Oil prices fall on demand concerns as G20 warns of risks to growth

TOKYO (Reuters) – Oil prices fell on Monday amid increasing concerns about fuel demand after finance ministers and central bank governors from the G20 warned that global economic growth risks have increased amid rising trade and geopolitical tensions.

file photo: Oil barrels are pictured at the site of Canadian group Vermilion Energy in Parentis-en-Born, France, October 13, 2017. REUTERS/Regis Duvignau

Brent crude LCOc1 dropped 9 cents, or 0.1 percent, to $72.98 a barrel by 0647 GMT. U.S. West Texas Intermediate (WTI) futures CLc1 declined 13 cents, or 0.2 percent, to $68.13 a barrel.

Finance ministers and central bank governors from the world’s 20 biggest economies ended a meeting in Buenos Aires over the weekend calling for more dialogue to prevent trade and geopolitical tensions from hurting growth.

“Global economic growth remains robust and unemployment is at a decade low,” the finance leaders said in a statement. “However, growth has been less synchronized recently, and downside risks over the short and medium term have increased.”

The talks occurred amid escalating rhetoric in the trade conflict between the United States and China, the world’s largest economies, which have so far slapped tariffs on $34 billion worth of each other’s goods.

U.S. President Donald Trump threatened on Friday to impose tariffs on all $500 billion of Chinese exports to the United States unless Beijing agrees to major structural changes to its technology transfer, industrial subsidy and joint venture policies.

“The impact of the trade war and the recognition that President Trump and his administration are serious about going to the mat on this issue is finally starting to register in the consciousness of traders and investors in oil and other financial markets,” said Greg McKenna, chief market strategist at AxiTrader.

Economic growth and oil demand growth are closely correlated as expanding economies support fuel consumption for trade and travel, as well as for automobiles.

U.S. energy companies last week cut the number of oil rigs by the most since March as the rate of growth has slowed over the past month or so with recent declines in crude prices.

Drillers cut 5 oil rigs in the week to July 20, bringing the total count down to 858, General Electric Co’s (GE.N) Baker Hughes energy services firm said in its closely followed report on Friday. RIG-OL-USA-BHI

The U.S. rig count, an early indicator of future output, is higher than a year ago when 764 rigs were active as energy companies have been ramping up production in anticipation of higher prices in 2018 than previous years.

Hedge funds and money managers cut their bullish wagers on U.S. crude for the first time in nearly a month, a further sign of weaker sentiment for the market. They cut their combined futures and options positions by 34,067 contracts to 423,650 in the week to July 17, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

Most of the reduction occurred as money managers reduced their long position, or bets that oil prices would rise.

The market seemed unperturbed after Trump warned Iran not to threaten the U.S. or face consequences, with the market little changed after he sent a tweet – written all in uppercase – directed at Iranian president Hassan Rouhani.

Reporting by Aaron Sheldrick; Additional reporting by Jane Chung in SEOUL; editing by Richard Pullin and Christian Schmollinger

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Senate set to confirm Wilkie for Veterans Affairs secretary

After months of tumult, Pentagon official Robert Wilkie is expected to become secretary of Veterans Affairs when the Senate votes Monday to confirm him, taking on the task of fulfilling President Donald Trump’s promises to fire bad VA employees and steer more patients to the private sector.

Wilkie is Trump’s third pick for the job in 18 months. The long-time public official says he will “shake up complacency” at VA, which has struggled with long waits in providing medical treatment to millions of veterans.

He is expected to easily win confirmation after a Senate panel approved his nomination earlier this month. Only Sen. Bernie Sanders of Vermont at the time voted “no,” citing concerns the Trump administration would “privatize” VA.

If confirmed, Wilkie, 55, was expected to be sworn into office quickly, the White House has told some veterans groups, possibly joining Trump at the Veterans of Foreign Wars national convention Tuesday in Kansas City. VFW has left a slot open for the “VA secretary” to speak before Trump addresses the convention.

Trump selected Wilkie for the post in May after firing his first VA secretary, David Shulkin, amid ethics charges and internal rebellion at the department over the role of private care for veterans. Trump’s initial replacement choice, White House doctor Ronny Jackson, withdrew after allegations of workplace misconduct surfaced.

Wilkie, a former assistant secretary of defense under President George W. Bush, has received mostly positive reviews from veterans’ groups for his management experience, but the extent of his willingness to expand private care as an alternative to government-run VA care remains largely unknown.

During his confirmation hearing, the Air Force and Navy veteran insisted he would not privatize the government’s second-largest agency of 360,000 employees and would make sure VA health care is “fully funded.” When pressed by Sen. Jon Tester, the top Democrat on the panel, if he would be willing to disagree with Trump, Wilkie responded “yes.”

“I have been privileged to work for some of the most high-powered people in this town,” said Wilkie, currently a Pentagon undersecretary for Defense Secretary Jim Mattis. “They pay me for their opinions, and I give those to them.”

Wilkie would be charged with carrying out a newly signed law by Trump to ease access to private health providers. That law gives the VA secretary wide authority to decide when veterans can bypass the VA, based on whether they receive “quality” care. Major veterans’ groups see VA medical centers as best-suited to veterans’ specialized needs, such as treatment for post-traumatic stress.

Wilkie also would have more power under a new accountability law to fire VA employees. Lawmakers from both parties have recently raised questions about the law’s implementation, including how whistleblower complaints are handled.

Republican Sen. Johnny Isakson of Georgia, chairman of the Senate Veterans Affairs Committee, praises Wilkie as “eminently qualified,” saying he will “bring stability and leadership” to VA.

Wilkie served as acting VA secretary after Shulkin’s firing in March, before returning to his role as Pentagon undersecretary.

If confirmed, he would replace current acting VA secretary Peter O’Rourke. Since taking over the acting role in late May, O’Rourke has clashed with the VA inspector general, initially refusing to release documents relating to VA whistleblower complaints and casting the independent watchdog as an underling who must “act accordingly.” Under pressure from Congress, the VA agreed last week to provide documents to the IG.

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President Trump warns Iranian president against threatening U.S. – The Denver Post

WASHINGTON — President Donald Trump warned Iranian President Hassan Rouhani early Monday that he will face dire consequences for threatening the United States.

Trump tweeted about the dangers to Iran of making hostile threats after Rouhani said Sunday “American must understand well that peace with Iran is the mother of all peace and war with Iran is the mother of all wars.” Trump responded with a tweet that warned: “NEVER EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKE OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE.”

Trump earlier this year pulled the United States out of the international deal meant to prevent Tehran from developing a nuclear weapon and ordered increased American sanctions.

Rouhani had warned Trump Sunday to stop “playing with the lion’s tail” and threatening Iran, “or else you will regret it.”

Trump has suggested Iranian leaders are “going to call me and say ‘let’s make a deal’” but Iran has rejected talks.

Rouhani has previously lashed out against Trump for threatening to re-impose the sanctions, as well as for moving the U.S. embassy to Jerusalem and banning travel to the U.S. from certain Muslim-majority countries.

Trump’s tweet suggested he has little patience with the trading of hostile messages with Iran, using exceptionally strong language and writing an all-capitalized tweet.

“WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS!,” he wrote.

Trump has a history of firing off heated tweets that seem to quickly escalate long-standing disputes with leaders of nations at odds with the U.S.

In the case of North Korea, the public war of words cooled quickly and gradually led to the high profile summit and denuclearization talks.

On Sunday in California, Secretary of State Mike Pompeo was strongly critical of Iran.

He called the religious leaders of Iran “hypocritical holy men” who amassed vast sums of wealth while allowing their people to suffer, part of a highly critical broadside issued as the republic approached the 40th anniversary of its Islamic revolution and the U.S. prepared to reimpose the economic sanctions.

In a speech at the Ronald Reagan Presidential Library and Museum, Pompeo castigated Iran’s political, judicial and military leaders, too, accusing several by name of participating in widespread corruption. He also said the government has “heartlessly repressed its own people’s human rights, dignity and fundamental freedoms.”

He said despite poor treatment by their leaders, “the proud Iranian people are not staying silent about their government’s many abuses,” Pompeo said.

“And the United States under President Trump will not stay silent either. In light of these protests and 40 years of regime tyranny, I have a message for the people of Iran: The United States hears you,” he said. “The United States supports you. The United States is with you.”

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New Fiat Chrysler boss set to stay on course in post-Marchionne era

MILAN (Reuters) – Fiat Chrysler’s (FCHA.MI) new boss, Mike Manley, faces the task of executing his predecessor’s plan to ramp up production of SUVs and catch up on electric cars to keep the world’s seventh-largest carmaker competitive in the absence of a merger.

FILE PHOTO: Mike Manley, head of the Jeep brand, speaks the Los Angeles Auto Show in Los Angeles, California U.S. November 29, 2017. REUTERS/Lucy Nicholson/File photo

Jeep division head Manley was named on Saturday to succeed longtime Chief Executive Sergio Marchionne, one of the auto industry’s most tenacious and respected auto chiefs, who fell seriously ill after suffering complications following surgery.

Marchionne was already due to step down next April, but shares are likely to react to the news of his health crisis on Monday. The stock closed at 16.42 euros on Friday.

Fiat Chrysler Automobiles NV (FCA) said British-born Manley would pursue the strategy that Marchionne outlined last month.

FCA has pledged to increase production of sport utility vehicles and invest in electric and hybrid cars to double operating profit by 2022. It also unveiled bold targets for Jeep, which has become FCA’s ticket to creating a high-margin brand with global appeal.

Analysts said that choosing the 54-year-old Manley, under whose watch Jeep’s sales surged fourfold, sent a clear message that FCA was staying on course and would keep the Jeep brand at the heart of its growth plan.

“Manley knows that his primary focus is on execution and that, already, he has a strategy into which his team has bought,” said George Galliers, an analyst at Evercore ISI.

“There is no reason the 2022 plan cannot be executed.”

Under Manley, the company is expected to sharpen its focus on revamping individual brands, including ailing Fiat in Europe, Chrysler in the United States and Alfa Romeo, which has yet to turn a profit despite multibillion-euro investments.

Marchionne, widely credited with rescuing both Fiat and Chrysler from the brink of bankruptcy, had focused on fixing FCA’s finances first, notably erasing all debt.

He was a gift to investors, including Italy’s Agnelli family, through 14 years of canny dealmaking, growing Fiat’s value 11 times, helped by spinoffs of tractor maker CNH Industrial NV (CNHI.MI) and Ferrari NV (RACE.MI). The Agnellis still have a controlling interest in all three companies.

But his track record at fixing some of FCA’s brands was mixed, with investments and product launches repeatedly delayed.

Profitability in Europe is only gradually recovering, FCA has yet to make significant inroads in China, and the company relies on North America for three-fourths of profits just as that market is expected to come off its peaks.

‘RIGHT MAN’

“FCA needs to fix the volume brands before it’s too late and make them appealing again. … Manley is the right man for that job,” said Felipe Munoz, an automotive analyst at JATO.

Marchionne had advocated industry mergers to share the cost of building electric, hybrid and self-driving cars, but gave up the quest when his preferred target, General Motors Co (GM.N), rejected his advances.

FCA said on Saturday that Manley would execute the new strategy to ensure a “strong and independent” future for the group.

But without a partner in sight, Manley needs to show FCA can keep churning out profits on its own, even as emissions rules tighten, SUV competition intensifies and worries over potential U.S. emissions fines abound.

While FCA had a succession plan, the future appears less clear at Ferrari, the luxury brand that Marchionne was due to lead until 2021.

Ferrari announced some midterm targets earlier this year – pledging to double core earnings and churn out hybrids and an SUV – but a detailed strategy was due in September.

Marchionne made some bold choices in recent years, notably raising production, but was always careful to not dilute the brand’s exclusivity.

Analysts questioned whether new CEO Louis Camilleri would be able to do the same and grow Ferrari beyond what it is today while keeping dealers, racing fans, owners and collectors on board.

“(Ferrari) will always be like a fine race car. Marchionne increasingly had it tuned to perfection,” Galliers said. “It has to be seen if it can remain so without him.”

Reporting by Agnieszka Flak; Editing by Peter Cooney

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In Damascus, Syrians dare to hope that war’s end may be near

Crossing into Syria from neighboring Lebanon, visitors are greeted by giant posters of President Bashar Assad.

The signs proclaim: “Welcome to victorious Syria.”

In the capital of Damascus, many of the checkpoints that for years have snarled traffic are gone. The city is again connected to its sprawling suburbs once held by the opposition, and many former residents and visitors from other parts of Syria fill its streets.

There’s a new feeling of hope that an end is near to Syria’s seven-year civil war.

“It is almost over,” Nazeer Habash, 60, said as he walked home near the Hijaz train station in central Damascus. “It is like a child when he starts to walk, taking one step after another, and victory will always be on our side.”

In a central square not far from where rebel shells used to land just a few months ago, families and groups of teenagers took selfies. Children played on a large sculpture spelling out, “I (heart) Damascus.”

The celebratory mood in government-controlled areas stems from successive military advances in the past year.

It is fed by a feeling that Assad, thanks to unwavering support from allies Russia and Iran, has won — or at least has defeated those opposition fighters trying to topple him.

The country has suffered catastrophic damage and some aspects of the conflict are far from over. Still, many Syrians — even some among the opposition — are hoping for some degree of security and stability.

The government now controls major opposition strongholds and key cities like Aleppo, Homs and even Daraa, the southern city where the uprising was born from protests in March 2011.

The vital border crossing with Jordan, sealed for years, is expected to reopen soon after troops recaptured Daraa province, and hopes are high for the resumption of trade and Syrian exports to Arab countries.

Syrians can now drive all the way form the Jordanian border in the south to the central province of Hama on one of the country’s most important highways that was severed by insurgents for years in several locations. There is talk that the railway from Damascus to Aleppo might resume operations later this year.

The latest government triumph came this week when rebels agreed to surrender their last pockets of control in Quneitra province in the southwest, opening the way for Assad’s forces to re-establish authority along the Israeli frontier.

“The direct threat to Damascus has ended. And since it’s the capital, its conditions affect all other parts of the country,” said Rami al-Khayer, 27, as he sipped a hot beverage with a friend at the famous Nofara cafe in the capital’s old quarter.

The scene in devastated areas once controlled by rebels outside Damascus is starkly different. But even amid the ruins there, life is slowly returning to normal, with more businesses reopening and people tricking back.

In Douma, the largest town near Damascus and site of an alleged chemical attack in April, trucks and bulldozers work around the clock to clear the remains of destroyed buildings, sending up clouds of dust.

The operation in Douma is the start of a long process to clear debris from eastern Ghouta, the string of towns and villages east of Damascus that were held by rebels and under siege by government forces for five years. Until the rebels surrendered in the spring, the residents suffered under food shortages, with cases of malnutrition reported. Now, almost everything is available, although prices are still too steep for many.

Two months ago, Mohammed Sleik reopened his sandwich shop near Douma’s badly damaged Grand Mosque. During the siege, he had to search for supplies; now they are brought to his door.

“Things are getting better but slowly,” Sleik said as he prepared a sandwich of french fries in pita bread for a customer at his shop, named Zaman al-Sham — Arabic for “Era of the Levant.”

He said he sells about 170 sandwiches a day, more than three times what he sold before government forces captured the area. Sleik has six employees at his shop, where the menu includes beans, falafel and fries.

Stores are reopening on Douma’s main street of Jalaa, and shoppers on a recent day were buying farm produce, clothes and shoes.

In nearby Ain Terma, a town that suffered much heavier destruction than Douma because it is closer to the capital, residents complain that electricity and running water are still scarce. They must rely on generators for power and tanker trucks to deliver water to their homes.

The International Committee of the Red Cross, the Syrian Arab Red Crescent and NGOs such as Oxfam have placed giant red plastic tanks of drinking water every 100 meters in the streets of Ain Terma and Douma so residents can fill containers for free.

“Now we have a state here,” said Taha Aboud, 60, owner of a shoe repair shop in Ain Terma. Every day, he said, government trucks distribute bread for free.

After being hemmed in for years, Ghouta residents can travel to and from Damascus, although they must register at checkpoints when they enter and leave.

“We were living underground, and now we are above,” said Samih Hanafi, standing outside his barbershop in Ain Terma.

Suha Touma, a teacher from Hassakeh, brought her daughter Chrystabel to Damascus’ landmark Umayyad Square to play in a garden decorated with the colorful “I (heart) Damascus” sculpture. They traveled from the northeastern province of Hassakeh to spend the summer in Damascus for the first time in years, now that it is safe.

“We see that victory will be very near, and we see the end of the conflict coming soon,” she said as her daughter ran around the garden.

“I hope that my daughter will become a teacher like myself so that she teaches the future generations to love their country,” she said with a wide smile.

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Cold case detectives told LandCruiser belonged to land council chief

A distinctive Toyota Troop Carrier that police have been told may be connected to the 1994 disappearance of Julie Buck and Richard Milgin belonged to the present chairman of the Kimberley Land Council.

Episode four of The Age’s investigative podcast seriesWrong Skin reveals that West Australian Cold Case Homicide Squad detectives recently showed photographs of the Toyota to people in the Looma community and nearby areas as part of their investigation into Julie’s 1994 death and Richard’s disappearance.

The Toyota was registered to KLC chairman Anthony Watson at the time the couple disappeared. He is the son of land council founder and former chairman, senior traditional owner John Watson.

Julie was the promised wife of elderly renowned Looma artist Jimmy Nerrimah when she was found dead at the age of 23 in December 1994. She continued seeing 24-year-old Richard Milgin in defiance of tribal rules which deemed the couple to be “wrong skin”.

No cause of death has been established for Julie, and Richard remains a missing person. He is also presumed dead. Detectives recently handed a detailed investigation report on both cases to the WA Coroner.

Wrong Skin, which is the Kimberly phrase used to describe a relationship forbidden under tribal laws, examines the possibility that traditional punishment may have been a factor in Julie’s death and Richard’s disappearance.

Several people recall seeing or hearing about the Troop Carrier and a smaller car being packed with senior tribal men from Looma and nearby communities around the time Julie and Richard were last seen alive.

A Troop Carrier is a long wheelbase LandCruiser that can seat 11 people. They are prized possessions in the Kimberley.

Some of the senior tribal men reportedly seen in the Troop Carrier had allegedly previously threatened Richard with harm if he did not end his relationship with Julie.

Witnesses also recall the Troop Carrier being spray-painted a different colour shortly after the couple went missing.

As land council chairman, Anthony Watson, 47, is the most powerful man in the Kimberley. The KLC is the representative body for all Kimberley people, and receives about $20 million in federal funding a year to help get native title recognition for traditional owners.

Anthony Watson was around the same age as Julie and Richard when they disappeared and he knew both of them.

The Age is not suggesting Anthony Watson was involved in the death of Julie or the disappearance of Richard. He declined to answer questions.

But the recollection by several people in and around Looma in 1994 of his Troop Carrier being seen full of senior tribal men around the time the couple disappeared has made the vehicle, and who had access to it back then, of interest to police.

John Watson, Anthony’s father, has been nominated by several Looma people as potentially being able to help solve the mystery of what happened to the young couple. This is because of his status as a senior traditional law man and his association with many of the male elders alleged to have been troubled by Richard and Julie’s relationship. Most of these senior men have since passed away.

John Watson and his son Anthony Watson.

John Watson and his son Anthony Watson. Photo: Kate Geraghty

John Watson was a founder of the 40-year-old KLC and has twice been its chairman. He has been a leading figure in the Aboriginal land rights movement and remains a strong advocate for traditional culture.

The Age is not suggesting John Watson, who leads the Jarlmadangah community about 30 kilometres from Looma, was involved in Julie’s death or Richard’s disappearance.

The KLC, one of Australia’s most famous land councils, named its $15-million Broome headquarters after John Watson and another respected leader, Frank Sebastian.

The land council has managed to secure native title across the vast majority of the Kimberley, an achievement which has the potential to deliver benefits to many Aboriginal communities.

But this process has also led to the KLC being offside with some people in the community, who accuse it of favouring certain groups over others and withholding anthropological information supplied by families.

The Age sought to contact John Watson through the KLC but the land council said it could not assist because he was no longer a director. It also tried to make contact through his son, Anthony Watson.

Court documents obtained by The Age reveal a long history of friction between the strongly traditional Jarlmadangah community and the majority-Christian Looma, despite strong family links between both places.

In 2005, Anthony Watson was convicted of an assault that inflicted grievous bodily harm after he broke into a Derby home and violently assaulted Darren Skinner. The two men had been having a personal dispute.

Mr Skinner was nearly blinded in the attack in which he was hit with an iron star picket. Anthony Watson’s sister and John Watson were also charged with inflicting grievous bodily harm in relation to this incident.

But John Watson’s charges were discontinued shortly before the matter was heard in the Derby District Court. Anthony Watson’s sister was convicted.

Anthony Watson and his sister were told by District Court judge Paul Healy that they had given Mr Skinner “a fair old thrashing” and their actions could attract a jail sentence of more than 10 years.

However, both Anthony Watson and his sister received positive references from leading figures at the KLC and had clean records. Judge Healy sentenced both to 18 months in prison wholly suspended.

Of the conflict with Looma families, Judge Healy said: “Unless you sort it out this generation, it’s going to keep on going … otherwise it’s going to flow and continue disrupting the two communities, Looma and your community, for a long period of time and probably the wider community as well.”

The Age can also reveal John Watson was charged by police in 1999 after he shattered the leg of a Looma woman with a club during a game of cards.

He admitted causing the damage to the woman, who required extensive surgery and has never walked the same since.

But The Age understands the magistrate in Derby received letters from supporters of John Watson which explained that there was cultural punishment context to the incident.

Many in Looma, though, say the incident had nothing to do with culture.

John Watson is understood to have received a light penalty and the Looma woman received a payout from the West Australian Criminal Compensation Tribunal.

John Watson remains a justice of the peace who can preside alongside another JP in the Derby Magistrates Court when there is no magistrate in town.


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President Trump warns Iranian president against threatening U.S. – The Denver Post

WASHINGTON — President Donald Trump warned Iranian President Hassan Rouhani early Monday that he will face dire consequences for threatening the United States.

Trump tweeted about the dangers to Iran of making hostile threats after Rouhani said Sunday “American must understand well that peace with Iran is the mother of all peace and war with Iran is the mother of all wars.” Trump responded with a tweet that warned: “NEVER EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKE OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE.”

Trump earlier this year pulled the United States out of the international deal meant to prevent Tehran from developing a nuclear weapon and ordered increased American sanctions.

Rouhani had warned Trump Sunday to stop “playing with the lion’s tail” and threatening Iran, “or else you will regret it.”

Trump has suggested Iranian leaders are “going to call me and say ‘let’s make a deal’” but Iran has rejected talks.

Rouhani has previously lashed out against Trump for threatening to re-impose the sanctions, as well as for moving the U.S. embassy to Jerusalem and banning travel to the U.S. from certain Muslim-majority countries.

Trump’s tweet suggested he has little patience with the trading of hostile messages with Iran, using exceptionally strong language and writing an all-capitalized tweet.

“WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS!,” he wrote.

Trump has a history of firing off heated tweets that seem to quickly escalate long-standing disputes with leaders of nations at odds with the U.S.

In the case of North Korea, the public war of words cooled quickly and gradually led to the high profile summit and denuclearization talks.

On Sunday in California, Secretary of State Mike Pompeo was strongly critical of Iran.

He called the religious leaders of Iran “hypocritical holy men” who amassed vast sums of wealth while allowing their people to suffer, part of a highly critical broadside issued as the republic approached the 40th anniversary of its Islamic revolution and the U.S. prepared to reimpose the economic sanctions.

In a speech at the Ronald Reagan Presidential Library and Museum, Pompeo castigated Iran’s political, judicial and military leaders, too, accusing several by name of participating in widespread corruption. He also said the government has “heartlessly repressed its own people’s human rights, dignity and fundamental freedoms.”

He said despite poor treatment by their leaders, “the proud Iranian people are not staying silent about their government’s many abuses,” Pompeo said.

“And the United States under President Trump will not stay silent either. In light of these protests and 40 years of regime tyranny, I have a message for the people of Iran: The United States hears you,” he said. “The United States supports you. The United States is with you.”

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Mortgage, Groupon and card debt: how the bottom half bolsters U.S. economy

PHILADELPHIA (Reuters) – By almost every measure, the U.S. economy is booming. But a look behind the headlines of roaring job growth and consumer spending reveals how the boom continues in large part by the poorer half of Americans fleecing their savings and piling up debt.

FILE PHOTO: A Walmart employee helps a customer load a 50″ TV he bought on sale in Broomfield, Colorado, U.S., November 28, 2014. REUTERS/Rick Wilking/File Photo

A Reuters analysis of U.S. household data shows that the bottom 60 percent of income-earners have accounted for most of the rise in spending over the past two years even as the their finances worsened – a break with a decades-old trend where the top 40 percent had primarily fueled consumption growth.

With borrowing costs on the rise, inflation picking up and the effects of President Donald Trump’s tax cuts set to wear off, a negative shock – a further rise in gasoline prices or a jump in the cost of goods due to tariffs – could push those most vulnerable over the edge, some economists warn.

That in turn could threaten the second-longest U.S. expansion given consumption makes up 70 percent of the U.S. economy’s output.

To be sure, the housing market is far from the dangerous leverage reached in 2007 before the crash. With unemployment near its lowest since 2000 and job openings at record highs, people may also choose to work even more hours or take extra jobs rather than cut back on spending if the money gets tight.

In fact, a growing majority of Americans says they are comfortable financially, according to the Federal Reserve’s report on the economic well-being of U.S. households published in May and based on a 2017 survey.

Yet by filtering data on household finances and wages by income brackets, the Reuters analysis reveals growing financial stress among lower-income households even as their contribution to consumption and the broad economy grows.

The data shows the rise in median expenditures has outpaced before-tax income for the lower 40 percent of earners in the five years to mid-2017 while the upper half has increased its financial cushion, deepening income disparities. (Graphic: tmsnrt.rs/2LdUMBa )

It is this recovery’s paradox.

A hot job market and other signs of economic health encourage rich and poor alike to spend more, but tepid wage growth for many middle-class and lower-income Americans means they need to dip into their savings and borrow more to do that.

As a result, over the past year signs of financial fragility have been multiplying, with credit card and auto loan delinquencies on the rise and savings plumbing their lowest since 2005.

FILE PHOTO: Shoppers ride escalators at the Beverly Center mall in Los Angeles, California, U.S., November 8, 2013. REUTERS/David McNew/File Photo

Myna Whitney, 27, a certified medical assistant at Drexel University’s gastroenterology unit in Philadelphia, experienced that firsthand.

Three years ago, confident that a steady full-time job offered enough financial security, she took out loans to buy a Honda Odyssey and a $119,000 house, where she lives with her mother and aunt.

Since then she has learned that making $16.47 an hour – more than about 40 percent of U.S. workers – was not enough.

“I was dipping into my savings account every month to just make all of the payments.” Whitney says. With her savings now down to $900 from $10,000 she budgets down to toilet paper and electricity. Cable TV and the occasional $5 Groupon movie outings are her indulgences, she says, but laughs off a question whether she dines out.

“God forbid I get a ticket, or something breaks on the car. Then it’s just more to recover from.”

DRAINING SAVINGS

Stephen Gallagher, economist at Societe Generale, says stretched finances of those in the middle dimmed the economy’s otherwise positive outlook.

“They are taking on debt that they can’t repay. A drop in savings and rise in delinquencies means you can’t support the (overall) spending,” he said. An oil or trade shock could lead to “a rather dramatic scaling back of consumption,” he added.

Some economists say that without the $1.5 trillion in tax cuts enacted in January spending, which has grown by around 3 percent a year over the past few years, could already be stalling now.

In the past, rising incomes of the upper 40 percent of earners have driven most of the consumption growth, but since 2016 consumer spending has been primarily fueled by a run-down in savings, mainly by the bottom 60 percent of earners, according to Oxford Economics.

This reflects in part better access to credit for low-income borrowers late in the economic cycle.

Yet it is the first time in two decades that lower earners made a greater contribution to spending growth for two years in a row.

Slideshow (7 Images)

“It’s generally really hard for people to cut back on expenses, or on a certain lifestyle, especially when the context of the economy is actually really positive,” said Gregory Daco, Oxford’s chief U.S. economist. “It’s essentially a weak core that makes the back of the economy a bit more susceptible to strains and potentially to breaking.”

JOBS NOT RAISES

While the Fed expects the labor market to get even hotter this year and next, policymakers have been perplexed that wages do not reflect that.

With inflation factored in, average hourly earnings dropped by a penny in May from a year ago for 80 percent of the country’s private sector workers, including those in the vast healthcare, fast food and manufacturing industries, Bureau of Labor Statistics figures show.

“It stinks,” says Jennifer Delauder, 44, who runs a medical lab at Huttonsville Correctional Center in West Virginia. In seven years her hourly wage has risen by about $2 to $14.

She took on two part-time jobs to help pay rent, utilities and a student loan. But she still sometimes trims her weekly $15 grocery budget to make ends meet, or even gathers broken fans, car parts, and lanterns to sell as scrap metal. A $2,000 hospital bill early this year wiped out her savings.

Even so, Delauder, a grandmother, recently signed papers for a mortgage of up to $150,000 on a house. “I’m paying rent for a house. I might as well pay for a house that I own,” she said.

Hourly wages for lower- and middle-income workers rose just over 2 percent in the year to March 2017, compared with about 4 percent for those near the top and bottom, while spending jumped by roughly 8 percent.

That reflects both higher costs of essentials such as rent, prescription drugs and college tuition but also some increased discretionary spending, for example at restaurants.

Economists say one symptom of financial strain was last year’s spike in serious delinquencies on U.S. credit card debt, which many poorer households use as a stop-gap measure. The $815-billion market is not big enough to rattle Wall Street, but could be an early sign of stress that might spread to other debt as the Fed continues its gradual policy tightening.

More borrowers have also been falling behind on auto loans, which helped bring leverage on non-mortgage household debt to a record high in the first quarter of this year.

While painting a broadly positive picture, the Fed’s well-being survey also noted that one in four adults feared they could not cover an emergency $400 expense and one in five struggled with monthly bills. This month the central bank reported to Congress that rising delinquencies among riskier borrowers represented “pockets of stress.”

That many Americans lack any financial safety net remains a concern, New York Fed President John Williams told Reuters in an interview last month. “Even though the overall picture is pretty good, pretty solid, or strong,” he said, “this is a problem that continues to hang over half of our country.”

(Graphic: Poorer Americans help fuel economic boom – at a price – tmsnrt.rs/2LdUMBa)

Reporting by Jonathan Spicer; Additional reporting by Ann Saphir in San Francisco and Howard Schneider in Washington; Editing by Tomasz Janowski

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Asian stocks fall as trade tensions take center stage

Asian markets were mostly lower on Monday as concerns over trade tensions moved to the forefront at the meeting this weekend of the Group of 20 industrial nations.

KEEPING SCORE: Japan‘s Nikkei 225 tumbled 1.3 percent to 22,403.45 and South Korea‘s Kospi dropped 0.7 percent to 2,272.57. Hong Kong’s Hang Seng slipped 0.1 percent to 28,200.33. The Shanghai Composite Index added 0.3 percent to 2,836.17, recouping Friday’s losses. Australia‘s S&P-ASX 200 fell 0.8 percent to 6,233.50.

WALL STREET: U.S. indexes closed slightly lower on Friday as a jump in bond yields helped banks but hurt big-dividend stocks. The S&P 500 index lost 0.1 percent to 2,801.83. The Dow Jones Industrial Average gave up less than 0.1 percent to 25,058.12. The Nasdaq composite dipped 0.1 percent to 7,820.20 while the Russell 2000 index of smaller-company stocks dropped 0.3 percent to 1,696.81.

G-20 CONCERNS: G-20 finance ministers and central bankers called Sunday for more dialogue on trade disputes that threaten global economic growth. Their communique said that although the global economy remains strong, growth is becoming “less synchronized” and risks over the short and medium term have increased. These include financial vulnerabilities, heightened trade and geopolitical tensions and global imbalances. “We … recognize the need to step up dialogue and actions to mitigate risks and enhance confidence,” the communique said.

TRUMP OFFENSIVE: On Friday, President Donald Trump took to Twitter to accuse the European Union and China of harming the U.S by manipulating their currencies and reducing interest rates. Speaking to CNBC, Trump renewed his threat to ultimately slap tariffs on a total of $500 billion of imports from China — roughly equal to all the goods Beijing ships annually to the United States. He shrugged off the prospect that a trade war with China could cause the stock market to tumble. “If it does, it does,” Trump said. Analysts say they’re becoming more convinced that Trump’s multi-front trade fights aren’t merely a short-term negotiating ploy. Rather, he may be prepared to wait for as long as he feels it’s necessary to force other countries to adopt trade rules more favorable to the United States.

ANALYST’S TAKE: “The hope is that this bluster is a negotiation tactic that will be watered down during negotiations but increasingly it looks difficult to duck trade blowback,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank.

CURRENCIES: The U.S. dollar fell sharply after Trump claimed countries were manipulating their currencies. It extended its losses on Monday, easing to 110.95 yen from 111.42 yen. The euro rose to $1.1738 from $1.1724.

OIL: Benchmark U.S. crude dropped 15 cents to $68.11 per barrel in electronic trading on the New York Mercantile Exchange. On Friday, the contract settled at $68.26 a barrel. Brent crude, used to price international oils, shed 20 cents to $72.87.

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Are Things Getting Better or Worse?

Branko Milanović grew up in Yugoslavia, during the nineteen-sixties and seventies. He became an economist at the World Bank and then a professor at CUNY; on his blog, Globalinequality, he discusses economics and reminisces about the past. Recently, he published a post about his youth. He had been reading histories of the postwar decades, by Svetlana Alexievich, Tony Judt, and others. Faced with these grim accounts, Milanović felt protective of his past. “However hard I tried,” he wrote, “I just could not see anything in my memories that had to deal with collectivization, killings, political trials, endless bread lines, imprisoned free thinkers,” and so on. Instead, he had mainly good memories—of “long dinners discussing politics,” the “excitement of new books,” “languid sunsets, whole-night concerts, epic soccer games, girls in miniskirts.” He worried that, with the passage of time, it was becoming harder to imagine life under Communism as anything other than a desperate struggle with deprivation and repression. He titled his post “How I Lost My Past.”

Was the past good or bad? Are we on the right track or the wrong one? Is life getting better or worse? These questions are easy to ask—pollsters and politicians love asking them—but surprisingly hard to answer. Most historical and statistical evidence shows that life used to be shorter, sicker, poorer, more dangerous, and less free. Yet many people, like Milanović, have fond memories of bygone years, and wonder if reports of their awfulness have been exaggerated. Others concede that life used to be worse in some ways, but wonder if it wasn’t also better in others—simpler, more predictable, more spiritual. It’s common to appreciate modernity while fearing its destructive potential. (Life expectancy may be higher today, but it will be shorter after the nuclear-climate-bioterror apocalypse.) If being alive now doesn’t feel particularly great, perhaps living in the past might not have felt particularly bad. Maybe human existence in most times and places is a mixed bag.

Last year, the Pew Research Center asked people around the world whether life had been better or worse in their countries fifty years ago. A slim plurality of Americans said they thought life had been better. In 1967, the United States was embroiled in the Vietnam War. Protest marches were taking place around the country, crime was surging, and race riots were breaking out in Detroit, Newark, Milwaukee, and other cities. That spring, a wave of tornadoes injured thousands across the Midwest; members of the Black Panther Party, carrying shotguns and rifles, marched into the California statehouse to protest a racially motivated gun-control law. In June, the Six-Day War broke out. Americans lived in smaller houses, ate worse food, worked more hours, and died, on average, seven years earlier. On the other hand, NASA launched several moon probes and Jimi Hendrix’s “Are You Experienced” helped launch the Summer of Love. By an obscure retrospective calculus, the good appears to balance out the bad. Frightening events seem less so in retrospect. Memory is selective, history is partial, and youth is a golden age. For all these reasons, our intuitive comparisons between the past and the present are unreliable. Many Americans living in 1967 might well have thought that life had been better in 1917.

Nor is this just an American inclination. In “Enlightenment Now: The Case for Reason, Science, Humanism, and Progress,” the cognitive scientist Steven Pinker looks at recent studies and finds that majorities in fourteen countries—Australia, Denmark, Finland, France, Germany, Great Britain, Hong Kong, Malaysia, Norway, Singapore, Sweden, Thailand, the U.A.E., and the United States—believe that the world is getting worse rather than better. (China is the only large country in which a majority expresses optimism.) “This bleak assessment of the state of the world is wrong,” Pinker writes—and not just a little wrong but “wrong wrong, flat-earth wrong.”

Because our ideas about human progress are so vague, it’s tempting to think they don’t matter. But “Is life getting better or worse?” may be a dorm-room debate with consequences. It has affected our politics, Pinker says, encouraging voters to elect unproved leaders “with a dark vision of the current moment.” He quotes from Donald Trump’s Inaugural Address, in which the President bemoaned “mothers and children trapped in poverty . . . an education system which leaves our young and beautiful students deprived of all knowledge . . . and the crime, and the gangs, and the drugs.” In fact, poverty, crime, and drug abuse are declining in America, and our educational system, though flawed, is one of the best in the world. Pessimism can be a self-fulfilling prophecy. By believing that the world is getting worse, Pinker argues, we can make it so.

It’s also possible to take this reasoning to an extreme—to become radically pessimistic about the consequences of pessimism. In “Suicide of the West,” the conservative intellectual Jonah Goldberg argues that progressive activists—deluded by wokeness into the false belief that Western civilization has made the world worse—are systematically dismantling the institutions fundamental to an enlightened society, such as individualism, capitalism, and free speech. (“Sometimes ingratitude is enough to destroy a civilization,” Goldberg writes.) On the left, a parallel attitude holds sway. Progressives fear the stereotypical paranoid conservative—a nativist, arsenal-assembling prepper whose world view has been formed by Fox News, the N.R.A., and “The Walking Dead.” Militant progressives and pre-apocalyptic conservatives have an outsized presence in our imaginations; they are the bogeymen in narratives about our mounting nihilism. We’ve come to fear each other’s fear.

With “Enlightenment Now,” Pinker hopes to return us to reality. In the course of five hundred pages, he presents statistics and charts showing that, despite our dark imaginings, life has been getting better in pretty much every way. Around the globe, improved health care has dramatically reduced infant and maternal mortality, and children are now better fed, better educated, and less abused. Workers make more money, are injured less frequently, and retire earlier. In the United States, fewer people are poor, while elsewhere in the world, and especially in Asia, billions fewer live in extreme poverty, defined as an income of less than a dollar and ninety cents per day. Statistics show that the world is growing less polluted and has more parks and protected wilderness. “Carbon intensity”—the amount of carbon released per dollar of G.D.P.—has also been falling almost everywhere, a sign that we may be capable of addressing our two biggest challenges, poverty and climate change, simultaneously.

Pinker cites statistics showing that, globally, there are now fewer victims of murder, war, rape, and genocide. (In his previous book, “The Better Angels of Our Nature,” he attributed this development to a range of causes, such as democratization, pacifism, and better policing.) Life expectancy has been rising, and—thanks to regulations and design improvements—accidental deaths (car crashes, lightning strikes) are also in steep decline. Despite what we’re often told, students today report being less lonely than in the past, and, although Americans feel overscheduled, studies show that men and women alike have substantially more leisure time than their parents did (ten and six hours more per week, respectively).

“Enlightenment Now” seems designed to reassure both Republicans, who worry about increasing drug use and terrorism, and Democrats, who see racism and sexism as the crises of our time. Despite fears of resurgent racism, the number of hate crimes in America has been falling for decades, while analyses of Internet searches, which reveal searchers’ hidden interests, indicate that racist, sexist, and homophobic attitudes are also in retreat. What Pinker calls “emancipative values”—tolerance, feminism, and so on—are becoming more common even in old-fashioned societies. (Young people in the Middle East now hold social views comparable to the ones held by young Western Europeans in the nineteen-sixties.) Although there’s been a recent surge in drug overdoses in the U.S., most of those who die belong to “the druggy Baby Boomer cohort . . . born between 1953 and 1963.” Drug and alcohol use among teen-agers—with the exception of cannabis and vaping—is at its lowest level since 1976.

Pinker’s message is simple: progress is real, meaningful, and widespread. The mystery is why we have so much trouble acknowledging it. Pinker mentions various sources of pessimism—the “progressophobia” of liberal-arts professors, for instance—but directs most of his opprobrium toward the news media, which focus almost entirely on of-the-moment crises and systematically underreport positive, long-term trends. (Citing the German economist Max Roser, Pinker argues that a truly evenhanded newspaper “could have run the headline NUMBER OF PEOPLE IN EXTREME POVERTY FELL BY 137,000 SINCE YESTERDAY every day for the last twenty-five years.”) He consults the work of Kalev Leetaru, a data scientist who uses “sentiment mining,” a word-analysis technique, to track the mood of the news; Leetaru finds that, globally, journalism has grown substantially more negative.

The power of bad news is magnified, Pinker writes, by a mental habit that psychologists call the “availability heuristic”: because people tend to estimate the probability of an event by means of “the ease with which instances come to mind,” they get the impression that mass shootings are more common than medical breakthroughs. We’re also guilty of “the sin of ingratitude.” We like to complain, and we don’t know much about the heroic problem-solvers of the past. “How much thought have you given lately to Karl Landsteiner?” Pinker asks. “Karl who? He only saved a billion lives by his discovery of blood groups.”

Even as “Enlightenment Now” celebrates our ingenuity, it suggests that there’s something bratty about humankind: we just don’t want to admit how good we have it. In “It’s Better Than It Looks: Reasons for Optimism in an Age of Fear,” the journalist Gregg Easterbrook offers a wider-ranging account of our pessimism. In his view, it’s the result of various demographic, cultural, and political trends. The country is aging, and older people tend to be nostalgic and grumpy. Reaganism made “ritualized denunciation” of the government routine, encouraging cynicism among conservatives; among liberals, a focus on marginalized groups has led to the competitive articulation of suffering, creating a culture of “majority victimhood,” in which every group trumpets its grievances. “Claims for liability and compensation have increased,” Easterbrook notes, reflecting the rise of a punitive society obsessed with the assignment of blame; fewer people attend worship services, where they might hear messages of hope or have uplifting interactions with neighbors. Thanks to cable news, talk radio, and social media, “society has opinionized,” and it’s now “expected that all will possess strong views”; this has fed the rise of “catastrophism,” or the continual overstatement of what’s wrong. (“Everything is terrible” is a stronger view than “Things are pretty decent.”) Finally, technology has changed. Easterbrook cites psychological research suggesting that the physical proximity of our smartphones gives them uncanny power to influence our moods. It’s one thing to see an alarming headline on a TV across the room, and another to feel it vibrating in your pocket.

Perhaps we’ve come to see history itself as one bad news cycle after another. The word “history” used to evoke “traditions to be respected, legacies to be transmitted, knowledge to be elaborated, or deaths to be commemorated,” the French historiographer Henry Rousso points out, in “The Latest Catastrophe: History, the Present, the Contemporary.” After the traumas of the twentieth century, however, we began to define our historical era by “the most lethal moments of the near past”—the conflicts, wars, and atrocities that “have had the most difficulty ‘passing away.’ ” We “delimit the contemporary era” by referring to “the ends of wars or sometimes the beginnings of wars: the end of World War I, the end of World War II, the end of the Cold War.” (In America, we talk about the Vietnam era and the generation born after 9/11.) “Since 1945, all contemporary history begins with ‘the latest catastrophe,’ ” Rousso concludes. We see the past in terms of crises, and imagine the future that way, too.

Pessimism may even answer to our spiritual needs. The philosopher Charles Taylor, in his book “A Secular Age,” from 2007, argued that modern life is characterized by a sense of individual spiritual obligation. In pre-Reformation Europe, ordinary people were held to lower spiritual standards than monks, priests, and nuns, and a member of the laity might live an imperfect, worldly life and still be saved, as long as he supported, through prayer or alms, the work of the “virtuosi.” Such a system, Taylor writes, “involved accepting that masses of people were not going to live up to the demands of perfection.” Eventually, Protestantism intervened, making individuals responsible for their own salvation. In the new way of life that emerged, religion was democratized, and each person was charged with spiritual self-stewardship. Part of this shift involved a political credo. In Taylor’s précis: “We are all responsible for each other, and for society as a whole.”

Today, we tend to conceive the credo of social responsibility as an ethical idea, justifiable on secular grounds. Still, it remains tied to an inner, devotional imperative. We know that we accomplish little by reading the news, and sense that our infinite, tragic news feeds distort, rather than enhance, our picture of reality. Still, it feels wrong to outsource the work of salvation to Bill and Melinda Gates, and presumptuous to trust too much in the power of good works. Pessimism can be a form of penance, and of spiritual humility in a humanist age.

Pinker urges us to overcome these cultural, psychological, political, and spiritual biases, and to take a more objective view of the world. But human beings are not objective creatures. When social scientists write about life expectancy, educational attainment, nutrition, crime, and the other issues Pinker addresses, they often use the abbreviation Q.O.L., for “quality of life.” They use S.W.B. to refer to “subjective well-being”—the more elusive phenomenon of happiness, fulfillment, or life satisfaction. In “Citizen Kane,” Orson Welles’s media tycoon enjoys high Q.O.L. and low S.W.B. He is healthy, wealthy, and unhappy. The question is whether what befalls individuals might also befall societies. If so, life could be getting much better objectively, on the social scale, without getting all that much better subjectively, on the individual scale.

The most obvious way to tackle this question is to survey people from different societies. The annual World Happiness Report combines data from Gallup opinion surveys with economic and sociological studies; it finds that, in general, citizens of high-Q.O.L. countries (Finland, Norway, Canada, Germany) report higher levels of S.W.B. than citizens of low-Q.O.L. countries (Venezuela, Chad, Laos, Iraq). Look closely, though, and the story is more nuanced. Although economics shapes S.W.B., so do social and political factors: despite immense economic growth, Chinese citizens are no happier today than they were in 1990 (fraying social ties, created by rural-to-urban migration, may be to blame), while in many Latin-American countries people report higher S.W.B. than their otherwise low Q.O.L. predicts. (Latin-American respondents often cite their strong family bonds as a special source of happiness.)

In the United States, the two measures have diverged. Although per-capita income has more than doubled since 1972, Americans’ S.W.B. has stagnated or even declined. In a contribution to the 2018 World Happiness Report, the economist Jeffrey Sachs attributes this divergence to a public-health crisis centered on obesity, drug abuse, and depression, and to a growing disillusionment with business and government. From all this data, the picture is one of large-scale predictability and small-scale volatility. Thanks to broad improvements in quality of life, today’s children are likelier to be happier than their grandparents were. But within any shorter span of time—a decade, a generation, an electoral cycle—there’s no guarantee that S.W.B. won’t decline even as Q.O.L. continues to rise.

These metrics may reflect something fundamental about how we experience life. Many psychologists now subscribe to the “set point” theory of happiness, according to which mood is, to some extent, homeostatic: at first, our new cars, houses, or jobs make us happy, but eventually we adapt to them, returning to our “set points” and ending up roughly as happy or unhappy as we were before. Researchers say that we run on “hedonic treadmills”—we chase new sources of happiness as the old ones expire—and that our set points are largely immovable and determined by disposition. Some fundamental changes can affect our happiness in a lasting way—getting married, immigrating to a wealthy country, developing a drug addiction—but many life improvements are impermanent in character. Although food quality may have been worse in 1967, the pleasure of today’s better meals is intrinsically fleeting. More people survive heart attacks than in the past, but the relief of surviving wears off as one returns to the daily grind.

The set-point theory is dispiriting, since it implies limits to how happy progress can make us, but it also suggests that progress is more widespread than we feel it to be. This last conclusion, though, makes sense only if we define “progress” in a certain way. “Imagine Seema, an illiterate woman in a poor country who is village-bound, has lost half her children to disease, and will die at fifty, as do most of the people she knows,” Pinker writes:

Now imagine Sally, an educated person in a rich country who has visited several cities and national parks, has seen her children grow up, and will live to eighty, but is stuck in the lower middle class. It’s conceivable that Sally, demoralized by the conspicuous wealth she will never attain, is not particularly happy, and she might even be unhappier than Seema, who is grateful for small mercies. Yet it would be mad to suppose that Sally is not better off.

Pinker is right: Sally is better off. To say so, however, is to acknowledge that we can be better off without feeling that way—working two jobs to pay tuition and save for retirement, Sally still suffers—or worse off without knowing it. Progress is objective and impersonal, at least in part, and can unfold without making us happier. “The goal of progress,” Pinker concludes, “cannot be to increase happiness indefinitely, in the hope that more and more people will become more and more euphoric.” Quality of life is higher today, no matter what you think, and it was lower under Communism, no matter how you feel about those whole-night concerts and epic soccer games. A blissful existence in the Matrix wouldn’t count as progress. There’s more to life than subjective well-being.

In a book titled “The Optimism Gap: The I’m OK–They’re Not Syndrome and the Myth of American Decline,” from 1998, the public-policy reporter David Whitman cited statistics showing that, in nearly every domain of life—crime, pollution, health, income, happiness—Americans were optimistic about themselves but pessimistic about society as a whole. While believing that crime was rising in general, they congratulated themselves for living in neighborhoods that were mostly crime-free; convinced that the economy was getting worse, they remained confident about their own earning potential. Pinker, too, finds that people are afraid for civilization but hopeful about themselves. Certain that those around them are living lives of quiet desperation, they continue to predict increases in their own life satisfaction. But it seems that this optimism gap isn’t just inaccurate; it’s pretty much backward. The world, as an objective whole, has been getting better. It’s our individual experiences of life that are unlikely to improve. We should be optimistic about civilization but neutral about our own future happiness.

A final reason for doubting progress is the future, in all its terrifying potentiality. One of Pinker’s most persistent critics is the statistician and risk analyst Nassim Nicholas Taleb, the author of “The Black Swan,” “Fooled by Randomness,” and other explorations of uncertainty. For the past few years, in a relentless barrage of tweets and Facebook posts, Taleb has responded to Pinker’s optimism by distinguishing between “thin-tailed” historical trends—picture the trailing ends of a bell curve—which are likely to continue indefinitely, and “fat-tailed” ones, which retain their capacity to surprise. Pinker shows that, during the past century, per-capita deaths from fire have declined by ninety per cent in the United States. In Taleb’s view, this is a thin-tailed trend, since it’s the result of innovations, such as better materials and building codes, that are unlikely to reverse themselves. By contrast, the decline in deaths from terrorism—far more people were killed by terrorists in the nineteen-sixties and seventies—is a fat-tailed trend; as Taleb writes on Facebook, “one biological event can decimate the population.” Pessimists of the Taleb school argue that we underestimate the number of fat-tailed trends. In a review of “Enlightenment Now,” the theoretical computer scientist Scott Aaronson imagines a hypothetical book, published in 1923, about “the astonishing improvements in the condition of Europe’s Jews.” The authors of such a book, Aaronson writes, would have reassured themselves that “an insane number of things would need to go wrong simultaneously” for that progress to be reversed—which, needless to say, is what happened.

Maybe our views about progress depend on our time horizons. Charles C. Mann’s “The Wizard and the Prophet: Two Remarkable Scientists and Their Dueling Visions to Shape Tomorrow’s World” tells the stories of two researchers, William Vogt and Norman Borlaug, who occupied opposing sides of the twentieth-century debate about the human population. In Mann’s terms, Vogt was a “prophet”: he predicted that, unless global population growth could be slowed, worldwide famine would result. Borlaug was a “wizard,” who argued that innovations in agriculture would make it possible for farmers to feed everyone. In the event, Borlaug was right: the “Green Revolution,” which he spearheaded, dramatically increased crop yields and saved billions of lives. But the deeper debate between the two sides—“Cut back or produce more?”—persists, this time around climate change. Today, pessimistic prophets argue that radical conservation is the only way to avoid a climatic apocalypse, while optimistic wizards propose innovating our way out of the crisis, perhaps through geoengineering or the creation of new energy sources. Our species seems to face a fork in the road: “If a government persuades its citizenry to spend huge sums revamping offices, stores, and homes with the high-tech insulation and low-water-use plumbing urged by Prophets,” Mann writes, “the same citizenry will resist ponying up for Wizards’ new-design nuclear plants and monster desalination facilities.”

Mann thinks the wizard–prophet distinction reflects a fundamental biological reality. If bacteria are left to grow in a petri dish, they’ll multiply quickly, then consume all their resources and die. The same goes for all species adaptive enough to flourish unconstrained. At first, “the world is their petri dish,” Mann writes. “Their populations grow at a terrific rate; they take over large areas, engulfing their environment. . . . Then they hit a barrier. They drown in their own wastes. They starve from lack of food.” A biologist tells Mann that “it is the fate of every successful species to wipe itself out.”

Both wizards and prophets hope that we can break this pattern. Wizards exhort us to “soar beyond natural constraints” using technology. (Think of Elon Musk, with his solar roof tiles and spaceships.) Prophets implore us to reach, through conservation and political reform, a “steady-state accommodation” with nature. (“What the climate needs to avoid collapse is a contraction in humanity’s use of resources,” the activist Naomi Klein writes.) Both sides agree that progress of a general sort isn’t enough: unless we adopt a decisive and coherent survival strategy, we’ll become victims of our own success. “The Wizard and the Prophet” provides an unsettling coda to “Enlightenment Now.” Pinker could be right in the short term but wrong in the long term. Maybe the world is getting better, but not better enough, or in the right ways.

In the Middle Ages, painters used triptychs to sum up the state of the world. On the left, one might see our origins, in the Garden of Eden; in the center, ordinary, terrestrial life; on the right, the torments of Hell. Above it all, Christ floats in Heaven, surrounded by angels: our redemptive future. One longs for a modern equivalent—a data-driven version of Fra Angelico’s “Last Judgment” or Hieronymus Bosch’s “Garden of Earthly Delights” equal to the contradictions of the human situation.

In “Factfulness: Ten Reasons We’re Wrong About the World—and Why Things Are Better Than You Think,” the Swedish global-health statistician Hans Rosling, who wrote the book with his son and daughter-in-law, tries to find such a picture. Most depictions of the world, Rosling thinks, are either too optimistic or too pessimistic; if they don’t succumb to despair, they seem to look too quickly away from suffering. Rosling adopts a mantra—“Bad and better”—to avoid these extremes. “Think of the world as a premature baby in an incubator,” he suggests:

The baby’s health status is extremely bad, and her breathing, heart rate, and other important signs are tracked constantly so that changes for better or worse can quickly be seen. After a week, she is getting a lot better. On all the main measures, she is improving, but she still has to stay in the incubator because her health is still critical. Does it make sense to say that the infant’s situation is improving? Yes. Absolutely. Does it make sense to say it is bad? Yes, absolutely. Does saying “things are improving” imply that everything is fine, and we should all relax and not worry? No, not at all. Is it helpful to have to choose between bad and improving? Definitely not. It’s both. It’s both bad and better. Better, and bad, at the same time. . . . That is how we must think about the current state of the world.

Rosling’s image captures many of the perplexities of our collective situation. We desperately want the baby to survive. We also know that survival doesn’t guarantee happiness. The baby is struggling, and suffering, and will continue to do so; as a result, we’re more likely to be happy for her than she is to be happy for herself. (Pinker, similarly, is happier for us than we are.) It’s possible, moreover, that she’ll be saved only temporarily. No one is ever truly out of the woods.

In the meantime, the baby’s survival depends on the act of diagnosis. Until her ailments are identified, they can’t be cured. Problems and progress are inextricable, and the history of improvement is also the history of problem-discovery. Diagnosis, of course, is an art in itself; it’s possible to misunderstand problems, or to overstate them, and, in doing so, to make them worse. But a world in which no one complained—in which we only celebrated how good we have it—would be a world that never improved. The spirit of progress is also the spirit of discontent. ♦

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