A Time for Choosing… Again

By David Stockman  |  January 14, 2020

The real division is not between conservatives and revolutionaries but between authoritarians and libertarians.

–George Orwell, “Letter to Malcolm Muggeridge,” December 4, 1948 (quoted in Malcolm Muggeridge: A Life (1980) by Ian Hunter)

Chris Scott, in his regular commentary on U.S.-China relations, zooms out for a big-picture view that’s sure to raise the hackles of anyone who purports to be for freedom and for liberty, for Americans and for people everywhere.

You see, we’re seeing in real-time what human beings will do for a little self-determination. It’s not enough to be sated with material needs and wants.

We’ve discussed at great length here what it’s meant for the U.S. to put consumption ahead of all else: the inexorable expansion of the state, both its “Warfare” and “Welfare” components.

We’re starting to see the breakdown of a different sort of state-focused system – and this one was at least as inevitable as ours.

While we’re zeroing in on China today, though, let’s not ignore the resonance of Chris’s headline with one of my own favorite recent tropes: “Peak Trump.”

The Tweeter-in-Chief’s is a cult of personality, make no mistake, at least as strange as Stalin’s and well more so than most of the litany of tin-pots we propped up for Cold War logic’s sake.

As Elizabeth Warren and Bernie Sanders engage in earnest in the struggle for control of the domestic political party honest about its love of government, we do well to focus on freedom and liberty.

Here’s Chris…

Peak Authoritarianism

By Christopher Scott

With every step of China’s dizzying economic development and “opening up,” the gaze of Mao Zedong has endured, still watching over the center of Beijing as I write this.

The late “Great Helmsman’s” somber eyes unironically fixate squarely on his own mausoleum, where his glassy, embalmed body sits under an eerie, dim, pinkish glow of what can only be compared to a heat lamp at an all-you-can eat buffet.

Lacking the energetic spirit that radiates from modern American presidential portraits, Mao’s expression perched at the entrance to the Forbidden City is more reminiscent of the despondent “Celestial Eyes” that grace the cover of F. Scott Fitzgerald’s The Great Gatsby.

Over the last four decades, China has wrestled with the memories of its painful past evoked by that monumental painting.

Mao’s successor, Deng Xiaoping, explicitly rejected the road China had taken, hastening a return to consensus rule. In 1988, the official state television network aired a six-part documentary, explicitly lambasting Mao’s policies and China’s traditional, inward-looking agrarian culture.

The only way for China to return to greatness on the world stage was to open up and embrace Western values, the narrator told the national television audience.

Then, in 1989, protestors took control of the entire city of Beijing. Almost identical to what we’ve seen over the past year in Hong Kong in terms of scale, student protestors even ran their own bus lines.

It’s hard to fathom now, seeing as the People’s Daily today prints pure propaganda, as it did under Mao, but the party mouthpiece at that time had become a publisher of actual journalism.

In the days leading up to the Tiananmen Square massacre we all witnessed across the globe on nightly news broadcasts, the newspaper looked like The New York Times during Vietnam. One front-page editorial said that democratic reforms should be discussed seriously.

Francis Fukuyama was writing what would be the basis for his book The End of History and the Last Man while those protests were raging in Beijing. He had the right idea when he punctuated the title of his earlier essay The End of History? with a question mark.

The fall of the Berlin Wall helped him clear up his doubts about whether Western liberal democracy had won out for good by the time he published the book in 1992.

But it turned out there was at least one more chapter in this history.

The shooting of possibly thousands of students that day in 1989, under that looming gaze of Uncle Mao’s, was not the end of authoritarianism, but the beginning of its resurgence on the world stage. It presaged the most spectacular economic growth in human history on mainland China.

That was accomplished while Beijing experimented with substantive economic reforms and maintained an ambiguity about whether it would eventually dabble with political reforms.

But, then, President Xi Jinping came to power and declared that the Communist Party was paramount in everything, and he was the paramount leader of the party.

China was riding high when he made that decision.

But, just as the Iraq War and the Great Financial Crisis in 2008 discredited the United States in the eyes of many on the international stage, events are starting to discredit Xi and his decision.

The protests in Hong Kong have shown that, while poor mainland Chinese might have traded freedom for economic prosperity, the Chinese model has no appeal to a middle class in a developed economy.

You could say that the unrest in Hong Kong has definitively discredited that model.

Over the weekend, Taiwanese voters sent that very message to Beijing. President Tsai Ing-wen was re-elected in a landslide victory despite polling behind her opponent just six months ago. What changed? She rejected closer ties with Beijing just as the Taiwanese people saw what closer ties with Beijing means.

All of this is happening while China’s economy slows, taking back, piece by piece, what the Communist Party had traded in exchange for power and legitimacy. The growth of the world’s second-largest economy is only going to slow.

So, the noose around the newly crowned emperor, who has only himself to blame for taking all the credit, is only going to tighten.

How to Fend for Your Own Freedom

I’ll say it again: This is the most politicized market in history. And the Tweeter-in-Chief is still in charge. So, the situation is changing almost by the minute.

It’s “Impeachment!” in Imperial Washington and all over the Mainstream Media. It’s “Easy Money!” on Wall Street and across Bubblevision.

And it seems as if the whole world has, indeed, gone mad.

Amid this chaos, prices will continue to rise and fall, trends will continue to develop and dissipate.

Well, The Stockman Letter is made for times like these. And we’ve updated our design to help us better navigate to not only the safest harbors but also the most promising opportunities.

The stakes are as high as they can be heading into 2020. Markets appear to be straining, catching up to an economy that’s been weak and getting weaker for years.

The Donald is tied up in the day-to-day movements of the major stock indexes like no president before him. The increasingly desperate incumbent will do anything he must to hold the White House.

It’s a major tipping point. And there’s no telling what the Donald’s great disruptions could do to your wealth.

You’ve got to be nimble to win in this market… and we’re here to help you do that.

To common sense.

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David Stockman

David Stockman is the ultimate Washington insider turned iconoclast. He began his career in Washington as a young man and quickly rose through the ranks of the Republican Party to become the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street.MORE FROM AUTHOR