INTERNATIONAL AND ECONOMOC PREDICTIONS FOR 2019

While making political predictions for 2019 are fraught with uncertainty (my last commentary) predictions on the international scene and on the economy, guarantee almost certain disappointment. Nonetheless, I will pull out the crystal ball and gaze into the foggy future.

The attempt by Great Britain to forge an orderly exit from the European Union must be completed by March of the new year.  I predict that the pessimists who see economic collapse of Great Britain and substantial damage to the world economy are wrong. We have been down this road before. The same negative thinkers called for the end of the world at the turn of the century with the “Y2K crisis” which failed to materialize. When the clock struck midnight in 2000 to ring in the new century, the chickens continued to lay eggs and there was no collapse. The same will be true for Brexit whether a comprehensive agreement is reached, or not.

I predict that 2019 will be a worse year for the European Union than for Great Britain.  Populist impulses will continue to gain strength. In Europe, political affiliations are no longer being drawn along progressive versus conservative lines as much as along globalist/humanist views versus those that favor cultural/ethnic boundaries.  2019 will determine how this monumental shift in sentiment plays out for the future of the European Union.

The hope that France would join with Germany to forge a stronger union has been dashed by President Macron’s setbacks after the Paris riots and by uncertainty in Germany as Angela Merkel’s government is replaced.  Italy is on the brink of an economic crisis, which will affect all the member states.

I predict that ISIS will gain both territory and volunteers in 2019.  With President Trump taking steps to remove troops from Syria and Afghanistan and the Iraq government demanding withdraw of the American presence from Northern Iraq, conditions for a resurgence are in place.

I predict that President Trump will continue to curry favor from authoritarian leaders around the world including those in Saudi Arabia, China, North Korea, Turkey, Russia and Brazil. Reaching hand shake agreements with these leaders provides the President with instant gratification and seemingly positive nightly news sound bites, even if long term meaningful results are nonexistent.  

I predict that a significant international event in 2019 will be the crisis in American-Latin American relations. Honduras, Guatemala and El Salvador are fast approaching failed states with urban gang warfare, repression, and political violence. Immigrants seeking a better life are flowing to the border and asking for asylum.  The Democratic House of Representatives will introduce legislation to improve conditions in these countries to stem the migration. President Trump will continue to lobby for the opposite and call for ending financial aid to Central America. He will continue to insist on fulfilling his campaign promise to build a wall.

In addition, the newly elected leftist government in Mexico and the more conservative government in Brazil will both take power in 2019. I predict that both events will call for major adjustments in American foreign policy.

I predict that international affairs will be a hot topic among Democrats seeking the nomination of their party for the 2020 Presidential election.  They will debate the Trump policy of “winning”, which is something you do to stomp down other nation states versus the traditional foreign policy objective of “leading” which is accomplished with the cooperation of others.

On the domestic economic front, I predict that the first 8-12 weeks of 2019 will be marred by uncertainty and volatility as Democrats take over the House and gain their sea legs. I predict that the middle of the year will be relatively calm with moderate increases in the stock market averages as earnings surprises to the upside are revealed and the trade war with China is resolved.  Lastly I predict a return to volatility in the latter part of the year as investors begin to worry about a long overdue economic slowdown and possible recession.

The big economic story for 2019 will be how little positive effect the Trump tax cuts have had on the economy.  Studies will reveal that most of the savings realized by corporations were utilized to buy back stock and not to make capital investments. It will become clear that wealthy Americans chose to save their windfall tax decreases rather than to invest, and to wait out the expected downturn in the economy.  Increases in productivity and full employment will not offset the losses in revenue from the tax cut (because a majority of the new employment provided for untaxed low wages) and the deficit will increase dramatically.

On the social front, I predict that in America and around the world global warming will replace 1) the “MeToo” movement and 2) the rise of populist political movements as the prevailing issue of debate. Discussion will shift from how to prevent global warming (that ship has sailed) to the most effective policies to limit the adverse effects of global warming.  Many Republicans will finally join the call to address climate change in 2019, as the economics of coal and combustion engines change for the worse and everyone knowns someone who is directly affected by the adverse consequences.

By the end of 2019 many of the questions now on our minds will be answered. Sure things will not materialize and unexpected results will have us all shaking our heads.  Then we can start all over again in predicting events in 2020.

PREDICTING POLITICAL EVENTS IN 2019

One of the most hopeless exercises one may undertake is predicting the future. Not only do our built-in biases adversely effect our views, the future truth is often stranger than fiction and impossible to nail down with any accuracy. But still many make the attempt to see if someone will get it right. 

My 2019 prognostications will begin, in Washington County, where I predict that all three of our Commissioners will be reelected with little appreciable opposition. Democratic Commissioner Shober has now served for two terms and has gained the name recognition and reputation as a hard working public servant that should guarantee him a safer margin of victory than in the past. The reelections of Commissioners Maggi and Diana Irey Vaughan are not a prediction, but rather a sure thing.  I have previously pointed out in this column that unlike our federal and state governments, our three Commissioners actually govern and have exercised the level of prudent cooperation that produces results.

There will be an election for District Attorney in 2019 and I predict that the present DA, Republican Eugene A. Vittone Esq., will be reelected.  Although Democratic voter registrations still outnumber Republican registrations, there is a growing Republican preference among the electorate as evidenced by the local 2016 local mid-term results.  Moreover, Vittone has pleased many citizens with his compassionate stand on drug abuse at a time when almost everyone knows someone effected by the opioid crisis.

The two most interesting municipal elections in 2019 will be to replace retiring County Treasurer, Francis King, and to fill a new Judgeship recently approved by the Governor in our local Court of Common Pleas.  I predict that both elections will feature multiple candidates and hotly contested May primaries.

In the City of Washington and in the Washington County municipalities there will be important elections for which I am not knowledgeable enough to offer any predictions.  I will predict that the hottest issue in Allegheny County local government will make its way into Washington County in 2019.  I am referring to the discussions to merge fire departments, to merge police forces and to merge municipal governments in order to save money and avoid financial collapse. The City of Washington and many small municipalities and first responders will not survive without joining this conversation to think outside the box.

I predict that the Commonwealth of Pennsylvania will follow the lead of New Jersey, Virginia and California in becoming more Democratic in 2019. In the mid-term elections, Republicans lost three congressional seats and lost both the Gubernatorial and Senate races by double digits.  The key is new voters, larger urban populations and Pennsylvania’s eastern suburbs where traditional Republicans are not comfortable with the new party brand as embodied by the President.

But, while Democrats now have the stronger statewide apparatus, they have not made significant inroads in electing State House and Senate representatives in the many rural Pennsylvania counties.  This will result in a continued legislative stalemate between the Governor and the State Legislature in 2019. 

Predicting results in national politics is the brass ring of 2019.  To be effective here, one must put emotion to the side to think through the most likely outcomes.  One must also recognize that in the wild wild west of Trump world, anything can happen.

First, I predict that President Trump will not be impeached.  The Republicans who control the Senate have too much invested in Trump’s base and their own political futures to walk out on the President now.  I also predict that Trump’s criminal exposure and that of his family and business interests will be more in focus after the Special Counsel completes his assignment.

Second, I predict that the Special Counsel will not indict the President while he is in office, but will indict members of his family.  I cannot see a Republican Justice Department changing their written policy and giving Mueller permission to indict Trump while he remains in office. I predict this result could be reversed if Trump attempts to pardon his own family or other co-conspirators while in office.

Third, I predict that Democrats who control the House of Representatives will not be spending as much political capital on removing the President as the cable networks are spending on advocating such a move.  The better bet is for the House to spend the next two years on developing policy that is beneficial to the electorate. 

When the Senate and President vote the Democratic initiatives down, there will be a voting record and platform for Democrats to regain control of the executive and legislative branches in 2020. Conversely, there is the possibility that the House, freed from the controlling freedom caucus, will actually pass legislation on spending, a farm bill, immigration reform and infrastructure that will reach common ground with the Republicans and become law.  (hedging my predictions here)

Third, I predict, for the same reason stated above, that House investigations into the Trump Presidency will be selective and involve only the most egregious transgressions.  It makes no sense to spend two years investigating Trump and to accomplish nothing else.  At this point the odds that such investigations will change the minds of Trump supporters is nil. But developing sound policy can bring traditional Republicans, purple Democrats and independents into the Democratic fold.

Fourth, not unlike the over-under bet in an NFL game, I predict that more Democrats will enter the Presidential race in 2019 than the 17 Republicans in 2015.

Fifth, I predict that all legal challenges to the ACA (Obamacare) will be defeated in 2019 and that the medical insurance plans offered in many states will begin to turn a profit for the first time.

Sometimes there is merit in throwing rationality to the wind, particularly when dealing with President Donald Trump. Accordingly, I predict that late in 2019, Donald Trump will announce he is not running for reelection.  Trump will turn the Presidency over to Vice President Pence, with assurances that he and all members of his family receive full federal pardons. Trump will claim he is a businessman not a politician, and like the virtuous Cincinnatus, that he has accomplished all of his announced goals. He will return to private live to save his business and to fight whatever state investigations and criminal charges are not cleared by the pardons.

In part II of this commentary, I will give my international, economic and social predictions for 2019.

RETHINKING THE HOLIDAY MESSAGE

There are many themes that people use to give meaning to the Christmas holiday.  The most important remains the birth of Jesus, which was not considered a cause for celebration among believers until the 19^th century. In America, recognition of the holiday started in the 1840s and Christmas was declared a federal holiday in 1870. 

High on the list is the proclamation of “peace on earth and good will towards men”.  This ideal famously led the opposing troops on the Western Front in WWI to stop shooting, leave their defensive positions and to warming great each other during the first Christmas of the War.  Then there is the theme of Santa Claus and gift giving to children, as imagined differently in cultures around the world.  And of course the business world concentrates on the explosion in retail purchases that determines which shopping emporiums will stay in business for another year.

My focus for the holiday season this year will be on a different topic.  My hope is to stimulate some thought and conversation about our future, our children and a social policy that could really make a difference. Speaking for myself, I have everything I could possibly need in life and find it unsettling when the world remains so economically unbalanced and inequitable. For these reasons, my holiday message will center on “success” and “luck”.

This Christmas day, December 25, 2018, 353,000 babies will be born and become part of the human experience.  I view each child as no less a miracle than the child born on the original Christmas Day. The majority of these children, despite intelligence and inherited talents will not succeed in reaching their potential because of odds stacked against them. Most will not escape poverty and will not receive adequate healthcare or educational opportunities.  Innumerable children will grow up in unstable home environments surrounded by violence.  Too many of these children will be born in America.

This reality is in stark contrast to my story where so much of my success and of many of those around me has been based on good luck.  But more than that, the good luck is based on loaded dice, almost guaranteeing the successful outcome I have enjoyed. This year’s Christmas message and New Year’s resolutions call for an ethical reset. I can no longer morally accept this result as a fait accompli.

The best-selling author Michael Lewis has often discussed the improbable chain of arbitrary events that led him to become a rich and famous nonfiction journalist. His comments at the Princeton University commencement address to graduates in 2012 express my thoughts exactly:

“In a general sort of way you have been appointed the leader of the group. Your appointment may not be entirely arbitrary. But you must sense its arbitrary aspect: you are the lucky few. Lucky in your parents, lucky in your country, lucky that a place like Princeton exists that can take in lucky people, introduce them to other lucky people, and increase their chances of becoming even luckier. Lucky that you live in the richest society the world has ever seen, in a time when no one actually expects you to sacrifice your interests to anything.”

Next, Consider the comments made by former Federal Reserve chairperson, Ben Bernake, again at a Princeton University Baccalaureate speech, this time in 2013:

“A meritocracy (a ruling or influential class of educated or skilled people) is a system in which the people who are the luckiest in their health and genetic endowment; luckiest in terms of family support, encouragement and, probably income; luckiest in their educational and career opportunities and luckiest in so many other ways too difficult to enumerate – these are the folks that reap the largest rewards. The only way for even a putative meritocracy to hope to pass ethical muster, to be considered fair, is if those who are the luckiest in all of those respects also have the greatest responsibility to work hard, to contribute to the betterment of the world, and to share their luck with others. As the Gospel of Luke says (and I am sure my rabbi will forgive me for quoting the New Testament in a good cause): ‘From everyone to whom much has been given, much will be required; and from the one to whom much has been entrusted, even more will be demanded’ (Luke 12:48, New Revised Standard Version Bible). Kind of grading on the curve, you might say.”

These words, from two thinkers I greatly admire and who understand economics and the choices available to us, explain my life and the success I have enjoyed due to being one of the “lucky few” as well as anything I have read.  The challenge here is to realize the arbitrary nature of my privileged position and to begin to make things right by sacrificing some of my economic interests and helping to level the playing field.

This seems like a tall order, so what is to be done? I have decided to go all in and support the plan offered by renowned economics professor, Robert Frank, in his excellent short book: Success and Luck. Professor Frank concludes his narrative with the view that: “there is a compelling moral case for rebuilding the environments for young children that foster success… growing income gaps have profoundly diminished the opportunities available to low income children.”

Frank points out that moral conversations are often necessary to prompt political action.  I am hoping that this Christmas holiday is a good time for such a conversation.  Professor Frank proposes a simple but radical change that would do away with our Income Tax structure and replace it with a steeply progressive tax based on each family’s consumption expenditures.  Such a step would reduce the high rates of spending on mansions, luxury vehicles, jewelry, second vacation homes and over the top celebrations.  Those of us who live comfortably would sacrifice some perks from a successful and lucky life. Those of us that are wealthy would sacrifice even more and hardly know the difference.

The extra funds collected from such a system (studies show it would be considerable) would be earmarked to level the playing field.  Not income leveling but rather opportunity leveling.  Such a tax is one of the few public policies that could unload the dice that now favor the lucky few who have gained an unjust number of favorable opportunities in the game of life.

There will be those that read these words and who will argue that I am wrecking the American Dream.  I am referring to the well held belief that talented people who work hard and play by the rules can always get ahead irrespective of their family backgrounds.  To this I say humbug. It is time to stop using this excuse to give the lucky and successful an advantage with which to accumulate more of what they do not need.  Welcome to the conversation.

Because John Lennon was a fan of Christmas conversations through his music, I will end with some appropriate lyrics from his album (and song) IMAGINE, reissued in dramatic fashion this October, in time for the holidays.

“No need for greed or hunger

A brotherhood of man
Imagine all the people
Sharing all the world...

You may say I'm a dreamer
But I'm not the only one
I hope someday you'll join us
And the world will live as one”

Merry Christmas and happy holidays to all.