Nov 7, 2018

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1 big thing: When markets and officials fall short

San Francisco. Photo: Francesco Vaninetti/UIG/Getty Images

In yesterday's midterms, voters set out yet again to tackle major social and economic issues — flat wages, expensive housing, discrimination against released prisoners — that public officials and companies failed to resolve.

  • As we reported yesterday, a dozen cities and states — red and blue — have recently approved $15-an-hour minimum wages. Dozens more have approved lesser increases from the $7.25 federal minimum wage.
  • Axios' Erica Pandey writes: Now, in the midterms, two red states — Arkansas and Missouri — approved big minimum increases. Arkansas raised its minimum wage to $11 an hour from $8.50, and Missouri to $12 from $7.85.

Why it matters: In part, the populism that is roiling nations around the world is a reaction to a feeling that the system has failed to respond to large social issues. In these cases, voters said markets and public officials fell short.

The issue of rectifying skyrocketing housing costs appeared on ballots in eight states.

Axios' Kaveh Waddell writes:

  • In San Francisco, voters overwhelmingly approved a tax on big business to fund permanent housing, emergency shelters and mental health services for the city's homeless people.
  • Economists said it would raise $250 million to $300 million.
  • The passage is a defeat for the city's big tech firms — accused of hugely exacerbating San Francisco's explosion of housing costs — who mostly opposed the tax or stayed quiet.

And voters in cities from Portland to Charlotte to Austin to Bellingham, Washington, voted to raise hundreds of millions of dollars via taxes or bonds to build new cheaper housing.

  • But Californians as a whole defeated a separate proposition to expand rent control. Opponents — who vastly outspent proponents — said the result would be to worsen the state's housing crisis because some property owners would take their homes off the market.

In Florida, voters decisively struck down a 150-year-old law that disenfranchised anyone convicted of a felony, even after completing their sentence.

Erica writes: The ballot initiative repeals an 1868 constitutional amendment that overwhelmingly affects black men. To the degree they vote, the ex-felons could have an enormous impact on elections, since they could become 9.2% of Florida's electorate.

  • What’s next: Iowa and Kentucky are the only remaining states that disenfranchise ex-felons.
2. A validation of tribalism

Illustration: Sarah Grillo/Axios

In October, we reported that no one should wait for the U.S. and global anti-establishment wave to soon dissipate — the shakeup to the system is going to be a feature of politics for years and perhaps decades.

The big picture: Now, in the U.S. midterm elections, American voters have validated that conclusion — Americans are living in a different country from two years ago.

  • Given the chance to inform President Trump that he should change course, voters instead delivered a relatively minimalist House victory to Democrats, while adding to his support in the arguably more consequential Senate.
  • "Voters had a chance to repudiate Trump and they did not,” Republican strategist Ed Rogers writes today in the WP.
  • “Much of the commentariat has said this year’s elections are about who we are as a country and what America is all about. Well, a lot of America seems to be about supporting Trump."

In the 22 months since President Trump took office, key underpinnings of administration policies have received begrudging intellectual support. Leading establishment thinkers condemn his divisive tactics, but validate some of his main gripes.

  • On China: In a speech today in Shanghai, Hank Paulson, the Bush administration treasury secretary and a longtime champion of close relations with Beijing, came down firmly on the side of Trump's get-tough policy toward China. He blamed China for the bad relations and said the onus for fixing it lies with Beijing. (h/t Greg Ip)
  • On globalization: Even leading Democrats have said that one of Trump’s geniuses was to pick out what almost every other major political leader had missed — the huge bank of voters who were economically excluded from the globalization boom. Now, these same politicians are trying to curry favor with them.
  • On nationalism: Speaking with Axios in September, Stanford professor Francis Fukuyama advocated the idea of an American identity, separate from specific U.S. immigrants. “We need to figure out how to re-create a sense of American national identity that will fit the diverse society that we've become but will still be meaningful in terms of binding us together,” Fukuyama said.

What they're saying: Today I contacted several of the thinkers who have spoken for our previous democracy coverage.

Brookings' Robert Kagan, author of "The Jungle Grows Back":

"It seems pretty clear that nothing in the vote suggests a shift away from the America First Troika of anti-immigration sentiment, protectionism, and a foreign policy more narrowly focused on immediate interests and away from global responsibilities. In the US, there has been a tension between two definitions of nationalism: one that is based on the universal principles of the Declaration — the one the founders intended — and one based on the premise of culture and civilization (and race). ... Today I think the nationalism as 'white nationalism' is enjoying a resurgence, as is the focus on group identity in general."

Timothy Snyder, a Yale professor and author of "The Road to Unfreedom" said Democrats did not achieve a "correction" and a return to pre-2016 politics. "Democrats got high turnout because they were against something. And rightly so."

"Nationalism can cut two ways. It can be a system of us and them, where 'they' are excluded from taking part in 'our' institutions. This is the logic of voter suppression in multiple American states. It is important that voter suppression be called for what it is, and that it not be allowed to prevail. Because when it prevails it is not only unjust. It turns nationalism into a form of systematic exclusion, the logic of which leads away from democracy towards managed democracy and authoritarianism."

But, but, but:

Charles Kupchan, a professor at Georgetown:

"The results of the midterms constitute a hung jury. The House swung to the Democrats, but the Senate went the other way. Key races split in a similar way. We are in the midst of a struggle for the heart and soul of liberal democracy — here as well as in Europe. But at least for now, Trump will face a new and potent check on his power, a most welcome development."
3. The Big Tech beauty edge

Photo: Alexandre Schneider/Getty

Big Tech — Amazon, Google, Facebook and Apple — is using data and augmented reality in a push into the $265 billion-a-year beauty retail market.

Erica writes: Tech giants own increasingly granular data about the people who search, socialize and shop on their platforms, giving them a strong start at countering the current dominance of brick-and-mortar stores.

Amazon already has a 20% share of online beauty retail — and it's growing.

  • Walmart remains far and away the biggest beauty retailer in the U.S., capturing a whopping 27.6% of the total market in 2017, according to Coresight Research.
  • But Amazon has recently launched a line of low-priced, private-label personal care and beauty basics, like face washes and shaving creams, per market research firm CB Insights.

Google has partnered with Sephora, the iconic makeup brand, and Google Home users can book treatments at Sephora or take beauty quizzes.

  • Google's other weapon is the community of beauty influencers on YouTube whose videos get millions of views. Google is partnering with traditional beauty brands like Neutrogena that want to put their products in front of those viewers through ads on viral beauty vlogs, CB Insights says.

Facebook is using all parts of its platform in a concentrated beauty push.

  • It's experimenting with beauty bots that chat with customers on Messenger. It's also using augmented reality, where customers can "try on" products to see what they look like, per CB Insights.
  • It's mining advertising data to offer companies insights on what beauty products its users like and buy.

Apple is also working with developers on augmented reality apps that will let iPhone and iPad users try on makeup at home, CB Insights says.

4. Worthy of your time

Sierra Leone President Julius Maada Bio and China's Xi Jinping. Photo: Andy Wong/Getty

Glitches on the path to Belt and Road (Janet Eom -— Axios)

Creeping up to the Milky Way's black hole (Joshua Sokol — Quanta)

The rise of China's e-sports athletes (Tom Hancock — FT)

When no one retires (Paul Irving — Harvard Biz Review)

8 U.S. retailers at risk of bankruptcy (Ben Unglesbee, Cara Salpini — Retail Dive)

5. 1 simulated thing: Avoiding civil conflict

Funeral procession for a victim of a Shiite mosque bombing in Gardez, Afghanistan, in August. Photo: Farid Zahrir/AFP/Getty

Researchers have used a computer model to simulate religious conflict, running the equivalent of millions of years of human interaction in order to better understand why such clashes occur.

Kaveh reports: The patterns the researchers found can help explain how xenophobia sprouts when groups with differing identities interact, according to a paper published last week.

The big picture: Conflict is most likely to erupt when there’s a roughly 60/40 split between a majority and minority religious group, the researchers found.

  • In this scenario, if members of each group interact often, both groups become increasingly anxious, Ross Gore, one of the paper’s co-authors, told Quartz’s Olivia Goldhill.
  • The groups tend to become more religious, turning to faith "as a calming mechanism," Gore said.

The bottom line: But overall, violence was not the default: It occurred in fewer than a quarter of the millions of simulations the researchers ran, LeRon Shults, another co-author, told Goldhill.

  • Outside factors like natural disasters, plus the groups’ relative sizes and how much they interacted, led to statistically different results, Gore said.

The experiment was a collaboration between Oxford University, Boston University and the University of Agder in Norway. The results were published in the Journal of Artificial Societies and Social Simulation.