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AEI's weekly digest of top commentary and scholarship on the issues that matter most

TOWARD A MORE BALKANIZED GLOBAL ECONOMY

Democracies Can Outcompete the China-Russia Alliance

May 28, 2022

As new geopolitical divisions form amid Russia’s war in Ukraine, Hal Brands argues the interconnected global economy is bound to fragment. While “the golden age of globalization” may be over, he believes that democracies can band together and outcompete the economic order being formed by the regimes in Russia and China. He also thinks we stand to benefit from our totalitarian rivals’ missteps. For example, President Xi Jinping’s “offensive decoupling” strategy of economically penalizing opponents may backfire and forge closer economic ties between democracies.

 

Michael R. Strain reports that the state of democratic capitalism in America has remained strong since the beginning of the COVID-19 pandemic. He sees plenty of evidence for that claim: Our economy has been recovering at a stunning rate, workers are returning to their jobs, and wages are increasing rapidly. However, Strain warns that inflation, growing illiberalism, and a host of other economic issues threaten the system that has been the foundation of our prosperity.

 

 

Writing in the Hill, AEI’s Gary J. Schmitt and coauthor Craig Kennedy say that we should not denigrate Sweden’s application to join NATO as a “Johnny-come-lately effort” that might weaken the alliance. Instead, they contend that in recent years the Swedish government and population have shown a remarkable willingness to meet new security challenges head-on.

 

Even as the Biden administration invests in quantum computers, Klon Kitchen warns that the risk of “quantum surprise” is upon us. If our rivals were to make breakthroughs in quantum computing before us, he says, it could pose unprecedented challenges to our cybersecurity and beyond.

 

Adam J. White explains how critics of Justice Samuel Alito's leaked draft opinion overturning Roe v. Wade exaggerate the opinion's implications for other major Court decisions. Because Roe has little grounding in the Constitution's text, it has distorted our understanding of precedent—a doctrine that "is too important to be defined by such a poorly reasoned and divisive case."

 

A Simpler Safety Net for Families: Consolidating Child Tax Credits into a Working Family Credit

In her latest report, Angela Rachidi proposes a consolidated working family credit to simplify and strengthen our safety net for struggling parents. She finds that our current system of tax credits still penalizes marriage to the detriment of family formation; other reform proposals, like the expanded child tax credit, would discourage work, which is the best path out of poverty. The working family credit she envisions would replace both the current earned income tax credit and the child tax credit to streamline administration and address marriage and work disincentives. The working family credit, she writes, would maintain a strong connection among poverty reduction, work, and marriage, in part by extending larger tax credits to married couples. Although the proposal would cost more than the current system, her estimates show that it would significantly increase after-tax income for families in the 0th–60th income percentiles while reducing benefits paid out to the highest-earning households.

 

 

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QUOTE OF THE WEEK

We are in a new era of geopolitics, and we need new strategic approaches to ensure that future coalitions needed to deter and defeat great-power aggression are strong and credible. History teaches that great-power aggression is like a contagion, difficult to stop once it begins to spread. We must contain it.

  — Dan Blumenthal