Learn About Opportunity Zones
White Virtua Partners Logo
Getting the Big Ideas Right | October 22, 2020

Getting the Big Ideas Right | October 22, 2020

October 21, 2020 Other

28 million Americans have already voted early in the United States, representing a little over 20% of the total vote in 2016. Here is a state-by-state early vote tracker. Over 86 million early ballots were requested by mail in 2020, with the largest number coming from California at 21 million, followed by Florida and New Jersey at under 6 million each. In 2016, over 140 million Americans voted in the presidential election, representing 63% of the overall population. Five states (Colorado, Maine, Minnesota, New Hampshire and Oregon) had voter participation over 70%.

Pew Research has tracked the erosion of the American ideological middle in a comprehensive review of attitudes and alignment going back to 1994.

Benjamin Franklin’s famous response to whether we would be a republic or monarchy at the Constitutional Convention of 1787 was American prose: “A republic, if you can keep it.” The Constitution designed an Electoral College to elect American presidents through an allotment of state electors, not by national popular vote. Each state legislature assigns the electors, and some states are winner-take-all.

At a time when many Americans may be concerned with efforts by foreign powers to interfere in the November election, a historian, an economist, a national security expert and a Constitutional legal scholar convened a conversation at the Hoover Institute. Niall Ferguson, John Cochrane, H.R. McMaster and John Yoo affirmed that with 36,000 different election functions in the American system, the level of decentralization in national elections is a natural buffer against coordinated interference. They conclude that “the system is working” as it was intended to do.

Prompted about whether America is at a precipice, the above thinkers pointed to the election of 1876 as a greater test of the Constitution than contemporary challenges. It proved America’s ability to peacefully transfer the power of the presidency while also instituting great social and economic change. As context, the election of 1876 resulted in the withdrawal of federal troops and military governors from the American South following the Civil War.

America’s top intelligence chiefs convened a joint video on the integrity and security of the American election system.

The Tax Foundation has produced a report on how former Vice President Biden’s tax plan ranks in terms of global competitiveness. Here is an index of the most competitive economies around the world and which pro-growth policies lead to being more competitive than others.

America added another 661,000 jobs in September, pulling unemployment below 7.9%. This continues a slowing trend in hiring from 1.5 million new jobs in August and 1.8 million new jobs in July. Here is a state-by-state breakdown of jobs and monthly employment trends.

The American election has resulted in a governance stalemate that is failing to adequately respond to the magnitude of the economic situation. The Federal Reserve chairman has been vocal in calling on lawmakers to act quickly and decisively to provide the American economy with the additional support that it needs.

This Wednesday, the Senate is scheduled to vote on a $500 billion economic stimulus bill. The White House has sought a larger $1.8 trillion package. Earlier this fall, the House passed a $2.2 trillion relief bill.

Many market analysts are concerned by the $15 trillion commercial real estate industry, especially retail, which is showing signs of turbulence at a time when over 75% of American public and private pensions are in commercial-real-estate-related holdings.

FICO scores have hit an all-time average high this summer. The average American has a 711 score. The New York Federal Reserve reports that “total household debt declined for the first time since 2014,” noting that during the course of the pandemic, “credit card balances fell by $76 billion, the steepest decline in the history of the data.”

For a “state of the union” on the American dream, millennials make up the largest share of the American workforce, but they are four times poorer than their baby boomer parents were going into their 30s. Millennials represent less than 5% of all U.S. wealth, at a figure of approximately $5 trillion. Baby boomers hold nearly $60 trillion in wealth.

Risk management best practices from households to family offices on how to protect wealth are more relevant than ever in a world of change and uncertainty. A new report out this week for family offices recommends considering the following steps:

  • Be vigilant about digital hygiene and cyber attacks.
  • Consider internal and external threats.
  • Map out intended and unintended consequences.
  • Stress-test strengths and vulnerabilities.
  • Have a plan for readiness in case of major or minor disruptions.

The United States Treasury and Small Business Administration released an Oct. 7 FAQ identifying 52 points of clarification or further definition for the Paycheck Protection Program (PPP) borrower and lender regulations. The guidance alters ownership definitions to allow for greater restructuring flexibility.

The Internal Revenue Service (IRS) and United States Treasury have issued a final rule for meal and entertainment expenses.

The Financial Times considers a widening Atlantic this month, in a piece that casts America’s calling beyond Europe to Asia. In a nod to a renewed alliance with India, the Pentagon has begun casting the Indo-Pacific as a broad theater of engagement. Where Europe has been the “strategic crux of the world,” they are now seen only as a “swing vote in the U.S.-China showdown.” Atlanticism sees Europe as “a player, but not the playing field,” says the European Council President. Johns Hopkins Professor Dan Hamilton writes, “It remains an open question whether Americans can muster the patience, and Germans the will, to reinvent their partnership for this unsettled new era. The elections each of our countries hold within the coming year will tell the tale.”

China, Russia and Cuba have been elected by the 193-member United Nations General Assembly to a 47-member Human Rights Council in Geneva this month. The move demonstrates the challenges to human rights in the 21st century, when China is moving major populations into labor and internment camps. At the same time, the European Union is preparing to sanction Russia over the suspected poisoning of a political opposition leader. Saudi Arabia was not successful in keeping its seat on the council, which it had held for the last two terms. Saudi Arabia has been under scrutiny for the unsolved murder of a Saudi journalist inside the Saudi consulate in Istanbul.

In the immediate aftermath of the coronavirus, Australia was one of the most outspoken critics of Beijing’s handling of information surrounding the virus. In a move seen by many global strategists as functioning to recalibrate Australia’s posture, China has imposed a $15 billion blockade on Australian coal imports.

The BBC reports that Chinese exports were up in September by 9.9% compared to the same time last year and imports into China beat analyst expectations up 13.2% over the same period. This month, the Chinese Renminbi had its biggest one-day rise since the peg to the dollar was removed in 2005. Chinese equities markets attracted over $13 billion in capital and Chinese bond markets have seen inflows of over $92 billion year-on-year as of August 2020.

600 million domestic travelers returned to the road in China this month, in part due to a week-long public holiday at the beginning of the month. China’s hospitality sector is restructuring. Roughly 500,000 hotels are being consolidated into larger hospitality groups. Analysts expect further consolidation.

Spain’s government has passed a 3% tax on digital ads and digital transactions. Additionally, Spain added a 0.2% financial transaction tax. Both will take effect in January 2021. 

Naval theorist Alfred Mahan opened the 20th century considering how America’s Navy had just transitioned from sail to steam engines powered by coal. In 1902 America’s Navy was once again making a change in sea power from coal to oil. It was at that time that Mahan considered access and opportunities to global oil capacity. Mahan wrote, “the Middle East, if I may adopt a term which I have not seen.”

In a sign of changing times, the State Department has signaled that it intends to close the American embassy in Baghdad, Iraq. The plan to remove the diplomatic footprint in the region would take effect over a 90 day period, unless Iraq can provide confidences that Iran-backed militias do not pose a threat to the compound.

Two leading contemporary thinkers on grand strategy are out with a new book framing what is at stake in the geopolitical crossroads of the 21st century. Rebecca Lissner of the Naval War College and Mira Rapp-Hooper of Yale University warn that fragmentation in multilateral institutions is undermining America’s capacity to set open rules of the road in the global trading system. They consider how major power competition can either be multipolar in line with globalization or retreat into a bipolar Cold War-style closed trading bloc system. Both scholars note the historical departure of military power leading economic strength in the 21st century. China’s economic influence spans both geographically contiguous and non-contiguous terrain in function spaces of information, finance, infrastructure, and technology. They conclude by offering the assessment that Washington must bridge the gap in self-governing capacity in the areas of knowledge, information, and technology.

Former Secretary of State Condoleezza Rice convened a multi-day conference aimed at better connecting Washington and Silicon Valley. She emphasized that the race for the future is all about artificial intelligence (AI), quantum computing, and machine learning. The conference focused on the central question of how to deal with China’s digital authoritarianism and what this means for overall governance. Rice drew the differences between how democracies and open societies will seek to govern the digital economy as compared with authoritarian regimes. Rice noted that civil society will need to reconcile how data and privacy are treated with respect to political freedoms and international peace and security. Rice concluded by considering the implications to human rights, freedom of expression, and the trajectory of political freedoms.

Georgetown professor Charles King has written a thrilling piece which reads more like a spy novel than a treatise on grand strategy in this summer’s Foreign Affairs. King’s work studies the decay of the Soviet Union with the fatalist political mythology that “all countries end.” To that, he says – look no further than the image of a herd of goats already roaming the Roman Forum by the 6th century. He offers wit and wisdom in stating that “the antidote to hopelessness isn’t hope. It’s planning.”

King’s study speaks to a broader political environment of having to manage “unexpected, confusing, and catastrophic” crises defined by rapid economic transitions, social evolution, and generational shifts. He notes that the Soviet Union fell because Soviet political system “lacked the nimbleness to engage in system-shaking reform and still survive.” He provides a framework to examine where the “breaking point” of systemic decline can be measured by asking the question: “Which portions of society are most threatened by change and which seek to hasten it?” He states that nations fall when the levels of change exceed the capacity of a state’s political institutions to remain intact. In further study of this subject, I have just downloaded Edward Gibbon’s six volume “Rise and Fall of the Roman Empire” originally published in 1776.

Pulitzer Prize winning author and intelligence correspondent Tim Weiner, is out with a new book, The Folly and the Glory, on the history of political warfare from 1945-2020. In a sneak peek at some of his research, Weiner tells the story of the 15,000 KGB spies who worked at the Kremlin’s Department of Disinformation (“D Unit”). Weiner shares that the Russian translation for political warfare is “active measures” with the mission to destroy the American people’s confidence in their own government and their credibility around the world through disinformation. In another episode, Weiner introduces listeners to the CIA’s Chief of Counterintelligence James Angleton, who recites T.S Elliot’s enchanting poem Gerontion in which he coins the term “wilderness of mirrors.” We also learn of William Epson, whose work Seven Types of Ambiguity, brought a new study of language, code, and meaning to the success or failure of American intelligence.

Arizona received $1.86 billion in Coronavirus relief funds, of which $441 million was made available to cities, towns, and counties to invest flexibly in their communities. In addition, $150 million will go to statewide public health infrastructure. With a spotlight on how local governments are implementing their funds: Gilbert, Arizona is investing $11 million in business recovery grants, $5 million in low-interest loans for mid-term recovery, $2 million in technical assistance, $2 million to support nonprofits, and $10 million in public health infrastructure.

With over 12,000 employees in Intel’s semiconductor manufacturing operation in Arizona, Intel celebrated its 40th anniversary in Arizona’s east valley.

When the Coronavirus hit the United States and demand for personal protective equipment (PPE) surged, Arizona’s Honeywell plant sprang into action. This fall, the PPE manufacturing plant will add another 700 jobs.

Arizonans created more than $16 billion in wealth. Arizona is the fourth most competitive economy in the country. Arizona’s median household income is on the rise. Arizona households have more than $8,600 in their pockets, a rise of 15.2% in 2019. August employment figures in Arizona have state unemployment below 6%.

Oliver Schwab is executive vice president of government affairs at Virtua Partners. Oliver supports and provides strategic guidance to the Virtua team, investors and owners with an active voice, shaping and understanding government policy.

In additional to Oliver’s work with Virtua, he leads a family office that he co-founded. Oliver is also trustee and treasurer of a private foundation. He served as a chief of staff in the United States Congress from 2011-2018. Oliver has experience as a principal in tax, trade, financial services and national security policy. He continues to support public diplomacy as a national security scholar.

Oliver is a visiting lecturer at the European Business School in Germany and the University of Warsaw in Poland. He is also a graduate student in strategic studies at the United States Naval War College, China scholar at the Center for Strategic and International Studies, and has been a fellow at the Woodrow Wilson Center for International Scholars and the Council on Foreign Relations. Oliver focuses his research on the relationship between policy, strategy and decision making. He and his wife Ana are the incoming cabinet co-chairs at the Thomas Jefferson Foundation.