growth, but over time is really just inflationary. Over the producers and the economic decision makers will recognize that actually it's not growth, but it's inflation, and over time they. Will put that. Expectation into their models of what really is growth looks like. And therefore has this feedback effect of discouraging certain economic behavior. But it also puts a check on the flexibility that policymakers may think they have and discouraging actions. So this rational expectations actually has this feedback effect and discouraging behavior.DanKevin, we understand there are some relatively small or appearing to be small changes going on in China. Some of them relate to their approach to intelligence, some changes in that. Could those have significant economic impacts.KevinSo there's a lot of conversation right now in China and among Western businesses about this new intelligence law and the application of that law around the sharing of information that they're going to prohibit the sharing. Of general business information with Western businesses and what the effects of this may be. So it's speculating right now, but the terms of what is restricted is very broad and in an environment of tensions between both sides, some people are interpreting. This situation that almost any type of business information, so whether that be sales or general economic conditions or other pieces of information that is normally used in common. Others may be utilized as the Chinese Communist Party as a type of intelligence, and the individuals utilizing that information may be restricted or be punished for that. So that could have a real chilling effect on economic activity. Years ago, China started to reduce the amount of economic data available throughout the economy and this compounds this problem. So if individual businesses are unable to share information. And there is less information shared from these macro sources from the government is going to be less clear about what economic conditions look like in China. So if individual firms are seeking to invest or they're seeking to, say, sell more cars or sell more environment for more technology, it will be more difficult for them to start a conversation about this or to commit to this because. It'll be unclear what the information looks like, but also, the signal about possibly being charged or facing backlash against the party would all discourage economic activity, whereas of many other countries do not have these types of uncertainties. So in a lot of ways, this comes back. To the conversation we just had around rational expectations, will firms, knowing this imperfect information and knowing that a few firms have already been caught afoul by the Chinese Communist Party for related cities? Will they decide to exit China or will some reconsider or rebalance their exposure to China under these conditions? If it's unclear how things may look, it could be rational for them to reevaluate where their standing is within China.DanWell, certainly an interesting situation and one that bears watching and through this series of podcasts, we certainly will do our best to come back and revisit several of these issues to help keep people informed. Thank you, Kevin.KevinThank youWSJ reports on China's general economic conditions and examples of U.S. manufacturers are reevaluating relations with China. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit modlinglobal.substack.com

Thank you for joining us for this edition of the Modlin Global Analysis podcast. I'm glad to be joined by Dan Modlin for a series of questions. We're going to have this week where we normally focus on international affairs, but this week we're going to focus on the debt conversation that we see going on in Washington. So Dan, you had some questions and thoughts on that?DanYes, Kevin, there's obviously been a lot of partisan bakery from both. Slides about the negotiations that lead to this debt limit question, and I think it might be helpful if we step aside from the partisan discussion of this and just get down to the basics, talk a little bit about how this got started, what were the factors that put us in this situation with this debt limit crisis?KevinThat's a great question. First, the federal government approves three types of spending type issue related matters, so one has to do with the total spending that occurs through a fiscal year as you're what we call appropriations bills, then you also have the taxes that are occasionally approved by Congress that go on until an endpoint. And then you have the conversation around a debt limit, and these questions all converge in different time frames, but basically, your debt hits at a moment where your revenues are not meeting up with the spending and particularly in environments as we've seen. In recent years, with increased obligations for spending for entitlement programs that you have this wall and needing to address the debt.DanNow you touched on this a bit, but maybe we could expand a little bit more and help us understand why leaders don't have a better idea of when the debt limit is going to be reached.KevinSo a lot of this has to do with the fact that while we have an idea of the total revenue that we will bring in year over year as a federal government and the idea of the total spend. At any given day, any given week, and month, it has variations to it. So we have an idea in the total, but month over month there's variation, and that's not unlike what we may expect with the weather. We don't know when it's going to rain, but we have a general idea of how much rain we will get each year. So because of that, we don't know when the limit will always be hit, but we have a general idea of when it will come about.DanNow, one of the questions I think a lot of people have during these discussions is why it seems that leaders wait until the last minute frequently to resolve fiscal situations in Washington. You have quite a bit of experience working on Capitol Hill yourself. Help us understand that. Why is it that people can't sit down and get these things worked out in advance?KevinEven though the specific date is uncertain, sometimes on when the debt limit may be met. The general timeline and when it's anticipated is understood by all sides and in Congress. They are not ignorant about timelines or when these develop, it has to do with what the expectation of what leverage they can get from certain time frames or when addressing certain. Questions and the general anticipation was that House Republicans were not benefiting from a prolonged standoff on this question that over time they would lose leverage in negotiating with time and the Senate side thought that they had more leverage over time and. So the anticipation was, is that these timelines would feed into that. Now what contributed also to this assessment was the expectation that House Republicans would have difficulty getting a measure approved and through the Chamber and they didn't expect that would happen. So both the expectations on where leverage was, but also the feasibility of a measure being passed or kind of merged together and perhaps conflated in some estimates. So what we're seeing now is now that House Republicans passed their measure and this has brought about a more robust debate among proponents of reducing some spending programs and those that are running more of what's called a clean debt limit increase. And I think it'd be interesting to explore the component parts of this. Those there's some proponents that want to have what's called a clean increase, which would be just increasing the debt limit to a certain time period. And then there are others that want to have certain reform policies within it. I think it's very unlikely that either side will get all of what they want, but actually some type of a compromise maybe developing throughout all of this, and one of the big pieces is that no side wants to continue deliberating over this very long, especially into next year, and this provides A rationale for both sides to reach some type of an agreement.DanWe've been living through a period of of inflation here in the last 18 months or so. How has that contributed to the debt crisis and also to the need to resolve it?KevinSo inflation both affects the amount of revenue that comes in. So theoretically you could have more revenue come in, but also you have more that goes out and your your set program since probably assumed that just because there's more expenditures then there is revenue that the inflation is also going to have more of an adverse effect. It also has an adverse effect because it has more debt that you need to be paying off and it makes it more difficult to do that. So that inflation rate is definitely not beneficial on the negotiations. On that level, but it also makes the overall deliberation more difficult because in a situation where you have high inflation, you're actually going to have a societal pushback from addressing programs that they would maybe reduce deficits. While at the same time you would have more reasons and more pressure on the budget to actually address those, so inflation only makes these issues a lot harder, but it could be argued that inflation is one of the reasons why this is hard to begin with, so not addressing it is also really problematic.DanNow if we can, let's look at this from the perspective of the average American citizen. Why should they be concerned about this issue?KevinAnytime Washington's talking about spending, I think the general public would benefit from paying attention to that. In fact, I think issues around spending are ones that don't always generate as much attention as hot button issues, but a lot of times hot button issues don't go anywhere in Congress, but spending questions frequently do in some form, some type of compromise. So I think that those are often less noticed, but I think they are usually very consequential. The debt ceiling specifically is important because if Congress does not address this, there's wild differences in what the effects could be. But I think overall the anticipation would be that the US would be less committed to paying down its debts and that this would contribute to higher interest rates overall. So this would ripple throughout the economy, because the basis of our overall interest rates. So what I pay on credit card or my mortgage is in reference to the overall national deficit numbers as well as. The ability to pay these things, and again, there's rich debate about that, but I think we could anticipate that interest rates would increase and that there would be doubts around that. So we'd probably also see a revision in our debt ratings.DanIn closing, if you might talk a little bit about lessons that maybe. Again, that average American citizen might learn from this what? These kinds of issues do come up over the years. What can we take from this experience maybe to help be better informed the next time this comes around?KevinI think the public always benefits from again paying attention to the status of tax bills, spending bills and the occasional debt limit increase and spending less time watching cable news and things like that while following the financial news. And the goings on with these, because these have real kitchen table ramifications. So if i were to extrapolate and make an assessment of what this looks like going forward, I actually think that there is room for compromise between the Republicans and Democrats. Even though there are rhetorical differences, there are many components of this compromise that are actually pretty palatable to both sides. For example, we're seeing funding from emergency COVID end spending and using that to pay down the deficit. That doesn't have a huge effect, but it is very popular on both sides. There's also discussion about changing permitting policy that would allow for certain energy projects to go forward more quickly. What I think is the big question right now is going back to this timeline that both sides want to not have to deal with the debt increase discussion next year. What the trade off will be for that. So if if the White House wants that to be addressed in 2025 then what will the formula look like for the budget freeze or for incremental increases year over year? I think as we're recording this, that's where the big standoff point is. I think that is the leverage points for each side talking and everything. So I I anticipate that there will be a 5 to 10 year budget window that there will be some type of a reduction in spending. Perhaps it will be a one year. Increase probably the big debate right now is what budget year will be the reference point. They will extrapolate from there, but they're going to be talking about big budget numbers and everything, but that will be the big puzzle piece, I think, going into this conversation and what the big stand-off point is. Whereas other pieces are going to be easier to resolve, but this is also resolvable.DanIt's a very complicated but important issue, and Kevin, thank you very much for taking a few minutes to kind of put this into terms that I think maybe a lot of us who don't follow this on a daily basis have a little better understanding of what's going on with the debt limit crisis.KevinI enjoyed talking as always. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit modlinglobal.substack.com

Welcome. Thank you for joining us for this edition of the Modlin Global Analysis podcast. I'm really glad to be joined by Dan Modlin, and we are continuing a conversation about Taiwan policy, U.S. policy with Taiwan, as well as Taiwan's. Relation to China and, of course, China's relationship with the United States. Dan, we had a lot of really interesting engaging questions that we had from people from that recent meeting and we organized those and into some thematic conversations that we're going to have. This week we're going to talk a lot about the goings on in China and how their policy directions are influencing this relationship. But first I thought it would be helpful for us to revisit the theme of the meeting around strategic ambiguity in some of the concepts and tenants that have evolved. And U.S. policy through that.Dan ModlinOK Kevin. How does strategic ambiguity relate to the Six Assurances?Kevin ModlinThe United States, the Three Communiques that it has sent to China and was statements mutually agreeing on practices and recognizing each other diplomatically. These statements set a framework for the relationship between China and the United States. In those exchanges, there's no seat at the table for Taiwan in these conversations, and as the United States was drafting the third communicate, Taiwan had concerns about being left out of this situation. And made suggestions on how to improve. That relationship and want to improve standing and what was suggested was the United States could draft some assurances to Taiwan and make this publicly known of what the United States would do and would not do. And what's important to note from those assurances is the arguments within them as what is said. So it talks about no pressuring Taiwan and China into resolving the issue, not setting a definite date to end military hardware sales to Taiwan. Not pressuring Taiwan in a lot of ways, and it's interesting that these are framed as assurances because every article of the agreement or the statement is in the negative saying what the US would not do. See and the US would not pressure Taiwan in this regard or would not seek out China to resolve differences or would not consult China first on questions. These are taken as assurances, but it could actually be viewed in a slightly different way that the negative language using this means. I mean. The use of not what will not be done is a very different framework to argue and think through than a framework that is in a positive direction of what will be done. So if I have an agreement between two people and one is an outline of things that they will. Are obligated to do, say, in a contract relationship. These are types of things that people can really have some type of. Certainty that they will. Be fulfilled or have some type of an assurance. So I think it's very interesting and assurance is taken from a framework that is in the negative and I would argue that this is on purpose because it actually continues. This general ambiguity of the relationship.Dan ModlinAnd so for those who might not have joined us for the last podcast, there's actually a strategy involved here where it's it's to the benefit of some US negotiators to be ambiguous about what the policy is.Kevin ModlinSo the US policy with Taiwan is a position that we call strategic ambiguity, and the ambiguity is around whether or not the United States would intervene and assist Taiwan if they were to face a threat or invasion from China. So by not stating that, it's argued that it doesn't escalate tensions with China, but it also doesn't encourage Taiwan to seek independence in that way, it maintains something of a status quo in the relationship and possibly reduces their risks around conflict.Dan ModlinOK, now let's talk a little bit about the Chinese leadership and where that leadership is coming from at this point. There are obviously a lot of economic challenges, some maybe some problems in unifying people in China right now. Where is Chinese leadership coming from right now, in your opinion?Kevin ModlinThat's a great question and it's important to note that it's always challenging to get inside any person's head. We know this whenever we follow politics, it's a lot of times the most inaccurate information is when we speculate on what a person or leaders are thinking because there's a lot of incomplete information. Around this and the analysis frameworks that we have are problematic. I think it's more beneficial to pause and work backwards from the few things that we do know and let that fill in. Our assessments and our analysis of leaders, instead of doing the opposite, filling it in with speculation, so we know that any leader has just like any human being, is faced with a range of interests and emotions and sentiments. And of course, that the case in China we know for centuries it's been an important for stability of the state. But of course we can argue that nearly every political system upholds that framework for that idea. So we know that the Chinese Communist Party finds its central goal is to maintain stability in the system both for the parties interests as well as overall state, and we'll find that as a primary objective. For that, so whatever economic policy that is, that ends whatever social policy that is the ends, and we have to assume that that's the. Case also for the foreign policy. So how do we fit that broad concept within that behavior? It's not always easy, but I think that that is a more healthy starting point within there. And then we just take a look at the patterns of relations and current policies. So there is increased notice of how China's economy is slowing down. Some of this has to do with COVID. And the COVID policies around that, but also they're talking about a dual circulation economy that basically emphasizes exports as well as domestic consumption. So by their society consuming goods that they're manufacturing, they may actually play less of a role in the global marketplace over the coming decades. What may be accelerating that are the tensions that China and the US have on a host of issues that we're aware of, but increasingly, both sides are adopting restrictive policies on technology chips, financial flows. At some point, that will have a real chilling effect and I think we are already witnessing that. But at some point, many, many firms will find it less beneficial to engage in economic relations with China. And that will contribute to this different arc of China's policy. So I don't have to know perfectly the sentiments of each individual and it's possible even knowing the sentiments can have a different outcome than that we can just watch the behavior. And extract a general pattern of relations.Dan ModlinAnother interesting issue to watch is what impact the Russian problems in their invasion in Ukraine might have on the way Chinese leadership would view Taiwan. What's that situation?Kevin ModlinYeah, that's a great point. I have a slightly different perspective from some folks. Some individuals look at the war in Ukraine. And assume that it is an encouraging development for China because maybe it inspires them to do the same, more that so and so responded to Russia a certain way and that will inspire China. I would say the poor execution and the. Dismal effects of the Russian invasion from the Russian perspective would have to give any country pause to reconsider any type of a major military operation. As we discussed in the previous episode about the challenges of naval operation, that's got to be at least 10 times more challenging than the operations that Russia is facing today. And again, I'm not convinced that is what China wants to face that, or if they have those capabilities in the present, that's the source of debate right now, and perhaps over time, they will improve those. It's far from certain, but I think actually the challenges that Russia. Facing would be a more realistic assessment of how many countries would face a challenge in a military operation at that scale and the challenges of mobilizing a population. The challenges of combined operations. And the possibility of not turning out as expected. I think any state would have to recognize the challenges on that front if they're being realistic.Dan ModlinSo it seems that the Chinese leadership really has some pretty tough issues to address as they move to the future and try to accomplish these somewhat contradictory goals.Kevin ModlinRight, right. So it it's both a goal of continuing to grow and provide for the needs of its population and possibly a population that has increased expectations of what income and wealth, and well-being are. Then there were the expectations of a few decades ago, and that's going to possibly be in tention. These efforts to be more inward looking and have slower economic growth. I think that again they will emphasize party security, the preeminence of the Chinese Communist Party. But I also think that it will create some very real challenges and having fewer resources. This means you're not as able to solve some of those problems. So we'll have to see how China prioritizes this. It'll be very interesting to see if they prioritize, say, nuclear modernization in the same way, I think they'll still uphold that or what will they do with with their Navy and investments in that front. This will force harder choices. Going forward, so we'll have to watch that part carefully as well.Dan ModlinKevin, if someone listening to this podcast has a question they would like to have addressed, what should they?Kevin ModlinSure, there anyone's always welcome to e-mail me at kevin@modlinglobalanalysis.com and I'm glad to have a conversation on these points. I think this conversation that we had at Lost River Cave recently is a great example of what comes out of these conversations. I was really interested in the number of people who had been to China. Or to Taiwan and had really great examples of personal stories and thought very seriously about these relationships. And I know this is a pattern globally, and I hope this podcast can be a platform where people can submit questions and we can think more deeply about these questions. Just as the people that we spoke with the other day did so feel free to e-mail me any time, and we'll continue talking about that in the next episode, I plan on talking about and more dynamics in China and specifically the small changes that may have really make effects in economic policy going forward, so I look forward to having that conversation with you, Dan, and we'll continue that.Dan ModlinThank you very much again.Kevin Modlin thank you. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit modlinglobal.substack.com

 Thank you for joining us for this edition of the Modlin Global Analysis Podcast. I'm glad to be joined by Dan Modlin who will be asking a series of questions. These questions are going to be highlighting a conversation that we recently had at Lost River Cave in Bowling Green, KY, where individuals engaged in a rich conversation. On US-China relations as well as Taiwan,-China relations. So Dan, what were some of those questions that we had that day?DanSo one of the first questions that came up at this presentation related to the alliance framework in light of treaties. What's the current alliance framework in this part of the world?KevinParticularly in the Asia Pacific, responding to China's rise, it's a really important question and unique for exploring the politics of this. So Asia has a unique culture and process around alliances. Some people think is very different from the NATO framework that we're familiar with Europe. But it's worth noting that every region of the world has unique characteristics of their alliance or nonalliance frameworks, and Asia's relationships largely through ASEAN and other organizations are very much involved with consultation of the rich relationship on the economic front as well as political at the same time, these are not deep alliance frameworks. So as far as committing countries to each other to help with security questions, these are not dominant. Dynamics within their respective countries within Asia at the same time, the United States has deep alliance relations throughout that region, and that contextualizes what the alliance frameworks. So whether that be with Japan or South Korea. In his history of relations with the Philippines and the history of relations with India and Vietnam and of course, with Australia and that alliance. These are all part of that framework, but it's worth noting that each of these respective countries have improved relations in different ways, as some are more complicated. It's kind of a mix of countries that have bilateral relationships that are close with the United States and more favorable relations with each other. But don't necessarily have an alliance with each other, so this serves their security needs, but it also for them it allows more autonomy in decision-making. In the 70s, there was rich talk of creating an alliance framework that the US would sponsor for countries in Asia. That resembled a NATO framework and that did not get off the ground very successfully. And some people argue that that is an inherent trait of the region. That is more focused on economic growth than this, but it is worth noting that even within that looser configuration that many of these countries are responding to China's rise and they are thinking about that in a security framework in ways that they haven't really thought of. For so many of them continue to trade with China, as most countries do they're also looking at the security questions because if if they do have a rising power in their neighbor in their region, of course that would have any consequences for them and their policies.DanDuring the presentation, it was suggested by some of the questioners that China at some point might try to create a crisis situation. To help unify people in China in the approach to Taiwan, do you believe that is likely? And how might such a crisis be shaped, or what? What form might that take?KevinSo crises obviously happen within relations, and it's also worth noting that those are the things that we notice in the politics among States and the domestic politics or these types of crisis. I think it's also helpful when looking at countries and their behavior to notice what context they are developing, the relationship between countries, how are they defining it, how are they defining it specifically for their population, and how that will mold the perceptions. What I think is an important thing to look at in China and Taiwan relationship is how much is China talking about Taiwan and reunification and these types of arguments. I don't know if states invade each other out of crisis, and one of the reasons why I question that is because anyone looking back at a country's behavior can make an argument that they're going through a crisis. It seems that the news of every country, every day has some type of a problem of some type of internal discord and division that people could go back and point to and say that that is the source of a conflict. I certainly think it's possible, but I also think we need to look more at the dynamics, and one of the dynamics I think is most helpful is to look at these language patterns as well as just to unpack where the interests lie. So China's military has expanded significantly in the region and especially just across the Strait with Taiwan. These are the types of patterns I would look at more towards the specific questions around crises.DanIn that region of the world, of course, naval forces would be very important should some kind of. Military action takes place if you would talk just a little bit about the difficulty of carrying out successful naval operations.KevinAs I mentioned in the meeting, one of the most difficult actions a military can take is the naval invasion of another country has a lot to do with how the defense is heavily favored in that situation, as well as how intricately. The operation has to be planned and executed for a landing, and it has to expect significant losses in the process so that the defensive side, in this case, Taiwan, be strongly favored to be able to repel an operation.  We're not aware of any capabilities or trainings or experiences that China has had with this to indicate that they are fully prepared for this. Now some states are willing to incur significant losses to have able to reach an objective. But I think at this point it's really important to notice how risky an effort that would look like likely involves many thousands dying on the Chinese side and the possibility of not achieving the objective at all or being delayed by many, many months. That has led me to consider the fact that if the state really is interested in Taiwan. It was possible that they could achieve some of those objectives. More subtle means and less risky, so throughout history, we notice the risks that countries take, and I think it's also worth noting the times that politicians are actually trying to avoid risks. Because I see the downside problems for that, and I think that at least that's a framework that needs to be thought through just as actively. As we think about the more aggressive and kinetic or conflictual options.DanWell, Kevin, obviously, there are a lot of unknowns in this situation, but where do you think the situation with Taiwan and China is headed?KevinA lot of people have this question. I think it's important to organize the question and the different frameworks that we look at this question use them to test against each other. So we can better understand the situation. So it's not as much about predicting what happens, but strengthening our thinking throughout our situation to help us prepare for understanding how different paths may diverge. I am not certain that a conflict is inevitable. I know there's a lot of rhetoric around that. But again, people can be very certain of things. That to me, is unclear. That is a scenario that has to be considered, but I'm not certain of that. We could say one option that China may consider would be this naval operation that we referenced a few minutes ago. Again, I think because of those risks. Has to be considered, but it also has to be considered, probably as a less favorable choice from the Chinese political objective. One of the reasons also for that is because I think that they have other options that may be more appealing to them. And this has more to do with less conflictual type options to them that may achieve similar objectives that they have. So, as we know, Taiwan's diplomatic standards throughout the globe is very different from what most other countries have in their relations among states. Only 12 countries recognize Taiwan, only 12 have formal diplomatic ties. Other countries, of course, trade with Taiwan and have interesting economic interactions on computer chips and services, and some agriculture and shipping. But the leverage that China has over Taiwan may be more around its diplomatic state, and I think something that has to be really considered is that China may decide to challenge Taiwan in that diplomatic realm in a way that Taiwan would have difficulty responding to so. Pursuing that option may not mean very much conflict. But if China develops a policy or a practice that makes it hard for Taiwan to address it, and maybe it's a practice that the global community outside of protest and it may not have much reason of supporting Taiwan. Then China would have found this middle sweet spot to achieve their objective, basically pointing out that the global community may not support Taiwan and this could create a political crisis that could create a lot of challenges for Taiwan in that scenario. So I think that that type of interaction is just as possible, if not more so. As the conflictual one and affect may proceed more of a conflict option in China's mind because again, it's a lower risk choice from their perspective. Another option that it's gaining more conversation among people is the possibility of some type of a naval blockade. And it's important when thinking through that type of scenario. But that would mean economically, of course, for China and Taiwan and globally, it would elicit a strong response and and outcry, but it would actually put the political impetus on other countries. To respond. Meaning who's going to break that blockade? Who is going to be seen as challenging that and I think many countries would be unlikely to do that, and there aren't many countries that have the Navy and the capabilities to challenge that. China can have huge political effects in Taiwan and may not even have to invade to achieve that, and maybe they will hold that option as the last one and go through a series like this and considering these scenarios, these are of course all hypothetical, and in fact I think that option to testing against all of this. Is the status quo option and our mindsets when we think about international politics or read our history. We think events are inevitable. We think that a crisis precedes a higher crisis and things continue to escalate up that rung. In fact, there are many cases. When we really dig into the relations among countries where things deescalate and there's less tension. So whether that be Taiwan and China, relations having an ebb and flow throughout and 70s and the 90s and today, they have continuously changed and there have been a number of periods of more positive relations. Right now there's more tension. But the tension doesn't always cause more. And that's a really difficult thing for us to get our heads around. But I think that that situation is something worth testing against that the status quo or improved relations are possible and to look at the causal mechanisms that we see within. Each of these arguments and see what may play out and prepare for all these scenarios? So in our conversation we also talked about how this may play out for domestic economies and there's a lot of interest in computer chips and how if more computer chips are made in the West and the United States and Europe. That that will mean that there is a more secure access to these materials and I think that that is true. At the same time, probably in any of these scenarios, Taiwan will be a significant player in the computer chip manufacturing sector for a long time. In any of these crisis points that I'm outlining will certainly cause a sharp increase in the price of computer chips. And so while there may be access to these chips, the costs themselves may be prohibitive, or at least very costly for individual firms. So this does not necessarily solve all of these problem points, they can still have big effects. This is not unlike the experience that everyone's having with gas prices. The United States supplies a significant share of its own oil. Nearly 90%, but it's still subject to the global demand chains and global market behavior ,and of course that has pushed the price for gas. Throughout this war with Russia's invasion of Ukraine it's not that different, I would argue, is what may transpire with computer chips.DanWell, it's a huge issue and in our next podcast, we're going to be talking about the Six Assurances and also talking a little bit about the thinking of the Chinese leadership. Kevin, thank you very much for your input and your perspective on all these issues.KevinThank you, everyone, for your time. I really appreciate all the interest and conversations that people had throughout that meeting. I welcome people to submit questions to me here through e-mail. You can email Kevin@modlinglobalanalysis.com and you can subscribe to the newsletter at modlinglobal.substack.com. Thank you.What Taylor Swift can teach us about logistics. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit modlinglobal.substack.com

KevinWelcome. Thank you for joining us again for another edition of the Modlin Global Analysis newsletter. I'm pleased to be joined by Dan Modlin, who's going to offer a series of questions to kick off our continued dialogue on Taiwan. We are focusing on how Taiwan came into being and how this relates to U.S. policy. So thank you again Dan, for joining us.DanThank you, Kevin. I think this is a very interesting subject, and I can recall back in the 1970s, when Nixon went to China, it was considered a major development in foreign policy. Tell us about the background of how that all came about.KevinRight. So we know from historic accounts that it actually took some time for the U.S. to perceive this as an opening for a relationship with China. China internally was expressing a lot of dissatisfaction in its relationship with Russia, the Soviet Union, and specifically, was growing more resentful and distrusting. This came out through border skirmishes, as well as lack of exchange and basically the tenants that we would see be shared for a partnership between the two. This was surprising to a lot of Americans because a lot assumed that just because they had a similar political system under the framework of Communism that, that automatically would be a shared sentiment and in fact, most communists assume that would be how that would transpire as well. But we see political party movements often also take on this weight to responsibility of the state and sometimes, the state itself brings in interests that override even party philosophies. That may be an agreement with each other. But over time, Nixon, as well as Kissinger, started to notice some opportunities that they thought they could improve relations with China. And there were two most important reasons. Why they were focused on that? One is they thought that maybe if China was more distant from Russia, that it may isolate Russia more than the Soviet Union specifically, and that that would contribute to a better way to contain the Soviet Union, and it would provide a path for China and the US to have a mechanism to resolve. The Vietnam War, fighting throughout that conflict, that by improving those relations, they thought they could withdraw from Vietnam more easily.DanKevin, as you mentioned, Kissinger played a key role of course in these developments with China during the Nixon administration. What role would he play in the development of the communique?KevinSo it's important to note that even though people really emphasize the role of Kissinger, how much in a broad framework, the national security advisor and the president had a general sense of opportunities as well as philosophy and how to implement these things. Nixon actually wrote about this potential even before Kissinger did. Kissinger implemented a lot of initiatives through this. So while Mao and Nixon were meeting the seconds were involved in this set out the framework for how this relationship would be again because they're navigating these important questions. But of course, when you have an opening of relations between states, you're going to expect some type of a formal understanding or mutual statement, between the two of what that relationship entails. So again, it's largely to address the issues in Vietnam and provide an opportunity to distance China from the Soviet Union. But China is expecting things in return for this and throughout the communique there are statements where both will acknowledge that others position on an issue without necessarily seeding the others position or necessarily agreeing to those points. And this includes on the issues around Taiwan. So after Chiang Kai-shek flees to Taiwan and asserts his position in that, and, by the way holds the Security Council permanent seat that this garners distrust.DanSo Kevin, my understanding is that the communique then kind of opened the door for a series of negotiations relating to the positions of the countries and also, how they view Taiwan?KevinYes, that's correct. So after you reached the agreement through the 1st Communique, you have a series of other communiques and importantly, those communique are adopted after each additional presidency. So under the Carter Presidency and then the Reagan presidency are both emphasizing the standards and basically fill out what we come to understand as strategic ambiguity, meaning that the United States encourages positive relations between both Taiwan and China, and that it will not provide formal recognition for Taiwan. Also, that it would not seek to further inflamed tensions while simultaneously saying that it would provide military assistance to Taiwan contingent upon its general relationship with China. So if relations between Taiwan and China are seen as improving, it's implicit that they would seek to reduce some aid. And if tensions increase that they would increase that aid. These are instruments of the communique. A big part of this ambiguity has to do with whether or not the United States would actually assist Taiwan in the event of a war, so it is not formally stated whether or not it would support Taiwan in the event of a war, and the rationale is that this provides a space for diplomacy, but also an uncertainty. So if the United States were to say it would support Taiwan perhaps that would be a rationale for China to attack Taiwan because they would view that as an attack on sovereignty. Also, the United States, by avoiding recognizing Taiwan and a possible assertion for independence also would not provide a rationale for China to attack Taiwan. So through this ambiguity, we've created something of a status quo in the relationship between the United States and China, United States and Taiwan, and, of course, Taiwan and China. So this has been basically the instrument for the 1970s going forward to today, we've seen more affirmative statements by our current President Biden. Were he expresses support for Taiwan, but at the same time, the State Department and National Security Council will make statements that backtrack or try to contextualize the meaning of those terms. So in a way, it's a different type of ambiguity and what that means. So maybe the President may have a different sentiment than his team does but by maintaining this ambiguity, it's argued that this helps maintain a sense of stability for the relationship and maybe can encourage improved relations.DanIt's a fascinating concept, and it's one I know you've presented a research paper on recently at a political science conference in Chicago. Part of the idea here then is that by not being too specific about policy it allows a little more wiggle room.KevinSo by not declaring a position, it doesn't provide a reason for either side to escalate tensions in the relationship, and therefore it's given the perception, especially in the U.S., that that ambiguity has actually contributed to stability in the region. Which is a general interest, but it has also been useful for U.S. purposes by maintaining a position of ambiguity. It's not increased the level of commitments that they've made globally, which may be desirable both by the United States standpoint as well as existing allies. So allies always think about their alliance structure, but the partners that they have with them, to what degree are they committed?DanAnd so it's it's kind of interesting if we think in terms of our policy, sometimes seeming rather confusing. Maybe that's somewhat by design.KevinIt's completely by design, and again, it's with the intent of not trying to increase tensions on both sides. Now it's important to note that just because that's the design, that doesn't mean that tensions still won't exist. And we have seen an ebb and flow in that dynamic in the relationship. But it's always maintained a degree of overall stability. The big question is, is as China increases in its military capabilities how will that affect their relationship with Taiwan? Does that mean that they are more likely to at some point attack Taiwan? This contributes to a lot of speculation that is hard to answer again because it's largely speculation. But we do see heightened concerns all across the board about this possibility, and the question is, is how durable is strategic ambiguity in light of this situation? But we do see continued practices, especially in Washington, by establishment figures seeking to maintain ambiguity in large part because they've seen it as effective in the past. But again, maintaining ambiguity is difficult because anytime somebody explains a policy on US-Taiwan relations, it can actually not always sound ambiguous, and depending on how people interpret the components or potential misstatements, it actually may not always sound ambiguous. Among the challenges that the US faces is the security challenges. But it's also a language challenge. That's something I will go more into in our briefing and presentation on May 4th at the River Birch Room at Lost River Cave. We'll also spend a lot of time not just thinking about the language issue, but thinking about how the various scenarios that may play out between China and Taiwan may contribute to global challenges and for challenges here in the United States and possible responses but also general economic effects.DanIt's a very interesting subject, Kevin and I know we'll be talking about it more here on the podcast for the Modlin Global Analysis and in some upcoming segments. But as you say on May 4th at 7:00 PM in Bowling Green, KY, you will be giving a presentation that will be in the River Birch room of Lost River Cave. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit modlinglobal.substack.com

Welcome. Thank you for joining us for this edition of the Modlin Global Analysis newsletter. I am pleased to be joined with Dan Modlin, who will be offering a series of questions on US-China relations, China-Taiwan relations, and US-Taiwan relations this week. We're going to be giving some background history on Taiwan relations and its origin story and how that traces back largely to China's history and its cycles of revolution, and how that contextualizes the politics that we see today. May 4th at 7 pm I will be hosting a conversation on Tawain and China at the River Birch Room at Lost River Cave in Bowling Green. Dan I think it's true that a lot of times we have a better understanding of the current situation if we can go back a little bit in history and kind of find out how we got here. Isn't it true it an awful lot of the current situation with Taiwan and China really relates to history in the 20th century. Kevin We need to look at the history of these relations, but also recognize throughout these periods that a number of decisions are made by those actors that influence us today, but also actors today have a range of choices. We know starting off that under the Qing dynasty was facing break up in the early 1900s by a series of challenges. These challenges included the effects of the war with Japan and then after that, the war that Japan had with Russia that further solidified gains that Japan had control over parts of what we call territorial China today. Also, that contributed to nationalist sentiments throughout China. That capitalized on the instability and weaknesses of the Qing dynasty and led to the overthrow of the dynastic system that we saw prevalent throughout most of China's history. That only really changed in the last 100 years or so, and that system rose to power and had gained strength largely through playing on these grievances as well as grievances that contributed from the colonial era that the Western powers gained access to Chinese ports largely through force. And to acquire goods and export those through the Opium War as well as the Open Door policy. Dan OK. And then as we move ahead, it's important to look at the origins of the Chinese nationalists. Kevin So that Chinese Nationalist Party, we often associate with Chiang Kai-shek. But he was not in charge of that movement to begin with. He comes later to the stage, but the Chinese nationalists also have difficulty facing external threats and internal challenges, including the rise of Mao Zedong. Through his Long March and other efforts lead a revolution throughout China that really challenges China at the worst time that they could imagine. So, they are facing an internal revolution as well as an external threat with Japan, and we see actually even the Russians intervene and assist sometimes the nationalists against Japan, other times they assist the Chinese Communists against Japan. But in all cases, they are playing against each other and particularly the Chinese Communists gain leverage and influence both by playing off the weaknesses of the Nationalist Party. But also, they had some victories against the Japanese, which garnered additional support. Dan OK. So then as you refer to the Chinese Nationalist Party ran into considerable trouble with the emergence of the Chinese Communist Party. Kevin Exactly. And Mao was very effective in garnering support. So, unlike other Communist movements that we saw before, this movement emphasized the agrarian culture and transformation and well-being for the agrarians. Whereas other communist movements look more towards the industrial workers. This agrarian angle has always been a point of distinction, but it also was a point of strength for Mao. He was able to draw supply and support from the rural parts of China, which is of course a considerable space, especially in that time period and always had a harbor there but also drew much of his political support from that region. Dan OK. And then as the military victories mounted up for the Chinese Communist Party, how did Taiwan become a more important location for the Chinese nationalists? Kevin So, the Chinese Nationalists again had to face both the threat of Japan and the communists simultaneously. And we do see this pattern come up that if communist elements or initiatives rise, they seem to do better in situations where you already have internal strife, especially the causes of an existing conflict. More so overtime, the Chinese communists gained power throughout China, and they are able to have victories largely because of the decline of the nationalists and the nationalists decide to flee. And the best choice they have, of course, is to go to Taiwan as we know today. Dan Kevin, isn't it true that Taiwan itself has a very interesting history? Kevin Taiwan was part of the Qing dynasty and number of Chinese would live and trade from Taiwan. Afterwards, the Portuguese gain control of that and colonial period, and during the Sino-Japanese War, the Japanese gained control of Taiwan, so Taiwan loses Japanese control. Of course, when Japan loses in World War II and 1945 and Chiang Kai-shek decides with the decline of his party's movement, to go into exile and occupy Taiwan. It should be noted that even though Chiang and his forces moved to Taiwan, they did not ever see claim of. I mean, the true government of China. So that is part of the complexities of the relationship to start right from the beginning. The Republic of China and the People's Republic of China claim to be the true government of the whole of China, and they mean the whole of China both what we call the mainland China as well as Taiwan. Even though there are rich differences as far as policies and distrust between the sides they both claim the same sovereign right over that territory. Dan And I believe it's true that a lot of conservative interests in the United States were very supportive of Chinese Government for many years. Kevin Right. So that's comes back to the US. So the US was not entirely super interested as a whole, especially its politics until the rise of communism in China, and found that as a threat in the same sense that it's all the revolution in Russia as a threat. And so any movement contrary to that they found sympathies with including Chiang Kai-shek. Dan OK. And so all of these elements working together play a role in what we're facing today. Kevin They do play a role in what we're facing today and we're going to talk through this series about that. It should be noted how the Long March and the Chinese Communist Revolution, as well as the government of Chiang Kai Shek and these competing claims continue to come up in the discourse that we see today between. China and Taiwan. So after Chinese party have their major meetings, they will go on a retreat and they will reference this Long March or they will reference other seminal events in their origin story for the Communist Party. In the same regard, the Chinese nationalists will remember the legacy of atrocities under communism as well as the hardships that they faced in these tension points. On both sides they have rationales and arguments that they referenced throughout these dialogues. In the past both determines where they are physically located. The animosities that they have, but there's also referenced continuously in trying to define who they are. Dan So we're getting kind of an overview here of the background of this very important issue. I know Kevin, you have a presentation coming up on May 4th at the River Birch Room at Lost River Cave in Bowling Green in which you will be talking about these issues and also some of the international relations strategy that perhaps is involved. Kevin Right, so I want to welcome people to come and join us on May 4th at the River Birch Room at 7:00 o'clock in Lost River Cave in Bowling Green, KY. I will be glad to take people's questions on these issues. Prior dynamics that we see in Taiwan, so we'll talk about both the points of division and why they continue to exist, but also why the US has this interesting policy that's called strategic ambiguity where its policy is actually not ever enunciated or it's intentionally. Ambiguous for both Taiwan's position as well as China's position. Dan Strategic ambiguity is an interesting term, and I know you gave a a paper on this at the political science conference in Chicago just a couple of weeks ago. So this will be a chance for people to kind of get an idea of some of the strategy that's going on behind the scenes when people discuss Taiwan and China. Kevin And what we're going to focus on is not just the ambiguity and how that is a concept and complicated, but also we're going to spend a lot of time thinking about the threats that Taiwan faces and how China may respond in the coming years, as well as what those could entail. And of course, how that may affect economic decision makers in the United States. This event is open to the public and free, and I've always found that the best part of these conversations are the question and answer. So we will have equal amounts of time for robust questions and I found we have excellent conversations to those angles. I know when I talk with people and throughout the community there is genuine interest in this question around Taiwan and I think just exploring these questions further will at least help us prepare and think more carefully about what's transpiring. Dan OK. And that's coming up May 4th at 7:00 PM at the River Birch Room lost River Cave in Bowling Green, KY and no admission. Charge and a very interesting presentation on the subject of strategic ambiguity and how that relates to China and Taiwan. Kevin Thank you very much. Dr. Garcia's article on China and Latin American relations in Foreign Affairs Latin America (Spanish)For news and analysis on Congress and the Debt Limit debate follow Liam Donovan. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit modlinglobal.substack.com

What can the Beatles documentary teach us about how people think?  This edition will focus on some background of the Beatles and examine the stories around them with references to global politics.  Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends.  ~ KevinThe Beatles are the greatest band in music.  No other group has a song collection comparable to Yesterday, Hide Your Love Away, Day Tripper, Help!, and In My Life.  They also had a uniform and yet dynamic sound.  There are also endless rumors around the band. These rumors all predate communication mediums (such as social media) that are often associated with causing contemporary events.  These range from the ludicrous speculation that McCartney was dead (and the message was “proven” by listening to the album backward) to the more innocuous curiosity around the opening chord in Hard Day’s Night.  However, no narrative has persisted as consistently and dramatically, without grounding, then the causes of the Beatles’ break up.  It is almost as if for the devoted fan a direct answer would be unsatisfactory.  Many people’s brains want a grand story to explain a great end to the greatest band.  This is where narratives fit into the process.  We may seek a story that satisfies us more than one that fits reality.The primary argument was that John Lennon’s close girlfriend, Yoko Ono, was the cause of the demise of the band.  Part of this is scapegoating an outsider.  It is also because people assume a change in one area (a girlfriend) is the source of other changes (the end of the Beatles) when in fact the dynamics within the band were the main issue.  In fact, the main change was the continuous development of George Harrison as a writer who didn’t fit into the arrangement of the early Beatles.There are plenty of rumors about the role Ono played in the demise.  However, as we know, rumors don’t have to be bound to facts.  Now we have hours of documentary footage that show the creative process from the Beatles in the recording studio.  It shows the brilliance of how they developed the ideas and continuous humor in the studio.  There was little drama although signs of creative differences were apparent. (see the discussion about Harrison).  The constantly argued idea that Ono dominated the recording process is shown clearly to be a fallacy.  She is present and listening but is not involved in the creation or recording process.What is your favorite Beatles song?  Please let me know in your comments.International AffairsWe see a much more insidious dynamic around Russia’s President Putin and his narratives.  For decades he has focused a domestic grievance around Russia’s decline in power and shifted it on to Ukraine.  Putin not only sees the demise of the Soviet Union as a catastrophe he judges all Russian leaders based on whether they expanded or contracted Russian territory.  This hyper sense of nationalism generally transcends Russia’s two most recent economic systems in favor of planning.  His brand of planning involves the coexistence of a powerful country and a powerful leader.  He even wrote about planning in his dissertation which we will explore in an upcoming briefing.  You can learn more, at a briefing of the Russian invasion of Ukraine at the Bowling Green, KY Knicely Center on March 24th at 3PM.   All folks interested are welcome.Note:Thank you for subscribing and reading this newsletter.  After taking a break from writing I am ready to restart after learning some new recipes, starting a new job, and getting a new home.  I finally have a home in my hometown!  The writing plan is to post about every few weeks to a month.  I would really value any feedback you have or questions on global affairs, economics, or politics. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit modlinglobal.substack.com

Although few people are talking about it, the market for bonds issued by Chinese firms is one of the most interesting and potentially consequential stories.  This topic allows us to explore some background and to dig into some current dynamics. Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends.  ~ Kevin In much of contemporary China, there is a mix of state party decision-making and responses to market incentives in the country’s bond market. For decades this mix has led commentators to assume the inconsistencies of overlaying these systems are unsustainable.  No doubt there are deep tensions between the two, both politically and economically.  This has led some to conclude the politics is driven by the Communist party while the economy is driven by market forces.  However, in practice, things do not always separate that easily.  At either the firm or individual level the state is influenced by profit and firms are influenced by political direction. A few months ago, we explored the dynamics of the dual circulation economy that China is increasingly talking about, which emphasizes both domestic consumption and exports.  Anytime we look at multiple systems, there are many pieces to consider.  In this issue, we will focus on our understandings of firms, debt, and the Chinese Communist Party.This context comes into play when looking at the number of Chinese firms that are state-owned enterprises (SOE).  Most businesses in China receive direction from, and are managed by, Chinese Communist Party officials. Frequently, the country is also an owner of these firms.  At the same time, many party officials profit from these layered relationships.  This leads to interesting questions involving what is known as capture in economics.  Capture is when an entity is designed to oversee another entity but becomes subject to the influence of the one they watch. This relationship is relevant in regulatory decisions, and possibly even the relationship folks have with a pet.  In this case, I would argue it is like a double capture.  The firm limits the party's options, and in turn, the party limits the firm's options. No one doubts the supremacy of the party in China, but that does not mean that capture does not happen.  When thinking about the complex layers, it is further fascinating to see China's robust economic growth in recent decades.  Perhaps in practice, China’s leaders think contradictions are not as problematic (or even causal) as they claim.  These dynamics have been less difficult in recent years in China, in part because robust economic growth has a way of clouding inherent tensions.  However, China has not been immune to slower economic growth as a result of COVID – 19.  This is particularly the case in its export sector.  As a result, some state-owned enterprises are experiencing unexpected losses even though they are assessed to be low-risk operations.  This risk assessment has less to do with the nature of the good or service and their customers, but more to do with China's ownership share.  This presence of state ownership shifts the perception of risk of failure or default, but I would argue that perception does not supersede the balance sheet for long. This has led to a distinct problem for China, a problem with a long list of possible consequences.  Currently, it seems that some firms are in trouble, but the scope of that trouble is unclear.  Accounting practices and explicit state support hinder an accurate picture.  But the dual capture dynamics make choices more difficult for Chinese political and economic leaders.  For internal stability, they do not want to see a contagion of doubt about these firms spread among bondholders. China also does not want to disentangle the existing power relationship or shift to an alternative.  This will mean that much of the debt issued by state-owned enterprises will be underpriced for risk, though some investor concerns will influence these assessments.  In recent weeks, Xi and party leaders have been emphasizing a Marxist legal system in the Chinese context. For many decades some commentators have argued that Chinese debt was not sustainable at its current levels.  While there is no doubt that China is a major political and economic power, it also faces challenges ahead.  A principal challenge is how it will adjust to slower economic growth rates and how slower growth will ripple through its economy.  Keeping an eye on the debt from these firms gives an important indicator.  For example, China's most volatile debt has been in the energy sector, which has experienced lower demand due to less manufacturing output this year.Some questions I think about:1. Debt crises and runs are not a perfect indicator of a country’s conditions.  Is it that the West has so little insight into China that the potential of these cycles is over magnified?2. If the potential is over magnified,  what is the appropriate observation we should be making?3. Is the dual capture argument an accurate description when, in fact, interaction is defused with a clear party hierarchy?4. Is this dual capture relationship help explain the preeminence in Xi’s speeches to direct both simultaneously? News:I look forward to continuing to explore China over the coming months. I am enjoying the chance to share these newsletters with you in the form of the new podcasts and appreciate your continued feedback. You can reply to this email or leave your comments below.  I sincerely enjoy chatting and learning what folks think. Thank you ~ Kevin Get on the email list at modlinglobal.substack.com

Political language can have a significant impact on how we understand one another and on how we react to other countries.  I think this week is an opportunity to take time to focus on political language.  We will take an abstract view of its use and influence in our social world.  Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends.  ~ Kevin One of my favorite country songwriting teams is Eric Church, Jeff Hyde, and Luke Dick.   A few years ago, they came out with a song called “Kill a Word”.  It is very clever and well written.  It explores the role language plays in our social world and argues for killing words like “hate”.  I have described it to friends as a mix of ideas with a spin on outlaw country killing.  It is interesting to think about.  The influence of language is something I go back and forth on and, to be honest, I have not resolved everything in my mind, though I enjoy thinking about it.  Nothing sparked my interest in this area more than my time at FIU, which is home to the study of language in international politics.  For example, Nicholas Onuf emphasizes the role of language in social interaction, including establishing rule and rules.  The rules are simply the laws and social norms and the rule is the power that reinforces or forms the rules. We are distinct individuals who interact with each other in various ways and a major part of that interaction is through language.  We relate, convey important things, joke, signal, direct, accept, and a whole range of things through the language we use.  Sometimes it takes just one word.  However, we know what we say is heard by others who may, but likely may not, hear or think the same way as the person speaking.  This can lead to regular misperception and misunderstanding that can be magnified when one of the parties wants to be misunderstood.  However, suspending intent, understanding is challenging.  Take for example the meaning of the word “literal”.  Depending on the context, and sometimes the age of the speaker, it can mean something specific or general. Possibly because it is frequently used in sarcasm, the meaning of literal has evolved to mean the opposite of what it used to mean.  The point of this illustration is that language is dynamic, and the meaning of words can change in many ways.  However, contrary to what I think my Constructivist friends would like to hear, it does not change as frequently as we notice and assume.  We see language in politics as both a medium of interaction and a way to influence other interaction.  Interestingly we pay attention to some forms of speech in different ways.  The medium of interaction in speeches and committee hearings is consequential in the formulation of policy.  We can call that the legal rule area. However, we focus considerable energy on the interaction from the way others influence and use language.  This is what we can call the norm rule area.  This involves protesting and constant bickering online.  As a society, we focus a lot more attention on the norm rule, bickering form of language. I suspect this is because some language elicits more of an emotional response. I think this is another area where our emotions, and those who stoke them, can distract us from one form of rules. I expect that more people fall asleep while watching C-SPAN congressional hearings than seeing a debate on cable news. In fact, there are norms in both areas that have little temperament for one type of behavior in another area. Who wants to hear a committee report read to them at a political rally? Regarding international political speech, one of the areas I am most interested in is how countries define each other and the degree of threat perception. Some of this is related to capabilities and history but there is also an important role of perception that is heard, interpreted, and shared through language. These definitions both mobilize and constrain relations among countries. For example, in pockets of the U.S., the perception of Russia distinctively shifted over the last four years, in ways that had not existed for over two decades. Will that perception of Russia significantly constrain the Biden administration in its policy choices in balancing against a rising China? I do not know the answer to that question but, perhaps with time, that perception may change. In fact, it may occur in parallel to the negotiations updating the New START Treaty. To me, this question illustrates how perceptions formed by language can be both static and dynamic. When looking at the constant social and political interactions of language there are plenty of opportunities to be confused and frustrated. I have collected a few thoughts that may help navigate the subject. Hopefully, this can provide an opportunity to help reflect on language and its unique role in our relationships and politics. Some general observations on language: Language reflects individuals and groups; it also influences them Those who speak things you agree or disagree with have about as much causal influence as others Expect higher standards for rule makers and what they say, but be more patient with others around you “It is not enough to show how clever we are by showing how obscure everything is." ― J.L. Austin “Language disguises thought.”― Ludwig Wittgenstein "Always remember that it is impossible to speak in such a way that you cannot be misunderstood: there will always be some who misunderstand you."— Karl Popper You can’t kill a word News: I look forward to exploring language in politics in more detail and, as situations arise, the opportunity to apply these ideas. I am enjoying the chance to share these newsletters with you in the form of the new podcasts and appreciate your continued feedback. You can reply to this email or leave your comments below.  I sincerely enjoy chatting and learning what folks think. Thank you ~ Kevin Get on the email list at modlinglobal.substack.com

These are some of my closing thoughts about the election. If necessary, I will do a midweek update. I think this presents an opportunity to reflect on how change impacts our lives. Equally important is the role of circumstances that rarely or never change. Both types of experiences influence our lives even when we are not in an election cycle. Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends. ~ Kevin To be honest I am getting a little burned out thinking about and talking about the 2020 U.S. election. Part of the weariness is the time spent thinking about it over prior months, but also burnout from hearing people speculate about things that have weak causal relationships. Perhaps it’s my old age speaking, but I have grown tired of speculations that are not grounded in causal relationships or plausibility. In this cycle, everyone has enjoyed picking and choosing their favorite polls as well as inferring possible results from turnout trackers presented by the respective political parties. Picking and choosing polls is grounded in confirmation bias and turnout trackers are notoriously poor predictors of election outcomes. Instead, these are my closing thoughts, which I will seek to sync up with a general discussion that may be useful over the coming weeks. When looking at individual states that are most consequential for the electoral college, I regularly return to my discussion about variance in statistics. I argue simply that some state polls have less variation than others. This is shown to be particularly the case with Wisconsin, Pennsylvania, and Michigan. So while it is fascinating to look at North Carolina, Arizona, Georgia, Florida, Iowa, and Ohio, the lack of variation in polling for the first group of states mentioned may be more definitive in the electoral outcome than all the variations that we follow in the closely watched states. This is because of the significant edge Biden has going into the election with existing electoral votes. It’s not insurmountable for Trump, but it is challenging. In Wisconsin, Pennsylvania, and Michigan Trump's numbers have had little variation. Biden’s numbers have also shown little variation in these three states, and this is a net positive for Biden because of his favorable spread in these areas. One important difference between this election and the previous election is how few voters say they are undecided in this cycle. Therefore, the margins the undecideds contribute to the outcome are far smaller than the difference between Biden and Trump. For a helpful tracker for the electoral college, please follow the Cook political reports reference sheet and if you enjoy gaming out multiple scenarios for the election, I encourage you to go to 538’s election map that simulates outcomes. These sites also have helpful information about House and Senate races and what to follow in these closing days. The pool of competitive races has increased significantly since the beginning of this year. Afterthought: This point is related to the election, but it is also a broader observation. As a society, we like to focus on change. But if we look at the election trends, the most consequential factors of the election have been about less change or nonchange.No doubt day after day there are news stories about the election and without a doubt, Trump has a way of capitalizing on numerous media cycles. This can lead us to the conclusion that change is always happening. However, it could also be argued that there has been relatively little change in the polls. Many of the polling averages in these core states I am talking about have changed very little over recent months, even under the interesting and unique circumstances we have experienced. So in short, for all of the variation that’s regularly discussed, there seems to be less variation in the impressions left among members of the public. The impressions seemed to be more ingrained as negative and positive for each of the respective candidates as the election has rolled on. But this is not unique. There are a whole range of things in our lives that we make conclusions about. I focus on this because there are only so many things we can think about in a day and it’s also because we are satisfied with a lot of the conclusions that we reach. So, while we favor habits and patterns that engrain continuity, our minds are much more actively aware of change. While I think we have a bias towards noticing change and its influence in our lives, it does make sense that we notice it. However, I do think it is a flawed approach to only look at the influence of change in our lives and not to consider the elements of continuity as well. So the elements of continuity may be daily routines, specialties skills, traditions, relationships, and a lot of the things that people will sometimes say that they take for granted. Those can be continuous factors. A lot of times change has associated negative repercussions, so it is logical that we sometimes focus on change instead of the things that remain more stable. In our social interactions, also, we sometimes emphasize change more than things that are continuous. An example of this interaction of change and nonchange around the globe is an illustration involving the number of great powers in the world. While countries are constantly interacting with each other and engaging in dialogue about change, the frequency of change of power status occurs much less often. In fact, in my lifetime there are about two examples of major change from this frame of reference. At the same time, a plethora of interactions, conflicts, dialogue, and trade have continued to transpire. These are all examples of change and continuity in our lives.News: twitter.com/lisaabramowicz1/status/1323206645661470720 twitter.com/BBCNewsAsia/status/1322339729686306818 I am enjoying the chance to share these newsletters with you in the form of the new podcasts and appreciate your continued feedback. You can reply to this email or leave your comments below.  I sincerely enjoy chatting and learning what folks think. Thank you ~ Kevin Get on the email list at modlinglobal.substack.com

This week we are going to continue focusing on some questions regarding the global, political, and economic environment and we will specifically look at some global trends regarding China and the Middle East.  Spoiler alert:  While I have some thoughts, I do not claim to have all the answers to these questions. Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends. ~ Kevin As I mentioned last week I enjoy sitting down and making predictions about what will happen in the world.  I believe it is an excellent test of critical thinking skills that hones my desire to learn more and my sense of realism about how power operates in the world. This practice also provides a good dose of humility when I am forced to admit that I am far from perfect at predicting the future.  There are many good lessons we can learn from the many tests regularly provided by world events.  This week our focus is on global dynamics. This is because I see several interesting trends that are worth exploring and providing an avenue for deeper discussion.  Please feel free to comment below about questions that are on your mind right now. Looking from the perspective of each country, how deep and strong are the tensions between the United States and China?  I believe this is a very important question because of the implications and because of what I sense is a distinct change in relations.  Politicians mold the public’s perceptions of how the world operates, but the public molds and conditions many of the choices available to politicians.  This is the case in the present relations between China and the United States.  Many polls show a considerable increase in the number of Americans who now distrust China. That number has gone from roughly half of the population a year ago to nearly three-quarters at present.  I do not sense that will change soon and may even increase as the effects of Covid-19 continue to permeate our lives. These tensions are not limited to the United States. Many parts of Europe are also distinctively changing relations with China. This can frequently be seen in that region’s policies, no doubt related to public sentiment, toward Chinese telecommunications companies.  Recently there was a robust political debate about tik-tok, which is owned by a Chinese technology firm. I believe this single example illustrates a deepening emotional and cultural divide between the U.S. and China.  However, it also shows how existing relationships continued to mold outcomes.  In other words, its likely in the future that the two sides will maintain robust economic activity as political divisions continue. How much is China’s emphasis on the dual circulation economy about transitioning away from the Belt and Road initiative? I believe that China’s approach of emphasizing domestic consumption and global exports can provide insight into the thinking of China’s leadership about its place in the world and, equally important, what the world will look like.  I think this dual circulation approach allows for a full range of scenarios to materialize over the coming decade.  We may see China capitalize on investment opportunities in its region or we could see them choose to minimize that focus, as generally outlined in the Belt and Road Initiative that financed regional development projects.  Not all of these initiatives had the same bang for the buck China and others would have expected.  It’s also likely that, due to the cost of Covid-19 throughout the developing world, there will be strains on the budgets for numerous countries throughout Asia and Africa.  This makes many projects riskier for China to initiate.  At the same time, it may be a risk for China to put too much emphasis on domestic consumption with the expectation that the demand will automatically meet the supply.  Given these two challenges, it’s not surprising that China is opting for an approach that incorporates a mix of these components. How will the quad relationship evolve? Some of the answers to this question relate to what transpires with the above issues. Specifically, the quad relationship is the informal phrase used to denote the relations between the U.S., India, Japan, and Australia.  For the U.S., two of these three countries are allies with security guarantees.  Since the George W. Bush administration, India has been increasing ties to the United States.  The increased frequency of these talks are no doubt influenced by the continued rise of China in the region and India’s desire to play a counter roll.  There have been increased talks about coordination engagement that are more extensive. However, these discussions are not fully committed, nor are they anything in line with a change from existing security guarantee alliances.  I expect that regardless of domestic political considerations there will continue to be advancements in these relationships.  It will be important to see how these partnerships incorporate other regional actors in Asia and how those actors respond to China.  No doubt there is broad consensus in Congress for increased military cooperation amongst these countries.  However, I expect relations to continuously evolve among these nations as they seek to determine the degree of commitment, will, capabilities, and perception of the threat posed by China. What does the future of relations look like between Israel and its Sunni neighbors? Recently Sudan, in part of its negotiations with changing relations with the United States, announced that they would also have diplomatic relations with Israel.  This makes for a distinct shift in relations in the Middle East.  I would argue that this is not a peace agreement as such, but it provides a foundation to hopefully lessen factors that contribute to tension, which may over time evolve toward an agreement. It’s a much more incremental approach that does seem to reflect the regional environment. While the future is never easy to predict, it’s clear the tensions between the Sunni and Shia worlds in the Middle East will continue and that form of regional balancing will characterize the region.  These changes in relations between Israel and its Sunni neighbors reflect these perceptions. News:I am enjoying the chance to share these newsletters with you in the form of the new podcasts and appreciate your continued feedback. You can reply to this email or leave your comments below.  I sincerely enjoy chatting and learning what folks think. Thank you ~ Kevin Get on the email list at modlinglobal.substack.com

This week we are going to focus on some questions I have regarding the global, political, and economic environment over these coming months.  Spoiler alert:  While I have some thoughts, I do not claim to have all the answers to these questions. Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends. ~ Kevin One of my favorite activities in my late teens and early 20s was to practice analyzing issues and then writing down predictions on what I thought would happen next.  This challenges a person to think more thoroughly about issues.  For me, it was the equivalent of a young person shooting free throws in the backyard trying to improve their precision.  It was a challenge to my thinking, which allowed me to be more real with myself and how I analyze situations. Those practices carry on to today, but I have to be honest: sometimes I have more questions than I can fully analyze.  So, while I have a few thoughts, I think it’s important to parse out the knowns from the unknowns.  Below are the unknowns that I think will be critical in the months ahead. I believe that organizing these thoughts can help us to come up with sufficient answers and to better understand important puzzles in our world.What is the influence of seasonality on outbreaks of Covid-19?Recently a friend of mine asked me this question and, while I am not an epidemiologist, I am increasingly convinced that there is a seasonal component to Covid-19.  Part of this conclusion comes from reading existing research of like viruses that have seasonal profiles to them.  Also, in regions that have had spikes in cold weather -- whether that be the upper Midwest, United Kingdom, or parts of northern continental Europe-- all have seen distinct increases in Covid-19 outbreaks.  My rudimentary frame of reference has been noticing temperatures in the 50s and spikes of cases 2 to 3 weeks later, but that is an imprecise rule of thumb.  If this pattern persists, we will likely see cases of Covid-19 feed into the further spread.  Simply put, cases come from previous cases. So even in periods of slightly warmer weather, you will see exponential growth of cases.  While treatments have advanced, it will be interesting to see which states pursue various policies to address this issue.  If a vaccine starts rolling out early next year, it will not forestall any of the build-up from the previous months of cases.  The gains from the vaccine will come as more and more people are vaccinated.  How these variables intersect is another puzzle.How will this seasonality of Covid-19 influence markets and the broader economy? I expect that the economies will be adversely affected by continuous waves of the virus.  The cost will be most pronounced among those entities affected now.  Those firms will have to deal with compounding periods of losses that will likely stretch for over 12 months.  I also think that shifting consumer attitudes could be one of the greater risks for these firms. Fear and decreased buying activity, outside core necessities, could have a significant impact on many companies. Of course, this will vary somewhat due to individual behaviors. But in the aggregate, this trend will be costly for many types of firms, especially those that directly interact with customers in confined spaces.  This connects to another question.What can we expect US unemployment to be in the coming months?  Outside of a few sectors that have seen robust growth, I think that these closing months of the year going into early next year will see fewer gains from people being reemployed. I’m thinking here specifically about workers who were let go during the closures.  Interestingly we did see a significant number of workers get rehired, beginning in the middle of the year.  That was largely due to individuals being rehired by firms who had temporarily let them go.  Often in labor markets, it is harder for both employer and employee to match up quickly but in these conditions, depending on the state of the specific business, it was easier to match. What is the likelihood that society will learn only a few things from the Covid-19 experience?On this front, I have a mixed response.  Societies sometimes learn the wrong things from crises.  However, that habit of wearing a mask and distancing will be ingrained in many societies for at least a few decades.  That can buy valuable months for effective responses and treatments.  Furthermore, an important lesson has been the application and testing of existing treatments to determine their effectiveness. This has helped us learn about the efficacy of existing, lower-cost steroid type injections for Covid-19 patients.  This may prove to be a more effective research method than starting from scratch.  On the flip side, we will also be affected by lessons that have flawed conclusions. Many of those are the result of depending on confirmation bias instead of testing. Is the four bedroom home the biggest selling commodity around? Between an increase in individuals working from home for an existing employer and those working from home for a new business startup, I expect that we will see increased demand for living space. This is incentivized through tax policy where small business expenses can be deducted from home work. There is also the real likelihood of an increase in household size due to more people being confined. All this seems to point to a demand for an additional bedroom in many households. Next week we will continue the discussion about existing questions, and we will focus on the implications of change as we look at specific international relations.  What questions do you think about?  News:I am enjoying the chance to share these newsletters with you in the form of the new podcasts and appreciate your continued feedback. You can reply to this email or leave your comments below.  I sincerely enjoy chatting and learning what folks think. Thank you ~ Kevin Get on the email list at modlinglobal.substack.com

In this issue, we take a look at the reunification of Germany while simultaneously discussing International Relations theory.  Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends. ~ KevinMost of us can probably recall seeing the images of the graffiti-covered Berlin Wall coming down in 1989.  This month marks the thirtieth anniversary of the reunification of Germany, a very important event in European history as well as in global political relations. A unified Germany and a broken Soviet Union, and its allied Warsaw Pact countries, created an environment of economic growth and the continued influence of the West. And that environment has continued throughout the following decades. In fact, at a scaled-down ceremony last week, Germany’s president declared, that the present is “the best Germany there has ever been.” But what had unified Germany earlier in its history?  Many point to the acts of Prussia’s leader, Bismarck, and his role in the Franco-Prussian war, which Prussia won.  In that process, he consolidated an order of seemingly disparate German states.  As the U.S. State Department history says, “The third and final act of German unification was the Franco-Prussian War of 1870-71, orchestrated by Bismarck to draw the western German states into an alliance with the North German Confederation. With the French defeat, the German Empire was proclaimed in January 1871 in the Palace at Versailles, France.”   What reunified Germany?   As we know Germany was divided by the East and West during the Cold War.  There continues to be a debate on the sources of the unraveling of Eastern Block countries as well as the Soviet Union.  Some suggest it was the decline of the Communist system. Others, in a related matter, suggest these decades of decline undermined the system from within and it imploded. Still others suggest it was part of the tension drawn from the conflictual relations with the U.S. that led to poor choices, or that Gorbachev’s efforts to open up the country politically set up a condition for unraveling. Some say the unraveling of the Soviet Union was due to their fighting in Afghanistan.  I put very little weight in the last point, but I do see a case for it being a confluence of the other factors.  It is important to remember that while there was an internal decline in the U.S.S.R., the Eastern European countries were behaving more autonomously, and they did not suffer all the negative repercussions that they experienced from the Soviet Union decades before.  Perhaps the most memorable element of this unraveling was the fall of the symbol of division, the Berlin Wall. However, when the wall fell there was a robust debate on how the political arrangement should be handled. Many Europeans were uneasy with the prospect of a unified Germany, in light of the painful memories of World War I and World War II.  While others, including President Bush, were strong proponents of reunification.  It might be helpful to visit some theoretical ideas that feed into this debate. The purpose of this account is to look at how much has transpired in the period, as well as how consequential specific factors are.  A lot of us look at the relations in politics (including those that are international) and focus on the traits and perspectives of individuals interacting with other individuals and producing specific outcomes.  As Kenneth Waltz said under this perspective, “the locus of the important causes of war is found in the nature and behavior of man. Wars result from selfishness, from misdirected aggressive impulses, from stupidity.” However, the reality (as Waltz would argue) is much more complicated. We can look at a country’s behavior based on their traits or consider that they operate in a global system where they influence and are influenced by other countries.  The influences range from diplomacy and commerce to culture and war.  These forces are specifically guided by the relative power of other countries.  To distill this in a different way, we can look at individuals and how their minds work to explain their behavior, or we can look at the society they operate within.  Both are interesting and helpful perspectives and I think that external frame provides a lot of insight into the relations between countries. With this in mind, we can see this system of relations among countries and things look somewhat different. The reunification of Germany and the fall of the Soviet Union take on added importance.  Although today we take the matter for granted, at the time many realized how important it could be. The world shifted from having two great powers (the U.S. and the Soviet Union) to a situation in which, for decades, the United States has been the only great power.  Today we see a clear transition to multiple levels of differing power where it most prominently features the United States and China.  However, German and European unification is a significant economic force, although nearly all the members are in alliance with the U.S. in NATO.  Nevertheless, there are at least three main units in economic power.  Russia, of course, adds to the complexity through its nuclear arsenal.  This perspective may not help us predict the motives of individual leaders, but it does help create a framework to understand the environment they operate within.  We will continue to talk about global politics in the months ahead in this context. Hopefully, that can help discourage us from thinking myopically about our complex world. Quote:“Some students of international politics believe that realism is obsolete. They argue that, although realism’s concepts of anarchy, self-help, and power balancing may have been appropriate to a bygone era, they have been displaced by changed conditions and eclipsed by better ideas. New times call for new thinking. Changing conditions require revised theories or entirely different ones. True, if the conditions that a theory contemplated have changed, the theory no longer applies. But what sorts of changes would alter the international political system so profoundly that old ways of thinking would no longer be relevant? Changes of the system would do it; changes in the system would not.” ~ Kenneth N. WaltzNews: I am enjoying the chance to share these newsletters with you in the form of the new podcasts and appreciate your continued feedback. You can reply to this email or leave your comments below.  I sincerely enjoy chatting and learning what folks think. Thank you ~ Kevin Get on the email list at modlinglobal.substack.com

In this issue, I dig into another discussion of variance where we apply the concept to examine COVID-19 response and prevention.  Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends. ~ Kevin A few weeks ago we talked about polling numbers and the issue of variance. We discussed the fact that there was more variance between in the results of several national polls as compared to several smaller state polls. The concepts we discussed a few weeks ago have many applications and might provide an informative way for us to look at Covid-19. Learning how to cook one dish can sometimes help us learn how to prepare another. P.S. When I was in Miami I enjoyed eating a famous Venezuelan beef dish and this weekend I made an attempt that you can view below.  I miss Amaize! Specifically, I discussed the idea of variance, which points to the degree things deviate from the average.  High variance changes a lot and low variance changes little.  For example, I would characterize the daily temperature every October as high variance from the average.   In contrast, the number of average laughs I get from jokes is a low average and low variance.  On the campaign front, before the events of what felt like a long weekend, Florida maintained a higher variance for Trump's polling numbers. But there was a low variance for Biden and Trump in Pennsylvania and North Carolina.  Good old Ohio deserves to be in the mix for future analysis. How does the topic of variance relate to learning more about Covid-19? Analysts, including Dr. Tufekci, have recently argued for approaches that consider both the average infection rate (R0) of Covid-19 as well as the variance.  Several studies indicate that the average person who gets Covid-19 will infect about 3 other people.  I believe it is worth asking, how average is average?  We are now learning that it is not uncommon for one or even zero to be infected from a single COVID patient.  So what is pushing the average to 3?  Super spreaders.  As we know, these are folks who may be knowingly or unknowingly spreading the disease.  While there may not be a drastic number of super spreaders, every day there are a few who have a dramatic effect.  At this point, it is not clear what characteristics super spreaders have, other than the fact that they interact with a lot of people.  In fact, that may be the only pattern of their behavior we are able to identify.  However, this factor can be kept in mind as practices and policies are established.  As a society, we should not hear this and become discouraged or defeatist. Even though there are a few super spreaders, there are effective approaches that can help to counter their impact. Perhaps the most important approach in the U.S. this year was the rapid canceling of large events. Curbing large gatherings indoors is also extremely important to lessen the impact of the super spreader.  Part of the risk with large gatherings indoors relates to the size of the group. But such events also raise concerns because it is believed the virus stays airborne longer due to ventilation and air conditioning. Also, Dr. Tufekci makes a strong policy argument for backward contact tracing. This would more accurately help locate some potential super spreader cases.  Backward tracing would look at a patient who recently was diagnosed and find out whom they came in contact within the days before they were known to be sick.  This is not to determine whom they infected (which is important) but rather to determine who infected them.  Probabilistically, this approach can help identify potential super spreaders and quickly trace their interactions to break transmission chains.  My non epidemiological mind looks at it like a tree.  The forward tracing is like the branches of recent interactions by the patient, whereas the backward tracing looks at the root sources for how the patient contracted COVID-19.  With robust testing and contact tracing infrastructure in place these approaches can help further reduce spread. We are witnessing the confluence of this practice, potential seasonal increases in COVID-19 cases, and the likely distribution of a vaccine in the year ahead.  Hopefully, the vaccine comes soon. But regardless of when an effective vaccine is widely available, we will benefit by considering the role of variance, super spreaders, and effective ways to minimize spread across social clusters. At the end of the year, I plan on diving into lessons learned from 2020.  Two parts come to mind including humility when developing expectations in our lives.  Another lesson is considering the effect of the seemingly small thing like the rare super spreader can have in molding our world.  I think society can regularly conflate the important events and assume large groups or forces are behind them.  This perception is further challenged because those who may have major effects in one circumstance can have negligible influence in another.  This year we have had countless examples of the effects of a small virus, small sparks, small errors, small actions, and small thinking.  The only thing that seems large is the number of words trying to explain these small things… with little success.News:Thought:I am enjoying the chance to share these newsletters with you in the form of the new podcasts and appreciate your continued feedback. You can reply to this email or leave your comments below.  I sincerely enjoy chatting and learning what folks think. Thank you ~ Kevin The Real Deal: My attempt: Get on the email list at modlinglobal.substack.com

In this issue, I dig into my unanswered puzzle of the Russia Investigation. As mentioned in the previous newsletter, the behavior of the U.S. source in Russia, and their life after being extracted to the U.S., are confusing. Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends. ~ KevinQuote: “Don't give it to them all at once, make them work for it. Confuse them with detail, leave things out, go back on your tracks. Be testy, be cussed, be difficult. Drink like a fish; don't give way on the ideology, they won't trust that. They want to deal with a man they've bought; they want the clash of opposites, Alec, not some half-cock convert.”  ~ John le Carré, The Spy Who Came In from the Cold Last week we started the discussion of my number one puzzle from the investigation into Russia’s intrusion in the 2016 election. I closed the last issue asking: What would you do if you had crossed Putin? I have asked myself that question many times regarding this story.  It seems to me the logical conclusion is that you would hide. I expect that many would have run far and would have made it a point to be hard to find. The more distant the better, like witness protection, designed so that the source could not be located. Even though many movies have exciting plots to the contrary, the overwhelming share of people in witness protection are rarely, if ever, in danger.It is difficult to understand why the source who allegedly betrayed Putin did not choose such a route. Please join me in taking another look at some unresolved questions linked to this story. I will conclude with some observations about confirmation bias and its impact, as well. If the source decided to hide, what message would that send, especially to Putin and Russian intelligence?  It would say that they had been double-crossed.  As mentioned earlier, there are examples of Russians being killed for crossing Putin and this would be considered a major betrayal.  Therefore, hiding is uniquely dangerous, and doing something different might be a preferred path. Just like the rabbit I wrote about in a previous newsletter, who nests in the open, being in plain sight may be a preferred alternative.  Being in the open is dangerous, but it might also make it more dangerous for those who seek to harm the rabbit. (in this case, the source).  However, I expect in this case, it is not outside the realm of Putin’s options to do fatal harm to someone he considers a traitor, possibly even someone living on U.S. soil.  Crossing such a threshold is considered an international political taboo, but it is one I think Putin would cross under these circumstances.  Of course, the source who was relocated to the U.S. knows all of this and chose this path anyway. Therefore, while it seems counter-intuitive from what many would rationally choose to do, it seems being vulnerable might be a path to security.  At least that appears to be the situation in this case.  Perhaps Russian Intelligence may be more trusting of the U.S. source the more vulnerable that source seems to be.  However, revealing details about Russia that they consider important would still seem to be a dangerous approach. The source was considered very important and guarded.  This is where other elements of the investigation come into play. I believe the much-dramatized document, the Steele Dossier, served the purpose of junk intel to provide cover for this source.  It seems plausible and one might speculate that intelligence services trade in gossip as a means to muddy the counterintelligence efforts of enemies and to protect sources.   Over time this material got pulled into the investigation, but the author and his sources have been routinely discounted by the CIA. So why use them for years?  They used them for information, knowing it was false, so if the Russians caught wind of activity they would assume (though this is all sloppy) the junk material was the source.  This could seemingly provide cover to a real source.  This might keep a source going longer, although this is certainly no justification for knowingly including this material in a FISA application. There are some plausible paths I consider when looking at this that range from the U.S. source being a double agent to providing false information they did not know was false.  First, Russia interfered in the U.S. election through various means, but it seems like this source informed U.S. intelligence, who took notice on the policy front.  Like many effective lies, it seems plausible that some elements were true and some were not true.  But this source, as far as Russia is concerned, did a great service for them by focusing the U.S. political system inwards instead of thinking about geopolitics. It also seems possible that the location of this source was listed but they were not living at that location. This approach might have been used as a way to draw out potential threats, but that strategy seems a little obvious. Perhaps there is an in-between space of deceit that maintains the status quo.  U.S. intelligence realizes they were partially duped and Putin figures keeping the facade up is useful.  Or from the other side, if this person was slightly untrustworthy from Putin’s perspective, he got rid of someone and gained politically at the same time. Some Questions: How did a media figure get information about a source that was so important that it was left out of the President’s Daily Intelligence Brief?   Who at this time knew of this figure existing?  How much danger was the source put in by being revealed…. and was it intentional?  Why did the story die as quickly as it started? In short, there are many parts of this matter that feed other questions that hopefully we will learn more about. This is important for the record. It is also significant to see how rivals are manipulative and react, to help serve as a lesson for future actions.  One lesson is how Russia managed to concoct a plot that got Americans to be more distrusting of each other than of their old Cold War enemy.  How this played out exposed a deep vulnerability, driven by confirmation bias, that senior officials and the public are swayed by. Sometimes we are too quick to believe something, not because it is factual, but because it is in line with opinions we already hold. What worries me most is how unaware we are as individuals of confirmation bias and how it drives so much of our behavior.  We share that, like many other things, with each other. Quote: “To the hard-liners of East and West the Second World War was a distraction. Now it was over, they could get on with the real war that had started with the Bolshevik Revolution in 1917, and had been running under different flags and disguises ever since.” ~  John le Carré, The Spy Who Came in from the Cold News:I am enjoying the chance to share these newsletters with you in the form of the new podcasts and appreciate your continued feedback. You can reply to this email or leave your comments below.  I sincerely enjoy chatting and learning what folks think. Thank you ~ Kevin Get on the email list at modlinglobal.substack.com

Unlike many other writers this week, I am not going to add to the discussion on the Supreme Court. Obviously, it is consequential, and we will be hearing about that controversy for months. Instead, I will focus on an aspect of the Russian interference investigation that has received very little attention. This is the one-year anniversary of a puzzle related to Russia that deserves more thought.  Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends. ~ KevinQuote: “We have to live without sympathy, don't we? That's impossible of course. We act it to one another, all this hardness; but we aren't like that really, I mean...one can't be out in the cold all the time; one has to come in from the cold...d'you see what I mean?” ~ John le Carré, The Spy Who Came In from the Cold No doubt the legacy of the investigation into Russia’s Interference in the 2016 Election has received robust attention in recent years.  But interestingly the attention continues.  The point of this newsletter is not to rehash the existing debates, but to point to a factor that has received scant attention.  I believe it is important to focus on this because without a few key individuals this event would have transpired very differently.  Specifically, these figures are not the ones we know from cable TV or the impeachment hearings and trial.  In other words, I am saying all of this to encourage readers to focus on a specific element and to try to momentarily suspend political biases and how they reinforce confirmation biases.  Because of the details, I am going to cover this subject in two issues. Why is it one of the people who should be most fearful of Russia’s President Vladimir Putin after the events of 2016 lived in the Washington DC area and never even changed their name?  It was only a year ago that some key elements of the story broke. The BBC reported, “According to the New York Times, the source was instrumental in the conclusion by US intelligence agencies in 2016 that Mr. Putin had personally orchestrated Russia's interference in the US presidential election.  The source's information was so sensitive that then-CIA director John Brennan prepared special sealed files for President Obama, rather than include it in the president's ordinary briefing, the Times report said.” Shortly thereafter a Washington news affiliate was able to locate the source and said the individual was living in the Washington Metro area and had kept their name.  They were unable to speak with the source and were asked to leave by federal officials who arrived on the scene.  DC is a town full of officials in various stages of trepidation regarding Putin.  But only this individual’s behavior is hard to comprehend. (At least to me.) In other words, almost everyone else involved in this narrative could easily be understood and explained as an extrapolation of Machiavelli made for TV and twitter. Let's use an alternative analysis of the uproar in Washington.  What if we push all of the regular daily talk about the case to the background and just focus on this one piece of information and examine human behavior. When looking through that lens, the actions of the US source in Moscow who was close to Putin was most peculiar.      If you had been an associate of Putin’s and had apparently double-crossed him, would you live in DC without changing your name?  Some would understandably consider that a risky thing to do. USA Today has published reports that include other examples of targeted killings by Russia including Litvinenko. “A Russian defector and former intelligence officer who specialized in blowing the whistle on organized crime in Moscow, Litvinenko fell mortally ill after meeting with several Russian intelligence contacts.” This person provided intel for nearly a decade and, when the CIA was worried about the person getting exposed, the source refused offers for extraction and stayed in Russia.  When the person finally left, they were extracted to the US where they moved to the DC area and lived under their own name.   They were even able to be tracked down by a reporter. (pretty easily it seems) Strip away everything else – how you feel about people and what they say – If you were this person who allegedly double-crossed and spied on Putin would you live in Washington and be easy to find?   In this whole situation, this is the only act I have found puzzling. I am not saying that everything involved in the Russia investigation no is disappointing or a reason for us to be angry. This is different. This act is puzzling. I think understanding this behavior will illuminate the puzzle better than what anyone has said over these years.  This is why – everyone is risking what they say versus what others say.  In other words, with very low risk.  It could be argued that politicians advanced many of their respective social positions through their statements on the investigation of Russian interference.  Those that declined in status saw little loss in income or other key aspects of their lives.  I am not saying politics does not involve stress and risk – It is very serious. However, there is only one actor in this story who I can imagine is at personal risk.  Living out in the open is a very high personal risk considering Putin’s record of killing people who cross him.   Why did the person do this?  Why have they not been harmed? This is where analysis intervenes with readings of spy books like those written by John le Carré and Littell.  But speculation continues and it is worth unpacking information so we might gain better insight into what actually happened.  While we explore possible explanations for this behavior in the next issue, I just want to close with one question:   What would you do if you crossed Putin?News:I am enjoying the chance to share these newsletters with you in the form of the new podcasts and appreciate your continued feedback. You can reply to this email or leave your comments below.  I sincerely enjoy chatting and learning what folks think. Thank you ~ Kevin Get on the email list at modlinglobal.substack.com

This issue looks at the Indo-Pacific region and specifically relationships among countries and the influence of China.  We will focus on the India and Japan relationship as a way to examine regional dynamics as they play out in many ways in the short and medium-term.  Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends. ~ Kevin The Japan Times recently reported that, “Japan and India have signed a military pact enabling them to exchange supplies and logistical support.”  The report continues by pointing out that these increased military ties are, “part of efforts to step up security cooperation in the face of China’s growing assertiveness.” The most frequently noticed element of Japanese – Indian military relations are the increased scope of military exercises.  As Rej recently noticed in The Diplomat, “Since 2015, Japan has participated in the U.S.-India Malabar naval exercises, which have grown considerably more sophisticated over the years.” The engagement also includes efforts to incorporate regional partners including Vietnam, Indonesia, and Australia.  People observing this activity may be interested in the meaning of this pattern of relations. First, let's turn to some general theoretical ideas to look at these relations. There is a concept in the Realist school of thought called “ offshore balancing” where a great power will seek to contain the rise of another great power through direct and indirect assistance for other regional powers.  The assistance can come in the form of supporting economies or institutions deemed critical, as well as the procurement of military systems and training.  The more direct approaches come in the form of alliances and mutually coordinating when engaging in conflict with an adversarial power.  This offshore balancing concept is most directly articulated in a Foreign Affairs article by Mearsheimer and Walt that, “Instead of policing the world, the United States would encourage other countries to take the lead in checking rising powers, intervening itself only when necessary.”  As we know, the U.S. does not have a formal mutual security treaty with India like the one shared between the U.S. and Japan.  There is no talk of modifying that dynamic. But instead, some significant steps to strengthen regional partners are taking place. However, there are numerous practical and conceptual challenges we may observe in these regional partnerships.  There is a conceptual tension, not unlike in other collective human endeavors, and it centers around commitment.  A great power may want its regional partners to be proactive in protecting their territory and overall security.  On the other hand, the regional partners want to know to what degree there is a commitment from the great power.  The great power can run into the challenges of over committing and inducing a free-rider situation of having the regional powers become too dependent. Conversely, the regional powers could be partners in name only who would be untrusting of the backing of the great power.  They could operate in the spectrum of these scenarios where different ones are to the benefit of one of the major powers.  It is also possible that the hypothetical median point of the two extremes could be even less desirable to some of the actors. In short, this can be a complex needle to thread. This practical problem intersects with another conceptual challenge in that these countries are fundamentally seeking to deter the rise of China in their space.  Deterrence is a core objective of a country as it tries to dissuade a threat.  However, it is not always easy to know if your policies are working. Sometimes it is easier to tell when a policy has failed than when it has succeeded. Therefore, regional powers may take on a mixed approach to achieve multiple ends, including addressing their relations with great powers. These two conceptual challenges of deterrence (as directed primarily toward China but conveyed to partners) and commitment (coordinated with partners but conveyed to China) will be part of these discussions in the decades to come.  There are various levels of engagement in Washington involved in strengthening the relations with Japan and India, including at the State Department and Defense Department.  It is worth noting that the National Defense Authorization Act for fiscal year 2021 has differing focuses in the House and Senate versions.  However, there is a strong consensus on allocating direct funds to the Indo-Pacific Command for direct assistance to its military counterparts in its region.  We may be surprised that there are layers of overlap in politics whether that be in Tokyo, New Delhi, or Washington, DC.  Politics, as they say, create interesting bedfellows. But the most predictable, to me, are those that meet because they agree on a perceived threat. While this seems to be the consensus view, the approach does not prevent or even dissuade interactions that would improve U.S. and China relations. However, this approach would provide options if relations between the U.S. and China further deteriorate.  The deterrence and commitment challenges are at play in the U.S. – Taiwan relationship, as well.  Although they are not security allies, the U.S. sells equipment to Taiwan with the intent of helping them resist an invasion.  Taiwan's political engagements and acquisition are efforts to improve a commitment dimension in its relationship with the U.S.  This was considered a bridge too far for the U.S., who for decades instead conveyed to China its satisfaction with the status quo. This approach was particularly effective in the earlier eras in the relationship, but is now challenged by China’s increased capabilities in precision munitions. As Greer points out there are a multitude of changes that evolved in the relationship and, specifically, Taiwan’s capability to sufficiently deter a sustained offensive from China.  He argues the military (especially the reserve component necessary for repelling an invasion) is poorly trained and ill-prepared for a sustained conflict.  Greer’s point may emphasize some of the challenges of prolonged off-shore balancing (it can rightfully be argued that the early relations were not part of a regional balancing effort that is in play today).  Again, these challenges of commitment and deterrence may make other challenges or crises difficult to address, like two gears that grind into each other continuously.  Challenges can arise without sufficient lubricant or when small external objects slow the gears down. How the U.S. deftly handles these dynamics, and equally important how the regional actors respond, will play a significant role in the politics and economics in the region over these coming decades.  It is also an important place to watch for potential flashpoints. It is a geographic space most likely to be the site of a disagreement between two great powers. Some of these concepts are discussed in an article I wrote with Drs. Chand and Garcia on regional efforts to address China’s rise.  For a more thorough discussion of the regional relations, you can access this 2019 article from The Air Force Journal of Indo-Pacific Affairs.News: I am enjoying the chance to share these newsletters with you in the form of the new podcasts and appreciate your continued feedback. You can reply to this email or leave your comments below.  I sincerely enjoy chatting and learning what folks think. Thank you ~ Kevin Get on the email list at modlinglobal.substack.com

As promised, we are continuing the look at the 2020 election.  This newsletter digs into the election polling and a quirk I noticed when looking at state polling and national polling. Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends. ~ Kevin Something I have noticed, but have not seen discussed elsewhere, is a trend that I was curious about during the primary season. This trend may be an indication that national polling and state polling have some differing results which are interesting. First, this is a post that is not a diatribe about polls.  Some firms do a better or a worse job per generally accepted methods. However, there is a nuance of the art of polling that many have debates over, but they still have difficulty in substantiating.  Let’s put all that drama in a box and revisit it later. I must make a brief tangent into statistics to put us all in the same headspace.  Let us focus on two concepts in statistics: average and variance.  The calculation of average is commonly used in our conversation in a multitude of areas.  We know the average height of a high school basketball team, we know the average grades of a school class, we know the average speed on the road, and we know if someone has an average fashion sense.  The average is a reference point, but it does not tell us everything.  This is where variance can be useful because it tells us how much a measure deviates from the average.  To begin let's suppose the average height of a male high school basketball player is six feet three inches. If we had a team with players ranging in height from six feet two inches to six feet four inches, then our average would be near six feet three inches.  However, we could also have a team with a player six feet nine inches tall and another player who is five feet nine inches tall.  An analyst would show that, on average, both teams are six feet three inches, but anyone who saw the teams play each other would notice the distinct differences in the teams and whatever advantages and disadvantages that would entail.  The point is that the average measure would be unhelpful in detecting this difference.  It is not incorrect, but another measure would help more.  We would see that the team where the player heights are closer to the average have lower variance, while the team where the heights were farther from the average have greater variance.  This is a quantitative statement and not qualitative.  If we were to apply this way of thinking to the returns in a retirement portfolio, a fund that holds U.S. Treasury bonds generally has lower variance than a fund that holds stocks. Something I have been curious about when looking at election polling this year is that the variance in polling for the presidential race has been higher in national polls than in state-level polls.  Hypothetically, I can think of better explanations for the opposite being the case (that national polls have lower variance than state polls). More analysis is warranted in this puzzle, but these are my current findings as culminated from the Real Clear Politics collection of polls.  I focus on the variance of Trump's numbers first under the assumption that an incumbent makes a general impression on voters.  I draw out the national data and key swing states WI, AZ, NC, PA, and FL.  These states have been followed for months.  Also, I am including polls taken after June 5, once Biden had secured the delegates to claim the Democrat nomination to polls analyzed on September 6th.  Inferences from Variance: If I were the leading candidate and I could not be in a blowout, I would want my average to be at or above 50% with low variance.  I would read the variance as how voters move around slightly in different conditions.  If they stick with you, that is a good place to be. If I were the trailing candidate, I would be disappointed with the lower average vote share. However, I might take solace in the fact that there is more variation for my support, because there might be approaches that could help stoke that support.  However, this variance is not consistent across the board.  Trump has much greater variance in Florida than Pennsylvania.  Among the states in this group, the state with the lowest variation for both candidates is North Carolina.  This may be an indicator of fewer swing voters in the Tar Heel State. Returning to my earlier puzzle on possible explanations behind the pattern, it may just be the result of the state's swing status and the low variance.  However, I could expect low variance in non-swing states whether they be Kentucky or New York.  It may be that a few states have movement in their polls that contribute to the national picture that is not seen in these individual states.  However, these states encompass a pretty broad demographic share of the country. To me, this puzzle is even more difficult to grasp because the state polls are generally not held in as high esteem as national polls.  The state polls also have a lower sample size which, by method alone, would lead us to expect greater variance.  It is also possible the results may be a coincidence or a matter of selecting a few states.  However, regardless of the comparison, it is important to note that there is less variation in preferences for these candidates.  One example of a higher relative variance would be Trump’s numbers in Florida.  This may be due to the disproportionate senior population in Florida and reactions to COVID-19.  Census data estimates that 20.5% of the population are seniors in Florida, while seniors account for 16.3% of the population in North Carolina.  Seniors represent 18.2% of the population in Pennsylvania, 17% in Wisconsin, and 17.5% in Arizona. As I have mentioned before, I am very interested in the sentiments of high propensity voting seniors in these swing states.https://www.census.gov/library/visualizations/2020/comm/map-popest-65-and-older.html Before analyzing election dynamics in the coming months I thought it would be helpful to explore this puzzle and consider how variance can reveal trends we may not recognize when looking at polling averages.  Like all other metrics, it is a mistake to over-focus on one measure. But we get a fuller picture by considering these factors along with other observations.News: I am enjoying the chance to share these newsletters with you in the form of the new podcasts and appreciate your continued feedback. You can reply to this email or leave your comments below.  I sincerely enjoy chatting and learning what folks think. Thank you ~ Kevin Get on the email list at modlinglobal.substack.com

Last week, the Federal Reserve announced changes in how it will target inflation. We will provide some context to this change in policy as well as consider some challenges ahead in policymaking.  Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends. ~ Kevin When some folks see these words, “Average Inflation Targeting” together their eyes get heavy.  However, often the consequential things in our lives are not necessarily the things we get excited about.  (Sorry that sounds like something a parent would say.) Once you read all the way through this newsletter you will be rewarded with a joke.  Economists know people follow incentives. Average Inflation Targeting is an important concept both in practice and in what it says about monetary theory.  First, we will take a look at economic theory, recent decades of practice, and then how this may play out.  Like most other aspects of our social world, there remain many unknowns and puzzles.  Among the unknowns are subjects we thought we understood, but over time we realize there are still more unknowns.  This is the case with how monetary policy affects inflation.  The general idea is that inflation follows when there is more money circulating in the economy than what is in line with the demand for purchased goods and services. The Federal Reserve’s statutory mandate is to manage inflation and secure full employment.  These guidelines from Congress are transformed into the Federal Reserve’s policy objectives.  For decades these objectives were sought through broad policy practices, namely trading government treasuries to hit a target short term interest rate.  Over time the Federal Reserve has adopted additional tools but, in practice and effect, the newer tools resemble the earlier ones.  These tools have been key during times of crisis like in 2008 and 2009, as well as today.  The general assumption is that low-interest rates stimulate economic activity as well as inflation.  While there is robust support for this argument, I will assert that the inflation puzzle is not as complete as we had assumed. There may be parts of the puzzle we do not quite grasp, and we might not know what pieces are missing.  However, that does not mean that interest rates are inconsequential.  No one is arguing that.  Monetary policy, including interest rates, is a vital variable in explaining inflation. Imagine you were working for the Federal Reserve and your goal was to hit a target for inflation of 2%.  Over the years you and your team should be pretty pleased because you have wound up close…at about 1.5%.  However, over time you get curious and ask why the result usually comes in under the target. George Mason University economist David Beckworth effectively illustrated this trend a few years ago through a target graphic, which reflects that academia and the Federal Reserve have been discussing this puzzle for about half a decade. The proposed solution is to slightly adjust the targeting approach.  In other words, if we were looking at a target and routinely undershot the bullseye, we would adjust the sights.  In fact, if we were uncertain about precision we might aim slightly above the bullseye, assuming that on average we would get close to the target. This is why the Federal Reserve statement says it, “seeks to achieve inflation that averages 2 percent over time.” To achieve this objective, “following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.” James Bullard, president of the St. Louis Federal Reserve defended the revised approach.  “There was a perception both in markets, and perhaps in the policy making community as well, that 2% inflation was some kind of a ceiling,” he said. “Inflation expectations should be moved up a little bit now in markets in response to this.”  What Bullard (who is not alone) is introducing into this puzzle is the role that expectations have on inflation.  In other words, the behavior of consumers and businesses is impacted by a general assumption of inflation that is informed by their past.  As human beings, we incorporate expectations into a whole range of decisions.  Economists started incorporating this back into economic theory, as argued by Muth, in the 1960s.  While we can think of this expectation as a factor, it is not always easy to measure.  Thus, the reliance on the original monetary tool of interest rates. This average inflation targeting approach is expected to be debated. But what is most likely to happen is that, over this decade, the Federal Reserve will be comfortable with inflation slightly above 2% (meaning brief periods of 2-3%) and will slowly raise rates to tamp down inflation.   In practice this could mean that the Federal Reserve delays for a few quarters what would have been assumed under the previous practices to be the proper time to raise rates to get closer to the 2% target on average. A few newsletters back I discussed some of the future challenges the U.S. faces with constrained monetary and fiscal tools as a result of the national debt. Some choices exist on paper but in practice are limited by the impact of the debt. This is a similar problem to the challenge policymakers faced this year when thinking about economic stimulus to support the economy while not simultaneously stimulating social activity that would spread a virus.  There were a range of policy choices that had to be fundamentally reconsidered.  I expect similar effects will be seen in the future with this constraint on monetary and fiscal policymaking, even assuming the figures and institutions reach an agreement. Promised Joke:News:I am enjoying the chance to share these newsletters with you in the form of the new podcasts and appreciate your continued feedback. You can reply to this email or leave your comments below.  I sincerely enjoy chatting and learning what folks think. Thank you ~ Kevin Get on the email list at modlinglobal.substack.com

In the last week, there has been an increase in the discussions about China’s economic plans and what they might mean. This week we are focusing on the importance of flexibility in state planning and the current emphasis on China’s economic concepts and the domestic and international political environment they are developing within.  Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends. ~ KevinQuote: “The great source of both the misery and disorders of human life, seems to arise from over-rating the difference between one permanent situation and another. Avarice over-rates the difference between poverty and riches: ambition, that between a private and a public station: vain-glory, that between obscurity and extensive reputation. The person under the influence of any of those extravagant passions, is not only miserable in his actual situation, but is often disposed to disturb the peace of society, in order to arrive at that which he so foolishly admires.”  ~ Adam Smith, The Theory of Moral Sentiments A phrase we heard during the US election in 1992 was “It’s the Economy … Stupid”.  As we are aware, this catchphrase knows no geographic bounds.  News out of China shows an increased emphasis on the economy and a state-led revival of economic development concepts.  This is likely due to several factors, as we will examine. That shift in emphasis on the economy may also suggest some things about the national outlook in China. Dual Circulation Theory is an idea being advanced by the leaders of the Chinese Communist Party that emphasizes two forms of growth.  Economic growth occurs through the country’s domestic consumption market as well as through exports.  No doubt many following China could rightfully point out that this concept is similar to the existing economic engines for China.  For China, like most countries, this is a typical approach.  It is not unlike a company saying it will turn a profit by providing products and services.  Both types of claims are sufficiently broad to be useful to operate within.   I think the purpose of this framework in discussing the economy is to create an environment where the broad concept can be employed to explain a whole range of scenarios. Why is this descriptive approach employed?  China needs both robust exports and domestic consumption.  It is assumed that if exports were to decline due to trade competition and manufacturing shifting away from China, the country does not have an adequate domestic market, at least in the short term, to create sufficient demand to meet its supported production. Therefore, I read this language as a sign that China may be preparing for a transition.  As always conditions remain influx. Who would have thought 12 months ago that the US and China would have reached a point where their strained relations could affect trade?  The enmity on both sides is shared by politicians and the public, and this can be expected to be a serious conditioning force for some years.  In response to the epidemic, China shut down numerous cities and production for months, and initially offered targeted relief to specific population hubs.  It has recovered somewhat, but China is still projected to have its lowest annual GDP in decades.  This dual approach gives China flexibility to modify and promote efficiency or to start emphasizing either domestic consumption or exports.  Bill Bishop anticipates this concept will be featured prominently in the roll-out of the Chinese Communist Party’s 14th  Five Year Plan.  Just as in the USSR these Five-Year Plans outline a prearranged national focus on production, technology, and development.  Under the Plan, the proponents aspire to maintain the advancement of a system of socialism with Chinese characteristics.  We may see an increased emphasis on domestic consumption that will occur, either from Say’s Law (“the mere circumstance of creation of one product immediately opens a vent for other products”)  or the Chinese Communist Party will say to consume certain goods. The two terms “socialism” and “Chinese characteristics” allow for flexibility in implementation, where China emphasizes each concept as needed. So, too, will the Dual Circulation Theory.  Others seem to disagree with this argument of flexibility and suggest this is more about China emphasizing domestic consumption.  I think this is a possibility but also under this approach, it would allow for trying to emphasize domestic consumption. In the event it fails, then the approach can be modified. A helpful indicator on this front will be how China frames this approach relative to its Belt and Road Initiative, and what commitments are made under each.  From an international perspective that maybe China responding to the regional investment challenges it was facing, even before the outbreak of Covid-19.  Whether it be the dual circulation approach, Trump’s tactical use of tariffs on steel and aluminum, or the UK restricting technology, we see some economic self-sufficiency winds blowing.  It is unclear how strong the winds are and, as I have argued before, the present is not always a very helpful leading indicator of the future. **Regular China news and analysis, I subscribe to Bishop’s Sinocism on Substack** Speaking of the weather, while folks obsess over trivial debates, China has been hit by an extraordinarily severe rainy season. Huge rains have severely taxed China’s elaborate dam system on the Yangtze river basin, and are responsible for the deaths of hundreds and evacuations in the hundreds of thousands.  Chinese authorities have had to continue to reassure the public the largest dam on earth, the Three Gorges Dam, will be able to handle this uncharacteristically heavy rain season.I am enjoying the chance to share these newsletters with you in the form of the new podcasts and appreciate your continued feedback. You can reply to this email or leave your comments below.  I sincerely enjoy chatting and learning what folks think. Thank you ~ Kevin Get on the email list at modlinglobal.substack.com

We are focusing on the announced change in relations between Israel and the United Arab Emirates along with the conditions involved.  Also, we will focus on some helpful peace concepts.  Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends. ~ KevinQuotes: “Rapprochement is more about practice than institutions.”  ~ Charles Kupchan “Inclined to peace by his temper and situation, it was easy for him to discover that Rome, in her present exalted situation, had much less to hope than to fear from the chance of arms; and that, in the prosecution of remote wars, the undertaking became every day more difficult, the event more doubtful, and the possession more precarious, and less beneficial.” ~ Edward Gibbon Last week the Trump Administration announced a shift in relations between Israel and the United Arab Emirates.  This involves the normalization of relations between the two countries that for decades have not recognized each other diplomatically.  We are going to examine the arrangement, the factors surrounding it, and contextualize it within the research study of peace. With a few exceptions, there seems to be growing support in Congress for this diplomatic effort.  From a consensus standpoint within US domestic politics that is useful.  It may also be important because the agreement may involve solidifying support, which often entails funds from the US.  Palestinian groups have been critical, as well as Turkey and Iran.  Speaking of Iran, many analysts argue that the differences Israel and the U.A.E. each has with Iran have helped to encourage their improving relations with one another. However, these are long-standing divisions and the enmity exists. The balance of power dynamics in the region involves many factors (domestic politics, energy, history of relations, and outside powers) but what seems to align and concern countries in the region most is the sectarian divisions.  (though some disagree)  Much of the suffering and standoff in Syria and Yemen is related to the proxy fighting between groups aligned with either Shia or Sunni. Frequently the efforts are less about achieving aims than about seeking to deny the aims of their sectarian rival.  This has also played a role in the politics in Iraq, Bahrain, and Lebanon, where sectarian divisions have been embedded in politics.  With Iran’s continued efforts to enrich nuclear capabilities, we see Saudi Arabia, with China’s assistance, also enter into this domain, probably as a reaction to the threat of Iran’s nuclear developments.  While there is robust disagreement among Sunni countries and Israel they all agree that their principal concern is Iran.  Plans for peace are laudable objectives.  But like most laudable things it is very difficult to attain.  No doubt this is the case, whether the focus is on Israel and its neighbors or the entire Middle East. That is why steps like those taken last week are important. When studying peace, we can look at work from Galtung, who characterized two types of peace: positive and negative.  This is not a normative characterization but rather is a description of what is actually done. When considering the meaning of positive peace, it is often described as occurring through a series of actions. Within these actions, there is an objective of moving toward peace, which is fostered through norms, laws, and habits. Meanwhile, negative peace is the result of the absence of war and is not the result of specific actions that facilitate the outcome, most notably at the normative level. The recent development between Israel and the United Arab Emirates is also an agreement (like most agreements) that involves the existence of leverage for each side to influence relations.  This may not include harmony or other types of idealized relationships, but it is also far from a conflictual relationship.  If one party does not meet the terms then the other can withdraw. It is also rumored that other Gulf states may join in similar arrangements, which intentionally hints at the possibility that normalization between Saudi Arabia and Israel may happen.  This is particularly plausible given the frequent interaction, although done informally, between these countries on regional affairs. That informal interaction is one of the many widely shared “secrets” in international affairs. In recent decades there have been many failed attempts to reach grand positive peace agreements in the region. Perhaps the lesson we should learn is that the alternative approach of building a foundation is the path to having a negative peace arrangement, and that approach is preferable to numerous alternatives.  Just as war does not last forever, neither does either type of peace.  It's important to recognize that the most desirable form of peace may not be within reach. In this case, it would be hard to assert that positive peace efforts have succeeded. But perhaps more incremental steps are attainable.  These measured positive peace moves like normalization help create a greater environment where negative peace is the dominant state in the western Middle East.  The parties involved seem to acknowledge this.  No doubt the amount of regional balancing and opportunities taken by leaders can influence this, but we could eventually see a series of incremental steps toward peace, which could prove to be very important. What do you expect to happen next in the Middle East? I am enjoying the chance to share these newsletters with you in the form of the new podcasts and appreciate your continued feedback. You can reply to this email or leave your comments below.  I sincerely enjoy chatting and learning what folks think. Thank you ~ Kevin Get on the email list at modlinglobal.substack.com

We have been investigating the science concepts behind the approaches to fight COVID-19.  The purpose of this series is to better understand some of the current responses to the virus and think about how to proceed.  This week we will examine how the human body responds to the virus. Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends. ~ KevinQuote: “In fact, biology is chaos. Biological systems are the product not of logic but of evolution, an inelegant process. Life does not choose the logically best design to meet a new situation. It adapts what already exists...The result, unlike the clean straight lines of logic, is often irregular, messy.” ~ John M. Barry, The Great InfluenzaFlashback: First, as I often say this year, I am not a medical doctor and this analysis is based on readings and attempts to explain a subject to myself as much to others.  With that in mind, all these points should be conditioned with the understanding that there is a lot that is still not known about COVID-19.  But decisions (good and bad) are regularly made under uncertainty.   Just as the virus spreads exponentially within a population it often spreads rapidly within the human body.  This is the case with viruses but there are elements of COVID-19 that makes this particularly the case.  Now of course there are examples where there are people, especially the young, where this does not apply and some of this information may help point to why. Just as a virus spreads rapidly in our body our system has tools to detect the invasion of an unwanted virus.  Once detected it sends a signal to the body to respond.  COVID-19 has many diabolical elements.  These include the possibility that people are contagious before it makes them sick enough to force them to be confined.  Another element researchers are learning is that it seems to interfere with the tools the body produces to detect viruses.  So, in the early stages as it advances in some cases it is less detected.  Konno, Kimura et al explain that COVID-19 is unique at, “suppressing the induction of type I interferon more efficiently than its SARS-CoV” gene sequence. Thus, just like with the other challenge COVID-19 poses is that it gets additional time to spread before our body responds.  To me, only one word describes this: diabolical. But our bodies are generally not going to be passive, as Drs. Iwasaki and Medzhitov explain our body produces T-cells that respond to the virus.  They say, “T cells detect and kill those infected cells.”  It is the job of antibodies to clear out the virus from a system, but the T-cells are the aggressive fighters.  In fact, the fight can sometimes cause damage depending on the circumstances. The challenge is that just as the body becomes more fragile it also generally produces fewer cells that detect viruses and fewer T-cells that are programmed to respond.  This is directly why as a national policy those with certain medical conditions and weak immune systems and/or senior citizens are so vulnerable.  Again, this is why new treatments like steroid injections and Remdesivir are important.  They help the individual recover.  They also generally accelerate the timeline for recovery which is good for the patient and their family but also good for the health care system.  This is because it can help shorten the time of the hospital stay making some beds more quickly available.  Again, because a virus spreads exponentially responses that allow for more hospital capacity can mean the difference in some hospital systems experiencing crisis or catastrophe.  Plasma treatments can also be helpful in this regard to dampen the worse aspects of an overwhelmed healthcare system.  As we wait for a vaccine of which many are designed to address these deficits in our immune system While the healthcare community is taking this seriously there are numerous things society can continue to do to dampen the exponential growth of the virus.  These include distancing, washing hands, and when we must socially interact wear a mask. There are amusing memes online suggesting everyone claims to be an expert at immunology.  This is a fair point.  This is particularly the case when folks seek out information to confirm their existing beliefs. (a common critique of mine) My modest observation is, with a few exceptions, the communities that have fared best, are those that culturally know how to respond to epidemic conditions.  This often is the result of recently dealing with a respiratory virus. They know to quickly responded by changing their behavior.  I fear that is what has slowly happened in the US as each region has had to learn the hard way through considerable suffering, the lesson of mitigation.  Further background read The Atlantic.News:Yesterday was National Book Day… I read I am enjoying the chance to share these newsletters with you in the form of the new podcasts and appreciate your continued feedback. You can reply to this email or leave your comments below.  I sincerely enjoy chatting and learning what folks think. Thank you ~ Kevin Get on the email list at modlinglobal.substack.com

In upcoming weeks we will look into science concepts behind the approaches to fight COVID-19.  The purpose of this series is to better understand some of the current practices, to consider how the increase in the positivity rate of new cases can significantly complicate efforts, and to think about how to proceed. Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends. ~ KevinPlease listen to this podcast as I revisit an earlier issue on exponential growth. This issue will tie into the following newsletter to see how treatments and concepts help deflect the rapid growth of a virus. You can read the original text here. I am enjoying the chance to share these newsletters with you in the form of the new podcasts and appreciate your continued feedback. You can reply to this email or leave your comments below.  I sincerely enjoy chatting and learning what folks think. Thank you ~ Kevin Get on the email list at modlinglobal.substack.com

In upcoming weeks we will look into science concepts behind the approaches to fight COVID-19.  The purpose of this series is to better understand some of the current practices, to consider how the increase in the positivity rate of new cases can significantly complicate efforts, and to think about how to proceed.  Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends. ~ KevinQuote: "The most beautiful experience we can have is the mysterious. It is the fundamental emotion that stands at the cradle of true art and true science."  ~ Albert Einstein Does anyone remember Mr. Wizard’s World?  It was a science show that I enjoyed in the 1980s  and in recent years I still think about that TV program.  I have wondered how Mr. Wizard would explain some of the important concepts behind understanding COVID-19 and our human response.  While I am not a scientist in the areas most often discussed as ways to combat COVID-19 (though cognitive and social behavior is way underappreciated right now), numerous tools and approaches cross disciplines.  My effort here will be to illustrate these concepts to enhance the discussion of ways to deal with COVID-19.  This week we will focus on testing.Testing: In recent months countries, including the US, have employed group testing. By this, I am not saying that individuals are tested together in a group. Rather the tests are run by grouping individual samples.  Grouping individual samples help expedite the testing process. This is especially the case with determining which individuals are negative for carrying COVID-19 antibodies. I believe this approach can best be illustrated in a way that Mr. Wizard might have approached it.Imagine having nine billiard balls and a scale.  The scale would be like the one Justice holds in the statues we see around courtrooms.  The billiard balls all look similar except someone tells us one detail, that one of the balls is heavier than the other eight.  How would you go about determining which ball is slightly heavier and finding it most efficiently?  As you may tell this question is as much about efficiency as it is about accuracy.  You could organize each of the billiard balls and weigh them one at a time against each other.  But outside of the few times you are lucky and find the heavy ball right away, over time it would be very inefficient.  However, just like with the samples for COVID testing, you could group the billiard balls.  For example, you can place three on one side of the scale and another three on the other side of the scale.  If you find that one side is heavier you immediately narrowed down your pool of prospective billiard balls from 9 to 3.  You could even determine this if the results from the scale were even because it would point to the group of three billiard balls that were not yet weighed.  Now you will simply have three balls that you can weigh to determine at random you can pick one ball for each side and be able to logically determine which billiard ball the heavy one is.  This approach allows one to process the nine balls in just two steps.instead of needing many more steps to test them individually.  Given the high demand for COVID 19 testing and the social need for it, this is an effective way to get test results.  There is an excellent article from Nature that explains this in more detail.  It explains how this approach was applied in other pandemics to useful effect. Another challenge with testing is the desire to fix individual pieces of the process (this is not arguing against the efficacy of doing so).  Two cognitive blind spots are at play and some could argue that those spots are in tension with each other.  One is the assumption that incremental progress is effective. Others claim whole change is effective.  Both have clear downsides but, in this issue, when looking at testing it is important to consider the possibility that fixes create problems.  For example, the serious problem of testing capacity may resemble the congestion we see in a city’s transportation flow.  This can be addressed sometimes by fixing some specific points.  However, that act of relieving congestion will reveal other sources of congestion that were less noticed before.Wholesale changes while we are building the plane we are flying in are completely unrealistic. It is also important to see the downsides to tweaks and unexpected effects.  We should at least entertain the possibility that these effects will occur and how to respond to them in the present, while other problems are fixed. There is a big vulnerability to these approaches.  Returning to the illustration with the billiard balls, imagine instead that you were told that the group of nine billiard balls has two or three balls that are a little heavier and it is your job to identify them.  Grouping them is still better than checking them individually, but it does take longer than in situations where fewer billiard balls are heavy.  Of course, my analogy carries over if you have more positive cases of COVID-19 in your pooled sample. It then takes more time to isolate and determine all of the positive cases.  This is bound to happen in any pooled sample. But if it occurs frequently, it causes delays in getting results, like we are hearing about now.  This relates to one of the core arguments of my newsletters this year, related to the compounding side effects of responding to a virus that grows exponentially.  Most systems can be vulnerable to this problem of compounding numbers of COVID cases.  Many systems that would face considerable strain have benefited from robust mitigation practices.  Another lesson from this experience is that having success for a while does not cause you to succeed in the future.  We will talk about all of this in more detail in the coming weeks.News: Humor:I am enjoying the chance to share these newsletters with you in the form of the new podcasts and appreciate your continued feedback. You can reply to this email or leave your comments below.  I sincerely enjoy chatting and learning what folks think. Thank you ~ Kevin Get on the email list at modlinglobal.substack.com

This week we look at working online, including those who could have worked at home for some months this year.  There are many interesting questions related to productivity, effectiveness, and knowledge gleaned from this online work experience.  These questions feed into some of the broader questions facing society. Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends. ~ KevinP.S. What game makes you think? “There is no known way to sell a share of stock-even a share you do not possess-except to somebody who buys it.  And no way to buy except from somebody who sells.  The people who refer to a selling wave mean something; but it is occasionally necessary to remind ourselves there can be no “wave” of selling unless there is equivalent buying, whether we call it “wave” or not.” ~ Thomas Schelling Working Online and Lessons from Chess Tournaments “I'm so much cooler online,” is the funny tag from a Brad Paisley song, but really how cool is it to be online?  This year a high percentage of employees who can have transitioned some of their work to online.  This, of course, is in response to mitigation practices against COVID-19.  With outbreaks occurring across several parts of the United States, there are a range of scenarios regarding how the workplace will adapt to these conditions.  While examining these scenarios, it is important to consider the existing insight we have on how the mind works during online activities versus how it works in person.  While online work and activity is undoubtedly unique, it is not clear how distinct the effect is, given how adaptive humans and communities are.  The differences could be seen as modest across various workplace conditions, but how disruptive we expect things to be may also have an impact.  However, there is also continuity in many of society’s spending habits, relations, and preferences.  As I often point out, it is important to consider the influence of unchanged conditions.  In this newsletter, we will focus on how the mind operates in different environments. A recent article, “Cognitive Performance in the Home Office - Evidence from Professional Chess” by Künn, Seel, and Zegners, compares the performance of top chess players in an online tournament organized by chess champion Magnus Carlsen to the performance at an in-person tournament.  Like other forms of research, the approach seeks to control for variables like player strength, prizes, and the time it takes to play a game.  As a result, the researchers aim to determine the influence of online activity.  They also point to existing cognitive and behavioral findings that are not conclusive regarding the differences between those working online from home and those who perform their duties at an established workplace. The different tasks we perform throughout a day may also be a factor. The literature they cover suggests that some work, like data entry, may be more productive in an office, while other tasks involving creativity may be better from home.  But what about chess? “The analysis is based on comparing the performance of elite professional chess players competing in a recently organized online tournament to their performance during recent offline tournaments,” the authors point out.  Their approach looks at all of the moves within games.  It then measures the errors within each move through a top chess program.  This approach is applied to examining those games played in person and those online.  They find that playing games online, “increases the error size by 16.8% which corresponds to a loss of 219 points of ELO rating.” In the chess world, this is a considerable number. This is insightful, but how many of us engage in the same amount of mental strain (on or offline) as chess games?  I have played chess tournaments and know the intensity of thought is generally higher than most work or classroom experiences.  If that is true, would errors like those identified in this study be more or less prevalent when applying these lessons to the workplace?   In chess, the accumulation of mistakes works significantly against a player.  Most of the errors are very small and may or may not play out similarly in the workplace.  For example, some workplaces would have consequences for ending a sentence with a preposition.  Other errors may be less consequential, if they are noticed at all.  With chess, what makes the errors consequential is that the opponent notices them and capitalizes on the vulnerability.  At the same time, a small business owner who makes a series of small mistakes may also face repercussions.  It may help to look deeper at the type of errors involved in all of these tasks.  I am also concerned about an assumption in the analysis in the article.  First, they excluded the moves from the opening of the game.  At top level play, these moves are universally well known but are also less likely to produce the same variation in errors.  By excluding the opening moves, it seems they magnify the number of errors.  This approach is like emphasizing all the errors we first make when learning how to ride a bike instead of looking at a lifetime of riding. I am also not certain about the way the researchers estimate the loss in rating.  While the errors happen, they are occurring for both players online. When sorting through the outcomes, there will be the same number of winners and losers as if they had been playing in person, so the effect is not the same on the rating estimate.  This point is similar to the Schelling quote at the beginning of the article. Overall, this work is fascinating for what it shows about the errors that occur in top-level thinking during online chess games. At the same time, this should be read in the context of other tasks.  In turn, this complicates the applications when employers consider the overall performance of the firm's workforce.  With existing information being inconclusive about working from home, it is hard to see this paper shifting any argument about working online. Rather, it can further our discussion on types of thinking involved and what errors may differ depending on the environment.  Again, I think this should lead us to focus on understanding the complexity of the mind and how it works, rather than assuming other variables, like where the worker is located, forever alter the mind’s performance. If you want to hear the funny Brad Paisley song:News:I am enjoying the chance to share these newsletters with you in the form of the new podcasts and appreciate your continued feedback. You can reply to this email or leave your comments below.  I sincerely enjoy chatting and learning what folks think. Thank you ~ Kevin Get on the email list at modlinglobal.substack.com

What are you Reading? In recent months the Covid-19 has restricted many of our usual activities, and many of us have used some extra time by turning to “beach reads.” Considering the circumstances, I would say beach reads are the books that you can enjoy, even if you have no beach to rest your toes in.  You can always have something engaging to read. (P.S. I am not really a big beach reader) This week I talk about an assortment of books I have enjoyed over the years.  Please leave a comment about some books you have enjoyed this year. We can have a fun conversation about books. ~ KevinQuote: “Thanks to my reading, I have never been caught flat-footed by any situation, never at a loss for how any problem has been addressed (successfully or unsuccessfully) before. It doesn’t give me all the answers, but it lights what is often a dark path ahead.” ~ James Mattis A friend of mine pointed out that Call Sign Chaos by Mattis (and Bing West) includes the former Secretary of Defense’s recommended reading list.  This newsletter is the beginning of an ongoing collection of readings that I would suggest. In some future titles, I will do a more thorough dive on some additional readings, but this week we explore themes of failure and being quiet. The Up Side of Down: Why Failing Well Is the Key to Success by Megan McArdle is a wonderful book that, as the title explains, shows that making a mistake is not always bad. The real mistake is failing to learn from the experience. McArdle's editorials often look at current economic events in a way that dissects the issues insightfully. In the same way, this book looks at everything from bankruptcy, business cycles, failed movies, criminal probation, and hospital diagnosis, to poor reporting. She makes a point that the US bankruptcy system compliments the social stigma of bankruptcy by a code that is less punitive than it is in some other countries. This, she believes, encourages risk-taking and entrepreneurship. She also cleverly points to past relationships and compares them to the GM bailout. Her underlying argument is that, in both cases, individuals were too guided by past achievements to understand changes around them. As McArdle points out, “A resilient society lets you fail, and even lets the failure sting, but only for a moment. Then it helps you get back on track, and everyone reaps the benefit.” Her insights are both honest and well-reasoned. Much like writers such as Gladwell and Taleb, she is willing to question conventional thinking in an insightful and approachable manner that is tangible. Admirably, she does not distance her own life from examples of personal and professional mistakes, and what she learned encourages all to look within themselves to help explain our world. These qualities make for an excellent read, and I look forward to diving into her next work. Quiet: The Power of Introverts in a World That Can't Stop Talking by Susan Cain is a very well written and insightful book on the qualities of those who are quiet.  I certainly can relate to many of the traits described by Cain.  We live in an extroverted world that rarely relents from its cacophonous sounds.  She does not dispute that human beings engage in social activity, but that quiet expression can have a deeper meaning.  This can take the form of talking in a small group or taking time for quiet reflection. She does not, “think of introversion as something that needs to be cured.” Cain argues that society can often overvalue the contributions of extroverts while the work of introverts is less noticed.  The increased volume and charisma of extroverts can lead the public and managers to be drawn to these figures.  However, she states that individuals who are seen as charismatic are not necessarily more effective at professional tasks.  She claims that this social preference is a mistake because introverts can be more perceptive of certain social conditions.  They can also be creative and develop new ideas during moments of solitude.  I enjoyed many aspects of this book, including the illustrations and insights. I also have to credit Cain for my interest in further exploring this topic with readings on solitude and creativity.  My dissertation writing practices were an attempt at understanding this relationship.“If there's a book that you want to read, but it hasn't been written yet, then you must write it.” ~ Toni MorrisonNews: How math helps with COVID-19 testing: Nature TikTok and the response to possible restrictions in the US: Axios India back in lockdown:  Axios ….. I hope Caro finds out….. I wanted to pause and recognize the value of time spent reading.  Please feel free to share what books you have enjoyed lately in the comments.  As always, thank you for reading this newsletter.  It is fun to write, and I always appreciate the feedback please forward to friends. ~ Kevin Get on the email list at modlinglobal.substack.com

This week we will look at US election politics.  I begin with a framework, based on habit, that looks at macro conditions and will be revisiting these in upcoming months.  This approach also helps parse out personal preferences, so I test my assumptions and predictions more harshly than those that others develop.  Thank you for subscribing, and if you enjoy reading this, please forward the newsletter to your friends. ~ KevinQuote: “Well, I cannot run the political machine; I have enough on my hands without that. It is the people's business, - the election is in their hands. If they turn their backs to the fire, and get scorched in the rear, they'll find they have got to ’sit ’ on the ’blister’!” ~ Abraham Lincoln In studying the 2020 election, I am examining the habits of voters and the factors that can alter those habits. Although we change throughout life, I believe we are pretty committed to our tastes, beliefs, daily practices, and things we say in conversations.  Habits are pretty ingrained.  I know my taste for Ale 8 one has remained steadfast for decades.  The same could be said for my philosophy and even for the way I cut the grass.  Some other habits have changed, and some for the better. Others may have been for the worse. For example, living in Miami did not make me more punctual. I go through this perspective to illustrate how each person is influenced by habit.  When looking at politics, I assume that habits do have an impact on one’s political behavior.  People all around us talk about change, but I will argue that nonchange usually molds our world even more.  Some academic types ascribe this to a structure.  However, when I look at political structures in the form of parties, their influence -but complete lack of control- makes me explore alternative explanations for the lack of variance in voting behavior.  (I am not arguing that structures do not exist, just that some of the sources of a structure are the result of individual actions.  We sometimes confuse that repetition in behavior with a structure. – but I digress) It is with this perspective in mind that I look at political analysis from Charlie Cook and others. We can examine the Electoral College states that are considered the most competitive. Wisconsin was discussed as the key swing state in 2019.  Most describe Wisconsin as the new Ohio in swing state terms. Arizona is usually the accompanying state in the same conversation. Three additional states listed as key toss ups are Pennsylvania, Florida, and North Carolina.  Therefore, over 40 of the states in the country are not under discussion. I frankly saw Pennsylvania as leaning Democrat with Florida and North Carolina leaning Republican, which reflects a slight widening of the pool of states. Dr. Larry Sabato lists Pennsylvania as lean Democrat.  But the number of competitive states needed to win the Presidency remains narrow, which I believe reflects the general assumptions of voter dispositions. The most prominent “lean Democrat” states include Minnesota and Michigan, and the list of “lean Republican” states include Georgia and Texas.  It looks like parts of the South will be in full swing state territory by 2024 and may move in that direction in the coming months.  This is largely due to decades of population influx into metropolitan areas in parts of the South. Current state polling shows a deficit, mostly in the middle single digits, for Trump in these states.  State-level polls are subject to some variance with methods and sample size.  But this is the pattern. This currently gives an edge to Biden, but its an edge not too different from the one that Hillary Clinton had in 2016.  Candidates need 270 Electoral College votes to win. According to Cook, Trump is assumed to have 204, while Biden is assumed to have 248 at this point.  In fact, the resemblance to 2016’s election map is pretty fascinating and not unlike the similarities in results that took place in presidential elections in 2000 and 2004.  So far, we see very few changes in assessing the state by state political landscape in a year of major events.  (Mark this under the theme that change does not always beget change) It seems the conventional wisdom is if Trump’s polling falls below the low 40s, Republicans that are in lean Republican districts are much more vulnerable.  This is the case with House and Senate seats.  I could see scenarios where Trump's numbers move up a little or down a little over the coming months.  These are my modest thoughts for campaigns in this cycle.  My free advice to both sides would be to convey seriousness and substance in more than tone.  This seems to be what the public expects during a pandemic. If Democrats were listening to my advice: 1. Find some way to claim the offensive 2. I would not pick a VP candidate on anyone's shortlist, because they would face considerable opposition within the party 3. Pick VP with medical experience (nurse or doctor) with competent leadership skills If Republicans were listening to my advice: 1. Focus on effective governance as employed in the “Baker Plan” that helped Gerald Ford recover support to the point that he barely lost in 1976. 2. Maintain the offensive 3. Establish message discipline that talks about economic recovery (I realize the tension in these three points) This is the general framework as I see it right now.  I will probably do an update in September and an election night tracking sheet to organize references to key races.  The condition of a severe pandemic makes me entertain the possibility that some voters will shift their habits.  Some folks who regularly vote could find doing so difficult, whereas others who infrequently vote could choose to cast ballots.  Some of this relates to the habit of voting but also to how Covid-19 conditions could interrupt that habit.  I think about this a lot and plan on including a discussion of this along with the election sheet.Perspective from the Economist and Electoral College sheet from Cook Report. News:US naval exercises as China has naval exercises in the South China Sea: AxiosIran acknowledges site was a centrifuge facility: Politico I’m enjoying the chance to share these newsletters with you in the form of the new podcasts and appreciate your continued feedback. You can reply to this email or leave your comments below.  I sincerely enjoy chatting and learning what folks think. Thank you ~ Kevin Get on the email list at modlinglobal.substack.com

This is the Modlin Global Analysis Podcast EditionYou can subscribe through your favorite podcast provider.Thank you for reading and listening! ~ Kevin Get on the email list at modlinglobal.substack.com

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