immigration

The Collapse of the Post-Soviet Equilibrium The 1990s represented a period of unprecedented American hegemony. Following the dissolution of the Soviet Union, the world settled into a unipolar economic order where the United States dictated the terms of trade, finance, and security. We are no longer living in that world. As Eswar Prasad highlights in his analysis of the The Doom Loop, we have transitioned into a multipolar reality where economic power is distributed among China and emerging markets. While competition generally breeds efficiency, the current shift is not towards a new stability but toward a volatile fragmentation. The global economic order is currently trapped in a negative feedback loop where domestic politics, geopolitics, and macroeconomics exacerbate one another. Globalization, once viewed as a positive-sum game that could offset the zero-sum nature of territorial disputes, has itself been weaponized. We now see trade relationships viewed through a lens of national security and zero-sum competition. This shift infects domestic discourse, giving rise to populist movements that prioritize protectionism over the aggregate gains of international commerce. The Paradox of American Productivity and Deficit Fragility Surface-level metrics suggest the U.S. economy remains remarkably resilient. Unlike its peers in Europe or Japan, the United States has generated significant productivity growth in the post-pandemic era. This dynamism allows the nation to sustain decent employment and growth despite a lack of clear policy signals from Washington. However, this strength masks a profound structural fragility: the national deficit. With expenditures reaching $7 trillion against $5 trillion in receipts, the fiscal path is mathematically unsustainable. The danger lies in the "crowding out" effect. Interest expenditures on government debt are rising, siphoning capital away from productive private-sector investments. While the U.S. Dollar maintains its status as the world's reserve currency, providing a unique cushion, that leeway is not infinite. If domestic and foreign investors reach a tipping point where they no longer believe the debt is manageable, the correction will be cataclysmic rather than gradual. We are essentially betting that our productivity—fueled perhaps by Artificial Intelligence—can outpace our interest payments. The Crisis of Inequality and the Fraying Social Fabric While income inequality has shown some signs of stabilization when accounting for taxes and transfers, wealth inequality has exploded. The concentration of assets within the top 0.1% creates a pervasive sense of unfairness that threatens liberal democracy. In a healthy market economy, inequality acts as an incentive for innovation. But when the system is perceived as being "stacked" through regulatory capture and tax loopholes, the social contract dissolves. This disillusionment manifests as a rejection of institutional norms. When the bottom 20% of the population feels the safety net is nonexistent—where healthcare costs are prohibitive and inner-city schools are starved of resources—they lose interest in maintaining the status quo. Eswar Prasad warns that the self-correcting mechanisms of democracy, such as the rule of law and the system of checks and balances, are fraying. When people feel they have no opportunity to clamber up the economic ladder, they become receptive to politicians who promise to "blow up" the system rather than reform it. AI and the Concentration of Economic Power Artificial Intelligence is often framed as a panacea for productivity, but its macroeconomic implications are more nuanced. We are witnessing an increasing concentration of power within and between nations. While AI makes lives more efficient, it poses an existential threat to service-sector employment. Entrepreneurs in emerging markets, such as Africa, report that while AI allows them to compete globally, it simultaneously reduces their need for human labor. The policy response in Washington has been characterized by a fear of stifling innovation, contrasting sharply with the aggressive regulatory stance of the European Union. However, failing to address the displacement caused by AI will only accelerate the doom loop. If the benefits of this technological leap accrue only to the owners of capital while the labor force is hollowed out, the resulting social unrest will dwarf previous populist surges. We need a robust safety net that recognizes the reality of technological churn rather than clinging to 20th-century employment models. The Entitlement Trap and Healthcare Inefficiency Any serious discussion about fiscal sustainability must confront healthcare and entitlements. The United States spends roughly $13,000 per capita on healthcare, yet produces worse outcomes in terms of life expectancy and chronic disease than lower-spending nations. This is the definition of an inefficient market. The system is currently "gummed up" by misaligned incentives that favor reactive emergency care over proactive wellness. Scott Galloway posits that GLP-1 drugs could be the most underhyped technology for deficit reduction. By addressing obesity and its associated chronic costs, we could theoretically reduce the burden on Medicare and Medicaid. However, Eswar Prasad notes that simply cutting these programs without reforming the underlying delivery of care will only hurt the most vulnerable. A transition to a value-added tax (VAT) on consumption, combined with a simplified tax code that closes loopholes for the wealthy, represents a more viable path toward raising the necessary revenue to sustain these obligations. Housing, Education, and the Erosion of the American Dream The traditional pillars of the American middle class—homeownership and higher education—have become predatory rather than preparatory. The housing market is crippled by a supply-side constraint, driven by restrictive zoning and a lack of new construction. When housing becomes a pipe dream for young people, it leads to risky behavior and social alienation. Government policies, such as the current administration's proposal for 50-year mortgages, often only serve to increase interest payments rather than address the root cause of high prices. Similarly, higher education is experiencing a crisis of access. While elite universities like Cornell University or UCLA sit on massive endowments, they sequester supply to maintain pricing power. This creates a bottleneck that prevents the best and brightest from entering the workforce. More concerning is the shift in national attitude toward foreign talent. The United States has historically succeeded by attracting global intellects, but increasing hostility toward immigration is turning off the tap. We are effectively opting to be a less prosperous, more insular nation, ceding our competitive advantage to any country willing to welcome the human capital we are currently rejecting. Rebuilding Institutional Foundations The path out of the doom loop is not found in a single policy but in the restoration of our institutions. The greatness of the American Dollar and the stability of our markets are built on the rule of law, a free press, and an independent central bank. These institutions provide the "common rules of the game" that allow for shared prosperity. Currently, we face a paradox: the very people tasked with strengthening these institutions are often the ones shredding them for short-term political gain. Reversing this trend requires a Herculean effort from citizens and leaders alike to prioritize long-term stability over the politics of resentment. If we cannot reinvigorate the framework that made the United States the center of the world economic order, we must prepare for a future defined by fragmentation, volatility, and diminishing influence. The shift from a positive-sum global mindset to a zero-sum nationalist one is a choice—and we are currently choosing the path that leads to the loop.