Disarmageddon

Despite North Korea, arms control is unravelling

Complacent, reckless leaders have forgotten how valuable it is to restrain nuclear weapons



RARELY do optimism and North Korea belong in the same breath. However, the smiles and pageantry in April’s encounter between Kim Jong Un and Moon Jae-in, leaders of the two Koreas, hinted at a deal in which the North would abandon nuclear weapons in exchange for a security guarantee from the world, and in particular America. Sadly, much as this newspaper wishes for a nuclear-free North Korea, a lasting deal remains as remote as the summit of Mount Paektu. The Kims are serial cheats and nuclear weapons are central to their grip on power. Moreover, even as optimists focus on Korea, nuclear restraints elsewhere are unravelling.

By May 12th President Donald Trump must decide the fate of the deal struck in 2015 to curb Iran’s nuclear programme. This week Binyamin Netanyahu, Israel’s prime minister, gave a presentation that seemed designed to get Mr Trump to pull America out. He may well oblige.

Worse, within three years current agreed limits on the nuclear arsenals of Russia and America are set to lapse, leaving them unconstrained for the first time in almost half a century.

In the cold war a generation of statesmen, chastened by conflict and the near-catastrophe of the Cuban missile crisis, used arms control to lessen the risk of annihilation. Even then, nuclear war was a constant fear (see article). Their successors, susceptible to hubris and faced with new tensions and new technology, are increasing the chances that nuclear weapons will spread and that someone, somewhere will miscalculate. A complacent world is playing with Armageddon.


START worrying

One problem is that the critics of arms control overstate its aims so as to denigrate its accomplishments. Opponents of the Iran deal, such as John Bolton, Mr Trump’s new national security adviser, complain that it has not stopped Iran from working on ballistic missiles or from bullying its neighbours. But that was never the intent of the Joint Comprehensive Plan of Action (JCPOA), as it is formally known. Instead, for at least ten years, the pact cuts off Iran’s path to a bomb and makes any future attempt more likely to be detected early. Whatever Mr Netanyahu implies, Iran has kept its side of the agreement despite not getting many of the economic benefits it was promised.

Wrecking the Iranian deal has costs. Iran would be freer to ramp up uranium enrichment, putting it once more in sight of a weapon. The nuclear Non-Proliferation Treaty (NPT), still the best bulwark against the spread of the bomb, would be undermined: other countries in the region, such as Saudi Arabia and Egypt, may well respond by dusting off their plans to become nuclear powers; and America would be abandoning a fix that shores up the NPT. Mr Trump would have to work even harder to convince Mr Kim that he can trust America—especially as Mr Bolton compares North Korea to Libya, whose leader gave up a nuclear programme only to be toppled by the West and butchered a few years later.

A second problem is mistrust, heightened since the revival of great-power competition between America and Russia after a post-Soviet lull. That ought to give arms control new urgency; instead it is eroding it. Take New START, which caps the number of strategic warheads deployed by Russia and America at 1,550 each. It will expire in 2021 unless Vladimir Putin and Mr Trump extend it, which looks unlikely. Instead Mr Trump boasts that America’s nuclear arsenal will return to the “top of the pack”, bigger and more powerful than ever before. That repudiates the logic of successive strategic-arms-control agreements with Russia since 1972, which have sought to hold back a nuclear arms race by seeking to define parity.

Fix it, don’t nix it

Or take the insouciance with which the likes of Mr Bolton and his Russian counterparts condemn the Intermediate-Range Nuclear Forces (INF) Treaty. Struck in 1987 by Ronald Reagan and Mikhail Gorbachev, this deal dismantled 2,700 ground-launched nuclear missiles with a range of 500-5,500km that put European deterrence on a hair-trigger. Today each side says the other is violating the INF. Mr Bolton et al argue that it is worth keeping only if it includes countries such as China—which they know will not happen.

Last comes the problem of technology. Better missile defence could undermine mutually assured destruction, which creates deterrence by guaranteeing that a first strike triggers a devastating response. Speaking on March 1st, Mr Putin brandished exotic new nuclear weapons he would soon deploy to counter future American missile defences. A new nuclear arms race, with all its destabilising consequences, is thus likely. A cyber-attack to cripple the other side’s nuclear command and control, which could be interpreted as the prelude to a nuclear first strike, is another potential cause of instability in a crisis. Verifying the capabilities of software is even harder than assessing physical entities such as launchers, warheads and missile interceptors. New approaches are urgently needed. None is being contemplated.

Extending New START, saving the INF, creating norms for cyber-weapons and enhancing the Iran deal are eminently doable, but only if there is sufficient will. For that to gel, today’s statesmen need to overcome a fundamental misunderstanding. They appear to have forgotten that you negotiate arms-control agreements with your enemies, not your allies. And that arms control brings not just constraints on weapons of unimaginable destructive force, but also verification that provides knowledge of capabilities and intentions. In a crisis, that can reduce the risk of a fatal miscalculation.

Cherish the scintilla of hope in North Korea, and remember how arms control needs shoring up. The alternative is a future where countries arm themselves because they cannot be sure their enemies will not get there first; where every action could escalate into nuclear war; where early warnings of a possible attack give commanders minutes to decide whether to fire back. It would be a tragedy for the world if it took an existential scare like the Cuban missile crisis, or worse, to jolt today’s complacent, reckless leaders back to their senses.


Barron's Cover

Facebook and Apple Embody New Tech Divide

By Alex Eule and Jon Swartz
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    Photo: Christina Chung


Apple became the largest public company in the world the old-fashioned way: charging lots of consumers lots of money. So it’s not surprising that its CEO, Tim Cook, would chafe as Facebook grew to challenge Apple’s supremacy without charging its users a dime.

In recent weeks, that tension has grown, as Cook and Apple (ticker: AAPL) sought to distance themselves from Facebook (FB) and the uproar over user data. In a television interview, Cook, hardly a rabble-rouser, accused Facebook of building a business based on an “invasion of privacy.”

“The truth is, we could make a ton of money if we monetized our customer—if our customer was our product,” Cook told MSNBC. “We’ve elected not to do that.”

Added Cook: “We’ve never believed that these detailed profiles of people, that have incredibly deep personal information that is patched together from several sources, should exist.”

Facebook CEO Mark Zuckerberg, who proved his composure during two days of congressional grilling, was less patient when it came to Cook’s criticism. We’re “not just serving rich people…you need to have something that people can afford,” Zuckerberg said about Apple. He called Cook’s comments “extremely glib and not at all aligned with the truth.”

Welcome to tech’s great divide. For several years now, investors have talked about FANG—Facebook, Amazon.com (AMZN), Netflix (NFLX), and Google-parent Alphabet (GOOGL)—or FAANG (adding Apple) as a unified trade, a way to play the latest tech trends.

The companies are all similar in that they use technology in disruptive ways, but investors have generally overlooked substantial differences in their business models. As changes loom, ignoring those differences is a risky bet. 
It’s not just personal sniping between rival CEOs. There are real differences between direct-to-consumer revenue models and ad-driven data models. Or, in a nutshell: Apple versus Facebook.




The divide has been amplified by the Facebook controversy, but the fault lines have been widening for years, as tech firms turned to advertising revenue to scale their businesses. Silicon Valley never got fully comfortable with that deal.


“The odd thing to me—as someone who has worked on Madison Avenue—is that most of Silicon Valley has always brushed under the rug the fact that Madison Avenue is the center of its commercial activity,” says Brian Wieser, an analyst with Pivotal Research Group, who spent eight years forecasting the global advertising economy at Magna Global, and currently has one of the few Facebook Sell ratings on Wall Street.

But after the outcry over Cambridge Analytica’s harvesting of personal data, the reality can no longer be ignored. Facebook and Google are advertising companies that don’t sell to consumers, while Apple, Amazon, and Netflix have spent years building direct connections to customers. The free frontier of Silicon Valley is now vulnerable to regulation, while the subscription model may be more stable and attractive.

To highlight the divide, we looked at how much revenue Big Tech players receive from advertising. Earlier this month, Zuckerberg repeatedly reminded his congressional questioners that Facebook doesn’t sell data to advertisers. The well-honed response is technically accurate, but Facebook is set to sell over $50 billion in ads this year, specifically because of its user data.

The same applies to Google. Data—and the ability to target viewers—is the main ingredient separating Big Tech from the traditional publishing and media companies.

As the risk of regulation mounts, advertising exposure should be a good proxy for which companies are most vulnerable among big tech. At the top of the list is Facebook. Last year, 98% of its revenue came from advertising. Snap (SNAP) came in at 97%, with Google-parent Alphabet and Twitter (TWTR), both at 86%.

We pulled the data with the help of Sentieo, a financial data platform. Not all tech firms break out their ad revenue as a separate segment, but the companies routinely disclose their ad dependence in the risk-factor section of annual reports. Those risk factors, while often full of worst-case scenarios, hold valuable data for investors.

Apple, Netflix, and Dropbox (DBX) have minimal, if any, ad exposure, and they don’t mention ad revenue in their risk section. Amazon is one to watch, given its growing ad business. So far, the company doesn’t address the ad risk, either.



Ad-free Netflix is the best performing stock in the Standard & Poor’s 500 index this year. After a banner earnings report last week, Netflix shares are up 71% in 2018. Strong subscriptions are the cause, but it doesn’t hurt that Netflix has skated worry-free as Facebook got dragged through the mud. Facebook shares are down 5.8% on the year.

Last week, during Netflix’s quarterly conference call, CEO Reed Hastings took a victory lap for the company’s ad-free model: “I’m very glad that we built this business to not be advertising supported, but to be subscription. We’re very different from an ad-supported business….So I think we’re substantially inoculated from the other issues that are happening in the industry, and that’s great.”

That line is unlikely to go over well at Facebook headquarters in Menlo Park, Calif. Hastings sits on Facebook’s board of directors; the great tech divide may soon play out live in Facebook’s boardroom.

Even oft-troubled Uber has found the moral high ground in Facebook’s struggles.

Uber CEO Dara Khosrowshahi told the Today show, “The fact is, human beings are sometimes good and sometimes not. I think Silicon Valley is understanding that with building these platforms comes the responsibility to make sure that those platforms are being used for good.” But “we don’t try to monetize it,” he added.

We contacted the companies cited in this article. Some declined to comment, while others didn’t want to speak on the record.

It makes no sense that Apple and Facebook would emerge as the primary adversaries in the privacy debate.

Facebook is a social-media behemoth built on accumulating as many members as possible—and it has done a phenomenal job, with 2.13 billion monthly active users. It’s a scale play built on the lowest possible barriers to entry for its users. The trade-off is an ad-heavy business that generated $40.65 billion last year and a projected $55 billion this year. Altogether, Facebook generates just $26 per year per user.

Apple is on the opposite side of the spectrum. There are no specific user metrics for the company, but Barron’s recently estimated that the company has 900 million customers. Based on an estimated $262 billion in revenue this year, we get Apple per user revenue of $291, or roughly 11 times Facebook’s average.



More than 60% of Apple’s sales come from sales of the iPhone, which had an average selling price of $796 last year.

Perhaps partially to justify its high prices, Apple has made privacy a sales pitch for its products. In a letter to customers in 2014, Cook hailed the efficacy of creating a “great customer experience” but not at the “expense of privacy.”

And before his death, Apple CEO Steve Jobs directed his animus at Facebook and Google. “Privacy means people know what they’re signing up for, in plain English and repeatedly,” Jobs told tech journalists Walt Mossberg and Kara Swisher in 2010. “Ask them. Ask them every time. Make them tell you to stop asking them if they get tired of your asking them. Let them know precisely what you’re going to do with their data.”

Given lawmakers’ recent questions to Zuckerberg about Facebook’s complicated terms of service, Jobs—no surprise— sounded prescient.

Now, amid the Facebook controversy, Cook & Co. see an opportunity to gain leverage against a competitor, says Scott Brazina, chief marketing officer of Impact Radius, a digital marketing firm.

“Apple is in a uniquely powerful position to take the high road on this”—especially in the current news cycle, Brazina says. “Consumers are getting desensitized to hacks and breaches, yes, but the pendulum is swinging back to the Apple model. Security is job one.”

Zuckerberg and Facebook didn’t take us up on our request to discuss the topic, but Zuckerberg hasn’t hidden his disdain for Apple’s mission. “I think it’s important that we don’t all get Stockholm Syndrome and let the companies that work hard to charge you more convince you that they actually care more about you,” Zuckerberg said in his recent Cook response. “Because that sounds ridiculous to me.”

And in 2014, Zuckerberg told Time magazine, “A frustration I have is that a lot of people increasingly seem to equate an advertising business model with somehow being out of alignment with your customers. I think it’s the most ridiculous concept. What, you think because you’re paying Apple that you’re somehow in alignment with them? If you were in alignment with them, then they’d make their products a lot cheaper.”

Zuckerberg and Chief Operating Officer Sheryl Sandberg have both hinted at the possibility of a paid version of Facebook, potentially free of ads. On the surface, it wouldn’t cost consumers much. If Facebook makes $26 a year per user, that could theoretically be more than offset by a monthly payment of $3.

But that has not been the model for Zuckerberg, who has made worldwide access a company mission. And globally, plenty of people can’t afford $3 a month.

Early on, as Facebook became an ad behemoth, few blinked at privacy concerns.

“Facebook is locked into Web 2.0 (circa 2008), thinking that advertising is the only way,” says Joel Vincent, chief marketing officer at cloud start-up Zededa. “Their systems are locked and optimized for that business model.”



The problem is that the model now looks outdated: Consumer trust in Facebook’s ability to protect privacy and safeguard data has plunged from 79% in 2017 to a recent 27%, according to a survey of 3,000 people by the Ponemon Institute, a research firm.

When Zuckerberg was pressed by members of Congress this month on whether he would consider changing Facebook’s business model, he refused to answer the question.

“Congressman, this is a complex issue that I think deserves more than a one-word answer,” Zuckerberg said.

Apple, Netflix, and others are happy to talk up their ad-free business models now, but some of this has come about by accident. In 2010—the same year that Jobs praised privacy to Mossberg and Swisher—Apple began a mobile advertising network called iAd, touting $60 million in commitments from “leading global brands.” In the announcement, Jobs sounded almost envious of Facebook’s growing success: “iAds will reach millions of iPhone and iPod touch users—a highly desirable demographic for advertisers.”

Apple shut down the network in 2016. A company representative declined to discuss the reason.

It’s possible that Apple’s product culture got in the way. “They were trying to bend advertising to Apple’s will, and it didn’t work,” Pivotal’s Wieser says.

To be sure, digital advertising remains a powerful business, and few on Wall Street seem worried about Facebook’s prospects. In fact, analyst estimates for Facebook’s revenue have actually headed higher since the start of the year.

Ultimately, consumers will decide this debate. And there, too, Facebook’s problems might be exaggerated. The #deleteFacebook movement has faded on Twitter, and in terms of number of tweets, it never reached the peak of #deleteUber, despite Facebook’s far larger user base.

But the boardroom debates over Silicon Valley’s business models are just getting started. At the earliest stages, venture capitalists and entrepreneurs in the Valley are assessing the new climate.

“It is a question that every VC asks: What are you going to do about privacy?” says Prashant Fonseka, a principal at CrunchFund, a venture-capital firm in San Francisco.

“From 2013 to 2016, the tech community assumed consumers didn’t care about privacy anymore,” he says. “We thought all data would eventually be in the public sphere.”

That utopian notion has been undone by the Cambridge Analytica scandal. Now, tech companies are scrambling to adapt. Exuberant tech investors will have to adjust alongside them.


New Revelations Suggest a President Losing Control of His Narrative

By PETER BAKER

President Trump is used to dictating the terms of his own life to create a narrative that suits his desired image. Credit Doug Mills/The New York Times 


As of last week, the American public had been told that President Trump’s doctor had certified he would be “the healthiest individual ever elected.” That the president was happy with his legal team and would not hire a new lawyer. That he did not know about the $130,000 payment to a former pornographic film actress who claimed to have had an affair with him.

As of this week, it turns out that the statement about his health was not actually from the doctor but had been dictated by Mr. Trump himself. That the president has split with the leaders of his legal team and hired the same new lawyer he had denied recruiting. And that Mr. Trump himself had financed the $130,000 payment intended to buy the silence of the actress known as Stormy Daniels.

Even in the current political environment that some derisively call the post-truth world, the past few days have offered a head-spinning series of revelations that conflicted with the version of events Mr. Trump and his associates had previously provided. Whether called lies or misstatements, Mr. Trump’s history of falsehoods has been extensively documented, but the string of factual distortions that came to light this week could come back to haunt him.

The shifting statements also illustrated starkly why some of the president’s lawyers have urged him not to submit to an interview by the special counsel, Robert S. Mueller III, who is investigating whether Mr. Trump’s campaign cooperated with Russia during the 2016 presidential election and whether the president obstructed justice to thwart that investigation. Those lawyers have said Mr. Mueller is setting a perjury trap for Mr. Trump. What they do not say publicly is that they worry the president would be unable to avoid contradicting himself.

Mr. Trump has for years presented selective and creative accounts of his life and businesses — “truthful hyperbole,” as he put it in his first book — and at times this habit has gotten him in trouble. Even after being elected president, he paid $25 million to settle lawsuits accusing him of fraud for hoodwinking students who signed up for his now defunct, for-profit Trump University.




As a matter of politics, the latest contradictions may not matter much, at least not yet. The public to some extent has grown accustomed to the factual deviations or written them off as unimportant. Just this week, Mr. Trump surpassed 3,000 false or misleading claims since taking office, according to a running tally by The Washington Post — an average of 6.5 per day.

A poll released this week by NBC News and SurveyMonkey found that 61 percent of Americans had already concluded that the president tells the truth only some of the time or less. But even among the Republicans who question Mr. Trump’s honesty, most still support him, according to the survey.

And to be sure, not every misleading statement is equally meaningful. In March, The New York Times reported that Mr. Trump was in discussions to hire Emmet T. Flood, a veteran Washington lawyer.

Mr. Trump reacted angrily. “The Failing New York Times purposely wrote a false story stating that I am unhappy with my legal team on the Russia case and am going to add another lawyer to help out,” he wrote on Twitter. “Wrong. I am VERY happy with my lawyers, John Dowd, Ty Cobb and Jay Sekulow.” Mr. Dowd resigned 11 days later. Mr. Cobb announced his resignation this week. He will be replaced by Mr. Flood.

Under the unforgiving glare of federal prosecutors, however, misrepresentations carry far greater jeopardy. In nearly a year on the case, Mr. Mueller has shown that he is more than willing to charge associates of Mr. Trump with lying to investigators; independent lawyers have said it would be reckless for the president’s lawyers to allow him to be interviewed. Even supporters who maintain that Mr. Trump is essentially a truth teller acknowledge that he can be loose with details.

For Mr. Trump, it is about creating a narrative that suits his desired image, and dictating the terms of his own life — in media coverage, in his business, in politics, even in his medical care. But he now risks losing his grip on the story line he has long sought to control, in part because of his own treatment of associates like his doctor and the lawyer who paid the porn star.

This week’s revelation about the true origin of the doctor’s statement may not have surprised many. When Dr. Harold N. Bornstein released a letter in December 2015 saying that Mr. Trump would be “the healthiest individual ever elected to the presidency,” few believed it was authentic. It contained the exact language about “strength and stamina” that the candidate often used to describe himself.
Dr. Bornstein confirmed this week that Mr. Trump had dictated the letter, a disclosure that stemmed from his own split with the president. After he told The Times last year that Mr. Trump used hair-loss medicine, the president was angry and embarrassed, according to aides. Mr. Trump, who often calculates the risks of angering people who know intimate details about him, did not express his frustration publicly. But he sent aides to seize his medical records from Dr. Bornstein, who felt burned enough by the incident to break his silence.

Likewise, Mr. Trump has to worry about whether his brusque treatment of his longtime lawyer, Michael D. Cohen, might come back to hurt him. Mr. Cohen, now facing an investigation by federal prosecutors in New York, originally said that he made the $130,000 payment to the porn actress, whose given name is Stephanie Clifford, from a home equity line of credit and that he was not reimbursed by the Trump Organization or campaign.

Mr. Trump, asked by reporters on Air Force One last month whether he knew about the payment to Ms. Clifford, said “no.” He likewise said he did not know where the money came from.

But in an interview on Fox News on Wednesday night, Rudolph W. Giuliani, the former New York mayor now serving as a lawyer for the president, said Mr. Trump had reimbursed Mr. Cohen for the money.
In a follow-up interview on Thursday morning, Mr. Giuliani said Mr. Trump did not actually learn the specifics until recently. “He didn’t know the details of this until we knew the details of this, which was a couple weeks ago,” Mr. Giuliani said. “Maybe not even a couple — maybe 10 days ago.”

Mr. Giuliani seemed less concerned with explaining Mr. Trump’s previous denial than with emphasizing that it was the candidate’s personal money and therefore could not be a violation of campaign finance law. He said the payment to Ms. Clifford as part of a nondisclosure agreement was made in October 2016 only to protect Mr. Trump’s family from a false allegation, not to influence the election less than two weeks later.

While others might think paying $130,000 to someone who was making a false allegation was hard to fathom, for a wealthy man like Mr. Trump it was not quite “pocket change, but it’s pretty close to it,” Mr. Giuliani said.

“When Cohen heard $130,000, he said: ‘My God, this is cheap — they come cheap. Let me get the thing signed up and signed off,’” Mr. Giuliani added.

The disclosure prompted a message of vindication from Ms. Clifford’s lawyer, Michael Avenatti. “We predicted months ago that it would be proven that the American people had been lied to as to the $130k payment and what Mr. Trump knew, when he knew it and what he did in connection with it,” he wrote on Twitter. “Every American, regardless of their politics, should be outraged by what we have now learned. Mr. Trump stood on AF1 and blatantly lied.” 
In his Wednesday night interview, Mr. Giuliani also offered a different reason for Mr. Trump’s decision to fire James B. Comey as F.B.I. director last year. When Mr. Trump first announced the dismissal, he explained it by saying that Mr. Comey was “not able to effectively lead the bureau” and cited memos criticizing his handling of the investigation into Hillary Clinton’s email server. The next day, Mr. Trump told Lester Holt on NBC News that he would have fired Mr. Comey regardless of the memos and that he had the Russia investigation on his mind.





On Fox News, Mr. Giuliani attributed the decision to Mr. Comey’s refusal to publicly exonerate Mr. Trump in the Russia investigation. “He fired Comey because Comey would not, among other things, say that he wasn’t a target of the investigation,” Mr. Giuliani said. Since then, Mr. Mueller’s office has told the White House that Mr. Trump is a subject, though not a target, of the investigation.

Mr. Giuliani told The Times that he had consulted with Mr. Trump before and after making the revelation about the $130,000 payment on Wednesday night, and the president posted a series of messages on Twitter on Thursday morning that read as if drafted by a lawyer to elaborate.

But some still wondered whether it was an unscripted comment, especially given that it came up almost casually at the end of a long interview with Sean Hannity, the Fox News host. Mr. Giuliani and Mr. Trump have a long and deep relationship. The former mayor has the president’s ear — and understands how to communicate with him — in a way that few others do.

Still, Mr. Giuliani is a former big city mayor accustomed to being an executive, and his ability to simply carry out orders without adding his own flair has always been in question.

Either way, the last few days have shown that Mr. Trump’s narrative is now at least in part in the hands of others — his lawyers, his friends, his doctor, his accuser’s lawyer, even his investigators. And for a man who prefers to craft his own story line, that is not a comfortable situation.


Maggie Haberman contributed reporting.


China, India and the Confrontation Neither Side Wants

By Phillip Orchard

 

Indian Prime Minister Narendra Modi is flying to Wuhan for a weekend of soul searching with Chinese President Xi Jinping along the banks of the Yangtze. The last-minute trip is Modi’s second of three to China scheduled to take place within the span of a year. It’s also just the latest bit of high-level outreach from New Delhi to Beijing, which makes sense: Neither leader has a shortage of grievances to air with the other – and both have ample interest in preventing tit-for-tat confrontation from putting the two emerging powers on a collision course.

Over the past year, Indian and Chinese jostling for position in South Asia has picked up considerably. In July and August, Chinese and Indian forces engaged in a standoff over the disputed Doklam border region in the high Himalayas. Since then, China has continued cozying up to pro-Beijing governments in South Asian countries firmly within India’s traditional sphere of influence, from Sri Lanka to Nepal to the Maldives. China’s tool of choice in its effort has been its sprawling One Belt, One Road infrastructure initiative, with Beijing winning the rights to build strategically located deep-water ports, among other projects, throughout India’s periphery.

India sees this as an excuse for China to encircle it with de facto Chinese naval bases. (In India’s view, its fears were validated this week when China’s defense minister told his Pakistani counterpart that Beijing was ready to provide security for OBOR projects such as Pakistan’s Gwadar port.) In response, New Delhi has been sounding the alarm that participating countries risk becoming overly indebted to the Chinese, poking holes in Beijing’s narrative that OBOR is a force for the common good. India has been similarly busy in China’s backyard, deepening defense and economic cooperation with states that pose strategic problems to Beijing, such as Vietnam, the Philippines and Singapore. Most alarming to Beijing, India has joined Japan, Australia and the U.S. in taking early steps toward reviving “the Quad,” an alliance aimed at managing Chinese assertiveness and economic coercion in the broader Indo-Pacific region.

Yet, over the past three months, India has also been moving to defuse tension. New Delhi has dispatched a series of high-level officials to Beijing. It canceled a pro-Tibet conference headlined by the Dalai Lama in New Delhi. It quietly backed down after China threatened to take action to prevent India from intervening in a political crisis in the Maldives. Most notably, on April 26, it announced that it would not invite Australia to take part in major trilateral naval exercises with the U.S. and Japan in June, a setback for the Quad.

All this speaks to the uneasy trajectory of Sino-Indian relations. Realistically, neither country has much interest in duking it out for supremacy in the Indo-Pacific. Yet, as illustrated by the sense of urgency with which India has been seeking to head off a major confrontation, underlying forces are pushing the two sides into a self-perpetuating cycle of zero-sum competition anyway. And the deeper China and India sink into this spiral, the harder it will be for either side to pull out.
 

Unlikely Rivals
It’s a matter of course that two rising border rivals – both just beginning to get a taste for power projection – would increasingly bump up against each other as they attempt to carve out protective buffers and lock in their newfound gains. But historically, and for the most part still today, neither China nor India poses a major threat to the other’s homeland.

There is literally a huge barrier to war between the two countries. To move a substantial force between China and India, one option would be to cross the forbidding Himalayas. If, say, India were to effectively occupy Tibet, or China were to occupy Nepal, this would certainly pose a problem. But the logistics of warfare at 14,000 feet (4,300 meters) is exceedingly difficult, meaning both could feel reasonably secure with these regions existing as buffers, perhaps host to occasional shows of machismo that fall far short of risking all-out war. The other option is to sail more than 3,000 nautical miles through the turbulent waters flanking the Malay Peninsula and the Bay of Bengal. Attacking China this way is a non-starter for India. For China, it’s true that the pace of the People’s Liberation Army Navy modernization has been extraordinary, as illustrated by this week’s launch of sea trials for China’s first indigenous aircraft carrier. But China’s buildup is primarily intended to dominate its littoral waters and secure access through the first island chain, and it’s a long way from developing the combined air-sea battle capabilities needed to really challenge India from the sea.

Moreover, Beijing and New Delhi’s strategic orientations are in fundamentally different directions, in inherently poor positions to threaten the other’s critical interests farther afield. China’s core strategic problem is the series of maritime chokepoints to its east and south, which an outside naval power could use to sever China’s access to critical sea lines of communication. A powerful Indian navy could conceivably threaten Chinese oil imports from the Middle East or exports to Europe, but the Indian Ocean is vast, and India is a long way from having a navy capable of dominating critical sea lanes even if it had a reason to. India’s core strategic problem is its internal incoherence and the hostile nuclear power on its western border. If it had its way, India would mostly just be left alone to manage its internal fractures and keep Pakistan at bay.

The problem is that as China moves to address its primary strategic concerns to its east, secondary concerns to its southwest are becoming more important, making India, largely unwittingly, more of a potential threat. This is forcing India to respond in ways that further heighten the threat to China, which is forcing China to fix the Indian Ocean more firmly in its sights, which is forcing India to reach out to outside powers like the U.S., and so on. This cycle will only intensify as military developments diminish the significance of the geographic barriers that have largely preserved an uneasy peace.
 
Necessary Choices
China is finding little choice but to push into South Asia. It needs to find ways to bypass chokepoints in the East and South China seas, so it needs to build deep-water ports, pipelines and rail lines in India’s backyard. It’s under pressure to keep its domestic industries humming and its oligarchs happy to prevent destabilizing power struggles at home, so it needs to bribe, cajole or coerce local governments into awarding Chinese firms the rights to build them. Since it doesn’t have the trillions of dollars needed to fund the entirety of the initiative on its own, it needs to use every tool of state power at its disposal to win projects on the most favorable terms possible. Inevitably, some of these will have to be built in notoriously restive regions – some of which will become more unstable as OBOR projects exacerbate social and environmental tensions – so it needs to push for permission to use its security forces to do what security forces from weaker host states may not be able to do. And to prepare for a potential conflict that blocks its maritime chokepoints, China needs to develop the naval forces to keep its backup outlets open and counter enemy forces coming from the west – and this means it needs to establish bases and logistics facilities abroad to support them.

China has relatively little fear of India’s own military trajectory – a fact underscored regularly, including this week, by derisive commentary in Chinese state media – even if India would have a considerable home-field advantage if a conflict broke out in the Indian Ocean. But an India tightly aligned with the U.S. and its regional allies would rightfully be alarming to Beijing. Such an alliance would help make up for the dramatic shortfall in Indian capabilities, of course, while allowing India to expand its presence dramatically without taking on a long-term project of developing overseas bases and logistics facilities. A string of recent agreements with both the U.S. and France will aid in this regard. More important, it would ease the burden on the U.S. in a potential conflict with China, allowing the Americans to amass forces where needed while trusting partners like India and Australia to provide support from the flanks.

For India, the validity of China’s strategic fears is meaningless, as is the reality that China is currently too weak to project substantial power into the Indian Ocean. Whatever China’s intentions, India feels encircled by a country with a voracious appetite for power – one that happens to be arming New Delhi’s most dangerous rival and intent on building a bluewater navy – putting it at an intolerable long-term risk of a two-front war.

Still, New Delhi is caught between conflicting interests here and struggling somewhat to find its footing. It doesn’t want to push its neighbors into China’s orbit by trying to deny them the Chinese aid and investment their economies may need. But its influence with these states would suffer if it were seen as a pushover, incapable of countering Chinese coercion. Already, China has ample cause to think that if it pushes, India will be the first to back down. New Delhi needs the Quad to pose a credible deterrent and persuade China that its best interest is to rise within the established order. Yet, lately, the U.S. has proved to be something of an aloof and inconsistent security partner, and India can’t build a strategy around an outside power that may not show up in a crisis.

Thus, while neither country wants a fight, India wants it less. This will make India an exceedingly reluctant Quad partner, keen to avoid coordinated actions that make China feel backed into a corner. But it will be a Quad partner nonetheless. China can’t back down without sacrificing its core imperatives, and India’s lack of options in the matter will become increasingly apparent.


Where Countries Are Tinderboxes and Facebook Is a Match

By AMANDA TAUB and MAX FISHER


MEDAMAHANUWARA, Sri Lanka — Past the end of a remote mountain road, down a rutted dirt track, in a concrete house that lacked running water but bristled with smartphones, 13 members of an extended family were glued to Facebook. And they were furious.

A family member, a truck driver, had died after a beating the month before. It was a traffic dispute that had turned violent, the authorities said. But on Facebook, rumors swirled that his assailants were part of a Muslim plot to wipe out the country’s Buddhist majority.

“We don’t want to look at it because it’s so painful,” H.M. Lal, a cousin of the victim, said as family members nodded. “But in our hearts there is a desire for revenge that has built.”

The rumors, they believed, were true. Still, the family, which is Buddhist, did not join in when Sinhalese-language Facebook groups, goaded on by extremists with wide followings on the platform, planned attacks on Muslims, burning a man to death. 



A false Facebook claim: “23,000 sterilization pills caught in Ampara. Thank you to the police. Muslim pharmacy owner from Akkaraipattu arrested. Who wants to sterilize the Sinhalese?” Credit Amanda Taub/The New York Times 


But they had shared and could recite the viral Facebook memes constructing an alternate reality of nefarious Muslim plots. Mr. Lal called them “the embers beneath the ashes” of Sinhalese anger. 
We came to this house to try to understand the forces of social disruption that have followed Facebook’s rapid expansion in the developing world, whose markets represent the company’s financial future. For months, we had been tracking riots and lynchings around the world linked to misinformation and hate speech on Facebook, which pushes whatever content keeps users on the site longest — a potentially damaging practice in countries with weak institutions.
Time and again, communal hatreds overrun the newsfeed — the primary portal for news and information for many users — unchecked as local media are displaced by Facebook and governments find themselves with little leverage over the company. Some users, energized by hate speech and misinformation, plot real-world attacks.

A reconstruction of Sri Lanka’s descent into violence, based on interviews with officials, victims and ordinary users caught up in online anger, found that Facebook’s newsfeed played a central role in nearly every step from rumor to killing. Facebook officials, they say, ignored repeated warnings of the potential for violence, resisting pressure to hire moderators or establish emergency points of contact.

Facebook declined to respond in detail to questions about its role in Sri Lanka’s violence, but a spokeswoman said in an email that “we remove such content as soon as we’re made aware of it.” She said the company was “building up teams that deal with reported content” and investing in “technology and local language expertise to help us swiftly remove hate content.”

Sri Lankans say they see little evidence of change. And in other countries, as Facebook expands, analysts and activists worry they, too, may see violence. 

The police guarding a restaurant run by the Atham-Lebbe brothers after violence broke out there. Credit Adam Dean for The New York Times 


One Town, Two Versions

Five hours east of Medamahanuwara lies the real Ampara, a small town of concrete buildings surrounded by open green fields. The road there passes over verdant mountains before coasting through tropical flatlands, contested territory during the civil war that ended in 2009, now distinguished mostly by quiet teahouses.

But the imagined Ampara, which exists in rumors and memes on Sinhalese-speaking Facebook, is the shadowy epicenter of a Muslim plot to sterilize and destroy Sri Lanka’s Sinhalese majority.

As Tamil-speaking Muslims, the Atham-Lebbe brothers knew nothing of that version of Ampara when, using money they saved laboring in Saudi Arabia, they opened a one-room restaurant there. They had no way to anticipate that, on a warm evening in late February, the real and imagined Amparas would collide, upending their lives and provoking a brief national breakdown. 

It began with a customer yelling in Sinhalese about something he had found in his dinner.

Unable to understand Sinhalese, Farsith, the 28-year-old brother running the register, ignored him. 
He did not know that the day before, a viral Facebook rumor claimed, falsely, that the police had seized 23,000 sterilization pills from a Muslim pharmacist in Ampara.

The irate customer drew a crowd, which gathered around Farsith, shouting: “You put in sterilization medicine, didn’t you?”

He grasped only that they were asking about a lump of flour in the customer’s meal, and worried that saying the wrong thing might turn the crowd violent.

“I don’t know,” Farsith said in broken Sinhalese. “Yes, we put?”

The mob, hearing confirmation, beat him, destroyed the shop and set fire to the local mosque.

In an earlier time, this might have ended in Ampara. But Farsith’s “admission” had been recorded on a cellphone. Within hours, a popular Facebook group, the Buddhist Information Center, pushed out the shaky, 18-second video, presenting it as proof of long-rumored Muslim plots. Then it spread.

An aerial view of Kandy, Sri Lanka, where Buddhists and Muslims have clashed. Credit Adam Dean for The New York Times 



Vigilante Justice

As Facebook pushes into developing countries, it tends to be initially received as a force for good.

In Sri Lanka, it keeps families in touch even as many work abroad. It provides for unprecedented open expression and access to information. Government officials say it was essential for the democratic transition that swept them into office in 2015.

But where institutions are weak or undeveloped, Facebook’s newsfeed can inadvertently amplify dangerous tendencies. Designed to maximize user time on site, it promotes whatever wins the most attention. Posts that tap into negative, primal emotions like anger or fear, studies have found, produce the highest engagement, and so proliferate. 
In the Western countries for which Facebook was designed, this leads to online arguments, angry identity politics and polarization. But in developing countries, Facebook is often perceived as synonymous with the internet and reputable sources are scarce, allowing emotionally charged rumors to run rampant. Shared among trusted friends and family members, they can become conventional wisdom.




And where people do not feel they can rely on the police or courts to keep them safe, research shows, panic over a perceived threat can lead some to take matters into their own hands — to lynch.


Last year, in rural Indonesia, rumors spread on Facebook and WhatsApp, a Facebook-owned messaging tool, that gangs were kidnapping local children and selling their organs. Some messages included photos of dismembered bodies or fake police fliers. Almost immediately, locals in nine villages lynched outsiders they suspected of coming for their children.

Near-identical social media rumors have also led to attacks in India and Mexico. Lynchings are increasingly filmed and posted back to Facebook, where they go viral as grisly tutorials. 

Worshipers at a burned-out mosque that was ransacked and set afire along with neighboring Muslim shops and homes by a Buddhist mob in Digana. Credit Adam Dean for The New York Times 



‘You Report to Facebook. They Do Nothing’

In a small office lined with posters in Colombo, Sri Lanka’s capital, members of an advocacy group called the Center for Policy Alternatives watched as hate exploded on Facebook — all inspired by the video from Ampara, which had overtaken Sinhalese social media in just a week.

One post declared, “Kill all Muslims, don’t even save an infant.” A prominent extremist urged his followers to descend on the city of Kandy to “reap without leaving an iota behind.”

Desperate, the researchers flagged the video and subsequent posts using Facebook’s on-site reporting tool.

Though they and government officials had repeatedly asked Facebook to establish direct lines, the company had insisted this tool would be sufficient, they said. But nearly every report got the same response: the content did not violate Facebook’s standards. 
“You report to Facebook, they do nothing,” one of the researchers, Amalini De Sayrah, said.
 
“There’s incitements to violence against entire communities and Facebook says it doesn’t violate community standards.”

In government offices across town, officials “felt a sense of helplessness,” Sudarshana Gunawardana, the head of public information, recounted. Before Facebook, he said, officials facing communal violence “could ask media heads to be sensible, they could have their own media strategy.”

But now it was as if his country’s information policies were set at Facebook headquarters in Menlo Park, Calif. The officials rushed out statements debunking the sterilization rumors but could not match Facebook’s influence.

Officials had pleaded with Facebook representatives, in a meeting in October, to better police hate speech and misinformation, which they warned could spiral into violence. They asked the company to establish an emergency point of contact in case it did. In a separate meeting, civic leaders urged Facebook to hire Sinhalese-speaking moderators to staff its reporting tool.

The Facebook employees left offering only vague promises, officials said.

Facebook still appears to employ few Sinhalese moderators. A call to a third-party employment service revealed that around 25 Sinhalese moderator openings, first listed last June, remain unfilled. The jobs are based in India, which has few Sinhalese speakers.

Facebook has no office in Sri Lanka, which officials say makes it difficult to impose regulations.

Mr. Gunawardana, the public information head, said that with Facebook unresponsive, he used the platform’s reporting tool. He, too, found that nothing happened.

“There needs to be some kind of engagement with countries like Sri Lanka by big companies who look at us only as markets,” he said. “We’re a society, we’re not just a market.”

   A charred Quran at a mosque that was attacked. Credit Adam Dean for The New York Times 




The Thrill of Tribalism

Facebook’s most consequential impact may be in amplifying the universal tendency toward tribalism. Posts dividing the world into “us” and “them” rise naturally, tapping into users’ desire to belong. 
Its gamelike interface rewards engagement, delivering a dopamine boost when users accrue likes and responses, training users to indulge behaviors that win affirmation.





And because its algorithm unintentionally privileges negativity, the greatest rush comes by attacking outsiders: The other sports team. The other political party. The ethnic minority.

Online outrage mobs will be familiar to any social media user. But in places with histories of vigilantism, they can work themselves up to real-world attacks. Last year in Cancún, Mexico, for instance, Facebook arguments over racist videos escalated to fatal mob violence. 
Mass media has long been used to mobilize mass violence. Facebook, by democratizing communication tools, gives anyone with a smartphone the ability to broadcast hate.




Facebook did not create Sri Lanka’s history of ethnic distrust any more than it created anti-Rohingya sentiment in Myanmar.

But the platform, by supercharging content that taps into tribal identity, can upset fragile communal balances. In India, Facebook-based misinformation has been linked repeatedly to religious violence, including riots in 2012 that left several dead, foretelling what has since become a wider trend.

“We don’t completely blame Facebook,” said Harindra Dissanayake, a presidential adviser in Sri Lanka. “The germs are ours, but Facebook is the wind, you know?”.


“The house is burning.” Abdul Basith died when a Buddhist mob set fire to his family home in Digana, Sri Lanka. Credit Adam Dean for The New York Times 



The Boiling Point

As anger over the Ampara video spread online, extremists like Amith Weerasinghe, a Sinhalese nationalist with thousands of followers on Facebook, found opportunity. He posted repeatedly about the beating of the truck driver, M.G. Kumarasinghe, portraying it as further proof of the Muslim threat. Mr. Weerasinghe stoked anger through images overlaid with text. 
When Mr. Kumarasinghe died on March 3, online emotions surged into calls for action: attend the funeral to show support. Sinhalese arrived by the busload, fanning out to nearby towns. Online, they migrated from Facebook to private WhatsApp groups, where they could plan in secret.

In a video posted to at least one group, a man dressed as a monk yells, “The sword at home is no longer to cut jackfruit so kindly sharpen that sword and go.”

In another group, a user shared a photo of a dozen makeshift weapons with a list of targets: “Thannekumbura mosque and the mosque in Muruthalawa tonight. Tomorrow supposedly Pilimathalawa and Kandy.”



A Sri Lankan WhatsApp user posted a photo of makeshift weapons and a list of mosques to target as anti-Muslim mobs descended on several towns.


On Facebook, Mr. Weerasinghe posted a video that showed him walking the shops of a town called Digana, warning that too many were owned by Muslims, urging Sinhalese to take the town back. The researchers in Colombo reported his video to Facebook, along with his earlier posts, but all remained online.

Over the next three days, mobs descended on several towns, burning mosques, Muslim-owned shops and homes. One of those towns was Digana. And one of those homes, among the storefronts of its winding central street, belonged to the Basith family.

Abdul Basith, a 27-year-old aspiring journalist, was trapped inside.

“They have broken all the doors in our house, large stones are falling inside,” Mr. Basith said in a call to his uncle as the attack began. “The house is burning.”

The next morning, the police found his body.

In response, the government temporarily blocked most social media. Only then did Facebook representatives get in touch with Sri Lankan officials, they say. Mr. Weerasinghe’s page was closed the same day..

Mohammed Haniffa Lebbe Mohammed Ibrahim, second from left, an imam, had to hide when his mosque was attacked. Credit Adam Dean for The New York Times 



One Size Fits All

No organization has ever had to police billions of users in a panoply of languages. Although Facebook prohibits incitement and hate speech, there is no clear line between prudence and censorship. 

Despite criticism and concerns from civil society groups, the company has done little to change its strategy of pushing into developing societies with weak institutions and histories of social instability, opening up information spaces where anger and fear often can dominate. 
When Facebook entered Myanmar in 2014, Buddhist extremists seized on the platform, spreading misinformation that set off a deadly riot that year. In 2017, hate speech on Facebook contributed to ethnic cleansing against Myanmar’s Rohingya minority.

Amrit Ahuja, a company representative, says Facebook’s approach to hate speech “has evolved” globally. The company plans to hire more moderators and increase coordination with officials and civic groups, she said in an email, to “help keep our community in Sri Lanka safe.”

Adam Mosseri, who runs Facebook’s newsfeed, said on a Slate podcast that he and his team were “losing sleep” over the platform’s role in Myanmar. Tweaks to the algorithm, he said, will privilege people’s long-term interests over their short-term preferences in an effort to address the problem.

Change is not without risk for the company. In January, when Mark Zuckerberg, the Facebook chief executive, announced changes to the newsfeed, the company’s stock tumbled 4.5 percent in a few hours.

And it is not without risks for users. From October to March, Facebook presented users in six countries, including Sri Lanka, with a separate newsfeed prioritizing content from friends and family. Posts by professional media were hidden away on another tab.

“While this experiment lasted, many of us missed out on the bigger picture, on more credible news,” said Nalaka Gunawardene, a Sri Lankan media analyst. “It’s possible that this experiment inadvertently spread hate views in these six countries.”.


Atham-Lebbe Farsith, right, a Muslim restaurant worker, was attacked by a customer who accused him of putting “sterilization medicine” in the food. Credit Adam Dean for The New York Times 



‘You’re From the Video!’

A week after the violence, Shivnath Thukral, Facebook’s public policy director for South Asia, and two of his colleagues flew to Colombo, for a meeting with a group of government aides. 

Mr. Thukral was conciliatory, acknowledging that Facebook had failed to address hate-speech and promising better collaboration. In a call with civic leaders, he conceded that Facebook did not have enough Sinhalese moderators, pledging to hire more.
Still, government officials said, they face the same problem as before. Facebook wields enormous influence over their society, but they have little over Facebook.


Even blocking access did not work. One official estimated that nearly three million users in Sri Lanka continued accessing social media via Virtual Private Networks, which connect to the internet from outside the country.

As officials met in Colombo, Atham-Lebbe Farsith, the Muslim restaurant worker, was in hiding. He had shaved his beard. Not to hide his faith, he said, but because even in the Muslim village where he found shelter, he could hardly make it a block without being recognized.

“People would ask me all sorts of questions,” he said. “‘You’re from the video!’”

Facebook had turned him into a national villain. It helped destroy his business, sending his family deeply into debt. And it had nearly gotten him killed.

But he refused to abandon the platform. With long, empty days in hiding, he said, “I have more time and I look at Facebook much more.”

“It’s not that I have more faith that social media is accurate, but you have to spend time and money to go to the market to get a newspaper,” he said. “I can just open my phone and get the news instead.”

“Whether it’s wrong or right, it’s what I read.”


Doug Casey on the Demise of Nation States, Part 2

Justin’s note: Yesterday, Doug Casey and I talked about the decline of nation states. Today, we continue our discussion… and look at what could ultimately replace them…

________________________________________

Justin: Will politicians allow this to happen? Or will they use the next crisis as an opportunity to seize more power and wealth from everyday people?

Doug: There’s no question about that. The prime directive of every living entity—including governments—is to survive. They’ll try to do so at any cost. They’re like giant dinosaurs in their death throes, thrashing around wildly. They’re very dangerous. You’re going to have to be a very smart little mammal that hides in a hole to not get crushed by them.

The best template for how this is probably going to evolve was laid out in Neal Stephenson's book, The Diamond Age. In that book, which is a work of genius, Stephenson explains how the world is likely to reorient itself. He expects most nation states will dry up and blow away.

Sure, some will still exist, but most will be replaced by what he calls “phyles.” These are support groups based on whatever you value most. These phyles will provide services like defense and insurance. So, they’ll offer all the benefits that nation states offer today but they’ll necessarily do a much better job, because they’re private, voluntary, and cohesive.

More and more people will discover who their real countrymen are. You’ll find out who you really want to associate and ally yourself with. And it won’t be people who just so happened to have been born in the same area as them, many of whom you have nothing in common with except proximity or government ID. Some may even be enemies or parasites…

Justin: And he thinks these phyles will replace governments completely?

Doug: There will still be governments that control certain geographical areas. After all, governments have lots of force. And most people are like chimpanzees; they crave, or at least accept, leadership by the biggest and most aggressive monkey. But I expect many will eventually be replaced by phyles. This will be technology driven.

And with migration unfolding the way it is, Africa is going to have hundreds of millions of Han Chinese changing the situation on that continent. They’re basically going to take over that continent. At the same time, scores of millions of African migrants will take over Europe.

Those are two big trends that I feel certain about. Who knows what other side shows will happen? But the nation state in its present form is a dead duck. And good riddance to it.


Justin: I find the concept of phyles fascinating. But can you help me better understand how they’d work? How big would they be? Would they span across countries and continents?

Doug: Well, again, people naturally fall into groups of the like-minded, joined by the things that are most important to them. They could be their philosophy, their religion, or their occupation. In prisons, for instance, it’s race. Inmates self-segregate. The concept is a perversion of the phyle concept, in a way. But to many people race is the most important thing in their lives.

Every individual has several, or a dozen, or perhaps a score of things that are important to them. In my case, my friends are people who share my worldview. They believe in maximum social and economic freedom. Those are good qualifiers. I also prefer—I’m quite exclusionary, actually, no “diversity”—people who are honest and competent. And I tend to associate with people of the same economic status because I frankly find that poor people mostly don’t usually bring much to the party.

Justin: Why do you say that?

Doug: Poor people are usually poor for a reason. They have bad habits. I know all the excuses and sob stories, and some of them are even true. But I don’t want to associate with people who have bad habits, whether they’re rich or por.

I can probably put my finger on about 25 or 30 people in the world that I’d want standing next to me when it’s time to fix bayonets. But that doesn’t, incidentally, include the average guy that lives in Aspen, Colorado, which is where I spend the northern summer. For that matter, it doesn’t apply to the average guy anywhere. In today’s world, “average” doesn’t cut it.

In most cases people maintain an acceptable social veneer. But they're not reliable or trustworthy enough to be part of a phyle that I’d join.

There will end up being thousands of phyles, everything from the Hell’s Angels to the Rotary Club. And that’s a good thing. It’s much better than just dealing with the people who happen to live in your área.

Justin: How long could it be before nation states start going up in smoke? It seems like this is already happening in Europe where many countries appear eager to break off from the European Union (EU).

Doug: No question about that. The EU is a complete dog’s breakfast, and has become totally counterproductive. One thing that you can plan your life around is that the EU will break up, dry up, and blow away. It’s completely dysfunctional. It makes absolutely no sense to have 50,000 bureaucrats, useless mouths, in Brussels making everybody's life miserable.

The EU started out as a free trade zone for iron and coal. Good, but unnecessary. And then it metastasized. The idea of a political group managing free trade is a contradiction, idiotic actually. You only need each individual government to drop its barriers, duties, and quotas—unilaterally. The US, and any other country, should have zero of these things, for its own benefit. Otherwise it’s like putting yourself under embargo.

Free trade is wonderful and natural. But having the EU or NAFTA facilitate trade is ridiculous and counter functional. The same goes for the United Nations, which is nothing but a corrupt club for bureaucrats. It serves no purpose, and should be abolished. It's just a drain on the world economy, the EU on steroids.

One of the nice things about the Greater Depression, which we entered upon in 2007, is that these governments will become unaffordable. The United States will soon find out that its giant military/industrial/security complex is not only bankrupting the country, but putting it in serious danger. It doesn’t “defend” the US, but draws attacks and creates enemies. And it certainly doesn’t defend freedom, rather the opposite.

All their domestic welfare programs are not only unaffordable but—even if they were free—are actively destructive. They’ll fall apart during the coming time of economic stress. And that’s a good thing, although the period of change will certainly be inconvenient and unpleasant for many people.

What scares me is that people will act like chimpanzees during this chaos. They'll be afraid. And they’ll want somebody to protect them. But that, of course, is asking for real trouble.

Leaders that promise the most freebies, and the most safety, usually end up being someone like Stalin, Hitler, or Mao. That will happen in the States, too. We’re no longer the country we once were not so long ago.

I mean, a lot of people hate Trump. I don't have any particular animosity toward him. Sure, he’s done some pretty stupid things; his foreign policy of late borders on the criminally insane.

But at least the Deep State—which really exists, should any naïfs have any doubt—hates him.

And that shows he’s doing a few things right…

But what really scares me is the next president, because that person will be elected in the middle of a gigantic crisis. And I’m afraid that Americans will pick someone very, very dangerous.

Justin: What will happen to public services when nation states get wiped out? Will phyles provide things like defense and education? Who will be responsible for public infrastructure like roads and bridges?

Doug: Well, there’s absolutely nothing that the government does that entrepreneurs couldn’t do better and cheaper.

The only justification for the State is its pure coercive power. People seem to think it’s necessary to have an organization with massive coercive power on top of society. That’s the essence of the state. It’s supposed to protect you from force initiated by other people. The army is there to protect you from people outside your geographical area. The police are there to protect you from criminals within your geographical area. And a court system that allows you to adjudicate disputes without resorting to force.

That’s what governments are supposed to do, at least in theory. I could live with a government that did that, and only that. But many governments, including the U.S. government, do these jobs incompetently, and at inordinate cost. Worse, they try to do absolutely everything else.
In fact, I don't believe the State should do anything. It’s innately dangerous, incompetent, and always draws the worst kind of people.

It certainly shouldn't be in charge of education. That’s the responsibility of parents. Education is the last thing that should be handed over to the State, if only because the public schools always tend to indoctrinate kids rather than educate them. Public schools also take responsibility away from parents. That makes them irresponsible, which is disastrous.

What else? Welfare? Before the Roosevelt regime, Americans used to provide charity on a one-to-one basis. You found somebody who was worthy of help and you helped them. Or you joined something like the Rotary, Optimists, Lions, Knights of Columbus, or what-have-you. There used to be 1,000 organizations like that. Their business was to help people who deserved help.

But all these organizations have been minimized because of the huge amounts of capital the State draws out of society. The State has replaced them. In the process the State has cemented the proles to the bottom of the barrel with their institutionalized programs.

And this is true of absolutely everything and everywhere the government sticks its tentacles.

Justin: Thanks for speaking with me today, Doug.

Doug: You’re welcome.