Editor’s Note: Ahead of Google I/O 2026, Saliya Weerakoon reflects on Alphabet’s latest earnings call not simply as a financial event, but as a marker of a broader civilizational shift. His concern is not the familiar fear that artificial intelligence will become too powerful. It is the quieter possibility that human beings may surrender too much of their own agency, memory and imagination in exchange for convenience.

❝ The danger is not artificial intelligence becoming excessively intelligent. The deeper danger is natural intelligence becoming increasingly unnecessary.

I was 23 years old when I received my first personal email address. Like millions entering the early internet age, I began with Yahoo and Hotmail. Back then, an email address felt almost ceremonial, a small digital passport into a new world. You chose it carefully, memorised passwords and waited patiently for dial-up connections. The internet still carried friction.

Then, in 2004, I moved to Gmail. At the time, it felt less like changing an email provider and more like stepping quietly into the future ahead of everyone else. Google had not yet become the giant it would later become, though there was already a strange confidence surrounding it. The interface was clean. The speed felt different. The architecture itself felt intelligent long before artificial intelligence became fashionable language.

Twenty-two years later, I rarely hear anyone speak about Yahoo or Hotmail anymore. One baby boomer friend still uses an AOL address, like an old photograph on the wall of an ancestral home. The world moved on. More importantly, the world moved into Google.

From Search Engine to Environment

On April 29, 2026, during Alphabet’s first-quarter earnings call, Sundar Pichai stood calmly before the world and narrated the next stage of technological civilisation through financial results. Rumours had circulated not long ago about the possible end of his tenure. Yet there he was again, composed and measured, speaking less like a corporate executive and more like the steward of a rapidly expanding ecosystem touching billions of lives every hour.

Google Services revenues increased 16% to $89.6 billion, led by 19% growth in Google Search & other, 19% growth in subscriptions, platforms and devices, and 11% growth in YouTube ads. Google Cloud revenue accelerated by 63%, reaching $20.0 billion, while Alphabet’s consolidated revenues rose 22% to $109.9 billion. Sundar Pichai also noted that Google’s paid subscriptions had reached 350 million, led by YouTube and Google One, while Nano Banana 2 reached one billion generated images in nearly half the time of Nano Banana 1. He spoke about agents, agentic coding, autonomous systems and the next frontier of intelligence.

To investors, these were extraordinary numbers. To me, they sounded like signals of something much deeper unfolding beneath the quarterly reporting cycle. This story is larger than Larry Page, Sergey Brin or Pichai himself. It extends far beyond another predictable apocalypse narrative surrounding artificial intelligence.

AI is here to stay. It will improve medicine, optimise traffic, reduce waste, personalise education, accelerate scientific discovery and possibly help prevent future conflicts. Every technological revolution in history has carried both advancement and consequence. Human beings eventually adapt to both. The machines are not evil. Corporations are rarely as simple as heroes or villains. Human beings themselves have always defined good and bad through lived experience, fear, ambition and survival.

The true antagonist is far quieter. It is the gradual surrender of human agency in exchange for frictionless existence. Human beings have always loved delegation. I am human, vulnerable, and I love delegation.

The Seduction of Convenience

We delegated farming to machines, navigation to GPS, memory to smartphones and attention to algorithms. Slowly and almost beautifully, humanity is now beginning to delegate thought itself. That was not something I wanted to give away completely.

The world is in a reconfiguration, but the transition does not arrive dramatically. The surrender arrives through convenience, comfort and efficiency. History shows that the deepest civilisational shifts rarely arrive through force. They arrive through seduction: the seduction of rewards, results, hope, fear, jealousy and optimisation.

Listening carefully to Pichai’s earnings call, I realised the deeper strength of the Google ecosystem is not technological dominance alone. Its true power lies in behavioural integration. Google no longer exists merely as a company people use. It is becoming an environment people inhabit. I understand this personally. Eventually, if I move deeper into Google’s health devices and hardware, I would touch the Google ecosystem every second of life, even in sleep.

Search thinks alongside you. Maps guide movement. Gemini writes and summarises. YouTube studies psychology through patterns of attention. Android follows movement through daily life. Google Photos remembers moments with greater consistency than human memory itself. Workspace increasingly organises professional cognition. Most people no longer remember phone numbers. Many struggle to travel without navigation systems. Birthdays, memories, schedules, conversations and even moments of silence increasingly pass through digital mediation first. The ecosystem no longer sits outside human experience. It increasingly positions itself between the human being and reality.

That is where the real question begins: what happens when human beings remove every difficulty required to remain human?

What Friction Teaches

Growing up, my parents taught me something modern systems increasingly avoid. Friction mattered. Failure mattered. Waiting mattered. I was four years old when I first learned to write words on a small tablet-sized blackboard with white chalk. The handwriting was imperfect. The process was slow. Learning required repetition, embarrassment, boredom and failure.

Natural intelligence emerged through struggle: through reading countless books whose meanings only became clear years later; through demanding teachers, examination failures, workplace betrayals, uncertain decisions and painful consequences. It emerged through frustration, silence, heartbreak and long periods when answers refused to arrive quickly. As a child, I learned imagination through boredom. Today, stimulation arrives before silence has a chance to speak.

Real intelligence was never frictionless. It was forged slowly through resistance.

When Assistance Becomes Dependency

Today, an entirely different architecture is emerging. A child uncomfortable with boredom reaches immediately for stimulation. A student facing difficulty summons AI assistance before wrestling with uncertainty. A politician models speeches through predictive systems. A CEO increasingly relies on machine-generated strategic interpretation rather than instinct formed through lived consequence.

At first glance, this appears like remarkable progress. In many ways, it truly is. Cities may become cleaner. We may end up with calmer traffic, predictive healthcare, lower crime rates, optimised nutrition and wars mediated by intelligent systems capable of simulating outcomes beyond human processing speed. Human civilisation may eventually become astonishingly efficient.

People will embrace this world because human beings naturally prefer comfort over difficulty. Speed, optimisation and predictive certainty create emotional reassurance. Frictionless systems feel safe. Yet beneath optimisation, another process quietly unfolds. Human tolerance for ambiguity weakens. Patience deteriorates. Memory externalises. Instinct dulls. Independent imagination narrows. Creativity risks becoming synthetic recombination rather than lived originality.

Even suffering, one of humanity’s oldest teachers, slowly loses relevance inside predictive systems designed to minimise discomfort before it appears. The danger is not artificial intelligence becoming excessively intelligent. The deeper danger is natural intelligence becoming increasingly unnecessary.

History repeatedly shows that human capacities left unused eventually disappear. This is why the future conversation cannot remain limited to innovation, regulation or corporate competition. The deeper conversation concerns preserving human depth within intelligent systems.

Preserving Human Depth

Humanity does not need to reject AI. Fear alone will solve nothing. The challenge is resisting complete surrender. There is a difference between assistance and dependency. There is a difference between optimisation and meaning. There is a difference between reducing friction and removing the conditions necessary for human growth itself.

Ironically, the more perfect systems become, the more imperfect human beings may quietly feel within them. A civilisation may soon know everything instantly, yet understand itself less deeply than ever before. Living inside Google may be the deeper reality unfolding beneath the product launches, quarterly numbers and extraordinary technological breakthroughs.

The world does not lack intelligence. It is screaming for orientation and purpose.

The Trump-Xi Summit in Beijing May 14-15, 2026

Stability, or the Appearance of Stability?

On May 12, econVue convened a subscriber panel ahead of the Trump-Xi Summit in Beijing. The panel asked whether the meeting would produce a meaningful reset in US-China relations, or simply a pause in a more profound strategic confrontation.

The discussion featured Christopher Balding, CEO of Siphtor and senior fellow at the Henry Jackson Society; Brian McCarthy, managing principal and chief strategist of Macrolens; and Eric Huang, senior fellow at Hale Strategic and an expert on US-China-Taiwan geopolitics. The conversation was moderated by Lyric Hughes Hale, editor-in-chief of econVue and host of The Hale Report.

The central question became clear early in the discussion: Will the summit produce real stability, or merely the appearance of stability?

Two Leaders, Two Centralized Systems

Panelists agreed that both Washington and Beijing are now operating through unusually centralized leadership systems. Xi Jinping’s China has become far more disciplined around one-man rule, while Trump’s second term has placed China policy in the hands of a smaller and more loyal circle. Christopher Balding argued that Xi’s advisors should not be understood as independent policy voices in the American sense, while Eric Huang described the current CCP system as one of “singular leadership under Xi Jinping.”

Taiwan: The Issue No One Wants on the Table

Taiwan emerged as one of the most sensitive issues. Huang warned that Taiwan does not want to become a topic at the summit. A warmer US-China relationship can sometimes reduce cross-strait tensions, but only if Taiwan is not treated as a bargaining chip. Brian McCarthy said the most important signal to watch would be any shift in US language on Taiwan, especially if Washington moved from not supporting Taiwan independence to actively opposing it.

Iran, Hormuz, and China’s Leverage

The panel also examined how the Iran conflict and the Strait of Hormuz could reshape the summit. McCarthy argued that markets are now focused heavily on Iran and energy risk, and that any real movement toward de-escalation may have to run through Beijing. Karim Pakravan, joining from the audience, emphasized that Iran’s relationship with China is transactional: Beijing has leverage over Tehran, but that does not mean China wants the same outcome as Washington.

Strategic Decoupling Moves From Theory to Policy

Strategic decoupling was another major theme. McCarthy described the emerging US approach as one that allows some continued trade in non-strategic goods while seeking to reduce dependence on China in critical sectors. Balding noted that supply chains are moving out of China, but that the biggest beneficiaries are often countries such as Mexico and Vietnam, rather than the United States. The harder task is securing pharmaceuticals, metals, medical devices, semiconductors, transformers, rare earths, and other critical inputs.

AI and the Battle for Technology Ecosystems

AI added another layer to the discussion. Huang argued that China is advancing quickly in business applications of artificial intelligence and intends to build a competing technology ecosystem. Taiwan sits at the center of that contest, both through TSMC and through the choices its firms will make between US and Chinese systems.

Allies Fear Both Abandonment and Entanglement

The panel also touched on Japan and allied confidence. Richard Katz, joining from the audience, noted that Japan fears both abandonment and entanglement: being left exposed by a US-China deal, or being pulled into conflicts driven by unpredictable US policy.

China’s Economy Beneath the Headline Numbers

On China’s economy, Balding and McCarthy both questioned the usefulness of headline GDP figures. McCarthy argued that China is barely growing in nominal terms, while Balding pointed to flat domestic car sales as one sign that official data may not reflect the underlying reality.

What to Watch Now

The discussion closed with a broader warning from Iraj Abedian: economies require predictability, and predictability has gone out of the picture.

What to watch now is not only what Trump and Xi say publicly, but what they avoid saying. The most important signals may come from the omissions: Taiwan, Iran, rare earths, AI controls, dollar dominance, and the pace of strategic decoupling.

As Christopher Balding put it, the key may be watching “what isn’t said.”

Audience Poll:

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The Trump-Xi Summit in Beijing May 14-15, 2026

You are invited to an econVue virtual panel discussion on the upcoming Trump-Xi Summit, scheduled to take place in Beijing on May 14–15. The conversation will be moderated by Lyric Hughes Hale.

The meeting comes at a critical moment for US-China relations. Trade tensions, technology restrictions, rare earth dependencies, Taiwan, sanctions, and the widening geopolitical fallout from the Iran conflict are all converging ahead of the summit. Whether the meeting produces a genuine reset or merely a diplomatic pause, markets, policymakers, and allies will be watching closely for signs of how Washington and Beijing intend to manage competition in a more fragmented global economy.

👥 Panelists

Our panel will bring together three sharply informed perspectives on China: Christopher Balding, who spent much of his academic career in the PRC; Brian McCarthy, who analyzes China from a Wall Street and global macro perspective; and Eric Huang, Hale Strategic senior fellow, joining us from Taipei.

Christopher Balding is CEO of Siphtor, a financial data provider based in California, and a senior fellow at the Henry Jackson Society. He spent nine years at Peking University HSBC Business School in Shenzhen and later taught at Fulbright University Vietnam. His work focuses on China’s economy, financial markets, technology sector, and corporate governance. He is widely followed on X as @BaldingsWorld.

Brian McCarthy is the Managing Principal and Chief Strategist of Macrolens LLC. A Harvard-trained economist, he has held senior roles at Alliance Capital, AIG, Barclays, UBS, RBS, and Emerging Sovereign Group, where he managed a China-focused macro hedge fund. He founded Macrolens in 2018 to provide institutional investors with independent research on global macro trends, China, and US-China financial dynamics.

Eric Huang is a senior fellow at Hale Strategic and a recognized expert on US-China-Taiwan geopolitics. He previously represented Taiwan’s Kuomintang Party in Washington, DC, where he worked at the intersection of cross-strait relations, US policy, and Taiwan’s domestic political debate. He is frequently quoted in leading global media, including The Economist, BBC, and Bloomberg. He holds degrees from Johns Hopkins SAIS, Harvard Kennedy School, and MIT.

Lyric Hughes Hale is editor-in-chief of econVue and host of The Hale Report. A longtime observer of the Chinese economy and US-China relations, she will moderate the panel and audience Q&A.

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❝ The unhappy scenario is one in which confidence in the dollar is lost abruptly…I worry about risks to financial stability that could lead to a disorderly migration away from the dollar before adequate alternatives exist.
— Barry Eichengreen

Episode Details

Guest: Barry Eichengreen
Book: Money Beyond Borders: Global Currencies from Croesus to Crypto
Host: Lyric Hughes Hale, Editor-in-Chief of econVue
Producer: Sam Fu
Recorded: Friday, May 1, 2026 | 48 minutes

Episode Overview

Barry Eichengreen joins econVue editor Lyric Hughes Hale on the The Hale Report to discuss his new book, Money Beyond Borders: Global Currencies from Croesus to Crypto. The conversation ranges from ancient coins and Spanish silver to sterling, dollar dominance, gold, stablecoins, and central bank digital currencies. His book spans centuries, from the history of money, to the state of US dollar dominance, and the future of digital money.

Eichengreen does not believe that the dollar is about to be replaced by the euro, renminbi, gold, or crypto. Instead, he warns that geopolitical fragmentation, US debt, sanctions, pressure on Federal Reserve independence, diminished faith in institutions, and new forms of market fragility could erode trust in the dollar system faster than alternatives can develop.

The result would not be a clean transition to a new reserve currency, but a more unstable monetary system, marked by increased reserve diversification, parallel payment systems, digital money, gold accumulation, and echoes of the 1930s.

About Our Guest

Barry Eichengreen is one of the world’s leading economic historians and monetary scholars. He is Distinguished Professor of Economics and Professor of Political Science at the University of California, Berkeley, where he holds the George C. Pardee and Helen N. Pardee Chair. He is also affiliated with the National Bureau of Economic Research and the Centre for Economic Policy Research, and previously served as Senior Policy Advisor at the International Monetary Fund.

He is a regular columnist for Project Syndicate and a past president of the Economic History Association. His most recent book is Money Beyond Borders: Global Currencies from Croesus to Crypto.

🎤 Topics and Key Moments

Money Beyond Borders: Money That Travels
The conversation begins with one of the book’s central ideas: currencies become international through trade before they become tools of finance, from ancient coins to Spanish silver to the US dollar.

The Life Cycle of Global Currencies
Eichengreen discusses whether reserve currencies rise and fall according to a recognizable life cycle, and whether the dollar’s century-long global role is entering a new phase.

The Dollar Under Stress
The dollar remains dominant, but Eichengreen argues that its strength depends on more than markets. It also rests on political stability, rule of law, Fed independence, and alliance trust.

❝ International currency status has economic and financial prerequisites, but it also has important political prerequisites.

Gold, Oil, and War
The conversation explores why central banks are buying gold, how sanctions are reshaping reserve management, and how Eichengreen sees events in the Middle East.

❝ I do think events in the Middle East are dollar negative and renminbi positive.

China, Silver, and Hong Kong
Eichengreen explains why the renminbi lags far behind the dollar, what China’s silver standard period reveals about global money, and why Hong Kong’s dollar peg depends on unusually specific institutional conditions.

Crypto, Stablecoins, and CBDCs
The discussion turns to Bitcoin, stablecoins, tokenized bank deposits, and central bank digital currencies, including Eichengreen’s warning that stablecoins could create new forms of Treasury-market fragility.

❝ We know from history that something that is safe and liquid today can become unsafe and illiquid tomorrow.

Monetary Fragmentation and the 1930s Scenario
The episode’s darkest warning is not that the dollar will be replaced overnight. It is that confidence in the dollar could be lost before alternatives are ready.

❝ The unhappy scenario is one in which confidence in the dollar is lost abruptly.

Policy and Practical Takeaways
To preserve the dollar’s role, Eichengreen argues that the United States must protect Federal Reserve independence, address its fiscal trajectory, maintain institutional credibility, and reassure allies.

Mentioned in This Episode

• Barry Eichengreen, Money Beyond Borders: Global Currencies from Croesus to Crypto
  Eichengreen’s newest book and the focus of the episode.

• Barry Eichengreen, Exorbitant Privilege
  Referenced through the discussion of dollar dominance and the advantages and burdens of the dollar’s global role.

• Federal Reserve Act of 1913
  Discussed in relation to the creation of the Federal Reserve and the early use of the dollar in international trade finance.

• GENIUS Act and CLARITY Act
  The GENIUS Act, signed into law in 2025, created the first federal framework for payment stablecoins, including rules on reserves, redemption, supervision, anti-money-laundering obligations, and sanctions compliance. The related CLARITY Act, still under debate in Congress, addresses the broader digital-asset market structure by clarifying regulatory jurisdiction between the SEC and CFTC.

• Dodd-Frank Act
  Discussed in relation to post-global-financial-crisis regulation, stress tests, and capital requirements.

• Smoot-Hawley Tariff Act
  Referenced as part of the 1930s breakdown in trade and global liquidity.

• Project mBridge
  The cross-border central bank digital currency project involving China, Hong Kong, Thailand, the UAE, and Saudi Arabia.

• Simon Kuznets’s “four kinds of economies” line
  A memorable reference to “developed, developing, Argentina, and Japan,” used to explain Japan’s unusual place in the global economy.

• John Greenwood
  Referenced in connection with the Hong Kong dollar peg. Greenwood is widely associated with the design and defense of Hong Kong’s modern currency board system, which restored the Hong Kong dollar’s fixed link to the US dollar in 1983. In the episode, his views are discussed in relation to the peg’s automatic convertibility and rule-bound credibility, as a comparison to stablecoin protocols.

• Paul Warburg
  Discussed as a central figure in the creation of the Federal Reserve and Eichengreen’s chosen dinner guest.

  ---

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Horses are beautiful, majestic creatures, but they can also be temperamental and unpredictable, which is what makes horse racing a sport. What matters is not just speed or strength, but pacing and timing. I have been thinking about the analogy to Iran, as we face the next few days of negotiations over the Strait of Hormuz. As Sherlock Holmes described in The Adventure of Silver Blaze:

Danger at Both Ends

This line offers a precise framework for understanding the current US–Iran confrontation. Negotiations over the Strait of Hormuz enter what may be their most consequential phase in coming days, in the run up to the Trump-Xi Summit next week. They have been buoyed by Putin’s announcement today of a ceasefire with Ukraine.

The Iran conflict has two clear points of danger, and both are already in motion. The front end is visible and kinetic. Direct military escalation has begun, with US–Israeli strikes on Iranian leadership and infrastructure followed by retaliation across the region. A US ship has been damaged, and the UAE just issued its strongest warning to Iran to date.

The back end is slower, but no less dangerous. Economic warfare is already underway. Iran is constricting maritime traffic, the United States is applying sanctions and financial pressure, and markets are constantly reacting. In our globalized economy, what begins as pressure on one system is rarely contained there, and spreads across others. Middle powers, energy-dependent economies, and poorer countries are raising the alarm on critical supplies. Shortages are looming as a result of both the blockade and military attacks, within Iran and across the rest of the world.

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The Uncomfortable Middle

Between these two ends lies what policymakers describe as a controlled space—a zone of managed confrontation in which limited strikes, maritime escort operations, and negotiations are meant to prevent escalation while preserving leverage. This is where the United States and Iran now find themselves, not full-out war, but not at peace.

The middle is not safe; it is merely less obviously dangerous. Miscalculation risk is highest here, signals are ambiguous, and each side is testing boundaries without clear rules. What appears to be equilibrium may in fact be fragility, and we are now skating on very thin ice. Anyone who assumes that the Iranian polity will quickly rise to challenge its leadership underestimates how technocratic dictatorships manage fear. Within Iranian leadership, self-immersion in their domestic politics and internal stalemate may encourage miscalculations about how much time remains before outside pressures force a decision.

China: The Dog That Didn’t Bark

Following on the plot of Silver Blaze, Holmes’ deeper insight was not about the horse, but about what did not happen: the dog that did not bark. That clue led to the solution of the mystery. In the current confrontation, that dog is China, whose silence has been striking. Despite deep ties to Iran and reliance on Middle Eastern energy flows, China has not visibly intervened, nor has it issued harsh criticism against America. This may reflect strategic agreement, calculated restraint, or a deliberate decision to wait for a moment when intervention would matter more. The most unsettling possibility is that China is waiting for a specific trigger. The best case is that China is quietly tolerating US efforts to prevent Iran from acquiring nuclear capabilities.

That trigger may not be in the Strait of Hormuz, but in the broader strategic context, including next week’s meeting between Donald Trump and Xi Jinping in Beijing. A summit between the two leaders, coming at a time of heightened tension, could redefine boundaries across multiple theaters. China could signal restraint and position itself as a stabilizing force, or leverage US distraction to press its own strategic interests, such as chips and Taiwan. With more than a billion barrels of oil in its reserves, it can bide its time. In the meantime, shots were fired again near the White House today, a little more than a week after an assassination attempt. It is hard to imagine what the Chinese, or the Russians make of this, but it does not strengthen the US position. The odds are lengthening that the trip could be cancelled.

Stamina & Control

My grandparents went to Kentucky each May for the Derby, and this year my mother and I attended a watch party at the Union League Club here in Chicago. It brought back another world—Colorado in the 1950s and 60s—where horse racing and figure skating intersected in unexpected ways. Serious figure skaters, including my mother, moved to Colorado to train. Olympic gold champion Sonja Henie, and World Championship silver medalist Hedy Stenuf, both became involved with race horses there. Stenuf, who was also my godmother, ran a skating school while she raised six children. An Austrian refugee whose competitive career was cut short by the war, she famously returned to the ice two days after giving birth.

My mother followed in her footsteps, and continued to teach skating while having five children. Even now, at ninety-three, she is still working. What united those worlds of racing and skating was stamina, speed with grace, and the ability to endure.

There is no doubt, given the past 47 years, that the Iranian people can endure the harshest of conditions, allowing their leaders to play for even more time. The rest of the world, however, is less accustomed to deprivation, and less practiced in endurance. The field has widened; there are many more horses in the race now.

Iran: The Human Reality

My mother is also the reason we moved to Iran, although there was no skating rink. She was drawn to adventure and persuaded my father, a journalist, to join the Foreign Service. Our family has of course been thinking of Iran and of dear lifelong friends there and around the world in light of the current conflict. I realize that what we miss is not just a place, but a time that simply does not exist anymore. We can never go back.

The damage is immense. It is estimated that Iran has lost one million jobs in over the last two months. Businesses cannot operate due to lack of supplies and raw materials. The rest of the world is impacted as well; fertilizer is a case in point. A significant share of globally traded fertilizer moves through the Strait, and disruptions are already affecting supply and pricing. In parts of Africa, for example, where planting cycles depend on timely delivery, shortages today translate directly into reduced yields months from now. Iran is also a mineral-rich country, with significant copper, zinc, iron ore, steel, barite, gypsum, strontium, and other non-fuel mineral resources which have yet to be fully exploited. Iran is not only an oil chokepoint. It is a rich land whose young people have lost hope.

The economic strain and opportunity loss is real, but when will it become unsupportable not just within Iran, but for the rest of the world? The answer may come sooner than we think. And the end result? When everything collapses, the country’s economy will require significant reconstruction, by the Iranians themselves, and likely the US or China, and the other 14 nations that have been drawn into the war. One barrier to an end to the conflict could be Iran’s fear that it will be asked to pay reparations to the other countries in the region it has attacked.

The next few days matter. Negotiations over the Strait of Hormuz could produce a temporary de-escalation, but a miscalculation could push the conflict toward direct escalation. Continued economic pressure could deepen internal strain within Iran, prolonging the standoff while increasing instability. The question remains whether China will continue to remain silent, or whether a shift in conditions will prompt it to act. The upcoming Trump-Xi Summit could be a turning point in this war.

Post Time

The race is on. The dangerous ends are real. The middle might feel manageable, but the status quo cannot continue. The post parade, when the horses leave the paddock and head to the starting gate, has begun. Options are narrowing, and the field is committing to the course ahead. There will be some last-minute scratches, but we know who will be on the field. No one can predict who will win or show with certainty.

President Trump may want the race finished by the 250th anniversary celebrations, before the midterm elections. The rest of the world cannot wait that long. Events are already in motion.

Postscript: Our Next Subscriber Panel

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Sources

1. Iran prevents entry of US warships into Strait of Hormuz, Navy says, Reuters, May 4, 2026.

2. US says it sinks Iranian small boats, shoots down missiles, drones as it opens Strait, Reuters, May 4, 2026.

3. US pushes to reopen Strait of Hormuz as Iranian attacks on UAE strain ceasefire, Associated Press, live updates, May 4, 2026.

4. Putin, Zelenskiy proclaim rival ceasefires around Russia’s Victory Day commemorations, Reuters, May 4, 2026.

5. Trump says harsh rhetoric toward Iran is necessary: “They don’t understand being nice”, Maria Bartiromo interview, Fox Business, April 2026.

6. Donald Trump Explains Why His Voice Sounds Different, Newsweek, April 17, 2026.

7. ‘Zero income’: Job cuts add to misery of war for Iranians, The National, April 22, 2026.

8. War And Internet Blackout Push Iran’s Economy Even Further Toward The Brink, Radio Free Europe/Radio Liberty, May 4, 2026.

9. African governments need to take urgent action on fertiliser shortages, African Development Bank, April 2026.

10. From Hormuz to the Sahel: A Fertilizer Shock, and a Maghreb Solution, Middle East Institute, May 2026.

11. IMF chief Georgieva warns of ‘much worse outcome’ if Middle East war drags into 2027, Reuters, May 4, 2026.

12. China, the United States, and Japan hold most strategic oil reserves, US Energy Information Administration, April 20, 2026.

Are we overreacting, or not responding enough to recent events?

The news cycle follows constant crisis: conflict in the Middle East, rising tensions in Asia, a deepening political divide in the US punctuated by episodes of violence, and concerns about where technology is leading us. These disruptions seem unrelated but they are all emblematic of growing global fragmentation.

Since World War II, globalization has depended upon a foundation, despite periodic flareups, of expanding trust between nations, institutions, and markets. As Steve Clemons observes in our discussion on the Hale Report, that world is giving way to one defined by “high-fear” globalization, where alliances are conditional and defensive, and risk is no longer easily priced. In fact, some risks might not be able to be quantified at all.

Across this issue of re:Vue, that shift in risk comes into focus through the work of our contributors. In my article, Bolt from the Blue, the escalation surrounding Iran underscores how geopolitical risk has moved beyond traditional deterrence toward a more diffuse and unpredictable nuclear landscape. Our panel on a “New Monroe Doctrine” reveals how this uncertainty is reshaping regional strategy, as the United States redefines its sphere of influence through the lens of sovereign economic security.

The material foundations of power are being reassessed. Measuring Energy Security highlights the growing effort to quantify resilience before crisis hits, while in After the Storm Eric Huang traces China’s transition toward a mobilization state—reordering its institutions around endurance rather than growth. The Great Productivity Divide argues, the real contest is not over technology itself, but whether economic systems can effectively deploy it. Taken together, they point to a broader social and economic reset.

That leads to a more fundamental question about incentives and behavior. As Arthur Laffer reminds us during our podcast, policy does not merely respond to conditions—it shapes the actions of individuals and institutions.

What connects these perspectives is a common challenge: in a high-fear world, it is increasingly difficult to distinguish real risks from imagined threats. Markets react to both, often imperfectly. Policymakers must navigate between them, because the consequences of getting that distinction wrong are no longer confined to economics. They are systemic.

It is difficult enough to follow the onslaught of events, but to interpret them, to separate structure from spectacle requires a willingness to learn from expert, and sometimes contrasting perspectives. In a high-fear world, judgment, not information, has become the scarcest resource of all.

In case you missed them, we hope you enjoy listening to and reading our recent work.

–𝓁𝓎𝓇𝒾𝒸 💬

Editor-in-Chief

About re:Vue

re:Vue is all our newsletters condensed into one convenient, unobtrusive e-mail, prefaced by our editorial commentary. You can select exactly which econVue newsletters you receive or omit, including this one, at any time in your econVue account.

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🎧 THE HALE REPORT™ ⸱ Episode 77

Steve Clemons- The Man About Town in a Fragmenting World→

▶️ Listen now (1:00:32)

Hosted by LYRIC HUGHES HALE ⸱ FEB 26, 2026

Our guest for Episode 76 of The Hale Report™ was Steve Clemons, Editor-at-Large of The National Interest and veteran global policy convener. He explores the transition from an era of "high-trust" globalization to one defined by "high-fear," where unconditional alliances are being replaced by ad hoc, conditional arrangements. 💬

2 .:

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🎧 THE HALE REPORT™ ⸱ Episode 78

Arthur Laffer- The Other Side of Taxation: Incentives→

▶️ Listen now (56:07)

Hosted by LYRIC HUGHES HALE ⸱ MAR 27, 2026

Our guest for Episode 78 of The Hale Report™ is the legendary economist Arthur Laffer, architect of the Laffer Curve and former advisor to President Reagan. He explores the fundamental role of incentives—shaped by taxation, trade, and monetary systems—in driving global economic behavior, arguing that policy does not merely allocate resources but actively dictates human and institutional action. 💬

3 .:

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↪: 👥 PANEL RECAP

MAR 11, 2026 → At the Crossroads of a New Monroe Doctrine

↳ Panelists: R. Evan Ellis, ERIC HUANG, Joshua W. Walker

Moderated by: Lyric Hughes Hale, Editor-in-Chief, econVue

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Bolt from the Blue

Lyric Hughes Hale ⸱ APR 13, 2026

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The global system has entered a “new nuclear era” where the collapse of US-Iran talks and the subsequent US naval blockade—the most significant escalation since the 1962 Cuban Missile Crisis—have pushed geopolitical risk beyond the limits of traditional market pricing. With the Doomsday Clock at 85 seconds to midnight and satellite evidence suggesting Iran possesses highly enriched uranium, the world faces a shift from concentrated Cold War risks to a widely distributed, “high-fear” landscape where miscalculation and the erosion of nuclear guardrails pose an existential threat to the global economy. 💬

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Measuring Energy Security

Lyric Hughes Hale ⸱ MAR 21, 2026

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The Center for Strategic and International Studies (CSIS) recently hosted the launch of the National Center for Energy Analytics (NCEA) US Energy Security Index (ESI), a critical new tool for quantifying American resilience in a volatile global system. Cross-posted by the Hale Strategic Resources Initiative (HSRI), the discussion emphasizes that energy is the foundation of economic security and cannot be improved without precise measurement. By tracking 18 indicators across fuel and mineral sectors, this index—led by NCEA Executive Director and HSRI board member Mark P. Mills—provides a major contribution to US efforts to identify and mitigate systemic vulnerabilities before they reach a crisis point. 💬

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The Great Productivity Divide

Lyric Hughes Hale ⸱ MAR 9, 2026

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While the global spotlight remains fixed on the technological race for AI supremacy, the true determinant of economic power is not technological discovery, but price discovery. Despite China’s massive lead in industrial robotics—installing nearly half of the world's robots annually—its total factor productivity growth has slumped to 1% or less, leaving its output per hour at just one-third of US levels. Sustainable innovation yields lasting gains only when institutional systems allow market signals to deploy resources efficiently across the economy. Ultimately, the AI "race" is less a battle of technologies and more a competition between economic systems to see which can best discover how to use these tools most productively. 💬

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After the Storm: China’s Military Purges and the Rise of a Mobilization State

⸱ERIC HUANG ⸱ FEB 18, 2026

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The investigation of General Zhang Youxia and senior PLA leadership marks a "self-inflicted decapitation strike" that signals China’s definitive shift from a developmental model to a mobilization state. By purging five of the seven Central Military Commission members appointed in 2022, Xi Jinping has dismantled the traditional princeling-led military power centers, trading institutional experience for absolute vertical obedience. This transition suggests that Beijing is no longer managing its economy for consumer prosperity, but is instead "hardening" its industrial and financial systems—prioritizing semiconductor autonomy and energy resilience to survive a state of permanent strategic siege. 💬

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❝ How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others…
— Adam Smith, The Theory of Moral Sentiments

The Moral Foundations of Economic Systems

Economists seldom frame their arguments in religious or moral terms. One exception is George DeMartino, my recent guest on The Hale Report, who has written eloquently about the ethics of economics and the need to hold economists accountable for the policy decisions they advocate.

Even more rarely do economists talk about God, or man’s place in the universe. Their domain is the material world rather than the spiritual realm. Yet economists often serve as secular priests of central banks, which in modern times have taken on a role not unlike that of ancient temples, continually refitted as their functions expanded. Similarly, central banks have their own arcane rules, rituals, and vocabulary, and demand an unshakable faith in the doctrine of monetary policy, even as they remain uncertain of its outcomes. Their regularly scheduled meetings and pronouncements are scrutinized with an intensity once reserved for oracles, as observed by their acolytes in the financial press. The appointment of successors is awaited with a degree of anticipation not unlike the white smoke of the Vatican.

In Bolt from the Blue, I argued that markets cannot price a nuclear attack. Here, the risk is different but no less profound: markets also struggle to price moral shocks that occur when the relationship between our values and our resources breaks down. Markets also cannot price moral misalignments.

The new pope, Leo XIV, has decided to venture into the geoeconomic realm. After all, for much of history, religious beliefs were not separate from economic life; they helped shape the moral frameworks that made trade and other means of exchange and settlement possible. Trust was grounded in shared beliefs about what individuals owe one another, and what a higher authority beyond the State requires of them. Those foundational beliefs, in turn, influenced how institutions were created and evolved over time.

Economists should be encouraged to cross over into this unfamiliar domain. They tend to focus more on prices and incentives, even though most would agree that individuals also make financial decisions based on their values and beliefs. There are notable exceptions: Adam Smith wrote The Theory of Moral Sentiments before The Wealth of Nations. Max Weber linked Protestant belief systems to economic behavior, and Douglass North brought culture and norms back into economic analysis.

❝ Not ideas, but material and ideal interests directly govern men’s conduct. Yet very frequently the ‘world images’ that have been created by ‘ideas’ have, like switchmen, determined the tracks along which action has been pushed by the dynamic of interest.

—Max Weber, The Social Psychology of the World Religions, 1946

But overwhelmingly, economics has moved toward models, quantification, and policy mechanics, and away from a more fundamental question: what ultimately sustains the human architecture of economic behavior? Moral expectations are not incidental. They determine whether contracts are honored, officials are trusted, taxes are paid, and whether individuals are willing to invest, hire, and take risks.

This matters because economic systems ultimately depend not just on incentives, but on how individuals perceive and act upon their obligations. Understanding motivation and core beliefs improves economic forecasting, pushing analysis beyond charts and graphs. What follows is not a single policy solution or market forecast, but a framework for understanding how decisions are made by individuals and government policymakers.

Economic systems do not operate independently of moral frameworks. They are expressions of them.

Rights Endowed by their Creator, Not the State

As enshrined in our founding documents, in the American tradition rights are not granted by the State, but are natural endowments from a higher authority. As articulated in the Declaration of Independence, individuals are “endowed by their Creator with certain unalienable Rights,” a principle that places limits on what the state, and society, can demand of them.

Since these rights are derived from outside the State, they establish a boundary on political authority over individuals. However, the invocation of a higher authority is not meant to expand political claims, but to restrain them. As Pope Leo XIV recently warned during his African tour, “Woe to those who manipulate religion and the very name of God for their own military, economic, and political gain.”

Beyond the US, in a world of limited resources, the success of economic systems ultimately depends on how societies balance rights and obligations, and whether that balance can be sustained. A question that economists should answer is whether we can afford to operationalize, individually and through our institutions, values derived not from the State, but from our higher beliefs as a society. And if not, what ethical compromises we can tolerate. These tensions must be worked through collectively.

Allowing only one viewpoint is why it is so difficult for theocracies to create flourishing economies. When God and the State are the same, there are no restraining influences on policy choices. And it is no accident that the US system, which separates church and state, has continued to show strong economic dynamism. And it is no surprise, given their profound structural differences, that the US and Iran have so much trouble negotiating with each other.

Economists can contribute by using facts to suggest ways to balance these rights and obligations within real resource constraints. In practice, these obligations are layered and overlapping, with a hierarchy that is anchored in our systems of belief. It’s complicated, and governments often get it wrong.

Circles of Obligation

A useful way to understand this tension over capacity constraints is by envisioning circles of obligation. At the center is the family, where responsibilities are immediate and non-transferable. Beyond that lies the community and the nation, where obligation is mediated through institutions and shared identity. Only then does responsibility extend outward to humanity at large, where moral concerns remain real but are inherently more diffuse, shaped by distance, capacity, and accountability.

This structure is not unique to the West. In Japan, the distinction between on (恩)—an unrepayable debt—and giri (義理) the social duty to honor and respond to that debt—defines a layered system of obligation that mirrors these concentric circles—personal duties at the center, and broader, more diffuse responsibilities extending outward.

These circles can also be understood as plates—layers of obligation that shift over time in response to economic change. Like tectonic plates, they are not fixed. They move gradually over long periods, sometimes abruptly, often in ways that are not immediately visible. While they remain aligned, the system holds. When they begin to drift apart or collide, strain accumulates beneath the surface long before it is reflected in policy or detected by markets. However imagined, the strongest pull is at the center, based on our immediate duties.

However, when the outer circle expands faster than the inner circles, economic repercussions will be felt. This is not simply a political or cultural problem; it is a question of priorities. Resources—whether fiscal, institutional, or social—are not unlimited. Every new claim carries a cost, and each society must decide how those claims are prioritized. A system that ignores scarcity in the name of moral ambition risks undermining the very foundations that makes that ambition possible. The recent immigration crises in Europe and the US are an example of this push and pull.

We cannot ignore any of these circles. A person or a society that only tends their own garden shrinks from the broader system on which it depends. However, it is within the family and immediate community that individuals have the greatest autonomy and the most direct capacity to act. The challenge, therefore, is not to choose between these spheres, but to order them—to conserve not only physical resources, but the social and moral capacity required to sustain obligation across all three. Good economic policy rests on moral clarity.

Obligations vs Capacity

Economic performance depends on alignment between moral principles and institutional capacity. When moral precepts evolve in step with institutional capacity, trust is sustained and growth follows. When they step out of alignment, when resources lag behind expectations, either adjustments need to be made or conflict will build. What appears as a shift in policy or political discourse is often something deeper: a society-wide disagreement about what we owe others.

We can see clear evidence of this today in the United States. As debates over equality, migration, tolerance, and national identity intensify, the link between values and economic capacity is fraying. These are often discussed as legal, political, or cultural disagreements, but at their core they reflect a more fundamental question: how far do our responsibilities extend when resources are not unlimited? The answer influences not only domestic social cohesion, but the evolving nature of globalization.

Resource Limitations

The scope of modern fiscal imbalances can be understood in this light. Persistent deficits reflect a deeper mismatch between the scope of commitments a society has assumed and the resources it is willing or able to allocate. When expectations expand faster than the capacity to fund them, the gap is often bridged through borrowing, which has expanded rapidly worldwide since the recovery from WW2 in spite of our unprecedented peacetime prosperity. This peace dividend has allowed societies to defer the consequences of difficult trade-offs, but not to escape them. In this sense, the fiscal deficit is not just a financial metric; it is a measure of unresolved questions about how obligations are ordered and maintained.

Recent efforts to reduce government spending, including initiatives such as the Department of Government Efficiency (DOGE), are an attempt to bring state obligations back into alignment with fiscal realities. Whether these efforts succeed depends not only on identifying inefficiencies, but on confronting the more difficult question of which obligations can be sustained, and which must be reconsidered or eliminated. This has been painful; Washington DC now has the highest unemployment level in the country— 5.9%.

Efficiency can reduce costs, but it cannot resolve the underlying question of how competing claims are prioritized. This brings us back to values. Do we house homeless migrants, the urban poor, or military veterans? There is a clear divide in the United States, and so far this debate has been pushed forward by borrowing resources, not just at the federal level, but locally. My own city, Chicago, is renowned for putting off inevitable decisions that will one day be made for us.

Under President Clinton, we had a balanced budget. We also had a far more unified polity. Fiscal deficits are a form of institutional scar tissue that develops along ideological divides. Japan and China, it should be noted, both have large fiscal deficits but have remained relatively culturally cohesive. China has a closed capital account; Japan owns most of its own debt.

Next, I discuss how this tension of boundaries plays out across religions, and across three economies: The EU, China, and Australia.

Three Traditions, Three Structures

This layered structure of obligations is also embedded in the world’s major religious traditions. Christianity, Judaism, and Islam each attempt to balance universal moral concerns with individual obligations.

Christianity pushes outward: “I was a stranger and you welcomed me” (Matthew 25:35). Yet it also affirms the priority of the inner circle: “If anyone does not provide for his relatives… he has denied the faith” (1 Timothy 5:8). The familiar phrase “charity begins at home” is a later formulation, but it reflects a much older principle: that obligation is ordered, beginning with the family before extending outward. This idea is not simply cultural; it is embedded within religious frameworks that define both the expansion and the limits of moral responsibility.

Judaism also prescribes care for the outsider: “You shall love the stranger as yourself” (Leviticus 19:34) while grounding obligation within a defined covenantal community.

Islam affirms universal human dignity—“We made you into nations and tribes so that you may know one another” (Qur’an 49:13)—while institutionalizing redistribution through zakat (Qur’an 9:60).

Each tradition offers a different solution to the same problem: how to extend moral concern without dissolving the structures that sustain it, and how to balance immediate responsibilities with duties to a larger community and, ultimately, to humanity as a whole. What they share, however, is an implicit recognition that obligations must be ranked. The call to care for the stranger does not eliminate responsibility to the inner circle; it exists alongside it, creating a tension that must be managed rather than resolved.

Theology Meets Policy

In this sense, moral systems are not simply exhortations to generosity. They are frameworks for prioritization under conditions of scarcity. They define not only who we are responsible for, but when, and to what extent. Historically, this ordering was anchored in a broader relationship to God, which provided both a justification for charity and a boundary for its application. This is being actively debated within the traditions themselves and increasingly expressed in contemporary policy discussion.

In a recent exchange on his return from Africa, Pope Leo XIV said the following, when asked about his stance on migration: “I would change the question: what is the global North doing to help the global South in its situation that forces them to migrate?”

His point underscores a broader challenge: resource transfers alone are often insufficient when underlying governance structures remain weak. In many regions, including parts of Africa, economic underperformance reflects not only scarcity, but regulatory proliferation and institutional constraints that are difficult for any foreign power to address short of colonization.

National Policies

Modern Western societies have often pursued expansion of benefits without fully articulating expectations, resulting not only in political disagreement, but in deeper uncertainty about how obligations should be prioritized. Europe now faces a dilemma as geopolitics changes the rules of the game they have played since the end of WW2.

1. Europe’s Model Under Strain

Germany’s post-2015 experience offers a clear example of balancing wants and needs. Following the admission of roughly one million asylum seekers, fiscal costs were estimated at €20–30 billion annually.¹ Yet unemployment among refugees rose to approximately 50% within five to seven years.² Across Europe, non-EU migrants continue to exhibit employment rates roughly 10–15 percentage points lower than native populations.³ At the same time, the EU’s working-age population is projected to decline sharply by mid-century.⁴

For decades, Europe’s social model has also been shaped by an external factor: security provided by the United States, which has kept defense spending at 1–2% of GDP below US levels⁵. By relying on the US defense umbrella, European countries were able to allocate a greater share of national resources to social spending rather than military expenditure. This helped support the development of extensive welfare systems that, over time, became both a stabilizing force internally and a source of attraction for immigrants. In effect, some of the cost of that model was subsidized by US taxpayers, allowing European societies to extend social obligations more broadly than might otherwise have been possible. As geopolitical conditions shift and defense spending rises, that implicit subsidy may no longer hold, forcing a reassessment.

Europe’s experience illustrates the central dilemma of expanding moral obligation. In the face of demographic decline, the long-term case for migration remains compelling. But in the short term, fiscal, institutional, and social capacity constraints can grow quickly, particularly when expectations adjust faster than institutions can realistically absorb them.

2. Australia

A useful contrast can be found in Australia, which has, until recently, managed to align high levels of immigration with relatively strong social cohesion. Its points-based immigration system prioritizes skills, language proficiency, and labor market needs, allowing it to balance openness with structural needs. The results have been tangible: immigration has supported economic growth, offset demographic pressures, and contributed to relatively high levels of trust.⁹

Yet this alignment is not static. Net migration reached roughly 500,000 in 2023¹⁰, while housing vacancy rates in major cities such as Sydney and Melbourne have fallen below 1%.¹¹ Infrastructure and public services are under increasing pressure. These challenges are not ideological; they are structural. Australia illustrates that expansion and cohesion can coexist, but only when expectations remain clear and institutional capacity keeps pace.

3. China’s Path: Strong State, Weak Institutions

As Europe’s social benefits have ballooned, China’s have shrunk. Over the past four decades, China has achieved extraordinary economic growth, driven by state coordination, foreign investment, and long-term planning.¹² But the social safety net and income equality that were universal prior to the Deng era have disappeared. Economic actors operate within a framework where political priorities can reshape outcomes, sometimes abruptly.¹³ ¹⁴

In this system, the allocation of resources is concentrated centrally rather than distributed across society. This allows for coordination, but it also creates limits. The state can enforce behavior, but it cannot fully substitute for internalized moral obligations. Where trust is not embedded in shared expectations, it tends to remain contingent, making it harder to sustain cooperation across a complex economy.¹⁵ The result is not instability in the conventional sense, but a different form of fragility, one that depends on continuous oversight rather than broad societal trust. One measurable result of the current paradigm: China’s GDP, once thought to exceed the US, has fallen behind and given demographics, will likely never recover.

The Boundary Problem, AI, and Institutional Risk

These ideological differences define how systems respond to stress, and that stress is likely to intensify in the age of artificial intelligence before benefits are widely shared. AI systems depend on institutional frameworks and shared norms. In high-trust environments with clear rules, they can enhance productivity and decision-making. In systems where trust is weakening or institutional boundaries are unclear, they can amplify fragmentation, uncertainty, and the erosion of shared norms and expectations.¹⁶ ¹⁷

Systems that once degraded slowly may now fail more quickly, as the gap between moral expectations and institutional capacity becomes harder to manage at scale and speed. But there is a twist here too. AI could serve to increase abundance in the future, and potentially ease global tensions. Now however, we are at a transition point.

At its core, what we face is a boundary problem. Across different systems, the central issue is the alignment between moral frameworks and institutional capacity. When moral ambition extends too far, systems strain. When obligation is too concentrated, systems become rigid. When expectations are unclear, trust erodes. The challenge is not to eliminate these tensions, but to match compassion with capacity, openness with coherence, and flexibility with stability.

In the end, the question is not whether societies expand benefits, or enforce obligations, but whether they can be sustained under stress and over time. The fate of an economy ultimately turns on a shared understanding of who owes what to whom.

Conclusion

As the world navigates a new period of rising tension, including the possibility of escalation with Iran and confrontation with China, policy impacts can no longer be measured solely in budgets, but in lives, and in the quality of those lives. Despite our generous impulses, we must ask a fundamental question: what are our priorities, and what is truly existential? What must be risked at any cost? What can we afford, and what can we not afford to forgo? What are our national, community, and personal values, and limits?

The answers can be found not only in the warp and woof of supply and demand, but in the fabric of our moral framework, and in our beliefs about higher authority in both the political and spiritual realms.

Economists may not speak in the language of morality or faith, but those who bear the costs of government policies make decisions based on those precepts. In times of uncertainty and risk, the underlying structure of our values becomes visible again. The gravity of this moment, and the realistic paths to resolve it, cannot be understood through quantification alone.

In moments like this, the distance between the consequences of our policies and our beliefs narrows. I am reminded of a haunting lyric:

❝ No matter what they tell you, all soldiers talk to God.
— James Taylor, Far Afghanistan

At the limits of economic policy, what we believe ultimately determines what we are willing to risk.

Postscript

After yesterday’s events, may the better angels of our nature prevail, and may civil discourse replace violence.

Footnotes

1. German Federal Ministry of Finance (Bundesministerium der Finanzen)
   Official publications, fiscal policy statements, and budget data:
   German Federal Ministry of Finance

2. Institute for Employment Research (IAB), Germany
   Labor market research, migration impacts, and employment trends:
   IAB Research Portal

3. OECD, International Migration Outlook
   Annual report analyzing migration flows, policies, and labor market integration across OECD countries:
   OECD International Migration Outlook

4. European Commission, Ageing Report
   Long-term projections on demographics, pensions, healthcare, and fiscal sustainability in the EU:
   European Commission Ageing Report

5. NATO, Defence Expenditure of NATO Countries
   Annual data on defense spending as a share of GDP and contributions by member states:
   NATO Defence Expenditure Data

6. Public statements attributed to Pope Leo XIV
   (Clarify exact speech, encyclical, or address if cited; placeholder reference should be replaced with a specific Vatican source or transcript once identified.)

7. City of New York, Official Budget and Financial Documents
   Fiscal reports, budget proposals, and municipal financial data:
   NYC Budget and Financial Information

8. OECD, Trust in Government and Public Institutions
   Research and policy frameworks on institutional trust and governance:
   OECD Trust in Public Institutions

9. Australian Treasury, 2023 Intergenerational Report
   Long-term projections for population, productivity, and fiscal sustainability in Australia:
   Australia Intergenerational Report 2023

10. Australian Bureau of Statistics (ABS)
    Official national statistics on demographics, labor markets, housing, and economic indicators:
    Australian Bureau of Statistics

11. SQM Research (Australia)
    Housing market data, vacancy rates, and property analytics:
    SQM Research Housing Data

12. World Bank, China Overview
    Macroeconomic indicators, development trends, and policy context:
    World Bank China Overview

13. International Monetary Fund (IMF), China Country Reports
    Article IV consultations and macroeconomic assessments of China:
    IMF China Country Reports

14. World Bank, Worldwide Governance Indicators (WGI)
    Comparative metrics on institutional quality, rule of law, and governance effectiveness:
    World Bank Governance Indicators

15. Brookings Institution, China Analysis
    Policy research and commentary on China’s economy, governance, and global role:
    Brookings China Research

16. OECD AI Policy Observatory
    Data and analysis on artificial intelligence policy, adoption, and economic impact:
    OECD AI Observatory

17. Stanford Institute for Human-Centered AI (HAI)
    Research on AI development, governance, and global competitiveness (including the AI Index Report):
    Stanford HAI

The recent meeting in Beijing between Xi Jinping and KMT Chairwoman Cheng Li-wun marks a significant recalibration of cross-strait optics, heavily influenced by the Trump factor and the shifting winds of American domestic politics. As the U.S. election cycle gains velocity, many nations are moving from a posture of high-trust cooperation to a strategic posture of high-fear hedging.

In this environment, the meeting serves as a pragmatic insurance policy. For political actors in Taiwan, maintaining a direct line of communication with Beijing is no longer just about ideology; it reflects the KMT’s calculated effort to ensure Taiwan is not left without a diplomatic exit should the Trump administration adopt a more isolationist foreign policy. This uncertainty is compounded by the volatility surrounding the upcoming Trump-Xi summit scheduled for May, a meeting delayed by the explosive escalation of the Iran conflict.

A Fragmenting Global Context

The broader global context reinforces this move toward a more conditional geostrategy. The ongoing war in the Middle East has disrupted the global energy architecture, forcing leaders to prioritize immediate stability over long-term alliances.

Simultaneously, the recent landslide victory of the opposition Tisza party in Hungary’s elections signals a potential removal of a key pro-Russia veto, while also introducing new variables into how the EU manages its collective security.

In this fragmented landscape, the Xi-Cheng meeting signals that traditional geopolitical guardrails are loosening. Leaders are increasingly forced to operate in a state of mobilization, where the risk of a “bolt from the blue” nuclear escalation, whether in Iran or via a sudden policy pivot in Washington, demands a more flexible and multi-directional foreign policy.

A Muted Reaction in Taiwan

While the meeting captured international headlines, the global press remains hot on this report. International media have largely interpreted Beijing’s invitation as a strategic attempt to bypass the official government and engage with opposition leader who adhere to the 1992 Consensus. Much of this coverage has focused on the timing of the event, with many analysts viewing it as a calculated move ahead of the Xi-Trump summit to signal Beijing’s preferred framework for regional stability.

For its part, the KMT continues to stress that this was a vital peace mission. Party leadership has framed the dialogue as a necessary step to lower the temperature across the strait and maintain open lines of communication that the current administration cannot access. Notably, Beijing’s Taiwan Affairs Office (TAO) underscored that the KMT initiated the encounter, revealing that Chairperson Cheng Li-wun had expressed her willingness to visit Beijing multiple times to foster “goodwill and sincerity.”

For the average citizen, the event was met with a distinct sense of apathy—a neutral “don’t care” attitude that lacks the visceral “anti-China” sentiment or public backlash the DPP might have hoped to galvanize. This indifference stands in sharp contrast to the historic performance of the domestic economy. As the Taiwan stock market hits all-time highs, it has solidified its position as the 7th largest stock market in the world by volume. This financial boom has created a sense of security that makes political gestures feel increasingly disconnected from daily life.

Furthermore, public perception may be influenced by China’s shifting role on the global stage. In recent months, Beijing has positioned itself as a stabilizer in the Iran conflict, through Pakistan helping to broker the fragile April ceasefire. This diplomatic pivot has been mirrored by a flurry of Western leaders, including the UK Prime Minister, the German Chancellor, Canadian Prime Minister and most recently Prime Minister of Spain, traveling to Beijing to seek pragmatic cooperation all in past months. To some observers in Taiwan, if the West is engaging with China to manage global instability, the KMT’s “peace mission” appears less like an outlier and more like a reflection of a broader international trend.

The Ten Measures to Benefit Taiwan (十項惠台措施) were announced on the final day of the visit, targeting specific sectors like tourism and fisheries. These measures include plans to resume individual travel (自由行) for residents of Shanghai and Fujian, push for the “full normalization” of direct passenger flights, and streamline access for Taiwanese agricultural and fishery products.

However, because the DPP government has not yet accepted these measures, characterizing them through the Mainland Affairs Council as “unilateral concessions” and “sugar-coated poison” lacking institutional guarantees, their actual impact remains to be seen. As the administration continues to emphasize that any cross-strait matters involving public authority must be negotiated between governments, the implementation of these policies on the ground is currently at a standstill.

Cheng’s Political Positioning

Domestically, the sentiment surrounding the meeting has effectively solidified Cheng Li-wen’s position as a heavyweight within the KMT. By securing an audience in the Great Hall of the People, the first for a sitting KMT chair in a decade, she has signaled to both her party and the public that she is Beijing’s preferred interlocutor.

This “blessing” positions her as a leader capable of managing the most volatile aspect of Taiwan’s security, yet it remains a double-edged sword. While it bolsters her credentials among the “Deep Blue” base, the challenge will be translating this institutional recognition into broader voter trust without appearing overly aligned with Beijing’s long-term political agenda.

The Washington Test

The true test of this new hedging strategy will come in June, when Cheng is scheduled to travel to the United States. This upcoming trip to Washington is a deliberate effort to rebalance the narrative and reassure American policymakers that her engagement with China does not equate to an abandonment of the U.S.-Taiwan alliance.

By framing her message around the avoidance of a Cold War 2.0 and the necessity of dialogue, Cheng is attempting to position herself as a leader who can navigate the great productivity divide and communicate effectively with both superpowers. Success in this era will depend on whether such leaders can maintain this delicate equilibrium while navigating the systemic pressures of a world increasingly defined by strategic anxiety and high-fear globalization.

Rumors in Taipei suggest this rebalancing act is already yielding legislative fruit, as the long-standing impasse over the massive NT$1.25 trillion defense package appears to be nearing a resolution. While there is broad consensus on the Foreign Military Sales (FMS) portion to satisfy Washington and the Asymmetric/T-Dome initiatives to modernize defenses, the Domestic Production (Indigenous Defense) component remains the final point in question.

The KMT has indicated support for an NT$800 billion package but is reportedly holding firm on the demand that the domestic portion be integrated into the annual general budget rather than a multi-year special budget. This shift is intended to ensure greater legislative oversight and fiscal transparency for indigenous programs. The passing of this now depends on whether the DPP government will budge on these structural budget demands to secure the overall funding, and whether leaders can maintain this delicate equilibrium while navigating the systemic pressures of a world increasingly defined by strategic anxiety and high-fear globalization.

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Guest: Arthur Laffer
Title: The Other Side of Taxation: Incentives
Host: Lyric Hughes Hale
Producer: Sam Fu
Recorded: Mon March 17, 2026 · 57 minutes

Art Laffer on Incentives, Policy Design, and the Future of the Global Economy

My conversation with Arthur Laffer explores a central question in economic policy: how incentives—shaped by taxation, trade, and monetary systems—drive outcomes across the global economy. What follows is a short guide to some of the key ideas discussed in the episode.

About our Guest

Arthur Laffer is best known for the Laffer Curve—the idea that beyond a certain point, higher tax rates can discourage work, investment, and entrepreneurship, ultimately reducing both economic activity and government revenue. His work helped shape the tax reforms of the Reagan era and continues to influence debates about taxation and growth today. Trained at the University of Chicago and long engaged at the intersection of academic theory and public policy, Laffer has spent decades focused on a central question: how incentives shape economic behavior.

In this conversation, Lyric Hughes Hale speaks with Arthur Laffer about how those ideas apply today—at a moment when policy decisions are reshaping the structure of the global economy.

🎤 Topics and Key Moments

Laffer’s framework is deceptively simple:

“ Incentives are what economics is all about.”

From this starting point, the conversation moves across taxation, trade, healthcare, and monetary policy—but consistently returns to the same underlying principle: policy does not merely allocate resources, it shapes behavior, often in ways that are not immediately visible.

This is something that, in Laffer’s telling, policymakers either recognize—or fail to recognize—at critical moments.

One of the more striking parts of our discussion—and one that aligns with broader questions about structural imbalances in the global economy—was Laffer’s critique of tax-exempt institutions.

He argues that exemptions, particularly in healthcare and education, have created significant imbalances in how capital is allocated. Resources flow not necessarily to their most productive use, but to sectors where tax treatment is most favorable.

“We could get rid of the income tax… just by eliminating those exemptions.”

The point is not simply fiscal. It is structural. When policy privileges certain sectors, it shapes the direction of investment, the cost structure of services, and ultimately the behavior of institutions.

On trade, Laffer offers a perspective that reflects both classical theory and contemporary reality.

“No one wins from a trade war—but they don’t all lose the same.”

That distinction reflects a shift from theory to application. Trade relationships are no longer evenly balanced, and policy tools—especially those executed through executive authority—can be deployed quickly and strategically.

Here, Laffer’s experience across administrations becomes instructive. He describes Ronald Reagan as unusually open to economic reasoning—willing to adopt ideas such as broad-based tax reform and energy decontrol, even when they ran counter to internal resistance. Policy, in that context, was designed with a clear view of incentives.

That same emphasis on execution appears in his description of Donald Trump—not in ideological terms, but in operational ones. As Laffer recounts, the ability to move from concept to action quickly can itself shape outcomes.

“President Trump doesn’t sit there and study a subject for 300 years… he makes a decision and it’s done.”

Whether one agrees with the policy or not, the observation points to something fundamental: the timing and clarity of decisions can be as important as the ideas themselves.

In discussing energy policy, Laffer points to earlier moments when shifts in policy reshaped entire markets. As he noted at the time—in a New York Times op-ed during the Reagan administration—measures such as oil price decontrol were not simply about prices, but about changing the incentives that governed production and investment decisions across the energy sector.

The lesson is consistent: policy works through the signals it sends—and those signals propagate across the system.

The conversation then turns to healthcare, where Laffer identifies a structural challenge rooted in the absence of information.

Without price transparency, markets cannot function effectively. Consumers cannot make informed choices, and providers face limited pressure to compete on cost or quality. The result is a system in which prices rise, but signals remain unclear.

Here again, the issue is not simply cost, but structure. When information is obscured, incentives shift—and behavior follows.

From there, the conversation turned to monetary policy, where Laffer draws a sharp historical contrast.

Prior to the creation of the Federal Reserve in 1913, he describes a system in which money was largely private—issued by banks, backed by their balance sheets, and subject to market discipline. Bank-issued notes circulated alongside one another, with their value tied to the credibility of the issuing institution.

From his perspective, the transition to a centralized system marked a profound shift.

“Starting in 1913, all hell broke loose.”

Laffer contrasts this with the earlier era of commodity-linked and privately issued money, which he describes as one of long-run price stability. While that period included cycles of inflation and deflation—including during wartime and financial disruptions—the overall price level remained broadly stable over extended periods, rather than exhibiting the persistent upward trend that has characterized much of the modern era.

It is in this context that he views the emergence of digital currencies:

“Stablecoins are the private market’s attempt to replace government money.”

Much like earlier bank-issued currencies, instruments such as Tether are designed to provide a stable medium of exchange, backed by underlying assets and governed—at least in principle—by market mechanisms.

This perspective places current developments within a longer intellectual lineage—one that extends through Laffer’s own work to that of Robert Mundell. Mundell, often described as the father of the euro, argued that the world had not yet gone far enough—that a truly international currency was still needed.

Laffer suggested that we may be closer to that trajectory than many assume—a market-driven, technologically enabled step toward a more global monetary system.

If there is a single thread that runs through this conversation, it is that policy design shapes incentives—and incentives shape outcomes. Taxes are simply negative incentives.

Policy structures evolve quietly, and become embedded in systems that appear stable, even beneficial in the short term. Over time, they influence behavior in ways that are difficult to reverse.

At a moment of structural change in the global economy, the question is whether incentives are aligned with the most beneficial global policy outcomes. And the answer is that we have a long way to go.

📚 Related Reading & References

Taxes Have Consequences: An Income Tax History of the United States, coauthored by Arthur B. Laffer, Brian Domitrovic and Jeanne Sinquefield

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💬 What we are seeing is not the end of globalization, but the emergence of a new geostrategic system of alliances—more connected, not less.

If you missed our panel last week, or want to revisit it in light of Japanese Prime Minister Sanae Takaichi’s visit to Washington this week –as well as the postponement of the Trump-Xi Summit, the replay of our March 11, 2026 panel is posted above.

Our panel asked a central question: Are we witnessing the emergence of a new Monroe Doctrine, and what are its geographic boundaries? Panelists include Dr. R. Evan Ellis, Dr. Joshua W. Walker, and econVue Senior Editor Eric Huang.

Why This Matters Now

Today, President Trump will meet with Japanese Prime Minister Sanae Takaichi as markets and policymaker reassess global risk. Japan’s Maritime Self-Defense Force is one of the most capable naval forces in the world, underscoring the strategic weight of the US-Japan alliance.

US actions in Mexico and Venezuela, and the escalating crisis with Iran, could have profound implications for security strategy and trade across Latin America and the Indo-Pacific—including Taiwan.

Key Takeaways

Evan Ellis (Latin America)

“This administration increasingly sees engagement in the Western Hemisphere not as co-development, but as an extension of U.S. homeland security.

Joshua Walker (Japan)

“Japan is our canary in the coal mine—no country needs the U.S. alliance more, but none is watching its limits more closely.

Eric Huang (Taiwan)

“Economic security is no longer a supporting pillar—it is the foundation of U.S. global strategy, and that is where Taiwan becomes indispensable.

Governments across Latin America, Japan, and Taiwan are reassessing assumptions about sovereignty, deterrence, and alliance commitments as the implications of recent events ripple across both the Western Hemisphere and the Indo-Pacific. Recent developments are sending geopolitical shockwaves far beyond the regions directly involved, and China’s leadership is no doubt recalibrating its options after US strikes in Iran.

Are we seeing the early contours of a new Monroe Doctrine in US strategic thinking — one that extends beyond the Western Hemisphere — as Washington navigates a more contested global order?

Introductory remarks by our speakers were recorded, but the Q&A session was off the record.

↳ Panelists

R. Evan Ellis
Research Professor of Latin American Studies at the US Army War College Strategic Studies Institute, specializing in China’s role in the Western Hemisphere.

Joshua W. Walker
President & CEO of Japan Society; former Eurasia Group executive and U.S. government official focused on alliances and Indo-Pacific strategy.

Eric Huang
Geopolitical strategist and econVue Senior Editor specializing in US–China–Taiwan relations and strategic technology competition.

It was a pleasure moderating this panel. My thanks to our panelists, and to our audience, who posed excellent questions. Join us next time to be part of the discussion.

–𝓁𝓎𝓇𝒾𝒸 💬

Editor-in-Chief, econVue

^📍Chicago

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Dear Readers,

Last month, we lost Karen Petrou. I wanted to reshare a conversation I had with her five years ago, a podcast we recorded in March 2021.

I first contacted Karen after reading her excellent reports at Federal Financial Analytics. She did me the honor of reading and commenting on mine. I planned to be in Washington for an event where she was speaking, and we agreed to meet after her speech. As I sat listening in the audience, I noticed that she had a dog at her side. Only then did I realize she was blind.

I could not believe that she was able to digest and analyze the enormous amount of information required for her reports, and I never complained again about having too much to read. I learned so much from her, especially from her book on Federal Reserve policy and inequality, which we discussed during this podcast five years ago, and personally from her remarkable ability to make what she did seem effortless.

It was a great privilege to know Karen. She never let her blindness keep her from the truth. Her work, including as Board Chair of Foundation Fighting Blindness, mattered to so many.

–𝓁𝓎𝓇𝒾𝒸 💬

About this Podcast

The March 2021 Hale Report podcast is my interview with Karen Petrou, discussing her new book, Engine of Inequality: The Fed and the Future of Wealth in America. Just published, it is already the #1 book in its category on Amazon.

Ms Petrou is a well-known and influential commentator on monetary policy and banking regulation, and is managing partner at Federal Financial Analytics in Washington DC. We have often included links to her analysis in our newsletter, and I have had the great pleasure of meeting her both in Chicago and Washington. 

That was not possible this time of course, so I interviewed Ms Petrou remotely. She made several key points: the Fed is responsible for the record rise in inequality between 2010 and 2016, and it continues to look for data in all the wrong places. Other potential countermeasures to inequality such as education simply take too long.

She strongly believes that the Fed should have a third mandate in addition to employment and price stability, economic equality. I've included excerpts from her remarks below, but hope that you will find time to listen to our half-hour podcast via the link below.  I always hope our listeners will learn something they didn't know before, or hadn't thought about in that way. I think this interview accomplishes just that.

Excerpts

❝ I think, sadly, the data the Fed uses are often way off base, because they're averages and aggregates. And in a highly unequal country, as the United States has become, that's very misleading.

❝ Something happened in 2010 and income and wealth inequality grew far worse, far faster than ever before. And the one thing that clearly changed, starting in 2010, after the Great Financial Crisis's worst effects were behind us, was new monetary and regulatory policy. And that's what this book is about. What happened in 2010, and how could it have made us so much less economically equal and, as you said, what can we now do to change?

❝ Think about it though, economic inequality, what's it about? It's about income and wealth. That's the engine that makes us more or less equal. But what is its fuel? In economic inequality, the fuel is money. There is no agency in the United States with the power over money other than our central bank. That's what monetary policy is all about. Bank regulation, what is it about? It's about who has the money, who gets the money, how much does it cost to get the money.

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💬 We used to live in a kind of high-trust globalization. What we have now is a world of great connectivity — but high-fear globalization.

🎙️Episode Details

Guest: Steve Clemons
Title: The Man About Town in a Fragmenting World
Host: Lyric Hughes Hale
Producer: Sam Fu
Recorded: Mon Feb 16, 2026 · 60 minutes

Episode Overview

What happens when the era of high-trust globalization gives way to something more conditional, more fractured—and far less certain?

On this episode of The Hale Report, Lyric Hughes Hale speaks with journalist and global policy convener Steve Clemons, a longtime observer of power, who has spent decades moving between Washington, journalism, and the world’s major geopolitical forums—from Tokyo and Brussels to Davos.

Clemons did not come to journalism through the usual route. Trained in economics, policy, and U.S.–Asia relations, and shaped by a childhood spent on U.S. military bases abroad, he built a career convening conversations among policymakers, business leaders, and thinkers across ideological and national lines. That perspective informs a wide-ranging discussion of how global alliances, domestic politics, technology, and journalism itself are being reshaped in real time.

From the legacy of Chalmers Johnson’s developmental state to Japan’s political transformation under Prime Minister Sanae Takaichi, from NATO’s evolving role to the growing power of Big Tech, Clemons argues that the world is reorganizing into more conditional and ad hoc arrangements. The United States remains central—but no longer unquestioned.

At home, he sees a Washington defined by internal fractures and performative politics, while globally the risk of conflict may arise less from deliberate strategy than from miscalculation in an increasingly unstable system.

Underlying the entire conversation is a quieter theme: the role of journalism in such a moment. In an era of fragmentation and personality-driven media, Clemons offers a reminder that the journalist’s task remains what it has always been—to illuminate reality, not become part of the spectacle.

About our Guest

Steve Clemons is a journalist, policy strategist, and global convener. He serves as Editor-at-Large of The National Interest and is the founder of Widehall, an international forum convening leaders across policy, business, and media.

Over the course of his career, Clemons has held senior roles at The Atlantic, The Hill, and Semafor, and founded the influential Washington policy blog The Washington Note. He has worked closely with leading figures in U.S. foreign policy and international economics and has been recognized internationally for his contributions to transatlantic understanding.

He is widely known for bringing together diverse voices across ideological and national divides to foster substantive global dialogue.

Topics Discussed

• The formative influence of growing up abroad and entering journalism through policy and economics

• Chalmers Johnson, industrial policy, and lessons for China and the United States

• Japan’s political evolution and the leadership of Prime Minister Sanae Takaichi

• Remilitarization of Japan and Germany post-WW2

• The shift from “high-trust” to “high-fear” globalization

• NATO, conditional alliances, and Europe’s emerging strategic autonomy

• Washington’s internal political fractures and performative partisanship

• Big Tech’s growing structural power and parallels to the robber-baron era

• AI, surveillance, and the future of privacy

• The rising risk of accidental conflict in a fragmented world

• The coming midterm elections in the US

• Journalism’s credibility crisis—and the importance of remaining neutral, factual, and accountable

🎤 Key Moments

❝ Unconditional alliances are over. They are going to be more conditional and ad hoc.

❝ Both parties are an exercise in the study of schizophrenia.

❝ I worry more about escalation, miscalculation, and accident than deliberate war.

❝ Journalists are not the story. They should never be the story.

📚 Related Reading & References

• Chalmers Johnson — MITI and the Japanese Miracle

• Graham Allison — Essence of Decision

• Thomas L. Friedman — The Lexus and the Olive Tree

• Brad Smith — Tools and Weapons: The Promise and the Peril of the Digital Age

• George Orwell — 1984

• Richard Vague — The Banker Who Made America: Thomas Willing and the Rise of American Finance

💬 Join the Conversation

Feel free to share this podcast. To receive new episodes of The Hale Report and additional econVue insights, consider becoming a free or paid subscriber.

Subscribe now

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📍 Chicago

Editor’s note: Recent changes inside China’s military have prompted renewed debate about command authority, political control, and the country’s longer-term strategic trajectory. In this article, eco…

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