Editor’s Note: Collin Canright has long followed the intersection of payments, fintech, digital assets, and public policy. In this article, he looks at Illinois’s new Digital Asset Privilege Tax not simply as a crypto-tax story, but as an early signal of a broader fiscal shift. As more economic value moves from physical property to digital representations of value, governments are beginning to follow the money.

Illinois has become the first state in the nation to place a transaction-style tax on digital asset business activity, including cryptocurrency exchanges, transfers, custody, and wallet services. The levy falls on digital asset businesses, but the cost is likely to be passed through to businesses and consumers.

The tax matters for more than the immediate cost of a crypto transaction. It points to a legislative sequence many jurisdictions are now working through across digital services, platforms, and intermediaries: first legal recognition, then regulatory supervision, and finally taxation.

Illinois offers an early case study. Digital asset adopters first sought state support for innovation and legal recognition. Consumer protection followed. A new revenue source came next. This article considers that trajectory in three parts:

1. The facts of the Digital Asset Privilege Tax. This section covers how the tax passed, what it appears to cover, what remains uncertain, and why the backlash has already produced a repeal bill.

2. The revenue needs of Illinois and Chicago. The digital asset tax is another example of how public officials are turning to nonphysical and digitally mediated activity for revenue, especially when geography makes the tax more politically palatable. I refer to that dynamic as asymmetric tax targeting.

3. The political conclusion state lawmakers appear to have reached. Legislators saw limited immediate benefit from digital assets measured by visible jobs and investment in their own districts. They did see a potential revenue source that, at least on its face, was politically feasible. Illinois once tried to attract blockchain and digital asset businesses. It now appears more focused on regulating and taxing them. That shift says something larger about how governments are likely to treat the digital economy as the tax base moves from physical property to digital value.

1. Digital Asset Transaction Tax Facts

The Digital Asset Privilege Tax was incorporated into Senate Bill 3019, Illinois’s roughly $56 billion budget bill for fiscal 2027. The Act imposes a 0.2% tax on the value of covered “digital asset business activity”.

DATA relies on the foundational definitions established in the state’s 2025 regulatory framework, the Digital Assets and Consumer Protection Act, or DACPA. Under Illinois law, a “digital asset” is defined broadly as a digital representation of value or contractual rights that may be cryptographically secured and recorded on a blockchain or distributed ledger.

That definition covers cryptocurrencies such as bitcoin and ether. It can also cover tokenized assets, including stablecoins, because a tokenized asset can represent a contractual right recorded on a blockchain. For that reason, the tax reaches well beyond cryptocurrency trading.

The tax is scheduled to take effect on Jan. 1, 2027, the same general timeframe as the state’s new digital asset regulatory regime. That delay gives exchanges, custodians, wallet providers, businesses, and consumers time to adjust systems, evaluate whether transfers should be made before the effective date, and wait for additional guidance from the Illinois Department of Revenue.

The backlash from the crypto industry has been swift. Opponents argue that the measure is unprecedented, discriminates against digital assets, and risks damaging Illinois’s reputation as a fintech and digital-assets hub. Supporters frame it as a modest revenue measure that brings digital asset businesses closer to the tax and regulatory expectations imposed on other financial intermediaries.

That backlash has now moved from industry statements to legislation. On June 22, 2026, Rep. John M. Cabello filed HB5798, titled “Digital Asset Tax Act-Repeal,” which would repeal the Digital Asset Tax Act effective immediately. The bill may not pass, but its filing confirms that the tax has already become a political issue as well as a tax-policy experiment.

Business and Consumer Taxation Scenarios

For businesses and consumers, the tax means that certain transactions moving from one digital asset to another will be taxed. If past tax history is any guide, digital asset exchanges will likely pass at least part of the cost on to customers while absorbing significant compliance costs themselves.

• Scenario 1: Exchanging BTC for USDC on Kraken or Coinbase. That transaction is likely taxed if the exchange is a covered digital asset business serving Illinois customers and meets the statutory threshold. Both bitcoin and USDC are digital assets, and major exchanges are likely to qualify as covered digital asset businesses. A $1,000 exchange would generate a $2 tax at a 0.2% rate.

• Scenario 2: Moving $1,000 from a bank account into Kraken or Coinbase to buy BTC or ETH. The movement of ordinary U.S. dollars from a federally or state-chartered bank is not itself a digital asset transaction. The subsequent exchange into BTC or ETH is the taxable event.

• Scenario 3: Holding or storing $10,000 of BTC, ETH, or USDC in an exchange or custodial account. Custody and wallet services are among the issues creating the greatest uncertainty. Is a taxable storage or custody event one-time, periodic, or tied to value changes and additions? The statute and future guidance will have to answer those questions.

The Illinois Department of Revenue will need to clarify a host of implementation issues. The storage and custody provisions are likely to be the most difficult to administer. The easiest policy solution would be to narrow or eliminate those provisions; absent that, “nightmare” is not too strong a word for the compliance challenge.

For a more technical discussion of the statute and its legal arguments, George Bellas’s Chicago Business Attorney Blog provides a useful practitioner overview.

2. Asymmetric Tax Targeting

The State of Illinois and the City of Chicago need additional revenue. Both face long-running pension deficits and strict funding requirements. No political constituency wants to pay more taxes. High-growth sectors, especially those that appear remote, digital, or lightly rooted in a particular district, become natural targets

Chicago is a trading town, home to decades of financial derivatives innovation and world-leading exchanges. It is notable, and not accidental, that the examples above use Coinbase and Kraken, neither of which is headquartered in Illinois. But the tax is not limited to out-of-state exchanges. It can apply to any covered digital asset business that is based in Illinois or that provides covered services to Illinois customers and meets the statutory gross-receipts threshold.

That means the affected universe is broader than crypto exchanges alone. Depending on future guidance, it could include custodians, wallet providers, crypto payment processors, transfer businesses, and other firms that exchange, transfer, store, or provide wallet services involving digital assets for Illinois customers.

At the same time, cryptocurrency derivatives traded on Chicago exchanges such as CME or Cboe are not the same as the underlying digital assets themselves. DATA targets covered digital asset business activity— exchange, transfer, custody, and wallet services—rather than ordinary derivatives trading in contracts that reference crypto prices.

That distinction helps explain why Gov. Pritzker can support a digital asset transaction tax while continuing to oppose a broader financial transaction tax on trading. Financial transaction tax proposals would have applied directly to trading activity rooted in Chicago’s exchange ecosystem. The relocation threat from trading firms, exchange-related businesses, and their owners is much more visible and politically dangerous.

This is why the term asymmetric tax targeting is useful here. Geography marks political boundaries as well as physical boundaries. The adage “all politics is local” holds with special force when the subject is taxation.

Gov. Pritzker has long opposed taxes on trading transactions, as did Mayor Rahm Emanuel during his 2015 reelection race. Progressive politicians and unions supported versions of what became known locally as a “LaSalle Street Tax.” Emanuel’s challenger, Jesús “Chuy” García, supported such a tax, and the proposal became part of the city’s broader fiscal debate.

Pritzker again opposed financial transaction tax proposals when they resurfaced during later mayoral campaigns. Mayor Brandon Johnson made an FTT-style proposal part of his 2023 campaign, but the idea has not become the city’s fiscal centerpiece in office.

In contrast, taxes designed as lease, amusement, social media, advertising, or digital-activity taxes have gained more traction. They fit the asymmetric pattern: the companies subject to the tax are often not headquartered in Chicago or Illinois, while the revenue can be framed as local.

Chicago has already expanded its tax base to include digital services and platforms through the Personal Property Lease Transaction Tax, often called the “cloud” or SaaS tax, and through the Social Media Amusement Tax. Illinois has now extended the same logic to digital assets and targeted advertising. The direction of travel is clear: public finance is moving from taxing only things and places toward taxing digital access, digital attention, digital intermediation, and digital representations of value.

A small Illinois irony is worth noting. North Dakota’s attempt to collect sales tax from Quill Corp., an Illinois-based retailer, produced the 1992 Supreme Court decision requiring physical presence for certain state tax collection obligations. Wayfair later overturned that rule. Illinois is now on the other side of the same long-running shift: the tax base is following economic activity even when the business is not physically present.

3. From Blockchain Dreams to Revenue Realities

As early as 2017, digital asset supporters in Illinois saw potential for the state to become a blockchain innovation hub. Early legislation proposed a study group for blockchain-based government records. That effort did not survive, but the state’s Blockchain Technology Act gave legal effect to blockchain records and smart contracts when it took effect in 2020.

The next attempt, in 2021, focused on changing Illinois banking law to make the state more hospitable to cryptocurrency and digital asset firms. HB 3968 proposed a special-purpose trust charter for digital-asset firms, similar in spirit to Wyoming’s approach. The bill passed the House unanimously but stalled in the Senate.

The likely reason is familiar. Supporters could describe the strategic upside, but they had a harder time tying the bill to visible, district-level gains in jobs and investment. At the same time, crypto markets collapsed, and federal regulators became far more hostile to the industry.

By 2025 and 2026, legislative sentiment in Illinois had shifted from recognition and attraction to supervision and taxation. DACPA and the Digital Asset Kiosk Act created a consumer-protection framework. DATA then built on that framework by levying a new 0.2% tax on digital asset business activity.

Conclusion: Follow the Money

Illinois may be the first state to levy a usage-style tax on digital asset transactions, but it is unlikely to be the last. The move to tax digital technologies may be focused on out-of-state firms for political cover, but it also reflects a deeper shift. Governments are searching for revenue without raising visible taxes on voters, and the digital economy looks undertaxed relative to its economic importance.

Assessors, county commissioners, and municipal leaders are realizing that 20th-century tax models weigh heavily on traditional industries while often missing the value created by technology peers. In Cook County Assessor Fritz Kaegi, Illinois has one of the country’s more vocal proponents of changing property tax laws so that data centers are assessed more fairly based on their digital economic output and not simply on their physical footprint.

That chapter deserves its own article. For now, the larger point is that a shift toward taxing digital technologies has begun. If the growing backlash against AI data centers is any indication, the general public may be more willing to tax the digital economy than technology firms and their investors would like.

For his part, Gov. Pritzker has called on state legislators to return to the data center question in the fall. Incentivizing data centers while managing electricity costs will require a more delicate balance than digital asset taxation.

The politics will not be simple. The crypto community turned sharply against Democrats during the last national election cycle, and Pritzker has come under criticism from digital asset advocates for championing a crypto tax after opposing trading taxes. My guess is that he is making a calculated bet: the number of affected Illinois voters is small enough, and the number of out-of-state firms large enough, to provide political cover.

But the larger story is not only about crypto, Illinois, or even this particular tax. It is about the next stage of public finance. As more economic value migrates from physical property to digital platforms, digital services, and digital representations of value, governments will follow. First comes legal recognition. Then comes regulation. Then comes taxation.

That is what makes Illinois’s experiment worth watching. The state may be first, and the Digital Asset Privilege Tax may yet be amended, narrowed, repealed, or challenged in court. But the fiscal impulse behind it is unlikely to disappear. States and cities need revenue, and the digital economy has become too large, too visible, and too tempting to ignore.

“Follow the money” may be the maxim we all know from Deep Throat in All the President’s Men. In the digital economy, the equally important question is whose money lawmakers choose to follow — and how quickly the rest of the country follows Illinois.

Tables

Sources

1. Digital Assets and Consumer Protection Act / Illinois General Assembly: https://www.ilga.gov/legislation/BillStatus?DocNum=1797&DocTypeID=SB&GAID=18&SessionID=114

2. SB 3019 / Illinois General Assembly bill status: https://www.ilga.gov/legislation/BillStatus?DocNum=3019&DocTypeID=SB&GAID=18

3. BDO, “Illinois Enacts Potentially Wide-Reaching Digital Asset Tax”: https://www.bdo.com/insights/tax/illinois-enacts-potentially-wide-reaching-digital-asset-tax

4. PwC, “Illinois legislature passes budget bill with new digital taxes”: https://www.pwc.com/us/en/services/tax/library/pwc-illinois-legislature-passes-budget-bill-with-new-digital-taxes.html

5. IDFPR, “Gov. Pritzker signs historic legislation to protect consumers from cryptocurrency scams”: https://idfpr.illinois.gov/content/dam/soi/en/web/idfpr/news/2025/2025-08-18-gov-pritzker-signs-historic-legislation-to-protect-consumers-from-cryptocurrency-scams.pdf

6. City of Chicago, Personal Property Lease Transaction Tax: https://www.chicago.gov/city/en/depts/fin/supp_info/revenue/tax_list/personal_propertyleasetransactiontax.html

7. Sales Tax Institute, Chicago Social Media Amusement Tax: https://www.salestaxinstitute.com/resources/chicago-rolls-out-social-media-amusement-tax

8. South Dakota v. Wayfair, U.S. Supreme Court: https://supreme.justia.com/cases/federal/us/585/17-494/

9. Chicago Business Attorney Blog, George Bellas overview: https://www.businessattorneychicago.com/illinois-just-became-the-first-state-to-tax-crypto-transactions-here-is-what-every-business-needs-to-know/

The boundary between the insurable and the uninsurable is the line between expansion and stagnation.

Risk in Motion

Could the automotive industry have grown into a world of roughly 1.5 billion cars without the parallel growth of automobile insurance?1 The answer is almost certainly not. Even when automobiles were relatively rare, accidents were common enough to create a new category of financial and legal risk. But the insurance industry quickly found a solution to the problem.

Automobile insurance appeared almost as soon as the car became a commercial reality: Travelers Insurance issued an automobile policy in 1897, while Massachusetts became the first state to require compulsory automobile liability insurance in 1927. 2 Insurance allowed the industry to become a mass market.

Automotive technology and manufacturing expertise transformed individual mobility in the US a hundred years ago. But wide adoption required a way to share the risks of that mobility. The same pattern applied to aviation: airplanes transformed the meaning of distance, but aviation insurance helped make commercial air travel financeable, governable, and scalable.3

The Link Between Insurance and Economic Growth

What is true of the automobile industry is true across the economy. Insurance is not just a financial product; it is hidden infrastructure, the secret sauce of American capitalism. It converts uncertainty into calculable risk, supports home buying, healthcare, and credit formation. It allows firms and entrepreneurs to take on risks while protecting directors and fiduciaries, and helps explain why the US economy is both unusually entrepreneurial and litigious..

Insurance is the infrastructure, the scaffolding that allows households, entrepreneurs, and corporations to take risks that generate greater growth. Banks store capital, but insurance stores risk.

Almost every economic activity we undertake today is insured. From trade and commerce, aviation, logistics, savings and mortgages, to health and life spans, are all impacted by insurance and the cost of insurance. It is the financial shock absorber of American capitalism. This can be seen clearly when insurance is withdrawn. In wildfire, hurricane and flood zones, local dynamism in the housing market can disappear.

The boundary between the uninsurable and the insurable is the line between expansion and stagnation. Every time societies find a way to insure against a new category of risk, they enlarge the set of economic activities individuals and businesses are willing to undertake. In the Strait of Hormuz, risk did not remain geopolitical. It became insurable, then expensive, then in some cases nearly uninsurable. The cost has moved through the global economy. Insurance prices risk in the open market.

Similar to limits on fund redemptions, insurance withdrawals are often signs of structural economic stress. Recent claims data suggest that the protection homeowners thought they had is becoming less reliable in some markets. In Texas, nearly 47% of homeowners-insurance claims in 2024 were reportedly closed without payment, up from 35% in 2016 and above the national average of 42%. As the US Treasury has reported, homeowners insurance costs are rising —and availability is worsening—especially in high climate-risk areas in Florida and California.4

At the same time, it is a mark of civilizational progress that a social compact allows us to share the risks of cancer, car crashes, hurricanes, and premature death with one another. It is an incredible innovation that has been with us since the Code of Hammurabi, but never has it been so widespread across so many sectors. It has girded our current prosperity and become the institutional expression of social solidarity.

A look at the numbers: net premiums in the US totaled $1.76 trillion in 2024, with property/casualty at $932.5 billion and life/annuity at $822.6 billion.5 Direct premiums were even larger, about $2.14 trillion. Health insurance alone reported about $1.2 trillion in direct earned accident and health premium in 2024.

Insurance companies are also major institutional investors. Collectively, insurers manage $42 trillion in invested assets worldwide, making them among the largest institutional investors in the global financial system.6

Precisely because insurance usually operates quietly in the background, it receives remarkably little attention from economists outside the industry itself. We only notice insurance when premiums spike, claims are denied, or coverage disappears. New industries cannot flourish until they can be insured.

An Economic Theory of Insurance

Economist Douglass North shared the 1993 Nobel Memorial Prize in Economic Sciences for work showing that institutions matter to economic performance. At the center of his argument was the idea that institutions reduce uncertainty, making exchange, cooperation, and long-term growth possible.7

Contracts that facilitate exchange and property rights encourage investment. Beyond legal mechanisms to resolve disputes however, insurance reduces the financial consequences of unforeseen events by allowing uncertainty to be shared across millions of policyholders. It is much more than a financial product; it is infrastructure.

Innovation never stops, and institutions always struggle to keep up with technological advancements. As the AI economy grows and diversifies, insurance against cyberattacks and malicious uses of AI models will also need to evolve. Tomorrow’s frontier may include autonomous AI systems, robots, lunar mining operations, and companies such as SpaceX as they venture farther out into the solar system. As the economy grows more technologically complex, so too do its insurance needs, creating opportunities for new financial products and new forms of risk-sharing.

The History of Insurance

Historically, marine insurance enabled trade, fire insurance enabled cities, liability insurance enabled industrialization. Automobile and aviation insurance enabled two of the great transportation revolutions of the twentieth century. Every great era of expansion depended upon new forms of risk sharing.

Unlike many advanced countries, the US relies heavily on private insurance markets to manage healthcare risks, leading to both innovation and higher costs. But as the COVID pandemic showed, some shocks exceed the capacity of even sophisticated insurance systems. Companies are mostly left to manage supply-chain and geopolitical disruptions on their own.

Every great era of expansion required a new form of insurance:

Insurance is much older than most people realize:

Ancient Trade

Merchants in ancient Mesopotamia, including Babylon developed arrangements where lenders would forgive a loan if a ship or caravan was lost. Elements of this appear in the Code of Hammurabi (around 1750 BC). That idea remains at the heart of insurance today.8

The ancient Greeks and Romans developed more sophisticated risk-sharing arrangements. Roman burial societies functioned as an early form of life insurance. Members paid into a common fund that covered funeral expenses and supported surviving family members.9

The real breakthrough occurred during the commercial expansion of medieval Italy. In the 13th and 14th centuries, merchants in cities such as Genoa and Venice began writing contracts that look remarkably familiar today. Separate insurance contracts were created to protect ships and cargo. This was revolutionary. Before insurance, a single storm could bankrupt a merchant. After insurance, trade became scalable. Marine insurance was one of the essential technologies behind the rise of global commerce.10

Lloyd’s and the Age of Empire

The next great leap occurred in 17th-century London. Merchants, shipowners, and financiers gathered at Lloyd’s Coffee House to exchange information about ships and voyages. Investors literally wrote their names underneath portions of risk they were willing to assume, hence the term underwriter. This eventually became Lloyd’s of London.11

The British Empire was not merely a naval achievement. It was also an insurance achievement. Without marine insurance, global trade routes would have been far more dangerous and capital-intensive. And less travelled.

Fire Insurance and the Growth of Cities

The next breakthrough followed the Great Fire of London which destroyed more than 13,000 houses and left an estimated 100,000 people homeless, creating the conditions for organized fire insurance to flourish.12 Urbanization required a mechanism to manage catastrophic fire risk. Fire insurance emerged and allowed cities to grow larger and denser. Again, economic expansion followed a new form of insurability.

The same pattern repeated itself in the United States. The Great Chicago Fire of 1871 destroyed more than 17,000 buildings and left roughly one-third of the city's residents homeless.13 The catastrophe accelerated advances in underwriting, building standards, and urban fire insurance, reinforcing the lesson that economic expansion depended not only on engineering and construction, but also on institutions capable of spreading catastrophic risk.

Industrialization

Factories, railroads, and industrial enterprises generated risks that had never existed before. Insurance evolved to absorb them, including casualty insurance, workers’ compensation, and liability insurance. Industrial capitalism expanded.

American Exceptionalism

Unlike many countries, the United States relies heavily on private insurance markets to manage risks associated with life, health, property, liability, retirement, and corporate governance. That reliance has fostered extraordinary innovation but also creates unique vulnerabilities.

The American insurance system is both highly decentralized and systemically important. That combination works well when risks are local but becomes more problematic when risks are national and correlated.

The US regulates insurance largely at the state level, a system that reflects the local nature of many insurance markets. Fire, flood, auto, health, and property risks vary enormously by geography, and state regulators often have a better understanding of local conditions than a distant federal agency would. Yet the same system becomes less well suited to risks that are national or global in character. Private credit exposures, offshore reinsurance structures, affiliated asset management, cyber risk, and climate-driven catastrophe losses do not stop at state borders.

As with data centers, where local permitting decisions now shape national AI capacity, insurance regulation illustrates a broader American challenge: the institutions responsible for governing strategic infrastructure are often fragmented precisely when the risks themselves are becoming more interconnected.

American insurance regulation reveals a recurring weakness in US political economy: nationally strategic systems are often governed through state and local mechanisms.

Global Divergences

Internationally, insurance penetration exceeds 10% of GDP in the US, UK, France, and several other advanced economies, while remaining much lower in many emerging markets.

The OECD reports that total insurance penetration (gross insurance premiums) averaged 6.2% of GDP across OECD countries in 2024 and 5.4% across all reporting jurisdictions.14

The comparison is stark:

Penetration is much lower in many emerging markets. The IAIS also reports that the US is dominant by global premium share: 40% of global gross written premiums in 2023, followed by China at 7.8%, the UK at 6.9%, and Germany, Japan, and France each just over 5%.15

Africa

Insurance penetration across Africa remains low, with Africa’s overall penetration rate around 2.4% in 2023 and non-life penetration around 1.1%, according to the African Insurance Organisation.16 That means risks remain concentrated in families, small businesses, farmers, and governments rather than being broadly pooled. When a drought occurs, a truck is destroyed, or a small factory burns down, there is often no mechanism for spreading the loss.

The contrast with much of Africa is instructive. In advanced economies, debates focus on private credit, regulatory complexity, and insurer balance sheets. In many developing economies, the challenge is more fundamental: insufficient insurance. The result is less investment, less entrepreneurship, and slower economic development. If insurance is a mechanism for sharing risk, it is also a mechanism for expanding opportunity.

What Will Insurance Enable Next?

History suggests that every great technological revolution eventually requires a corresponding revolution in risk sharing. Artificial intelligence may prove no different. Before autonomous agents can negotiate contracts, diagnose disease, manage infrastructure, or operate factories, societies will need institutions capable of underwriting the new risks they create. The next frontier of economic development may therefore depend not only on breakthroughs in computation, but on breakthroughs in insurability.

Conclusion

At its core, insurance reflects one of humanity's oldest and noblest impulses: the recognition that some risks are too great for individuals to bear alone. Insurance shares uncertainty before the fact; charity responds to suffering after the fact.

Economists often describe growth as a function of capital, labor, and innovation. Yet beneath all three lies a less appreciated requirement: the ability to share risk. From the first marine insurance contracts to modern cyber policies, economic progress has repeatedly depended on expanding the frontier of the insurable. The great challenge of the coming decades may not simply be developing new technologies but creating the institutions capable of underwriting them.

Technological progress creates new risks. Institutional progress determines whether those risks can be shared. Economic prosperity depends on both.

The history of economic development can be viewed as the gradual expansion of what societies are capable of insuring. The next question is whether the institutions that store society’s risks are themselves becoming a source of risk based on the quality of the assets they manage on behalf of policyholders.

Part 2

In Part 2, we examine whether the institutions that hold society's risks are themselves becoming sources of risk—and what that could mean for the future of the global economy. Become a subscriber to receive the next installment.

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Footnotes & Sources

Editor’s Note: In this Vuepoint, Saliya Weerakoon suggests that Pope Leo XIV’s new encyclical on artificial intelligence should be read not only as a religious document, but as a civilizational intervention.

Pope Leo XIV recently published his encyclical letter Magnifica Humanitas, addressing the safeguarding of the human person in the age of artificial intelligence. The immediate global reaction followed a familiar modern pattern. Headlines spread rapidly across mainstream and digital media platforms. Social media divided instantly between admiration, criticism and ideological positioning. Some praised the intervention without fully reading the document. Others dismissed it within moments of encountering fragments online.

Many reacted emotionally to headlines rather than substance. Modern civilisation now judges almost everything through thirty-second windows of attention. The velocity of digital discourse leaves little room for reflection, patience or deeper absorption. Public conversation increasingly rewards reaction over understanding. Inside that environment, even a deeply reflective civilisational document can quickly become another object within the attention economy.

Beneath the noise surrounding the encyclical, something much larger may have quietly occurred. A civilisational institution nearly two thousand years old has formally entered the global artificial intelligence conversation, approaching the issue not from technological competition or commercial opportunity, but from the standpoint of the human condition itself. That distinction carries enormous significance because the conversation surrounding AI is no longer confined to engineers, investors or technology companies. The question increasingly concerns civilisation itself.

From Industrial Civilisation to Cognitive Civilisation

In 1891, exactly 135 years ago, Pope Leo XIII published Rerum Novarum, the landmark encyclical that later shaped the social doctrine of the Catholic Church. The world at that time was confronting industrialisation, labour exploitation, class tensions and the transformation of economic power structures. Humanity then stood at the edge of industrial civilisation. Today, humanity stands at the edge of cognitive civilisation.

Back then, the earth carried roughly 1.5 billion people. Today, more than 8.2 billion human minds exist inside a hyperconnected digital architecture increasingly shaped by artificial intelligence systems. Drawing direct comparisons between the nineteenth century and the present era may oversimplify history, but a deeper continuity remains visible beneath the vastly different technological conditions. Both eras confronted moments in which systems were expanding faster than humanity’s emotional, political and institutional ability to fully absorb them.

Magnifica Humanitas appears to confront that same deeper concern. The encyclical raises difficult questions about human dignity, dependency, judgment and agency inside increasingly intelligent systems. Many observers will naturally interpret the document through religious or theological frameworks alone. Such a reading risks missing the wider civilisational significance of the intervention.

The Question Beneath the Technology

The document speaks to anxieties increasingly visible across political institutions, corporate boardrooms, universities, military establishments and ordinary households. People across classes and geographies are beginning to ask similar questions in different languages. Where exactly is the world heading in the age of artificial intelligence? Which human capacities remain essential once intelligent systems become deeply integrated into everyday life? How does civilization preserve meaning, judgment and emotional depth inside increasingly optimized systems?

The messenger also matters enormously at this moment. The weight of the message changes because the messenger carries moral continuity rather than commercial incentive. A technology executive raising concerns about dependency or psychological erosion would immediately trigger market reactions, investor speculation and political interpretation. A pope entering the conversation shifts the centre of gravity differently. The discussion moves away from product cycles and toward questions surrounding human meaning itself.

Imagine similar concerns emerging publicly from figures such as Warren Buffett, Sundar Pichai, Satya Nadella, Jensen Huang, Peter Thiel or Elon Musk. Financial markets would immediately interpret the statements through investment implications, geopolitical competition and corporate positioning. A religious figure speaking about artificial intelligence creates a different type of public tension because the discussion suddenly enters psychological, ethical and civilizational territory.

The Invisible Architecture of Dependency

That tension reflects a deeper reality unfolding beneath the public discourse surrounding AI. The global conversation has quietly shifted beyond simplistic narratives involving China versus the United States, regulation versus innovation, or machines replacing human jobs. The deeper anxiety concerns the invisible architecture of dependency.

Modern societies increasingly depend on systems they neither fully understand nor meaningfully control. Search engines shape perception. Algorithms influence attention. Predictive systems guide decision-making. Artificial intelligence models increasingly calibrate human judgment itself. The architecture of thought is slowly changing beneath ordinary daily life.

Simultaneously, institutions historically responsible for guiding civilization appear increasingly uncertain about how to respond. Governments move slower than technological acceleration. Regulatory structures struggle to adapt to innovation cycles measured in months rather than decades. Educational systems continue preparing students for worlds already disappearing beneath technological transformation.

Even elite circles now carry visible hesitation beneath public confidence. Political war rooms, corporate boardrooms and strategic policy environments increasingly revolve around one quiet question. Civilization may be building artificial intelligence infrastructure faster than humanity fully understands its psychological consequences.

When AI Becomes Internal Infrastructure

Artificial intelligence is no longer external infrastructure alone. It is becoming internal infrastructure. Human beings increasingly think with systems before thinking through themselves. Memory, navigation, creativity, communication and even emotional interpretation now pass through intelligent mediation. Dependency rarely arrives dramatically. It emerges gradually through convenience, efficiency and behavioural adaptation.

The anxiety surrounding artificial intelligence therefore differs across classes, institutions and geographies, but one underlying concern increasingly converges beneath them all. Human beings fear losing agency inside systems designed to optimise life itself.

This fear often remains difficult to articulate because artificial intelligence simultaneously delivers extraordinary benefits. Medicine advances faster. Scientific discovery accelerates. Productivity improves. Language barriers weaken. Access to knowledge expands across borders. AI is inevitable, and Pope Leo XIV does not appear to be arguing otherwise.

The deeper question concerns the role artificial intelligence will eventually occupy inside the human mind itself. Intelligent systems may remain tools assisting human judgment, creativity and decision-making. Another possibility also exists, one in which human judgment gradually reorganizes itself around intelligent systems. That distinction may ultimately define the psychological architecture of the twenty-first century.

What Must Remain Human?

History repeatedly shows that civilisations eventually create systems more powerful than the individuals operating within them. Industrial systems transformed labour. Financial systems transformed economies. Media systems transformed perception. Artificial intelligence may now transform cognition itself.

The significance of Magnifica Humanitas therefore extends far beyond religion or technology policy. A global public discourse has quietly begun around one of the defining questions of the century: which human capacities must remain distinctly human in an age increasingly shaped by synthetic intelligence?

Clear answers may not emerge immediately. Civilizations rarely understand the full consequences of transformation while living through them. The importance of this moment lies elsewhere. Humanity has finally begun asking the deeper question aloud.

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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 i…

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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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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

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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.

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📍 Chicago