The Unacceptable Hegemon

Originally sent to VIXCONTANGO subscribers on September 13th, 2022

Liberalism, nationalism, federalism, imperialism and globalism are all ideologies whose purpose is to organize the co-existence of ever larger groups of people. That co-existence may or may not be peaceful. Ideally it is peaceful but most of the time peace is neither possible nor pragmatic. Peace may not be realistically achievable given the ambition of groups and the practical realities of resource and time constraints. In fact, as Kissinger observes peace is often only possible after opponents exhausts their means to fight. If co-existence can’t be peaceful then a pragmatic objective is to reduce the cost of friction.

All of those various organizational ideologies exist in the modern world and interplay with each other through the existence of various institutions. Liberalism is about the individual and his rights and the court system is what looks after those in every country in the world. Nations are ethnic groups bound by common history, struggle, language, religion and customs. National governments are the institutions that looks after their public interest. Nations are the core organizational unit in the world today as recognized first in the League of Nations and subsequently in the United Nations. Federalism is a grouping of nations bound by common values. United States is one such federation, the European Union another. Imperialism is the domination of one nation over others. The imperial nation commands and controls the resources not only of itself but of its vassals. Examples of empires are Nazi Germany or British Empire or the American empire today. Finally, globalism entails the establishment of a single world government which commands and controls all nations in the world – in essence making every nation a vassal to a hegemonic global bureaucracy and dismantling the institutions of the nation state.

Corporations are groups of people inside one or many nations dedicated to providing professional services in some industry. Shareholder capitalism is about putting profit (making money and acquiring property) above all other considerations as primary objective in the decision making of corporations. Because corporations are all about making as much money as possible, they desire to be ethnically and nationally blind – they will take the money no matter what nation it comes from. Since the end of the Cold War corporations have started to market their products to an ever more ethnically diverse set of customers and that led to the development of the new corporate religion and moral code of anti-racism or color blindness. The reality is that racism is perfectly natural. People have the right to freedom of association and can associate with whomever they want. Nations have enemies and allies. People have enemies and allies. Only corporations want to make money from everybody. But you can’t force people to be friends with whoever they don’t want to be friends with. They simply won’t participate in the interaction. People don’t want to associate with others because they smell different, look different, think different or whatever the reason may be – the reasons can be hundreds. Social behavior is not the same as selling a product but since corporations only know how to sell product, if put in charge of social behavior they put the same policies for social behavior as if they are selling a product. The classic fitting a square peg into a round hole.

The notion that “racism is bad” is a corporate moral code invented by the by world’s biggest multinational corporations in order to maximize profit.Because corporations became the world’s premier hoarder of material resources since the end of the Cold War, they can now also finance the campaigns of elected representatives in national governments around the world. Thus corporations have come to control a lot of governments and have started to influence social policy in addition to their core competency – economic policy. Because America’s business is business – in other words the American government’s policy works exclusively in favor of corporate interests, not ethnic ones – combating naturally occurring racism and other ethnic considerations has become a prime objective of the American government under both Republican and Democratic administrations. Except that this is a futile fight.

The American government is not a liberal government nor a national government. The American government is a federal government of a set of states which was expanded into an empire after WW2 with Europe and Japan as its vassals. Europe and Japan are subject to American economic and foreign policy without actually having any representative in the US Congress to discuss the impact of American policies on them. As such America often makes decisions that directly hurt the interests of both Europe and Japan. Right now Europe and Japan are becoming poorer on the directives of the American government (Yen and Euro are collapsing). Over the past 30 years, America has acquired a corporate government that tries to morph the American government into a globalist government – a one world government which directs the affairs of all other countries in the world. Japan and Europe have had to swallow this decision by America because they are vassals. Now America wants to force feed this hegemonic design to countries in the East as well. This project is directed by the World Economic Forum (WEF) – a corporate think tank based in Davos, Switzerland which seeks the establishment of an unaccountable global bureaucracy by infiltrating governments around the world. Nobody can become a leader of a major Western nation without first becoming a convert to the Davos WEF religion first. You gotta kiss the ring of the Davos mob boss Klaus Schwab. Great Power nations like China and Russia see this attempt at a global government and reject it. This is the main cause of geopolitical friction currently. America wants global unipolarity. Russia, China and Asia want sovereignty and a multi-polar world in which different Great Powers have their own spheres of influence.

The big problem for our geniuses at Davos is that the American global hegemon model simply cannot work because of what America is today. There is a fundamental deficiency in the system and that deficiency is that America is a liberal democracy. America currently has two parties and every 4 years or 8 years power changes. The policies of those 2 parties – Democrats and Republicans are radically different. Democrats want Big Government and socialist, labor friendly policies. Republicans want Small Government and capitalist, business friendly policies. In the foreign policy realm, Democrats are friendly to China, Venezuela and Iran, Republicans are friendly to Russia and Saudi Arabia. Democrats care about human rights. Republicans care about human liberties. Every time there is a power switch in America, the rest of the world sees a completely different America. One year, they hate China and Venezuela and impose sanctions on them and they pump a lot of oil and oil prices are cheap. The countries around Venezuela and China suffer from the American sanctions on their trading partners. A couple of years later when Democrats come to power America now hates Russia and Saudi Arabia and imposes sanctions on them and oil prices become high. Countries around Russia and Saudi Arabia then suffer from sanctions on their trading partners. America lifts sanctions on Venezuela, Iran and China. Small political changes in America amplify to big changes around the world.

The internal divisions in America result directly into world chaos precisely because of America hegemonic reach and ambition. It is very difficult for any government abroad to have a position that won’t be changed by America. And if governments don’t dance to Washington’s tune of the day then they are vigorously and immediately prosecuted by America for it. God forbid, you don’t do what the Americans tell you right away, God forbid you try to think, America comes down with its full power on you. No dissent on any issue is allowed at any time. It’s not just Russia today. It was Iran yesterday. Afghanistan the day before. Iraq before. Vietnam before that. Korea, Yugoslavia, Libya, Syria. The list of issues is endless. Compliance with America through all its twists and turns is a very difficult act to pull off for any politician abroad. Pro-business Republican government leaders the world that were celebrated in 2020 have been harassed and jailed by Biden government’s allies abroad this year. If you were a pro-Trump politician in Japan like Shinzo Abe, the moment Biden comes to power you get harassed and assassinated by the Hard Left in the country. In Bulgaria, the former Right Wing Prime Minister of 12 years Borisov was jailed on the orders of the Biden government by Bulgaria’s new Hard Left government. In Moldova, similar jailing of former pro-Russian President Dodon also happened. Examples like this abound around the world.

American domestic instability is world instability squared. And this ultimately is the problem with globalism. While globalism may be a good economic policy – and by now it has proven not to be – it is clearly a horrible social and foreign policy. What is good for corporations is not necessarily good for nations whose job is to preserve the well-being and sustainability of their tribes. Different nations survive in different ways. That is why there are different moral codes and religions. That is why there are different nations. A global hegemon will always be unable to deal with the totality of the world’s social conflicts effectively. There just too many things to adjudicate. America can’t be a judge to every conflict. Globalism is simply too big to manage. But the much bigger problem here is the policy volatility – every year America has a different solution to every problem. People can’t tell what America stands for anymore. A global hegemon with a democratic government will suffer from tremendous policy volatility and instability. When you amplify that volatility across big distances you get chaos. A small wave in America is a tsunami in Japan. And I am not sure what good chaos is. In its attempt to create global order, America instead created global chaos.

If America wants to be a global hegemon, it needs to stop being a democracy. It can’t be a global hegemon with this much policy volatility induced by its democratic process. Only through reduction of policy volatility can America function as a global hegemon. So America has to give up either its global hegemonic ambition or its democracy. Pick one. You can’t have both.

I think the much more pragmatic solution is National Conservatism. To do that – even inside the bloc it controls of Europe and Japan – America will need to implement constitutional changes and change most countries from Parliamentary Democracies to Presidential Republics. The Presidential Republic design is modeled after France. The President is directly elected and is in charge of military and foreign policy, while the Parliament elects the Prime Minister who is in charge of economy and domestic/social affairs. The President is elected for a longer period of time (6 years) than Parliament (4 years). 6 years is similar to a Senator in the US. The Presidency is a big deal and the country has to really pour over the Presidential candidate and elect him with a clear super majority. As such 60% vote through a runoff is needed for a win. The President then becomes a mini equivalent of the British monarch – the true head of state that unifies the nation and rises above domestic politics. With Queen Elizabeth’s death and after the hell of the past 5 years, America discovers now what it is like for a country to have a head of state that is above domestic politics. A consistent and stable head of state is very important feature for a country that aspires to be a world hegemon. Foreign policy stability in both practice and in the form of a single person is very important. It is critical for America to arrive at this way to structure governments in its sphere of influence. The Presidential Republic model will dramatically reduce foreign policy volatility in the Western hemisphere which is super important over the next few decades.

Even if America doesn’t change its constitutional model, I think many countries in Europe will adopt a variant of the French Presidential Republic model. I think there is a growing dissatisfaction with Parliamentary Democracy in Europe. Bulgaria has had 6 governments and held 3 elections over the past 2 years. Each election costs hundreds of millions of dollars to hold. Elections are being held for a tremendous cost for then to disband within a few months. Italy has had similar experience. Italy has had 66 government since 1945 (77 years). That is a new government every year. Parliamentary democracy certainly portrays chaos where there may not be one particularly in the foreign policy arena. Countries know pretty well where they stand on geopolitical issues. At the very minimum I expect Italy, Bulgaria, Poland and Hungary to officially change to Presidential Republics in the next couple of years.

This transition to the Presidential Republic model will become the institutional foundation on which National Conservatism will be built. Countries will have a stable and consistent foreign policy. That policy may change over time slowly but certainly there won’t be the crazy volatility that the democratic process produces today. That is essential for creating a more stable world and more stable geopolitical landscape. I don’t think the globalist hegemonic model is viable at all given how it amplifies domestic dissent in the hegemon. I think the world is too complex for one world government. However, a problem can always be broken down into smaller pieces and that is where National Conservatism implemented through Presidential Republics is the far better model for world governance. You will know that the world is moving towards the National Conservative model when Europe’s Parliamentary Democracies adopt the Presidential Republic model.

Fairness, not Equality, not Equity

One concerning trend since the Obama’s election in 2008 is America preoccupation with “equality” and “equity”. These are classic communist objectives no matter how you dress them up. They are bad and nobody wants them. What people want is “fairness”. “Fairness” is a different concept that both “equality” and “equity”. Let’s use the analogy of a 100 meter dash race to explain the differences. “Fairness” means giving all participants the same rules and the same distance – 100 meters and the same space in which to run. I think we can all agree that this is what people want out of this world – a fair game to play with clear rules and objective referees. “Equality of outcomes” ensures that nobody wins – everybody is forced by the ref to arrive at the destination at the same time and thus everybody is a winner. That obviously is demotivating to many – if the outcome is predetermined, why bother running? In the case of economies, nobody works. “Equality of opportunity” means that the people that are faster are being hobbled with weights (they are being “leveled down”). I am not sure how that is different than “equality of outcomes”. If everybody’s abilities are equalized by the referee, not sure how the outcomes will be different. May be the winner is the one that didn’t get hit by a thunder strike? Again this is not something that anybody wants. “Equity” is giving the slower people artificial bionic legs that make them faster (“leveling up”). Ultimately, all these approaches want to make everybody have the same abilities. So not sure how that results in anybody being motivated to race. Whatever advantage they might have is being obliterated. Ultimately, people are different and have different ways to compete. Competition is all about bringing out different ways to compete, to explore the diversity of the human population. The hare wins with speed, the turtle with tenacity. Differentiation is essential to competition. Thus “fairness” is really the objective, not “equality” or “equity”. The sooner America abandons its current neo-communist obsession with “equity”, the sooner it will be able to restore some of its standing in the world. The more Biden sinks down the hole of “equity”, the worse the geopolitical situation for America will get. If countries around the world wanted “equity”, they’d still be aligned with the Soviet Union and the Soviet Union wouldn’t have collapsed. But that is not what people around the world want. And they have never wanted it.

While America’s preoccupation with “efficiency” over the last 30 years has been bad, its current preoccupation with “equality” is also bad. America needs to be concerned with “fairness”. America needs to right-size its ambition and find the right message. That is the only way for it to move forward.


Quants in the Room by Jason Furman

French Fifth Republic

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