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Showing posts with label capitalism. Show all posts
Showing posts with label capitalism. Show all posts

Tuesday, August 1, 2023

The New World (Dis)order: Part IV: Crony Capitalism and the West’s Achilles Heel

Empty shopping cart in an empty parking garage
(Image: Xavi Cabrera on Unsplash)


NOTE: This is the fourth in a five part series.
PART I: American Adventurism, Non-Interventionism, Trumpism and Afghan Chaos
PART II: The Misunderstanding of Vladimir Putin
PART III: China Awakens Under Xi Jinping
PART IV: Crony Capitalism and the West’s Achilles Heel

PART V (
November): The New World (Dis)order

Part IV: Crony Capitalism and the West’s Achilles Heel


“Private individuals can corrupt free markets by using the government to procure for themselves ‘systems either of preference or of restraint’.”

 

-Adam Smith on Crony Capitalism (via Heritage Foundation Report)


Have you ever visited Londongrad and strolled along Moscow-on-the-Thames? No, seriously these nicknames were conferred upon the British capital city, with good reason.


Since the fall of the Soviet Union, successive British governments of every political stripe had an open door policy to welcome in Russian money. In 1994, PM John Major, a Conservative, launched a ‘golden visa’ scheme offering residency visas to anyone who invested £1m pounds. Tony Blair and the Labour Party continued the visa scheme. Even Ken Livingstone, London's Mayor from 2000 to 2008, a socialist, declared he wanted “Russian companies to regard London as their natural base in Europe.


The scheme was rebranded the Tier 1 investor visa by Gordon Brown, in 2008. The BBC reports that since the rebrand, 2,581 visas have been issued to Russian citizens. In 2020, Boris Johnson made his friend Evgeny Lebedev, owner of the Evening Standard newspaper and son of a former KGB officer, a peer in the House of Lords.


Even after Russia’s annexation of Crimea in 2014 and release of the Panama Papers in 2016, which detailed how 214,488 offshore entities shell companies invested in places like London, nothing was done. Russian oligarchs continued to launder money by buying luxury mansions and even English Premier League football teams.


In 2020, UK’s parliamentary intelligence and security committee issued a damning report about the growing influence of Russian money in the country. The report stated that the UK had become the ‘most favourable’ destination for oligarchs and that the visa scheme offered the ‘ideal mechanisms’ to launder money. 


It warned that dirty money was being used to “extend patronage and build influence across a wide sphere of the British establishment – PR firms, charities, political interests, academia and cultural institutions…” Another report issued that same year by the Home Office cautioned that “Russian-linked illicit finance” was being used by individuals to successfully "launder their reputations”.


A 2022 analysis by independent anti-corruption group, Transparency International, found £1.5 billion worth of property owned by Russians accused of financial crime, or with links to the Kremlin. The actual figure is likely much higher because they found another 90,000 properties owned by shell corporations, which prevents the British Government, law enforcement and the public from uncovering who owns them.


Despite the obvious red flags the visa scheme remained open and was only shut down one week before Mr. Putin invaded Ukraine. However, a new book by Oliver Bullough argues that even though the UK sanctioned Russian companies, banks, tycoons and pushed through a hastily crafted anti-crime bill, there remains a big “gulf between rhetoric and reality”.


According to Mr. Bullough, the UK became the preferred destination for oligarchs, gangsters and kleptocrats not by accident, but by design. He says the government’s new law lacks teeth, and more importantly does nothing to dismantle the underlying systems that have led to Britain having an estimated £100 billion-a-year money-laundering problem.


According to him, the lawyers and public-relations firms that scare away anyone prying into their clients’ business, along with plaintiff-friendly libel and privacy laws, remain in place. As does access to a network of secretive offshore territories like Jersey and the Cayman Islands. Extradition to Russia is still a no-no in the eyes of British judges and oligarchs rest easy knowing they spent years investing large sums of money building deep ties to every part of the British establishment.


While the UK has a big dirty money problem, it is not alone in Europe. 


In 2005, less than three weeks after Gerhard Schröder stepped down as chancellor of Germany, he got a call from Mr. Putin asking him to lead the shareholding committee of Nord Stream, the Russian pipeline which delivered 55% of Germany’s natural gas, prior to the Ukraine invasion. Despite the obvious ethical conflict of Mr. Schroder being the one who pushed through approval of the pipeline, during his final weeks in office, he accepted the job.


It is true that successive German chancellors, captains of industry and journalists believed that binding Russia in trade would deter Mr. Putin from risking a conflict with Europe, while securing Germany’s economic interests. After the Ukraine invasion this calculus changed for every German, but not Mr. Schröder. 


He has made millions pushing Russian energy interests and far from expressing regret, he accepted a new position to be on Gazprom's board last year. He refuses to condemn the invasion and is still pushing Germany to reopen Nord Stream.


The European Parliament too has been rocked by a recent corruption scandal. A series of raids carried out by Belgian investigators, last winter, uncovered that politicians had pocketed cash in exchange for praising Qatar and downplaying its human rights abuses, leading up to the 2022 World Cup.


A New York Times investigation found that Qatar used bribes to turn the International Labor Organization, the United Nations workers’ rights watchdog, from critic to ally. Qatar’s campaign included “free travel; a parliamentary hearing with planted questions and a $25 million Qatari contribution to the labor organization”. 


On the eve of the World Cup, Qatari officials succeeded in getting the U.N. watchdog to refrain from making comments that might overshadow the tournament and to withdraw an earlier complaint “accusing Qatar of forced labor and exploitation”


The reality is that dirty money’s tentacles have spread to every part of the West and infiltrated sectors ranging from startups and real estate, to colleges and cultural institutions. 


The Atlantic Council estimates $1 trillion in Russian "dark money" is hidden around the globe. The National Bureau of Economic Research (NBER) estimates that 60% of the wealth of Russia’s richest households reside outside the country’s borders. 


Another place swimming in dirty money is Silicon Valley. Russian oligarchs have sometimes invested openly, like when Mikhail Fridman made a $200 million investment in Uber, in 2016. However, most use shell companies and middlemen that are hard to trace, and through them invest in blue chip companies like Meta, Twitter and Airbnb.


Saudi Arabia is one of the largest investors in US startups. A 2018 estimate by Quid put their direct investments at $6.2 billion in companies like Tesla, Uber, Lyft and Twitter. In 2020 they bought a $500 million stake in LiveNation, the parent company of Ticketmaster and Taylor Swift fans’ worst nightmare. Prior to that they wrote a $45 billion cheque to SoftBank’s Vision Fund. Through it they have made around 26 investments in startups like WeWork, Magic Leap, GM CruiseWAG, Slack, Sofi and DoorDash. 


After the World Cup in Qatar, the Saudis managed to pull off their first professional sports coup by signing one of the greatest footballers of our time, Cristiano Ronaldo. They are paying him over $200 million a season to play for a local club. They also offered football legend, Lionel Messi, a $400-$600 million a year deal to sign with another Saudi club, but he decided to sign with FC Miami in the end. According to press reports Miami managed to make him a sweeter deal.


In 2022, five European football clubs were owned by Russian oligarchs and five by Arab billionaires, including one by Saudi crown prince Mohammad Bin Salman. Russian oligarch Roman Abramovich only agreed to sell Chelsea to a US consortium, after he was sanctioned for the Ukraine invasion.


As they continue to sportswash their human rights record, last year the Saudis upended the genteel world of US professional golf. First, they divided the PGA tour by luring away some of their biggest stars to join a rival Saudi-backed LIV Golf circuit. Last month, Saudi Arabia effectively bought off the PGA Tour when it was announced that LIV and the PGA were going to merge


While financial details of the merger have not been disclosed, the head of the Saudi Public Investment Fund (PIF), who happens to be the right-hand man of Crown Prince Mohammed bin Salman, will be the new Chairman, and the current PGA commissioner its CEO. The deal also gives the Saudis the first right to refusal on any outside investment in the future, effectively giving them total control over a major U.S. sport.


The real estate markets of Los AngelesMiami and New York are another magnet for dirty money. Current US law makes it easy to make large purchases through untraceable shell companies with few questions asked. 


According to PropertyShark, $8 billion is spent each year on New York City homes that cost more than $5 million each. That is triple the amount spent a decade ago and over half these purchases are made by shell companies.


In 2010, a entity named 25CC ST74B L.L.C. paid $15.65 million to buy a condo on the 74th floor of the Time Warner Center. A NY Times investigation traced it to the family of Vitaly Malkin, a former Russian banker who is barred from entering Canada because of his suspected ties to organised crime. 


The condo down the hall was bought by a shell company for a Greek TV magnate, who was later arrested on fraud and corruption charges. A few floors down, three condos were purchased by another shell company that belongs to a Chinese businessman, Wang Wenliang. His construction company was fined for housing workers in hazardous and unsanitary conditions in New Jersey.


The same NY Times investigation found that two-thirds of Time Warner Center residences were owned by shell companies. They managed to uncover the names of 16 owners. All sixteen were the subject of government investigations into housing and environmental violations or financial fraud in their home countries. They hailed from places like Russia, Colombia, Malaysia, China, Kazakhstan and Mexico.


Remember the Chinese businessman who owns the three Time Warner condos and was cited for labour violations? Turns out that Mr. Wenliang managed to secure a seat on the NYU board of trustees after making a donation to New York University. 


In 2020, the US Department of Education (DoE) sent letters to Harvard and Yale for failing to "disclose donations and contracts" from foreign governments that included China, Iran, Russia, Qatar and Saudi Arabia. While the majority of money these institutions received was from legitimate sources, the department said the lack of “institutional controls” was making it easy for dirty money to go unnoticed. The DoE's letter cited Yale for failing to disclose “a single foreign source gift or contract in 2014, 2015, 2016 and 2017.”


These colleges are not alone. A 2021 report by the National Endowment for Democracy found that US educational institutions and think tanks have become vulnerable to “transnational kleptocratic activity”. 


Kleptocrats are using major gift giving as a way to launder their reputations by influencing academic remits, serving as guest lecturers and gaining admission for family members. Russian oligarchs have donated $1 million to MIT, $4 million to NYU and more than $10 million to Brandeis.


US Cultural institutions too, have been busy opening their doors to dirty money. The John F. Kennedy Center for the Performing Arts got more than $5 million from Russian billionaires. Viktor Vekselberg donated to Lincoln Center, Carnegie Hall and the Museum of Modern Art. Vladimir Potanin is a major donor to the Guggenheim Museum and recently gave over $6 million to the Kennedy Center in Washington.


The Brooklyn Museum received $1 million from Mikhail Prokhorov, former owner of the Brooklyn Nets basketball team. Even the Mayo Clinic has accepted at least $1 million. According to the co-founder of the Anti-Corruption Data Collective, these gifts do not even start to scratch the surface of oligarch donations, as most are impossible to trace.


Many reputed US firms have been caught engaging in corruption while doing business abroad. Goldman Sachs paid a $3 billion fine to end a probe into its role in the 1MDB corruption scandal. The scheme involved paying $1 billion in bribes to Malaysian government officials, including a former prime minister. US officials concluded that Goldman played a "central" role in the "massive corruption scheme”. 


Even McKinsey, the world’s most prestigious consulting firm, has gotten their hands dirty. They were barred from doing business in Mongolia after allowing a government official to double as a profit-seeking business partner. More recently, they were criticized for nepotism when they hired the children of high-ranking Saudi officials while being paid millions to advise the Saudi government on its economic transformation.


In 2018, McKinsey found itself embroiled in a corruption scandal involving South Africa’s largest power company, Eskom, in a deal that had ties to shady businessmen brothers who bankrolled the former president, Jacob Zuma. In 2021, McKinsey agreed to repay $63 million in fees to Transnet, a South African logistics company, after being linked once again to bribery-tainted contracts. Last year McKinsey was officially charged in the Transnet case by the country’s National Prosecuting Authority. 


Not to be outdone, their rival Bain & Company got themselves banned from bidding on public contracts in South Africa for ten years, after they helped corrupt government officials degrade the country’s revenue services’ ability to probe tax evasion.


Meanwhile across the pond, Europe’s biggest bank HSBC decided to become the local bank of drug cartels in Mexico. The ‘world’s local bank’ had created a Ponzi scheme to help cartels funnel money. They did this while on probation for past ties to drug kingpins.


A UK government investigation found that HSBC’s subsidiaries helped traffickers transport billions of dollars in armored vehicles, cleared suspicious travelers cheques for them and helped one drug lord purchase an airplane to transport drugs. 


The same UK investigation found that HSBC employees helped terrorists move money outside Iran and Syria, and a Saudi bank with links to Al-Qaida transfer money to America. British lawmakers concluded that the bank had a "pervasively polluted" culture that had persisted for years.


Much before the HSBC scandal, Siemens, a German company and the world’s largest electrical engineering firm shocked the world in 2012 when they agreed to pay a $1.6 billion fine. The penalty related to a bribery scheme that began in the 1990’s and ran through the 2000’s, spanning the globe from Azerbaijan and China, to Iraq and Russia. 


German investigators found that the corruption started in Siemens executive suite and flowed from there to every corner of the firm. It was so pervasive that Siemens actually had an internal accounting euphemism for bribes. One German prosecutor summed up the case saying, "bribery was Siemens' business model”


Even Scandinavian companies, long considered the gold standard for corporate responsibility, have been caught in dirty money scandals. Danske Bank, the largest Danish bank, was the first to get caught conducting suspicious activities, after which the scandal spread to the highly respected Swedbank. Both are accused of helping Russian oligarchs, corrupt politicians and organized crime lords transfer hundreds of billions to offshore tax havens.


Earlier this year, the Swedish telecom giant Ericsson pled guilty to and agreed to pay $206 million in criminal penalties. They were fined for covering up bribes they paid between 2000 and 2016 to government officials in Kuwait, Saudi Arabia and China. Credit Suisse, the 167 years old Swiss bank that was recently sold to UBS, was criminally charged in 2022 for laundering money for a Bulgarian cocaine smuggler. 


While corruption seems endemic, there is a more fallible weakness the West has when it comes to their ties to autocratic regimes, and it has to do with their reliance on these countries for critical raw materials, minerals and energy. 


Take for example the fanfare with which US, UK and EU imposed sanctions on Russian billionaires. An analysis by Bloomberg found that the EU sanctioned nine and U.S. just four of twenty billionaires with ties to Putin. Sanctions experts say the decision not to sanction some was based on their "critical stakes in energy, metals and fertilizer companies”. It is the same reason that Russian agricultural products, like fertilizers, have not been a target of Western sanctions.


Russia is the world’s largest supplier of fertilizers, followed by China, which means the two countries effectively have a stranglehold on the world’s food supply. Russia and its closest ally Belarus, account for nearly a quarter of all crop nutrients, followed by China. 


According to the US Department of Agriculture, fertilizer accounts for almost one-fifth of a U.S. farmer’s cash costs. For corn and wheat it is even higher, accounting for 36 percent and 35 percent, respectively.


After the Ukraine invasion, global fertilizer prices skyrocketed but US consumers did not feel these effects because for 2022 plantings, purchases had been made in 2021. This year, wheat prices have increased 21 percent, barley 33 percent and fertilizers 40 percent. The longer the war continues, the more likely it is that Americans will start to feel some pain at their dinner table. However, for poorer counties the impact of these price rises will result in starvation. 


In early 2023 the IMF raised the alarm saying that 48 countries in Africa, Asia and Latin America were at serious risk from “acute food insecurity,” because of the war in Ukraine. 


Many low-income countries in Middle East, Africa and Central Asia get 75% of their wheat from Russia and Ukraine. Prior to the invasion Ukraine accounted for 46% of global exports for sunflower oil, 37% of millet, 15% for corn, 13% of barley, 10% of wheat, 8% of honey, and 7% of walnut.


With the Russian navy blockade of the Black Sea the situation has grown more precarious. Russia now controls the main shipping corridor for these critical food exports. Last year, the UN had to step in to broker the Black Sea Grain Initiative for exports to resume, after Mr. Putin halted them.


Late last year Russia again refused to renew the initiative unless the West softened sanctions, and last month they withdrew from the deal altogether. A few days later Russia said it would treat any ship heading to Ukrainian grain ports as a military target and they started bombing grain facilities in Odesa and other cities. 


While there is no question Mr. Putin will continue to use this as a bargaining chip, I do not believe he will completely halt exports because much of it goes to countries like Turkey, Iran, Egypt and African and Latin American nations that have refused to publicly condemn Russia’s invasion.


Instead, Mr. Putin might try to cut it off for European nations like Germany, France, Spain who rely on Ukraine to a lesser extent but would see a rise in prices if he managed to stop their supply. The bottom line is that the longer this war goes on, the greater the threat to global food security.


The West’s energy needs are another weakness that Mr. Putin and Mr. Xi are aware of. The EU surprised the world by how quickly they managed to cut their reliance on Russian gas but they pulled it off with a mix of expensive and short-term fixes like buying from higher priced suppliers, getting citizens to cut back on their energy use and doling out costly subsidies.


It is worth noting that the EU has not sanctioned Russian gas sales and member nations continue to import large volumes of Russian liquefied natural gas. It is also true that Europe got lucky with a mild winter last year. There is a long road ahead and no guarantees that these temporary solutions will be sufficient to withstand a harsher winter next year.


Unlike the EU, the US was only dependent on Russia for 8% of its oil imports, so Americans did not feel the same bite from sanctions. However, America's insatiable thirst for big cars and cheap gas still has dangerous consequences. 


A Berkeley study found that the average American consumes more than 300 gallons of gas a year, which puts the U.S. at the top of 128 countries studied. A typical American consumes more than what three Germans consume and the equivalent to the consumption by six Frenchwomen.


Last year, as global energy prices rose, fuel-guzzling Americans feeling the pinch at the pump were immediately up in arms. Being an midterm election year, gas prices turned into a hot button political issue, which led the US President to tuck his tail and run to Saudi Arabia. 


Mr. Biden, who had promised to turn Saudi Arabia into a ‘pariah’ over their human rights record, instead rushed to fist bump Mohamed Bin Salman. The man who, according to the CIA, had personally approved the murder of Jamal Khashoggi. 


Coincidentally, just when Americans were complaining about high gas prices, another dictator got a free pass. The Biden administration eased sanctions on Nicholas Maduro’s regime, giving Chevron permission to start producing and exporting oil from Venezuela. This is the cost of satisfying American’s insatiable thirst for oil. 


To be fair, while we can criticize American oil consumption, there was no shortage of countries looking to buy cheap Russian oil, including India and China. Another unintended consequence of Europe’s price cap on Russian oil is that it created a thriving black market. 


Russian crude managed to find back doors into Europe through middlemen, with one suspected route being through Azerbaijan. Data shows that Azerbaijan exported 242,000 barrels a day more than it produced last year. Another is through Turkey, which not only doubled its direct oil imports last year, but has refused to impose sanctions on Russia.


Russia has also been busy building a shadow fleet of oil tankers. They are estimated to have 600 vessels known as "dark" ships, which turn off their AIS transponder, technology used to identify and locate vessels. This playbook was written by Venezuela and Iran, who for years used these tactics to skirt sanctions. These dark vessels are operated by hard to trace shell companies located places like Dubai, Hong Kong and Cyprus.


Far from crippling Russia's economy, the sanctions have not even dissuaded many countries from trading with Russia. A NY Times analysis finds that over the last year, trade with Russia actually grew. 


This was not just with countries like China, Brazil and India but EU countries like Germany, Belgium, Spain and Netherlands, reaffirming how deeply the West is reliant on countries like Russia for their energy and other needs. 


Europe is weaning itself off Russian energy, with plans to replace it with clean energy solutions. However, in order to make their clean energy future a reality, they need Russia, because it is the leading producer of copper, nickel, platinum and other minerals. All critical raw materials Europe needs to build solutions for a low-carbon future.


In America, over the last few years there has been growing political rhetoric about “breaking-up” with China, but reality does not support this. President Trump first took a hard line with China by putting in place a number of trade tariffs. President Biden has not only kept these in place but he has also increased scrutiny of Chinese firms, adding new export controls on national security grounds. 


However, what no U.S. politician will admit is that behind all the rhetoric, the reality is that breaking up with China would cause untold economic pain for Americans. 


China is the U.S.’s largest trading partner with two-way trade totaling $559.2 billion in 2020. That same year the U.S. was China’s 3rd largest export market. By contrast, US-Russia trade accounted for $28.0 billion in 2019, making them the 26th largest trade partner.


Severing ties with Russia would feel like a paper cut, but cutting them with China would be akin to transplanting every organ in the body, without anesthesia.


Beginning in the 1990’s and a trend that accelerated in 2001, after China joined the World Trade Organization (WTO), American firms began offshoring manufacturing to China. This enabled them to bring down prices, while increasing profits. Today, the depth of America’s reliance on China, across every industry sector, cannot be underestimated. 

 

Apple relies on China for 85% of its manufacturing, according to market-research firm Counterpoint. Recently, Apple has been talking about moving production out of China, and started manufacturing iPhones in India and Vietnam, yet, the truth is starkly different. Bloomberg Intelligence estimated that it would take Apple eight years to move just 10% of their production capacity out of China, where 98% iPhones are still made. 


This is why Apple’s CEO, Tim Cook, on a recent visit to China said at a conference hosted by the Chinese government, “I am thrilled to be back in China, “It means the world to me and I feel really privileged to be here”.


For Tesla, China accounts for a quarter of its revenues and is their second largest market. Similar to Apple, they rely on China for around 85% of their manufacturing. Tesla just announced they are building a new battery megafactory in Shanghai, where they already have a Gigafactory that makes cars. This will deepen their investment in China, while helping to cement the China’s leadership role in the energy storage supply chain.


Other US companies may have less visible ties, but are equally reliant on China. Take Amazon, which entered the Chinese market through a local acquisition in 2004 but found itself unable to compete with local e-commerce behemoths. While they shuttered Amazon China in 2019, a 2021 Marketplace Pulse analysis found that 75% of new sellers of goods in their top four markets of U.S., U.K., Germany, and Japan, are based in China.


A few years ago, Nike’s CEO proclaimed that “Nike is a brand that is of China and for China”. He was referring to the fact that China had become Nike’s fastest growing market, accounting for 15.8% of total revenues in 2020; five years prior it was less than 1%. Nike is not alone. Numerous American brands are made in China like Barbie, Levis Gillette, Melissa and Doug and Chevy Silverado, to name a few from a much longer list. 


It is not just in manufacturing that America is beholden to China. In 2022, China overtook US as the world’s largest film market. Hollywood relies on China to stay afloat and this is why they kowtow to Chinese censors and stay away from storylines about Uyghurs and Taiwanese independence. 


Giants in the music industry have also been collecting big money for years, doing private performances for leaders of unsavory regimes. Beyonce, Mariah Carey, Seal, Nikki Minaj, Kanye, Jennifer Lopez and Sting are just a few of the names stars have entertained autocrats and their families.


Another important area where the West is reliant on China is critical rare-earth minerals. These are integral to nearly all high-end electronics from cell phones, computers, electric vehicles and flat-screen TVs, to defense equipment ranging from guidance systems, lasers, to radar and sonar systems. According to a U.S. Geological Survey report, China accounts for 80 percent of rare earth mineral imports to the U.S.


American reliance goes even deeper when we consider that approximately 80 percent of the active ingredients (APIs) used to make U.S. pharmaceutical drugs comes from China, and to a lesser extent from India. 


A US Department of Commerce study found that 97 percent of US antibiotics came from China. The FDA states that China ranks first among countries that export medical devices to the U.S., accounting for 40 percent of imports.


The same Bloomberg Intelligence report concluded that while it may be easier to move manufacturing of clothes and toys outside China, U.S. tech companies that have invested over two decades and spent billions of dollars setting-up sophisticated supply chains will not find it easy to unwind them. 


More worryingly nobody can predict the negative impact that a real decoupling of the world’s two largest economies will have on global markets.


Read final installment in November:

PART V: The New World (dis)Order

Thursday, August 15, 2019

Democrats Need a Better Strategy to Defeat Trump in 2020

(Reuters)

“If you're confused about what to do, it's a sign that your enemy is winning.” 
-Toba Beta

The general consensus in the liberal media was that the Democratic Party squandered an important opportunity during the recently televised debates to show voters outside of their base that they have nationally electable candidates. The party instead seemed to move further to the left in the first debate, and spent much time infighting during the second, only serving to highlight that they are a deeply divided and leaderless party. I fear that this observation, made by the most supportive news outlets and friendly commentators is correct and unless the party works to remedy their current trajectory, they are likely to face another humiliating defeat in 2020.

Here are five things Democrats need to do if they are serious about defeating Trump.

One: Democratic National Committee Must Wrest Control of the Debate Process
It is wonderful that the party wants to show that it supports a transparent and democratic process, after the cloak and daggers they were caught doing with Hillary Clinton, but this does not mean that they should have a free-for-all circus. Part of the issue is that to stand out in such a crowded field the candidates have no choice but to resort to positing extremist views.

To remedy this, the DNC needs to change the criteria for the next round of debates, so that only a handful of the candidates are able to qualify. Further, they should hold one debate with the frontrunners - candidates who record double digit support in the polls - and a second for the next five contenders. This way they would ensure a more substantive debate, covering a wider range of issues in more depth than will ever be possible with ten candidates on stage.

The DNC also needs to take control of the format, rather than allow news outlets to determine it. This will prevent juvenile hand raising questions that oversimplify complex issues or childish ones, like CNN’s moderators kept asking in a bid to get candidates to attack each other.

Two: Stop Crying for Impeachment
Saying that she is going to Clorox the Oval Office before moving in certainly provided Kirsten Gillibrand a viral moment, but it did nothing to win middle and low-income voters in Michigan, Pennsylvania and Wisconsin, who voted twice for Mr. Obama before turning to Mr. Trump. Neither will hysterically pushing the case for impeachment, in a partisan manner.

An NBC News poll found that the support for impeachment had steadily declined among registered voters before Mr. Mueller’s testimony, with just “21 percent of registered voters saying there is enough evidence for Congress to begin impeachment hearings.”  After Mueller’s testimony, which many Democrats had hoped would be a watershed moment, an ABC News/Ipsos poll found that little had changed in voters’ minds on the issue”.  

Even if Democrats in the House find the votes to impeach (they don’t currently have them), the GOP-controlled Senate will likely exonerate the President. Both Nancy Pelosi and Chuck Schumer are acutely aware that such an outcome, while placating a minority in their base, will also play right into Mr. Trump’s hands. The President has claimed all along that this is nothing more than a naked partisan witch hunt and a Senate trial clearing him will be the final vindication he needs to claim his false victimhood.

Democrats would be wise to stop publicly calling for impeachment and focus instead on the pocketbook issues that people vote on. Privately, they should absolutely continue to pursue the numerous investigations already under way into the Trump administration and his family business and allow these to reach their natural conclusions. There is nothing protecting a President from prosecution once he leaves office.

Three: Build a Rational Case against Trump (not a moral one)
Democrats need to understand that the people did not elect them to be the moral guardians of this country. So instead of feigning outrage and trying to be the moral police, they need to focus their energies more on holding the President accountable for his actions and lack thereof, and less on offensive tweets and insensitive words.

To defeat Trump they should focus on both his numerous broken promises to the working class and farmers, and on his routinely erratic behaviour. They should build a non-partisan case explaining how the President is putting every American’s national and economic security at risk with his shoot-from-the-hip, go-with-his-gut policies.

He has dangerously conflated trade and national security issues with the Huawei case in a bid to score easy concessions in his ill-conceived trade war. The issue is not that he is being tough with China, but that he has picked a fight with the second largest economic and military power in the world without a plan or a long-term strategy, which makes it likely that the outcome will be damaging for American manufacturers and consumers.

Also, why aren’t Democrats questioning the invisible line between affairs of state and the President’s personal business? It is clear that Mr. Trump draws no distinction between self-promotion and official business; family members regularly accompany him on state visits to places where the Trump enterprise has business interests. This should be a legitimate concern for all Americans, who need to understand that when foreign policy decisions are made based on personal motives, they will never align with the interests of the country and its citizens. So much for America first because it seems more like Trump first.

Another issue Democrats should be raising is the fact that there has been a marked drop in the number of warning letters issued by the FDA under this administration. These letters have long been considered a vital tool to protect consumers from unsafe drugs and food products, and a way to ensure the safety and quality of medical devices. At a time when we are facing rising healthcare costs and increasing corporate abuse, peeling away these protections will likely lead to dangerous health and safety consequences for all Americans.

Even our foreign policy is in complete disarray. From Venezuela to Iran and Syria to North Korea, beyond bullying allies, touting his personal charm and creating photo ops, it is clear the President again has no game plan. Democrats would do well to remind Americans that the last time a US president winged it and went it alone on foreign policy; we wasted trillions of taxpayer dollars on two wars with no tangible results.

Four: Present a full-throated defense of Capitalism
If government were in the business of running businesses, we would all be raving about the DMV’s ease and efficiency, and the TSA’s world-class customer service. Visit any government website - federal, state or local and let me know how simple the language is, and how easy the process to do anything is - from registering a small business to filing a claim.

Take the example of the US department of education. Their stated mission is to promote student achievement. In the thirty-six years they have been a cabinet-level agency, their taxpayer funded total annual budget has increased from approximately $14 billion in 1980 to $70 billion in 2018, while improvement in student test results has been negligible. For 17-year-olds, math scores have improved by only 1.6 percentage points from 1982 to the most recent test. In reading, scores are up 0.4 percentage points since 1980.”

Now think about who finances all government enterprise and consider how much accountability, transparency and results we get for our tax dollars from federal, state and local agencies – do you truly believe that MORE government is the answer to our problems?

There is no question that there are many things that are broken with our current system of Capitalism, but the solution is not to throw the baby out with the bath water. Instead, we need to focus our efforts on improving the systems and processes that are not working and to rebuild trust in public and private institutions by creating greater transparency and demanding more accountability from elected and unelected officials. We also need to use the law to prosecute those who have misused power; from abusive cardinals to errant CEO’s.

John Delaney put it best when he suggested in the first debate that Democrats should be the party “that keeps what’s working but fixes what’s broken”.

Five: Don’t Ignore a Winning Strategy
Winning more votes in California is completely pointless. The path to defeating Trump requires winning the Electoral College and the only way for Democrats to do this is by appealing to a broader cross-section of voters beyond their base. Consider that 35% of Americans describe themselves conservative, 34% moderate and 4% refuse to identify themselves according to Gallup. Only 26% call themselves liberal. Given this, I cannot fathom why the majority of Democratic candidates seem hell-bent on alienating 76% of the voting population.

As I have written before, the most valuable lesson learned from the 2018 midterms is that Democrats can successfully flip Republican districts and turn red strongholds blue when they campaign as centrists. The majority of Democratic newcomers who scored surprising victories in historically red districts said they were tired of the partisan gamesmanship. They promised to solve problems like healthcare costs and income inequality by reaching across the aisle, not by going it alone. Importantly, not one of these candidates ran on the promise to remove the President from office. The majority of them won.