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Good Morning. U.S. markets are closed today for Martin Luther King Jr.'s birthday. Political and business leaders are gathering this week for the World Economic Forum in Davos, Switzerland. In today's holiday 10-Point edition, we take a look at some of the issues confronting them, including the regulation of giant tech companies, the rise of China and Russia, and what's troubling democracy. |
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| | PHOTO: FABRICE COFFRINI/AGENCE FRANCE-PRESSE/GETTY IMAGES |
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From Greg Ip: Leaders Overshadowed Politics has always been a messy business. But this year opens with divisions and protests in many of the world’s democracies, described by my colleague Jerry Seib in our special report. President Trump’s address tomorrow in Davos will compete with his impeachment trial in Washington, D.C. Meanwhile, Spanish Prime Minister Pedro Sánchez and Italian premier Giuseppe Conte, who also will be at Davos, both lead fragile coalitions. Another attendee, Hong Kong Chief Executive Carrie Lam, has been severely rebuked by Hong Kongers, on the streets and in local elections. Still, while politics may be messy, threats to markets and the economy are receding. The U.S. and China have declared a trade-war truce, Brexit is moving toward an orderly resolution, and the Federal Reserve has lowered interest rates. The International Monetary Fund said todayglobal growth would accelerate in 2020. For the financiers milling through Davos’s Congress Center and nearby hotels and pop-up lounges, it feels like time to relax—at least until the U.S. presidential election and all the uncertainty that entails are in full swing. |
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For 2020, the global economy should be good—not great. | |
Last year, the world's economies were buffeted by the U.S.-China trade war and the aftereffects of U.S. interest-rate increases in 2018. This year, those risks should recede, but they won't disappear completely. Many countries are facing the same challenges: slow growth, central banks stymied by low inflation, high government debt, political instability. The IMF expects the global economy to grow 3.3% in 2020. |
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When President Trump went to Davos in January 2018, he reassured the global audience there: "'America First' does not mean 'America alone.'" Two years later, the world is learning what it does mean. The U.S. isn't turning isolationist, but unilateralist: It is rewriting the rules of engagement to prioritize its narrowly defined interests and maximize its leverage. Other nations, companies and investors must adjust to a global arena where the U.S. is no longer the referee, but another player—the biggest and most aggressive. |
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Capitalism is under fire, even though the global economy is strong. Worries about income inequality, jobs disappearing due to automation and environmental sustainability are all feeding wide-scale distrust in capitalism as the world knows it, according to a new study. The analysis from Edelman, a public-relations firm, reveals both skepticism about institutions—including government, business, the media and nongovernmental organizations—and a hunger for leadership on important issues. In stakeholder capitalism, shareholders are still king: Corporations are talking big about looking beyond share price, but don’t count on it. |
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Democracy was never intended to be the neatest form of government. Today, though, democracies around the world seem to have become more messy and less functional than usual. Authoritarian leaders are crowing at the trend and seeking to take advantage, while their democratic counterparts are left wondering whether something has gone off the rails. In the U.S., President Trump has been impeached amid a growing partisan divide. The British government floundered for three years before agreeing on how to make an exit from the EU. Germany’s Angela Merkel, the dean of Western leaders, is on her way out. India seems to be drifting away from secular rule and toward religious sectarianism. "Democracy is under threat and its promise needs revival." | —International Institute for Democracy and Electoral Assistance, in a report |
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Meanwhile, Russia is rising, and China's President Xi Jinping has been in a hurry to put his country on the global stage. The central questions are whether democracy’s current problems represent simply one of the periodic bouts of adjustments democratic societies must make, or whether something more corrosive is under way. What's behind the EU's decline? Hong Kong's political storm is threatening its economy. |
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For tech companies, election-year politics in the U.S. could be a boon. The U.S. electoral calendar will likely lead to an escalation in Washington’s criticism of big tech companies. Tensions between Washington and Silicon Valley have already mushroomed: The FTC and the Justice Department launched separate antitrust investigations into Facebook, Google, Amazon.com and Apple. Several Democrats running for president have targeted Big Tech for breakups or other severe changes. But the current partisan divide, exacerbated by the presidential election, makes it hard to imagine meaningful rules on the tech industry coming out of Washington this year—especially because the two parties don’t share all the same grievances or agree on what kind of role the government should play. |
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🌐 Watch for our special 10-Point afternoon editions this week, rounding up what's happened at the WEF, and follow complete coverage at wsj.com. |
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| The 10-Point was the name given to the news column that runs on the front page of The Wall Street Journal. Today’s newsletter was curated and edited by Eleanor Miller in New York in collaboration with Editor in Chief Matt Murray. Let us know what you think by replying to this email. The 10-Point is a WSJ member benefit. If someone forwarded you this email, we invite you to join us and enjoy the full breadth of scoops, analysis and great storytelling from our journalists around the globe. |
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