The 1989 that gave us 2019

Thirty years ago, the Berlin Wall fell. Within months, the Soviet-backed governments of Central Europe were swept away by democratic systems. Two years later, the Soviet Union itself collapsed.

It's hard to capture just how extraordinary all that was at the time. Faced with popular protests, one of history's most fearsome empires had swiftly and (largely) peacefully melted away. Freedom had won. Police states had lost. Right?

But those events were seen in very different lights around the world. Here are three interpretations of 1989 that, in many ways, gave us the more troubled world of 2019.


First there was the 1989 of Western policymakers, who drew the conclusion that political and economic freedom were inevitable. This view opened the way to what we'd later call "globalization:" the rapid opening of economies to transnational flows of people, goods, and capital.

That delivered huge benefits to the world. It lifted a billion people out of poverty over the next 25 years. Entire continents joined the global middle class. Bankers and businesspeople got fabulously wealthy. Stuff got a lot cheaper. The internet came to change everything!

But that system eventually sparked a backlash among middle classes and rural communities in Europe and the US. They resented the offshoring of their jobs, the rising inequality of their societies, and the threats that a more globalized world posed to their ways of life. This is the arc that delivered Brexit, Trump, and the return of populism in continental Europe.

Second, there was the 1989 of China, where the Communist Party concluded it must never, ever, relinquish political power. The crushing of the Tiananmen Square protests in June, followed by the fall of the Wall in November, convinced the Communist Party that while its ongoing economic liberalization was necessary, political liberalization was fatal.

In the coming years, China would prove wrong the Westerners who were certain – certain ! – that economic openness would lead to political freedom. Instead, the party harnessed economic growth to strengthen its grip. Now it's using new technologies to shore up its authoritarian system, and we're close to the moment when the world's largest economy is an opaque one-party dictatorship. The West believed wrongly that the global economy would change China's system: in fact, China's system changed the global economy.

Third, there was the 1989 of today's illiberal former liberals. The man who currently leads Hungary's avowedly "illiberal democracy" was once a shaggy haired dissident who helped bring down communist rule in his country. How is this possible? For men like Viktor Orban – or former dissident Jaroslaw Kaczynski, who leads Poland's ruling rightwing Law and Justice party – 1989 wasn't about the triumph of liberal democracy as such. It was about reclaiming national sovereignty after decades under Soviet rule.

Today, these leaders have exploited the economic and cultural anxieties of their shrinking populations to argue that the EU – which they joined in 2004 – is a new kind of oppressor whose liberal policies, particularly on migration, are a threat not only to their countries, but to Europe as a whole.

All of these interpretations of 1989 combined to give us the world we live in today. It's a world that is vastly more prosperous and free than it was before the Wall fell, but it's also a world where nationalism is rising, a new global rivalry is emerging between the US and China, and freedom is more fragile than we thought thirty years ago.

This month, a bipartisan group of legislators in Washington state presented new legislation that could soon become the most comprehensive privacy law in the country. The centerpiece of this legislation, the Washington Privacy Act as substituted, goes further than the landmark bill California recently enacted and builds on the law Europeans have enjoyed for the past year and a half.

As Microsoft President Brad Smith shared in his blog post about our priorities for the state of Washington's current legislative session, we believe it is important to enact strong data privacy protections to demonstrate our state's leadership on what we believe will be one of the defining issues of our generation. People will only trust technology if they know their data is private and under their control, and new laws like these will help provide that assurance.

Read more here.

Let's be clear— the Middle East peace plan that the US unveiled today is by no means fair. In fact, it is markedly more pro-Israel than any that have come before it.

But the Trump administration was never aiming for a "fair" deal. Instead, it was pursuing a deal that can feasibly be implemented. In other words, it's a deal shaped by a keen understanding of the new power balances within the region and globally.

More

Betty Liu, Executive Vice Chairman for NYSE Group, explains:

Do election years have an impact on the markets?

So, the short answer is it depends. There's lots of factors that affect the markets, right. But there are some trends. So, the S&P has had its best performance in the year before elections and the second-best performance on election year. Now since 1928, we've had 23 election years and the S&P has had negative returns only four times in that duration.

More

For months now, the US has been lobbying countries around the world to ban the Chinese tech giant Huawei from building the 5G data networks that are going to power everything from your cell phone, to power grids, to self-driving cars. US security hawks say allowing a Chinese company to supply such essential infrastructure could allow the Chinese government to steal sensitive data or even sabotage networks. On the other hand, rejecting Huawei could make 5G more expensive. It also means angering the world's second-largest economy.

More

The end of the interim in Bolivia? – Mere months after taking over as Bolivia's interim president, Jeanine Áñez has decided that "interim" isn't quite permanent enough, and she now wants to run for president in elections set for May 3. Áñez is an outspoken conservative who took over in October when mass protests over election fraud prompted the military to oust the long-serving left-populist Evo Morales. She says she is just trying to unify a fractious conservative ticket that can beat the candidate backed by Morales' party. (Morales himself is barred from running.) Her supporters say she has the right to run just like anyone else. But critics say that after promising that she would serve only as a caretaker president, Áñez's decision taints the legitimacy of an election meant to be a clean slate reset after the unrest last fall. We are watching closely to see if her move sparks fresh unrest in an already deeply polarized country.

More