November 7th, 2014
05:32 PM ET

What I'm reading: A growth pact for America

By Fareed Zakaria

“The list of potential policy actions that could benefit the United States – trade liberalization, comprehensive regulatory reform, and immigration and education reform, among others – is long,” writes Glenn Hubbard for Project Syndicate. “But only two policies are particularly promising for such a ‘Pact for America’: federal infrastructure spending and corporate-tax reform. Enactment of these reforms would generate a win for each side – and for both.”

“But such a bipartisan consensus requires removing both the left and the right’s ideological blinders, at least temporarily. On the left, a preoccupation with Keynesian stimulus reflects a misunderstanding of both the availability of measures (shovel-ready projects) and their desirability (whether they will meaningfully change the expectations of households and businesses). Indeed, to counteract the mindset forged in the recent financial crisis, spending measures will need to be longer-lasting if they are to raise expectations of future growth and thus stimulate current investment and hiring.

“The right, for its part, must rethink its obsession with temporary tax cuts for households or businesses.”

“For airlines, Asia's skies aren't terribly friendly. According to data compiled by Bloomberg, six of the 10 initial public offerings by airlines in Asia during the past five years are trading below their sale prices. Legendary investor Warren Buffett, who swore a decade ago never to invest again in the airline business following his losing $358 million bet on US Airways, is surely feeling vindicated,” writes Dhiraj Nayyar for Bloomberg View.

“India should stand out amid this grim landscape. Passenger traffic has grown rapidly over the last decade. At its peak between 2003 and 2009, traffic grew somewhere between 20 and 40 percent per year. Growth hardly slackened even after the economy stalled in 2013: Traffic that year was up 5 percent over 2012. Packed airplanes, however, have not led to profitable airlines.” FULL POST

November 3rd, 2014
05:11 PM ET

What I'm reading: The single-engine global economy

By Fareed Zakaria

“The global economy is like a jetliner that needs all of its engines operational to take off and steer clear of clouds and storms. Unfortunately, only one of its four engines is functioning properly: the Anglosphere (the United States and its close cousin, the United Kingdom),” writes Nouriel Roubini for Project Syndicate.

“The second engine – the eurozone – has now stalled after an anemic post-2008 restart. Indeed, Europe is one shock away from outright deflation and another bout of recession. Likewise, the third engine, Japan, is running out of fuel after a year of fiscal and monetary stimulus. And emerging markets (the fourth engine) are slowing sharply as decade-long global tailwinds – rapid Chinese growth, zero policy rates and quantitative easing by the US Federal Reserve, and a commodity super-cycle – become headwinds.

“So the question is whether and for how long the global economy can remain aloft on a single engine.”

“We will never be free of epidemics. We will always be at risk from newly discovered and emergent diseases such as Nipah and Hendra, as well as those dating back into antiquity, such as cholera, malaria, and influenza. It’s been estimated that there are on the order of 320,000 undiscovered mammalian viruses lurking out there. Some, certainly, will cause disease in humans,” writes Tara Smith for Slate.

“In many ways, we're about as limited in our options as our ancestors were when they had to deal with yellow fever, smallpox, or bubonic plague. Despite our success with medications, vaccination, and sanitation, the current Ebola outbreak shows that we are woefully unprepared for new infectious diseases. When they hit us at our most vulnerable, we resort to centuries-old practices to contain them: isolation, quarantine, and methods that rely on the most difficult challenge of all, modifying human behavior.” FULL POST

October 16th, 2014
10:55 AM ET

What I'm reading: The age of vulnerability

By Fareed Zakaria

“In the U.S., upward mobility is more myth than reality, whereas downward mobility and vulnerability is a widely shared experience,” writes Joseph Stiglitz for Project Syndicate. “This is partly because of America’s health-care system, which still leaves poor Americans in a precarious position, despite President Barack Obama’s reforms.”

“Those at the bottom are only a short step away from bankruptcy with all that that entails. Illness, divorce, or the loss of a job often is enough to push them over the brink…The recent economic downturn eviscerated the wealth of many. In the US, even after the stock-market recovery, median wealth fell more than 40% from 2007 to 2013.”

“If China can impose its will in the South China Sea, at least five rival claimants – all much smaller, weaker Asian states – will be limited to a narrow band of the sea along their coastlines,” writes Howard French in The Atlantic. “China would gain greater security for its crucial supply lines of oil and other commodities; exclusive access to rich fishing areas and potentially vast undersea oil deposits; a much larger buffer against what it regards as U.S. naval intrusions; and, not least, the prestige and standing it has long sought, becoming in effect the Pacific’s hegemon, and positioning itself to press its decades-old demand that Taiwan come under its control. Arguably, it would achieve the greatest territorial expansion by any power since imperial Japan’s annexation of large swaths of Asia in the first half of the 20th century.”

July 28th, 2014
04:44 PM ET

What I'm reading: Sanctions and Russia’s Achilles heel

By Fareed Zakaria

“But even by hinting as to what sectoral sanctions might look like, Obama has upset Russia’s economic calculations. Obama is often criticized for not backing up the ‘red lines’ that he draws. But in Ukraine, Obama essentially has drawn a ‘gray line’ – demanding Russia take certain actions to end the crisis,” writes William E. Pomeranz for Reuters. “No one knows when this gray line is crossed, however. So these new sanctions only heighten the uncertainty – and risk – of doing business in Russia.”

“The market responded immediately, with dramatic declines in the Russian ruble and the Moscow stock market. In addition, the sanctions only exacerbated an already difficult situation for Russian companies. Syndicated loans for Russian commodities producers are down more than 80 percent over the past six months. The appetite for Russian bonds has also decreased considerably in the aftermath of the Ukraine crisis. So the current round of sanctions made a bad situation worse.”

“Arab leaders, usually prodigal in their outpourings of ritual solidarity with the Palestinians, have been curiously silent,” writes David Gardner in the Financial Times. “Partly that is because Saudi Arabia, Egypt and their allies are so hostile to the Muslim Brotherhood, of which Hamas is the Palestinian chapter. It is also because the ferocious Syrian war, and lightning surge of Sunni jihadis from Syria into Iraq, eclipses what for many looks like a new episode in a wearisomely familiar feud. Paradoxically, Israel wants to weaken but not overthrow Hamas – the cynical military expression is ‘mowing the lawn.’ For beyond Hamas lies the unbridled savagery of movements such as the Islamic State of Iraq and the Levant (Isis), which already has followers in Gaza and the Palestinian refugee camps up and down the eastern Mediterranean that serve as universities of jihad.” FULL POST

May 15th, 2014
11:53 AM ET

What I'm reading: Nixon's 'Wizard plan'

By Fareed Zakaria

"Now Nixon’s preoccupation, even obsession, after being forced from office was to become a respected figure. It wasn’t for him to live out the rest of his life in disgrace. He was determined to become someone people listened to—a senior statesman, a sage," writes Elizabeth Drew in The Atlantic. "And the best way to be considered a sage, Nixon understood, was to establish one’s credentials as an expert in foreign policy, a man known to world leaders. Domestic policy didn’t cut it the same way: Lectures and articles on education or the environment didn’t attract the Brahmins and the business leaders Nixon wanted to attract, didn’t occupy nearly as much space on the stage. No splashy trips."

"In accordance with the Wizard plan, the former president first would write another memoir (because statesmen wrote memoirs), both to make money and to give his own version of events." FULL POST

April 28th, 2014
04:03 PM ET

What I'm reading: The eurozone’s dangerous path

By Fareed Zakaria

“One only needs to look at the United States to see how dangerous – and indeed unsustainable – the eurozone’s path has become,” writes Hans-Werner Sinns for Project Syndicate. “When one of the US states runs up too much debt, creditors become jittery and austerity measures are introduced to avert the risk of bankruptcy – as has happened in the past few years in California, Illinois, and Minnesota.”

“But all of that occurs while the debt/GDP ratio is still minimal and clearly below 10 percent, because creditors know that no one will come to their aid. The Federal Reserve will not buy their government bonds, and the federal authorities will not issue any guarantees.”

“The existence of the global middle class, however fragile, is a great success of globalization. But will this success deepen (by making slippages less likely) and broaden (by bringing more people into the global middle class)? This depends foremost on the continuation of high rates of growth in large, still relatively poor, countries,” argues Branko Milanovic in the Financial Times. “While the attention of the world was focused on Asia, the growing population in Africa means the “battlefield” on which both the reduction in poverty and expansion of the global middle class will be fought is gradually moving there. Overall Asia and Africa have survived remarkably well the worst years of the Great Recession. If their growth rates do not decelerate, we can look fairly confidently to the growth of the global middle class. But many dangers loom.”

FULL POST

April 24th, 2014
05:14 PM ET

What I'm reading: Syria key to handling Russia

By Fareed Zakaria

“[S]hots fired by the U.S. in Syria will echo loudly in Russia. The great irony is that Putin is now seeking to do in Ukraine exactly what Assad has done so successfully: portray a legitimate political opposition as a gang of thugs and terrorists, while relying on provocations and lies to turn non-violent protest into violent attacks that then justify an armed response,” writes Anne-Marie Slaughter in Project Syndicate.

Recall that the Syrian opposition marched peacefully under fire for six months before the first units of the Free Syrian Army tentatively began to form. In Ukraine, Putin would be happy to turn a peaceful opposition’s ouster of a corrupt government into a civil war. Putin may believe, as Western powers have repeatedly told their own citizens, that NATO forces will never risk the possibility of nuclear war by deploying in Ukraine. Perhaps not. But the Russian forces destabilizing eastern Ukraine wear no insignia. Mystery soldiers can fight on both sides.”

“Sixty-one years ago, a telegram arrived at the State Department from the U.S. embassy in Moscow. Its purpose was to examine the sources of the conduct of the men who ruled in the Kremlin. Its impact was immediate,” writes Yuliya Tymoshenko for Foreign Affairs’ iPad extra on Ukraine. “The ‘Long Telegram,’ penned by a young diplomat named George Kennan, became the basis for U.S. policy toward the Soviet Union for the next half century. Although the Soviet Union is long gone, the West is once again groping to understand what motivates the leaders in the Kremlin.”

FULL POST

April 15th, 2014
06:15 PM ET

What I'm reading: The real history of the 2nd Amendment

By Fareed Zakaria

"Emotional claims that the right to possess deadly weapons is so important that it is protected by the federal Constitution distort intelligent debate about the wisdom of particular aspects of proposed legislation designed to minimize the slaughter caused by the prevalence of guns in private hands," writes John Paul Stevens in the Washington Post. "Those emotional arguments would be nullified by the adoption of my proposed amendment. The amendment certainly would not silence the powerful voice of the gun lobby; it would merely eliminate its ability to advance one mistaken argument."

“In Ukraine, nuclear emissions could exceed both Chernobyl and Fukushima. Wartime conditions would prevent emergency crews from getting to an affected plant to contain radiological releases should reactor containments fail. And, with government services shut down in the midst of fighting, civilians attempting to escape radioactive contamination would not know what to do or where to go to protect themselves,” writes Bennett Ramberg for Project Syndicate.

“Such risks might be one reason for Russian President Vladimir Putin to think twice about ordering a military invasion of Ukraine. But, should war come, combatants must do all they can to keep conflict away from the nuclear sites and the off-site power sources feeding them.”

FULL POST

February 28th, 2014
01:52 PM ET

What I'm reading: Can Ukraine avoid partition?

By Fareed Zakaria

“If neither the Slavophiles nor the Westernizers can carry the entire territory, some kind of separation starts to look inevitable. Such a separation might come about as paramilitary groups establish local supremacy. Or it might happen as a result of Russian intervention, as in Armenia, Moldova and, later, South Ossetia,” writes Daniel Hannan in The Telegraph. “It is easy enough to imagine Russian security forces crossing the border at the request of local proxies and establishing a de facto Russophone state. The Trans-Dniester Republic still exists, unrecognized but very much in force, on Ukraine’s western border; why not a Trans-Dnieper Republic to its east?”

“Does Nato have the will to prevent such a development? If not, what are our options? If a partition is coming anyway, might it not be better to take ownership of the process: to see that the border is decided peacefully and by referendum rather than by military occupation?”

“Crimea could become a part of Ukraine that is not really ruled by Ukraine,” argues Anne Applebaum in the Washington Post. “Clearly, the men with machine guns are not the product of a chaotic social movement, as were the protesters in Kiev. Someone bought them their unmarked uniforms, and somebody planned their carefully timed arrival on the scene. Their presence, coupled with major Russian military exercises in the area, may be intended to encourage separatism. So are the warnings that the Russian media have issued about “fascism” and extremism in Kiev. And if separatists don’t appear in large numbers, then the issue can be used anyway, as a constant source of anxiety and tension for the fragile new government in Kiev.”

FULL POST

February 13th, 2014
11:19 AM ET

What I'm reading

By Fareed Zakaria

"Argentina and Venezuela have run out of heterodox policy tricks," writes Dani Rodrik for Project Syndicate. "Brazil and India need new growth models. Turkey and Thailand are mired in political crises that reflect long-simmering domestic conflicts. In Africa, concern is mounting about the lack of structural change and industrialization. And the main question concerning China is whether its economic slowdown will take the form of a soft or hard landing."

"This is not the first time that developing countries have been hit hard by abrupt mood swings in global financial markets. The surprise is that we are surprised. Economists, in particular, should have learned a few fundamental lessons long ago."

FULL POST

February 11th, 2014
04:19 PM ET

What I'm reading: Employer-based health benefits need rethink

By Fareed Zakaria

“It’s never made a bit of sense for health-care benefits to be routed through employers. The system emerged in the U.S. by accident,” writes Ezra Klein for Bloomberg. “Wage controls during World War II made it impossible for companies to attract workers by offering higher salaries. Because health benefits were exempt from high wartime taxes, companies began using them to attract talent. After the war, unions joined employers in pressuring Congress to ensure employer-based health benefits were never taxed. So the U.S. emerged with an odd system in which a dollar of untaxed employer-based health benefits was worth much more to a worker than a dollar of taxed salary. Employers became the main vehicles for insurance not because anyone thought it was a good idea, but because the tax code made it a bargain.”

FULL POST

January 16th, 2014
11:46 AM ET

What I'm reading: Enough 1914 comparisons

By Fareed Zakaria

“Today’s world is different from the world of 1914 in several important ways,” writes Joseph Nye for Project Syndicate. “One is that nuclear weapons give political leaders the equivalent of a crystal ball that shows what their world would look like after escalation. Perhaps if the Emperor, the Kaiser, and the Czar had had a crystal ball showing their empires destroyed and their thrones lost in 1918, they would have been more prudent in 1914. Certainly, the crystal-ball effect had a strong influence on US and Soviet leaders during the Cuban missile crisis. It would likely have a similar influence on U.S. and Chinese leaders today.”

“Another difference is that the ideology of war is much weaker nowadays. In 1914, war really was thought to be inevitable, a fatalistic view reinforced by the Social Darwinist argument that war should be welcomed, because it would “clear the air” like a good summer storm.”

FULL POST

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