The Red Folder

Archived from June 24, 2024.

Key stories for the week, brought to you by Lindsey Zhao and the Red Folder team.

Reading for the sake of reading sucks. Telling yourself to read to win a round is nice but ineffective. This condensed news brief helps you understand current domestic and international issues, analyze the news, and gives you opportunities to read more.

Publishing since January 2024.

International Stories

4 key international stories for the week:

1) Pierre Poilievre Propelling Politics Lindsey Zhao

Canada doesn’t usually make it into extemp questions. Recently, that’s changed; mostly because everyone hates Trudeau nowadays. Still, it seems as though Prime Minister Justin Trudeau of Canada might be facing a reckoning more harsh than a high-school extemper can give him, mostly because he’s facing one of his toughest elections yet.

Similar to countries in Europe, Canada allows its Prime Minister to decide the exact date of the general election; the only rule is that no more than 5 years can pass between terms. Justin Trudeau is attempting to make Canadian history and boost himself to his fourth straight term. (He’s served as Prime Minister since 2015!) The next election must be scheduled before October 2025, so Trudeau has roughly a year to make up some pretty terrible voter ratings for his Liberal Party compared to the Conservatives, their main opposition.

A recent national poll conducted at the end of April found that the Conservatives led the Liberals by 21 points, for 42% support nationally. The reason why comes in the form of a career politician and the leader of the Conservative Party, Pierre Poilievre, whom 44% of Canadians would like to see as Prime Minister today.

Justin Trudeau has long championed liberal causes like gender equality, welfare, and fighting discrimination. For example, his cabinet is 50% women and under Trudeau, there are more women than men on the Supreme Court for the first time in Canadian history. He’s also passed a carbon tax and a national child-care program.

Unfortunately, despite the widespread appreciation of these policies, he’s come under massive vitriol in recent months from Israel-Gaza fallout, his poor handling of the economy, his massively unpopular carbon tax, and more. The economy is an especially large issue this election, as interest rates increase and cost of living rises, forcing Canada near the verge of recession.

A series of scandals and poor political maneuvering over the years have left the spotlight wide open for Pierre Poilievre. Serving as the opposition party’s leader since 2022, he’s made a name for himself as Canada’s version of Donald Trump. And on the surface, his relatively angry outbursts at rallies, populist ideas, and former support of extremist trucker groups may make him seem that way. However, Vox cautions that the reality is more mixed. While he promotes firebrand, controversial rhetoric that includes a conspiracy theory that Trudeau is working with the World Economic Forum, his actual policies are much less extremist than his southern neighbor’s controversial politician. For one, he is much more of a so-called classic conservative than Trump or his European counterparts are, focusing on more housing, repealing the carbon tax, and being firmly pro-immigration.

The University of Georgia’s Cas Mudde, one of the leading scholars of the European right, developed a definition of radical right politics today. Politicians like Geert Wilders, Viktor Orban, Donald Trump, and Marine le Pen share three main qualities: nativism, or opposing immigration and multiculturalism; the willingness to use authoritarian measures against opponents; and finally, the belief in populism.

Poilievre is most definitely a populist. However, he’s been firm on his stance of being pro-immigration, saying at a recent Diwali rally, “It doesn’t matter if your name is Poilievre or Patel, Martin or Mohamed. If you’re prepared to work hard, contribute, follow the rules, raise your family, you can achieve your dreams in this country.” The second criterion is more debatable; while he hasn’t outright called for the arrest of his political opponents, he has advocated for tougher on crime policies like mandatory minimum sentences, which some see as authoritarian.

Poilievre has uniquely been able to pull widespread young voter support through dissatisfaction with home inaccessibility, economic anxieties of young Canadians, and more. He’s successfully capitalized on their frustrations and Trudeau is now polling significantly lower than Poilievre among younger demographics.

Justin Trudeau has shaped the Liberal Party around his idealism and optimism, but with his political downfall, it’s also dragging down Liberal MPs; some are extremely worried they’ll lose their seats when the next election comes around.

Trudeau might’ve made history as a progressive firebrand. But now, there’s an even brighter one that just might be able to unseat the formerly popular, now downtrodden Prime Minister once and for all.

Read more here:

3) Can Labour Govern? Paul Robinson

As a citizen of the United Kingdom of Great Britain and Northern Ireland, I must confess I was slightly concerned when Rishi Sunak claimed that Conservatives want to institute the draft. While I am lucky enough to have the right to live in the United States, meaning I don’t constantly have to listen to my great uncle talk about his military service in the Second World War and how National Service (colloquially called NS) would keep young people in check, this isn’t the case for millions of 17 year-olds who might have to endure NS or face penalties.

My cousin Alex, himself nearing the proposed conscription age of 18, has put his hope in the Conservatives (also called the Tories) losing in the general election on July 4. He is likely to get exactly what he wants, with the recent YouGov survey predicting that the Tories will lose all but 140 seats - their biggest loss since the turn of the 20th century. However, the new method used to predict this outcome - known as multi-level regression and post-stratification, or MRP for short - is far from foolproof, especially when dealing with an incumbent so hated as Rishi Sunak.

To suggest that Labour can easily win the next election is to ignore that Britain is not, like the United States, a two-party congressional system, but rather has a parliamentary system similar to much of Europe where many parties are popular in different regions of the country, and they do actually win seats in parliament. The Prime Minister is not elected by the people but by the parliament, and if no party wins an outright majority, a coalition of different parties which forms a majority must be made.

Labour is not popular in Britain. They are not less popular than Rishi Sunak, but that is a low bar. Their leader Sir Keir Starmer - who barring a miracle will be the next PM - wants to increase welfare programs such as removing the infamous “two child limit” (which bars low-income families from receiving welfare payments in excess of that proportional to two children, regardless of how many they have). However, when asked to commit to that policy, he responded that he was “not going to make promises I can’t keep.”

How to Infuriate Your Voters, ft. Sir Keir Starmer

The Labour party is the definition of the word “vague”. Starmer’s refusal to promise anything is indicative of what their position has been for the last two decades: we want to enact our progressive ideals, but have absolutely no interest in actually doing it. The reason? Labour, terrified of losing votes it never even had, is allergic to spending money.

Starmer spends much of his time, as opposition politicians usually do, criticizing the ruling party. He bills the failure of the NHS, the rise of “firing and rehiring”, zero hour contracts, and many more social problems in Britain as squarely the result of the Conservative party misusing funds that the government does bring in through taxation. He claims that if Labour is elected, it will solve all of this.

Despite his best efforts to bury it in rhetoric, Starmer has seemingly forgotten a very basic principle: government programs cost money. With the economy being a central issue for British voters, many of whom ask why their incomes lag behind those in America or Europe, Starmer has not clarified how he will pay with all of his programs. Instead, journalists are left to theorize about who will be paying for an increased role the British government would likely play in people’s lives. It almost seems as if Starmer is trying to convince himself that the money exists in the current system, but is somehow being wasted by the Tories.

The simple truth is that the programs being proposed by the Labour party will cost money. Unless, of course, they don’t get enacted.

Labour has made their policies vague and refused to promise anything because they intend to not enact them if they have to raise taxes to do it. They refuse to make commitments because they realize that whether they fill them or not, they will make someone mad. There is a good chance that Labour will manage to get the worst of both worlds in an attempt to balance the two evils of raising taxes and not improving social programs. There is a good chance that Sir Keir Starmer will come to be hated in the same vein as Rishi Sunak or Boris Johnson, just another PM who made bold promises just to make things worse than they were already.

As such, Labour risks alienating its own voters, who want to see real change in Britain after 14 years of Tory rule. For these voters, their best bet may not be Labour, but rather smaller regional parties.

The Real Winners

In the event Labour fails to get an outright majority, smaller parties will have a chance to boost their issues, which are often regional, to the national stage. Under threat of losing their majority in Parliament, Labour may have to bend to the will of these parties. The Green party, for instance, could demand the government institute a carbon tax, the Scottish National Party or the Welsh Plaid Cymru could demand more funding in their regions specifically, or the Liberal Democrats could demand that the UK rejoin the EU.

All of these parties could hinder a clear message from 10 Downing Street. Britons will begin to wonder why Labour’s vision seems so incredibly clouded. Labour will inevitably risk losing some parties in an attempt to please others, making everyone unhappy and leading to yet another general election. Labour has the odds stacked against it. It is the job of Sir Keir Starmer to prove the nay-sayers wrong.

Read more here:

4) Turkey’s Perpetual Inflation Crisis Justin Palazzolo

For the last six years, the inflation crisis that has enveloped Turkey has hit every class and facet of the nation’s society. Hafize Erkan, the former chief of Turkey’s Central Bank and quite literally the most powerful banker in Turkey, was forced to move back in with her parents because “Istanbul was too pricey” for apartments. However, even though Turkey’s inflation issue has lasted more than a half-decade, the end is not in sight for both Hafize Erkan and the roughly ⅓ of the country’s people at risk of slipping into poverty due to inflation.

On paper, Turkey’s economy should be improving. After the central bank jacked up interest rates to 50%, Turkey’s lira stabilized against the dollar which is quite impressive considering the lira has lost 80% of its value relative to USD over the last 5 years. Furthermore, the lira’s foreign currency reserves have reentered the positive for the first time in years, gaining 51.3 billion USD since March 31. This is indicative of increased demand for the lira and a rise of increased foreign investment, which is essential for Turkey to reverse the depreciation of its currency.

However, these optimistic signs are not pointing towards a brighter future but rather a resurgence in Turkish inflation. Last month, inflation jumped from 69.8% in April to 75.45% in May, a staggering resurgence after rates supposedly peaked in 2022 with a rate of 84.38%.

Upon closer inspection of the Turkish economy, the political and economic issues that have pushed the nation to the brink become obvious. In December of 2023, the Turkish government approved a minimum wage hike to 17,000 lira per month, an increase of 100% since January of 2023. Critics immediately pointed to this bill as a political move, to essentially “buy” more popularity for the ruling AKP before the elections in March. The claims do have substantive evidence since the AKP turned down calls for a two-step wage hike which would have been better overall for inflation and would have allowed businesses and manufacturers to adjust in favor of an immediate increase before the election.

Furthermore, despite the upside of increased wages, the effect on inflation was significant, with estimates postulating a 25-30% increase in prices due to larger labor costs and increased consumer spending. Erdogan’s decision to prioritize politics in his fiat experiment to stop the devaluation of the lira has completely backfired since the wage increase received by the Turkish people will likely be rendered negligible due to inflation.

Furthermore, the “good signs” of a recovering Turkish economy only exist on paper. The increasing foreign currency reserves are not a product of business investment but rather the boom of carry trade. This is where traders will exchange low-interest currency (in this case the dollar) for high-interest currency (in this case the lira) to profit from the difference in rates.

While these funds still give Turkey inflationary breathing room since banks no longer have to borrow from the Central Bank as much as before, they trap the Turkish government in a conundrum. If the lira declines, something that has been the rule, not the exception for Turkey, investors could jump ship and drain the precious foreign currency reserves which are needed to prevent currency devaluation. Thus the increase to 75.45% inflation despite the high interest rates is incredibly troubling since rising prices pressure the lira and threaten to knock the currency from its stabilized position relative to the dollar.

One does not have to be a Harvard economist to understand that basing an economic recovery on the volatile carry trade is not a sound economic strategy. Neither is feeding more worthless currency into circulation that only causes prices to increase with wages. Erdogan and his AKP should be less concerned with his Central Bank head working from home and instead more concerned about the fiat experiment that has failed Turkey.