Op-Ed Contributor
China Fills Trump’s Empty Seat at Latin America Summit
By Alfonso Serrano
Vice President Mike Pence may be taking President Trump’s place at the Summit of the Americas in Lima, Peru, on Friday, but the vacuum left by the United States’ steady retreat from the region was filled, much earlier, by China.
Latin America is now the second-largest destination for Chinese investment, after Asia. China is the top trading partner for three of Latin America’s biggest economies: Brazil, Chile and Peru. Chinese influence is evident throughout the region, from highway construction in Ecuador to port projects in Panama and a planned fiber optic cable running from Chile to China.
China’s soft power is perhaps most visible at the southern edge of Argentina, in Santa Cruz province. This pristine Patagonian terrain, home to glacial lakes and one of Argentina’s last free-flowing rivers, has also become home to bulldozers and cranes made by Shantui, the Chinese construction giant. The machines are excavating the area around the Santa Cruz River to build two hydroelectric dams, financed by $4.7 billion from the China Development Bank and built by China Gezhouba Group with partners from Argentina. When completed, the dams will flood roughly 116,000 acres, generating 5 percent of the country’s energy needs and an estimated 5,000 local jobs.
President Mauricio Macri of Argentina, left, and President Xi Jinping of China in Beijing last year.CreditPool photo by Damir Sagolj
The Santa Cruz project is just one of the $141 billion in loan commitments China made to Latin America from 2005 to 2016. China’s lending now surpasses lending from the World Bank and the Inter-American Development Bank.
But China, unlike those agencies, isn’t putting short-term conditions on those loans or pushing for austerity measures. Instead, its interest in Latin America is part of a long strategic game, an effort to assert its influence around the world, quench its need for raw materials and control the flow of global trade through Chinese-funded transportation hubs.
While the United States has been retreating from its southern neighbors for years, Mr. Trump has added outright hostility to neglect. Five months after taking office, he reversed Barack Obama’s historic overtures to Cuba and stifled United States business ties with the country, a move perceived as potentially devastating for the island’s private sector. Threats to blow up Nafta, cut aid to Honduras and Colombia, and militarize the United States border with Mexico have underscored Mr. Trump’s contempt.
The message is not lost on Latin America, and it is much louder than anything Mr. Pence may say in Lima, where he is expected to argue that the United States, not China, is Latin America’s preferred trading partner. He may also announce some progress on a renegotiated Nafta.
United States influence in the region lingers, of course. The United States remains Latin America’s largest trading partner. Despite the pivot to China, certain countries have resisted its dominion, wary of China’s thirst for raw materials and its lax environmental standards. President Mauricio Macri of Argentina, breaking from his predecessor, has sought warmer ties with the West. And however strong Mr. Trump’s xenophobic rhetoric may be, Latin America is intimately tied to the United States by immigration. Remittances from the states to the region amounted to $74 billion in 2016, a 7.4 percent increase from the previous year.
It’s not too late for Mr. Pence to quietly strengthen those ties. He could listen to the concerns of pro-business leaders, such as Mr. Macri and President Sebastián Piñera of Chile, who may ask for a return to more open trade policies. He can put something concrete behind Mr. Trump’s apparent willingness to re-enter the Trans-Pacific Partnership, an agreement that includes three Latin American countries and serves as a countermeasure to China. He could signal the administration’s openness to ending the ban on American business transactions with the government-led group that oversees the Cuban economy. That policy, criticized even by Republicans, is likely to harm average Cubans more than the inner circle of Cuban leadership.
This is a good moment for a few friendly gestures. Some of China’s splashiest megaprojects, including a transcontinental railway from Brazil to Peru, a high-speed railway in Mexico and an interoceanic canal project in Nicaragua, have run into trouble. Germany has already emerged as a potential investor in the stalled Brazil-Peru railway.
Meanwhile, Chinese firms have begun to expand into sectors other than natural resources and transportation, particularly into energy infrastructure projects in Chile, Argentina and Ecuador, as China makes good on Xi Jinping’s pledge to deliver $250 billion in direct investment and $500 billon in bilateral trade by 2025.
Mr. Xi has backed that lofty promise by visiting Latin America three times in his first three years in office. The Chinese president doesn’t have a seat at the table for the Summit of the Americas, but he doesn’t really need one.
Alfonso Serrano is an independent journalist who writes frequently about Latin America.
CHINA FILLS TRUMP´S EMPTY SEAT AL LATIN AMERICA SUMMIT / THE NEW YORK TIMES OP EDITORIAL
VIOLENT CRIME: HOW TO CUT THE MURDER RATE / THE ECONOMIST
Violent crime
How to cut the murder rate
Murder is set to soar in some cities of the developing world
THE planet has rarely been so peaceful. Even with terrible fighting in such places as Congo, Syria and Yemen, wars between and within countries are becoming less common and less deadly. But a dark menace looms. Some of the developing world’s cities threaten to be engulfed by murder.
Of the 560,000 violent deaths around the world in 2016, 68% were murders; wars caused just 18%. Murder has been falling in rich countries (though London is suffering an outbreak, but it has long plagued Latin America and is starting to climb in parts of southern Africa, the Middle East and Asia. The world often goes to great lengths to stop wars. Just imagine if it put as much effort into stopping murders.
Latin America shows what is at stake. It has 8% of the world’s people but 38% of its recorded murders (see Briefing). Counting the costs of police, hospitals, victims’ lost incomes and so on, the bill for violent crime comes to 3.5% of GDP. The greater toll is human: mothers and fathers burying children, children brought up without a parent and societies deprived of tens of thousands of citizens in the prime of their lives.
There is no excuse for this suffering. Many of the emerging world’s problems are intractable.
Murder is not one of them.
Dusty death
High murder rates have lots of causes: fragile government; guns and fighters left over from wars; families broken up and forced into the city by rural violence and poverty; drugs and organised crime that police cannot or will not confront; and large numbers of unemployed young men.
The mix of causes in each country is unique but in every case rapid, chaotic urbanisation makes the problem worse. Urbanisation itself is welcome, because it boosts incomes and growth. It need not lead to violence—look at India and China, which have relatively low crime rates. But it can feed a vicious cycle, as the proliferation of murder destroys trust between the police and the people they are meant to protect. Residents keep off the streets. They no longer support the authorities. Impunity grows and the level of violence climbs further.
That is what faces some of the world’s poor cities. Many already have the ingredients of a murder culture. Over the next decades these cities are set to grow rapidly. As much as 90% of urban growth will take place in the poor world. By 2030, according to HSBC, a bank, 42 of the 50 most-populous cities will be in emerging markets. Dhaka, Karachi and Lagos, each crammed with roughly 25m people, will join the ten largest.
To understand where this can lead, consider Latin America, where seven countries account for a quarter of the world’s murders. Killings often started rising in its cities because of drugs and gangs. Since Latin America urbanised a generation before other developing countries, it has had time to find out which policies help stop the killing—and which fuel it.
El Salvador, though off the main drug-trafficking corridor, has struggled to establish peace since the end of civil war in 1992. A weak state failed to cater for hundreds of thousands of new city dwellers, driven into slums by fighting in the hills. The police were unable to cope with violent new residents who arrived in the slums: street gangs like MS-13 and Barrio 18. In 2015 El Salvador became the world’s most deadly country bar Syria. The police still do not know who is killing whom or why. Ninety-five percent of murders go unsolved.
Yet the continent also has some of the biggest improvers. In many Colombian cities murder used to be the leading cause of death. The rate in Cali in 1994 was 124 per 100,000, four times worse than New York at its most lethal. The mayor was a surgeon who realised that murder was like a disease. Following an approach pioneered in New York and copied across the rich world, he set up “violence observatories” to study precisely how people, places and behaviour led to killings. They found that, even amid a raging drugs war, most murders resulted from drunken brawls. Restrictions on alcohol and guns helped cut murders by 35%. Other Colombian cities tweaked Cali’s evidence-based policing to suit their own needs—Medellín, for example, targeted drug cartels. Police and judicial reform, and aid from the United States, were crucial, too. In 2017 Colombia’s murder rate was 24 per 100,000, the lowest for 42 years.
The killing in Latin America has been shaped by local factors—political violence, crowded prisons, North America’s appetite for drugs. In Colombia an offensive against guerrillas helped cut murders. Yet the continent holds broad lessons.
Because impunity encourages murder, you might think that the secret is tough policing. The Salvadorean government sent soldiers into the streets and threw petty criminals in prison. But both the criminals and the population were brutalised and the murder rate rocketed. Or you could buy peace with truces and special deals between rival gangs. El Salvador tried that, too, but the truce fell apart and the slaughter resumed. Although murders there have fallen slightly in the past two years, killing has become a way of life.
Instead, toughness needs to be targeted. Murder is extraordinarily concentrated—80% of violent killings in Latin American cities occur on just 2% of streets. Detailed crime statistics enable the police to get to grips with the local factors behind the killing. If they know exactly how and where to apply their efforts, they can make arrests and prevent violence.
Learning from murder
The good news is that you do not have to solve all the complex social causes of murder to begin to cut the murder rate. Colombia’s innovative mayors helped create a virtuous cycle in which the police caught and punished murderers, and citizens concluded that the police were there to help them and that the streets were safer. Busier streets discouraged murder and other violent crime. Once the virtuous cycle starts to turn, the entire criminal-justice ecosystem can grow stronger.
If all countries cut murder rates to match the best in their region, 1.35m lives will be saved by 2030, says the Small Arms Survey. If they fall back to the worst, an extra 1.25m lives will be lost. Trusted police forces armed with good statistics could spare millions of lives, and an ocean of human suffering.
THE SYRIAN TANGLE / GEOPOLITICAL FUTURES
The Syrian Tangle
By George Friedman
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THE DARK SIDE OF ENLIGHTENMENT / THE WALL STREET JOURNAL OP EDITORIAL
The Dark Side of the Enlightenment
Today’s advocates oversell the benefits of unfettered reason. They dismiss the contributions of tradition, religion and nationalism to human progress.
By Yoram Hazony
A lot of people are selling Enlightenment these days. After the Brexit vote and the election of President Trump, David Brooks published a paean to the “Enlightenment project,” declaring it under attack and calling on readers to “rise up” and save it. Commentary magazine sent me a letter asking for a donation to provide readers “with the enlightenment we all so desperately crave.” And now there’s Steven Pinker’s impressive new book, “Enlightenment Now,” which may be the definitive statement of the neo-Enlightenment movement that is fighting the tide of nationalist thinking in America, Britain and beyond.
Do we all crave enlightenment? I don’t. I like and respect Mr. Pinker, Mr. Brooks and others in their camp. But Enlightenment philosophy didn’t achieve a fraction of the good they claim, and it has done much harm.
Boosters of the Enlightenment make an attractive case. Science, medicine, free political institutions, the market economy—these things have dramatically improved our lives. They are all, Mr. Pinker writes, the result of “a process set in motion by the Enlightenment in the late 18th century,” when philosophers “replaced dogma, tradition and authority with reason, debate and institutions of truth-seeking.” Mr. Brooks concurs, assuring his readers that “the Enlightenment project gave us the modern world.” So give thanks for “thinkers like John Locke and Immanuel Kant who argued that people should stop deferring blindly to authority” and instead “think things through from the ground up.”
As Mr. Pinker sums it up: “Progress is a gift of the ideals of the Enlightenment, and will continue to the extent that we rededicate ourselves to those ideals.”
Very little of this is true. Consider the claim that the U.S. Constitution was a product of Enlightenment thought, derived by throwing out the political traditions of the past and applying unfettered human reason. Disproving this idea requires only reading earlier writers on the English constitution. The widely circulated 15th-century treatise “In Praise of the Laws of England,” written by the jurist John Fortescue, clearly explains due process and the theory now called “checks and balances.” The English constitution, Fortescue wrote, establishes personal liberty and economic prosperity by shielding the individual and his property from the government. The protections that appear in the U.S. Bill of Rights were mostly set down in the 1600s by those drafting England’s constitutional documents—men such as John Selden, Edward Hyde and Matthew Hale.
These statesmen and philosophers articulated the principles of modern Anglo-American constitutionalism centuries before the U.S. was created. Yet they were not Enlightenment men. They were religious, English nationalists and political conservatives. They were familiar with the claim that unfettered reason should remake society, but they rejected it in favor of developing a traditional constitution that had proved itself. When Washington, Jay, Hamilton and Madison initiated a national government for the U.S., they primarily turned to this conservative tradition, adapting it to local conditions.
Nor is there much truth in the assertion that we owe modern science and medicine to Enlightenment thought. A more serious claim of origin can be made by the Renaissance, the period between the 15th and 17th centuries, particularly in Italy, Holland and England. Tradition-bound English kings, for example, sponsored pathbreaking scientific institutions such as the Royal College of Physicians, founded in 1518. One of its members, William Harvey, discovered the circulation of the blood in the early 17th century. The Royal Society of London for Improving Natural Knowledge, founded in 1660, was led by such men as Robert Boyle and Isaac Newton, decisive figures in physics and chemistry. Again, these were politically and religiously conservative figures. They knew the arguments, later associated with the Enlightenment, for overthrowing political, moral and religious tradition, but mostly they rejected them.
In short, the principal advances that today’s Enlightenment enthusiasts want to claim were “set in motion” much earlier. And it isn’t at all clear how helpful the Enlightenment was once it arrived.
What, then, was “the Enlightenment”? This term was promoted, first and foremost, by the late-18th-century philosopher Immanuel Kant. Mr. Pinker opens his first chapter by endorsing Kant’s declaration that only reason allows human beings to emerge from their “self-incurred immaturity” by casting aside the “dogmas and formulas” of authority and tradition.
For Kant, reason is universal, infallible and a priori—meaning independent of experience. As far as reason is concerned, there is one eternally valid, unassailably correct answer to every question in science, morality and politics. Man is rational only to the extent that he recognizes this and spends his time trying to arrive at that one correct answer.
This astonishing arrogance is based on a powerful idea: that mathematics can produce universal truths by beginning with self-evident premises—or, as Rene Descartes had put it, “clear and distinct ideas”—and then proceeding by means of infallible deductions to what Kant called “apodictic certainty.” Since this method worked in mathematics, Descartes had insisted, it could be applied to all other disciplines. The idea was subsequently taken up and refined by Thomas Hobbes, Baruch Spinoza, John Locke and Jean-Jacques Rousseau as well as Kant.
This view of “reason”—and of its power, freed from the shackles of history, tradition and experience—is what Kant called “Enlightenment.” It is completely wrong. Human reason is incapable of reaching universally valid, unassailably correct answers to the problems of science, morality and politics by applying the methods of mathematics.
The first warning of this was Descartes’s 1644 magnum opus, “The Principles of Philosophy,” which claimed to reach a final determination of the nature of the universe by moving from self-evident premises through infallible deductions. This voluminous work is so scandalously absurd that no unabridged English version is in print today. Yet Descartes’s masterpiece took Europe by storm and for decades was the main textbook of the Cartesian school of science. Kant followed this dubious example with his “Metaphysical Foundations of Natural Science” (1786), in which he claimed to have deduced Newton’s laws of motion using pure reason, without empirical evidence.
It was once well understood that much of the modern world’s success grew out of conservative traditions that were openly skeptical of reason. When I was a graduate student at Rutgers in the 1980s, the introductory course in modern political theory had a section called “Critics of the Enlightenment.” These figures included more conservative thinkers such as David Hume, Adam Smith and Edmund Burke. They emphasized the unreliability of “abstract reasoning,” which they believed could end up justifying virtually any idea, no matter how disconnected from reality, as long as it sounded self-evidently true to someone.
One such myth was Locke’s claim that the state was founded on a contract among free and equal individuals—a theory the Enlightenment’s critics understood to be both historically false and dangerous. While the theory did relatively little harm in tradition-bound Britain, it led to catastrophe in Europe. Imported into France by Rousseau, it quickly pulled down the monarchy and the state, producing a series of failed constitutions, the Reign of Terror and finally the Napoleonic Wars—all in the name of infallible and universal reason. Millions died as Napoleon’s armies sought to destroy and rebuild every government in Europe in accordance with the one correct political theory allowed by Enlightenment philosophy. Yet Napoleon was simply trying, in Mr. Brooks’s phrase, to “think things through from the ground up.”
Advocates of the Enlightenment tend to skip this part of the story. Mr. Pinker’s 450-page book doesn’t mention the French Revolution. Mr. Pinker cites Napoleon as an “exponent of martial glory” but says nothing about his launching a universal war in the name of reason. These writers also tend to pass over Karl Marx’s debt to the Enlightenment. Marx saw himself as promoting universal reason, extending the work of the French Revolution by insisting that the workers of the world stop (again in Mr. Brooks’s words) “deferring blindly to authority.” The “science” Marx developed “from the ground up” killed tens of millions in the 20th century.
The Enlightenment also propagated the myth that people’s only moral obligations are those they freely choose by reasoning. That theory has devastated the family, an institution built on moral obligations that many people, it turns out, won’t choose unless guided by tradition. Mr. Pinker’s book is filled with charts showing the improvement in material conditions in recent centuries. He offers us no charts describing the breakdown of marriage or the increase in out-of-wedlock births in “enlightened” societies. Nor is he worried about the destruction of religion or the national state. Kant believed that both were out of conformity with reason, and Mr. Pinker sees no grounds to disagree.
Which brings us to the heart of what’s wrong with the neo-Enlightenment movement. Mr. Pinker praises skepticism as a cornerstone of the Enlightenment’s “paradigm of how to achieve reliable knowledge.” But the principal figures of Enlightenment philosophy weren’t skeptics. Just the opposite: Their aim was to create their own system of universal, certain truths, and in that pursuit they were as rigid as the most dogmatic medievals.
Anglo-Scottish conservatives, from Richard Hooker and Selden to Smith and Burke, were after something very different. They defended national and religious custom even as they cultivated a “moderate skepticism”—a combination the English-speaking world called “common sense.” If old institutions weren’t in evident need of repair, a common-sense view favored leaving them unmolested, since there was always the risk of making things much worse. But it also saw the potential in attempts to improve mankind’s knowledge, so long as the weakness and unreliability of human reason were kept firmly in view. As Newton wrote in his “Opticks”: “Arguing from experiments and observations by induction be no demonstration of general conclusions, yet it is the best way of arguing which the nature of things admits of.”
I think of these moderate, skeptical words frequently these days, as I follow the political and cultural transformation of the English-speaking world. American and British elites, once committed to a blend of tradition and skepticism, now clamor for Enlightenment. They insist that they have attained universal certainties. They display contempt worthy of Kant himself toward those who decline to embrace their dogmas—branding them “unenlightened,” “immature,” “illiberal,” “backward-looking,” “deplorable” and worse.
If these elites still had access to common sense, they wouldn’t talk this way. Enlightenment overconfidence has gone badly wrong often enough to warrant serious doubts about claims made in the name of reason—just as doubt is valuable in approaching other systems of dogma. Such doubts would counsel toleration for different ways of thinking. National and religious institutions may not fit with the Enlightenment, but they may have important things to teach us nonetheless.
The most important political truth of our generation may be this: You can’t have both Enlightenment and skepticism. You have to choose.
Mr. Hazony is author of “The Virtue of Nationalism,” forthcoming from Basic.
THE NEW SHAPE OF THE MIDDLE EAST / GEOPOLITICAL FUTURES
The New Shape of the Middle East
By George Friedman
Among the outsiders, the war gave Russia an opportunity to reposition itself as a significant power. The United States got involved to destroy IS and contain Iran, but mostly out of habit. Only upon reflection did the U.S. recognize that its interests in Syria were limited. The Americans’ apparent clumsiness had less to do with competence than with the crosscurrents of a redefined U.S. strategy that was taking shape as the war in Syria raged.
There is no common understanding of what should happen in Syria – that’s what they are trying to figure out – just that the U.S., even as it draws down its forces and interest in the region, remains the power to play off against.
STRANGE TIMES IN A STRANGE SECTOR: THE U.S. HOUSING MARKET GOES "BRUTAL" / DOLLAR COLLAPSE
Strange Times In A Strange Sector: The US Housing Market Goes “Brutal”
Consider:
Home buying market so brutal, some home buyers make offer sight unseen
(CNBC) – This spring home-buying season should be a coming-out party for Millennials, many of whom are finally ready to make a purchase after hunkering down for years in their parents’ basements or expensive apartments.
The only problem: Much of the food at the party is gone, and what’s left is priced like caviar.
Although solid job and income growth is emboldening many prospective home buyers, record low housing supplies are driving up prices and curbing sales, especially for Millennials looking to buy starter homes.
“For home buyers, this is shaping up to be one of the most difficult years in recent memory,” says Ralph McLaughlin, chief economist of Veritas Urbis Economics, which studies the housing market.
For sellers, it will be a standout spring that brings big profits, unless those sellers themselves are looking to buy a larger home in the same metro area. “It’s going to have the feel of a hot market,” marked by multiple offers and bidding wars, says Lawrence Yun, chief economist of the National Association of Realtors (NAR).
Already, house hunters are waiving inspections, making offers without even seeing homes and bidding well above asking price. Yet Yun predicts sales will be flat compared to spring 2017 because of the skimpy supplies and reduced affordability for many buyers.
“This year’s (spring) buyers may be competing against some of those buyers who have been unsuccessful during the past few months,” Zillow Senior Economist Aaron Terrazas says. “Increasingly, the traditional seasonal boundaries around home shopping season … are becoming less pronounced” as the fierce competition forces buyers to lengthen their searches.
Some of the hottest markets in recent years — such as Seattle, Las Vegas and San Jose — have continued to post double-digit annual price increases. Now, they’ve been joined by cities such as Nashville, Salt Lake City and Kansas City.It wasn’t supposed to be like this. Starting a few years ago, retiring Baby Boomers were supposed to downsize en masse, flooding the market with houses bought in the 1970s, 80s and 90s and producing a buyer’s paradise full of 70-year-old sellers on their way to Florida and eager to entertain any reasonable (or less than reasonable) offer. Based purely on demographics, today’s media should be full of stories about cocky Millennial buyers who feel no need to pull the trigger.
And even without a tsunami of downsizing retirees, you’d think soaring prices would convince more homeowners to take their profits to avoid being roundtripped as many were in Great Recession.
But no. Boomers are retiring, home prices are soaring, buyers are getting desperate…and hardly anyone is willing to sell.
To find out how things got so weird so fast, I checked with Peter Miller, author of The Common-Sense Mortgage and regular contributor to the Mortgage Reports website. Here’s his take:
If you’ve been reading industry news releases the inventory shortage is a huge concern.
“Total housing inventory at the end of February rose 4.6 percent to 1.59 million existing homes available for sale, but is still 8.1 percent lower than a year ago (1.73 million) and has fallen year-over-year for 33 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace (3.8 months a year ago).”
There are number of reasons for the inventory shortage.
First, home prices have been going up consistently in most markets for the past six years.
This may sound encouraging but it also means that today’s seller will be tomorrow’s buyer, someone competing for homes which may require a bigger mortgage and steeper monthly payments.
Second, there are transaction costs associated with, first, the sale of a property and, second, the purchase of a replacement residence.
Third, millions of owners have fixed-rate mortgage financing in place at 4% or less.
If they move the rate they pay goes up.
Fourth, for people in the upper brackets and for individuals who live in high-cost, high-tax areas it may be difficult to justify the sale of a current residence given tax reform.
Fifth, new construction is insufficient to meet demand. Multifamily construction starts were down 10 percent in 2017.
Sixth, many people no longer have the income certainty they once had. The typical work week is no longer 40 hours. Artificial intelligence, machine learning, robotics, outsourcing, downsizing, and rightsizing are threatening the hours and employment of both blue-collar and white-collar workers alike. We see more and more examples of flexible work schedules as opposed to set working hours known in advance. The result is that increasing numbers of workers earn different amounts each month. I suspect many sellers wonder if they can still qualify for the mortgage they got a few years ago.
Okay, that makes sense. Higher mortgage rates raise the cost of moving, even if it’s to a smaller place. And work isn’t what it used to be, which means mortgages aren’t the sure thing they once were.
This shrinks the transaction pipeline but raises the average amount of leverage — which adds yet another point of fragility for the next downturn.
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