Read the other installments in this series:
 
The American Retreat, Part II: Soldiers of Fortune
The American Retreat, Part III: the Korean Peninsula

I’m going to do something I loathe and quote something I read on Twitter June 24. In a pair of posts U.S. President Donald Trump asserted:

Diction and statistical issues aside, these tweets comprise the 92 most important words used by anyone in the past three decades. Trump just made clear the days of America protecting global shipping – particularly of oil shipping in the Middle East – are over.

There is an easy argument to be made that the United States’ shale revolution will make the United States a net exporter of crude oil in the current calendar year, but to understand just how critical that is for the Americans we must first pick apart just how horrible that is for everyone else.

Let’s talk importance:

In the pre-Order world if you couldn’t obtain fossil fuels yourself, first coal and later oil, you failed to industrialize. Your manufacturing would at most be a step above cottage industries, so no mass education and no consumer goods (aka peasantry and mass poverty). Lack of fuel condemned you to having an at-best rudimentary transport system meaning your cities were very small, only able to exist in regions that could grow their own food (aka high living costs and low quality of life).

The handful of locations that could secure fossil fuels – either by producing it locally or by seizing it from others – could advance into something we today recognize to broadly mean “civilization,” which includes among other things homes that don’t leak and gadgets and full bellies.

This all changed in the late 1940s. After World War II the Americans created a global Order – a mix of security and trade guarantees which they used as a bribe to induce others to join their side in the Cold War against the Soviet Union. With global security now a thing, oil could be shipped safely and at volume without military escort, meaning that countries that didn’t have a military capable of escorting could now access fossil fuels. BAM! Civilization goes global.

Remove the Order, remove global oil markets, and civilization itself goes into screaming reverse in any location that lacks either the ability to produce oil locally, or the ability to venture forth and secure someone else’s.

Let’s talk vulnerability:

Crude tankers are huge. A modern supertanker can shuttle around oil weighing more than four Nimitz-class aircraft carriers. They are so big expressly because of the Order.

Pre-Order, merchant shipping used small, fast vessels because they needed to be able to scatter and hopefully outrun predators whether those predators wore eyepatches or naval uniforms. The Order ended such predation under the watchful eye of the U.S. Navy. Instead of commercial advantage coming as a result of speed and distributed risk, it instead came from efficiencies and economies of scale. Ships evolved to became slower to save on fuel costs, and bigger to get more bang for the buck. Today’s oil tankers are the slowest and biggest of them all and are nearly 50 times the size of some of the biggest cargo ships of the WWII era.

A similar logic holds with ports: size generates economies of scale. In addition, as ships have gotten larger, ports had to expand to match – a city with a small dock simply cannot handle a ship that is longer than the Empire State building is tall. Bigger, slower ships forced fewer, larger ports. Disrupt anything within the system and the damage quickly becomes extreme.

Between oil’s criticality to and ubiquitousness in modern life, oil is by far the most commonly traded product on Earth comprising some 18% of all maritime shipping traffic (by volume). About a third of all waterborne crude and product shipments originate in the Persian Gulf.

Let’s talk stickiness:

There are no shortages of politicians out there who agitate for relocating manufacturing capacity to their countries, provinces or cities. Making a speech is one thing, but actually building industrial plant and infrastructure is another. It costs billions and takes years for large industrial shifts, and even then there is no guarantee that a new industrial park will prove economically viable.

But at least manufacturing can be relocated. Commodity production cannot. Either you have it or you don’t, and the Persian Gulf has the greatest concentrations and volumes of easily-produced conventional crude oil on the planet. It can never not matter.

There’s also the impossibility of substitution.

Simply put, greentech isn’t ready. Most advances in greentech have to do with electricity generation, and since so few countries burn oil for electricity greentech’s impact upon oil markets has been negligible. As a rule greentech is shit for transport. High cost combined with insufficient energy density makes electric cars little more than a niche sector for early adopters, with Tesla’s recent sales figures crash indicating that market may already be saturated.

Even if the medium for most modern batteries – lithium – was sufficiently energy-dense to provide a viable long-term improvement in capacity (it isn’t), the stuff still needs to be mined and processed and fabricated into battery assemblies. Each step along the value-chain is so energy- and transport-intensive that very little of it can even be attempted without fossil-fuel-based energy for processing and transport across the world. As counterintuitive as it sounds, we need more carbon-heavy fuels to get to a lighter-carbon world. And that means coal and oil. A lot of oil.

There’s also the issue of lifespan. Most vehicles put on the roads since 1990 have a long lifespan to the point that even if every passenger vehicle sold from now on was an EV, we’d not see an end to oil in passenger transport for another two decades. Even then, even if every passenger vehicle and light truck were an EV right now, that would only make a dent in global oil demand. About 2/5ths of oil is used for transporting people and heating. The rest is much more difficult to do away with. Another 1/3rd is used for air transport, industry, and other modes that require far more range or power than electric engines can manage. And another 1/5th isn’t going anywhere ever, as it is what makes petrochemicals as varied as paints, plastics and pesticides possible.

(None of which means greentech won’t eventually solve the petroleum problem, but all of which means technology needs another couple decades to give it a go – and even that assumes the capital and educational structures around the world which have made the Digital Revolution possible hold steady at their current historical highs.)

Let’s talk protection:

At the end of World War II every nation of consequence aside from the United Kingdom had lost its navy. The United States in essence inherited the global ocean. America’s creation of the Order gave everyone aside from the Soviets a vested economic interest in not floating a new one. Fast forward to today and the American Navy is over ten times as powerful as the combined blue water fleets of every other country combined. Putting that force disconnect at the service of the global commons is what makes the Order work, and what makes global energy shipments and markets possible.

The world’s second- through sixth-most powerful navies in terms of long-range power projection are (roughly in order) Japan, the United Kingdom, France, China, and Russia. Of these only Russia need not sail forth for oil, as it has plenty of its own. France and the United Kingdom can secure what they need from the North Sea and North and West Africa. China has only 30  combat-capable surface ships of size that can effectively operate over 1000 miles from shore; unfortunately (for the Chinese) Southern China is a cool 5800 or so miles distant from the Persian Gulf. Only India – keeper of the world’s seventh-strongest navy – is even remotely proximate.

End result? Today’s oil markets comprise the greatest concentration of risk in themost critical economic sector at the most vulnerable part of the global system and no one can do anything about it if the Americans leave.

And that’s just the beginning.

By the way, for more on oil’s role in a world without American strategic oversight, I’m happy to refer you to my 2016 book, The Absent Superpower: the Shale Revolution and a World Without America. 

See Part 1: From Sears to Google and Part 2: From Order to Disorder… in America.

So here’s where I get a bit nervous. One of the great truths in geopolitics between 1950 and 2015 is that American domestic politics barely mattered at all. Support for the global Order was strongly bipartisan and it was considered treasonous for any politician to seek foreign support against a domestic opponent. Republicans may have not cared for JFK, but they certainly didn’t try to reach out to the Soviets during the Cuban Missile Crisis to undermine him. Democrats might demonize Nixon, but they never considered collaboration with the North Vietnamese to score political points at home. (Jane Fonda doesn’t count.) Even in periods of America’s most intense infighting, the strategy was the same: the Soviets were the bad guys, and global leadership via the Order was the way to fight them.

As such I get to dive into the political guts of every country in the world with regularity, but I don’t have to dissect the internal politics of my home country. That’s awesome! Americans are really touchy about their ideologies; the bipartisan nature of American Cold War foreign policy enabled geopolitical strategists like me to take a pass on all things political.

Well, so much for that.

With American foreign policy in a state of collapse right along with America’s party structures, I now need to apply the tools I use daily on the United Kingdom and Germany and Russia and Brazil and China and Vietnam and India and Iran to the United States.

Everybody buckle up.

Take a look at this matrix. It breaks out the various voting blocks in the United States on ideology as well as old-style party affiliation. The closer to the top, the more you feel the government should stay out of your personal life. The closer to the right, the more you believe the government has no business in your economic life. If you hug the left, you feel the government must take an active role in managing the economy. If you’re near the bottom, you want the government to not simply respect but actively protect traditional societal norms. If you’re near a corner, you have hybrid views. For example, if you find yourself at the intersection of economic and social conservatism (the bottom right), you believe the government has no role in helping poor people get food, and the stress of poverty will actually do them spiritual good. If you’re completely opposite where economic and social liberalism meet (the top left) you look forward to the day that we all sing kumbaya dressed in government issued gunny-sacks paid for by the confiscation of the assets of anyone who owns their own home.

Factions are color-coded by political affiliation: blue for Democrats, red for Republicans, green for swing voters.

While you’re digesting that, a couple caveats followed by a simple observation:

Caveat #1: These are broad, poorly-defined groups because that’s how coalitions (and graphic making) work.

Caveat #2: Predicting the tactical shifts in American politics is tricky. Americans tend to be a bit moody. What follows is less a hard forecast and instead a probable outcome based on what we know today. It’s an example of the sort of work that’s consuming bigger and bigger slices of my time.

The observation: There are a lot of American factions in the bottom-left quadrant. Folks who are socially conservative on cultural issues, but also feel the government should play a role in ironing out economic inequalities – or at least personally give them more stuff.

That concentration is where Donald Trump is focusing his attention. The oval is the cluster of factions Trump is fashioning into a new coalition. Those bottom three categories (populists, evangelicals and pro-lifers) are his core. But that trio is not far off from the ideological mix that tends to drive unions, Catholics and Hispanics. I’m not asserting here that Trump has these groups in the bag. That’d be hilarious. I’m simply noting the ideologies of Trump’s core groups are not all that far off from these other groups, and that voting patterns among these factions in the 2016 election indicated a sharp break with what we thought we knew about who votes blue versus red.

Most union members, for example, are conservative on social issues and most of Trump’s core is left-of-center on economic issues. All tend to be somewhat distrustful of globalism. Despite all the rhetoric on all sides, the Hispanic vote isn’t locked into the Democratic coalition. Most voting Hispanics are social conservatives who are broadly against large-scale immigration unless it deals with family reunification issues. If Trump’s core coalition could find a way to massage the race issue, there’s a distinct and mind-bending possibility that not only could the – let’s call them Trumplicans – capture a large chunk of the Hispanic vote, but a sizable piece of the ideologically-similar African-American vote as well. That would easily give the Trumplican coalition an outright majority of American voters.

Noticeably absent from the Trumplican coalition are a pair of factions core to the traditional Republican identity: fiscal conservatives and the business community. Both are dismissed by Trump’s core as either irrelevant or an enemy, and both hold – at best – a very weak hand in the Trump administration at present. Their core ideological issue is that math matters – let’s call them Mathocrats – and they strongly favor a right-leaning tax policy that minimizes the role of government. Since the Trumplicans are somewhat left on economics, particularly when it comes to government spending, this pair of formerly Republican factions are likely to from the nucleus of opposition to the Trumplicans.

So who are the Mathocrats’ potential allies? Greens, Socialists and youth voters are probably out of the question as rebelling against basic mathematics is sorta their thing. That leaves a trio of more economically moderate groups near the top-center of the ideological matrix: pro-Choice voters, single women and gays. Women and gays are concerned with political rights, something that modern business thinks is broadly peachy. Women and gays want to protect their own property and financial assets – you haven’t seen a hissy fit until you tell a 35-year-old gay man that his partner can’t be listed on a lending agreement. (I sure know I threw one.) Such economic concerns are near and dear to the hearts of both fiscal conservatives and the business community. The only tension in such an alliance is getting over inertial expectations – and since issues of race are not in play, a Mathocrat coalition would have a far easier time of putting the past to bed than a Trumplican coalition.

Now think about this in terms of foreign policy.

Under the Order, the all-or-nothing nature of the Cold War dictated that foreign policy had to be bipartisan. It was not overly shaped by either party, nor did it much vary from administration to administration regardless. But now there is no unifying threat or need or theme. Each new party can have a foreign policy that makes sense to its constituents as things evolve. American foreign policy is likely to oscillate not only between administrations, but within them.

That is likely to be far more erratic than it sounds. Think of what has happened in the past two years. The Americans have abandoned many of their alliances and geopolitical agreements and yet taken minimal hits – NAFTA, NATO, the WTO, deals with Cuba and Iran and Turkey and both Koreas. It is all falling apart, yet the U.S. economy is growing quickly. Instead of being abuzz with talk of the world burning these past two weeks, Americans instead obsessed about how a would-be Supreme Court justice acted in high school. Foreign policy – at best – demands third-tier attention in the American mind, and typically then only when it is mated to a domestic issue they care more about.

But look who is missing from both potential coalitions: national security voters. Folks who care about national security are the ultimate agnostics. They don’t care about social mores or the culture war or tax rates or development policy or the balance of power between the federal center and the states. So long as the military is capable and politically protected, they’re good. American isolation from the world will make American foreign policy a part-time issue. America’s likely future political parties will make American foreign policy inconsistent. And with America’s military supporters being the ultimate swing voters, American foreign policy will be intensely kinetic.

Yes, the Americans are taking a break from the world and that is problematic, but it is nothing compared to what is coming. In about a decade, instead of living in a world where the Americans are the most powerful force for global stability, they are likely to be the most powerful force for global instability.

See Part 1: From Sears to Google and Part 3: Beyond Democrats and Republicans.

The American political system is in breakdown.

It isn’t a bad thing. It is perfectly normal. Healthy even. Let’s lay it out:

The United States has a first-past-the-post electoral structure based on single-member districts. When you go to the polls, you are being asked to vote for the specific person who will represent the specific geographic area in which you live. In most cases the winner will be the sole representative for said area in whatever representative body is in play. To win that specific seat, the would-be representative does not need a majority of votes, but “only” needs to get one more vote than whoever comes in second.

Applied across a large population and territory, such a system forces a two-party political structure. A party that attempts to cater to a narrow slice of the electorate would never be able to get more than a few percent of the vote, and therefore never gain a majority for any meaningful amount of time. The diversity of the American political and economic base further weakens would-be small parties: voters that make their living on the coal production of Illinois have different interests from those who work in the medical centers of Boston, the data centers of the arid West, the whiskey producers of Kentucky, the aeronautical center of Seattle, the chemicals producers of the Texas shore, the agricultural plains of the Midwest, and the techies of Silicon Valley, just to name a few.

So the question becomes, how do you become a big party that appeals to a lot of voters?

The solution is to put up a big-tent. To form a coalition of different factions that collectively appeal to more people. The trick is to form a coalition wide enough to attract lots of votes, but narrow enough so the factions under your tent don’t fight.

Between 1940 and 2015 the Democrats were pretty good at the first bit. Their coalition combined minorities, unions, Greens, socialists, youth and pro-choice voters. Collectively such groups make an easy majority of the American electorate. But there are many issues that spawn internal conflict. For example, “minorities” includes African-American, Hispanics, gays, and single women – all have radically different concerns, many of which conflict. When the Democrats play the culture war card, their entire coalition tends to implode: the economic concerns of African-Americans differ from the immigration concerns of Hispanics differ from the political concerns of gays differ from the reproductive rights issues of single women.

The Republicans, in contrast, have proven better at the second part of the electoral math: building a cohesive alliance. The Republican coalition comprises evangelical Christians, pro-life voters, national security and fiscal conservatives, business owners, and populists. With the notable exception of the populists, these factions’ core issues do not conflict, and since the populists in many ways define themselves as the anti-Democrats it has proven fairly easy for the rest of the Republican alliance to count upon the populists as a vote bank, without giving them much influence over the Republican electoral platform.

It all went to hell in 2016.

The implosion of the Democratic alliance has been most spectacular. An alliance of white, young, urban liberals and card-carrying socialists who make up (at most) one-fifth of the Democratic voting base threw a social media rebellion. They collectively seized control of the media during the primary process and made a bid to dislodge the Democrats’ mainstream candidate (aka Hillary Clinton) with one of their own (aka Bernie Sanders). As damaging as the fight was for Democratic unity, it was only one piece of the puzzle. African-Americans experienced a sharp breach with the Democratic National Committee over police brutality issues. Jill Stein successfully courted many Green voters to her splinter party.

And of course the Democratic strategic platform has some perennial problems that led to periodic vote collapses. Democrats see themselves as the voice of youth and immigrants. Unfortunately for the Democrats, the most liberal of the youth are too young to vote and as Americans age they become more conservative. Similarly, undocumented immigrants are the most pro-Democrat, but since undocumented immigrants are not citizens they cannot vote. Additionally, second- and third- generation Hispanics are very conservative economically and politically. In essence, the Democrats’ strategy mobilizes non-voters in the current election, who then go on to be the conservative voters of the next election. Perhaps not the best plan.

The Republicans are in a similar state of disarray. There were many things that went wrong for the Republicans in the campaign: campaign finance reform muted the business community, Hillary Clinton was actually somewhat attractive to national security voters, no one running seemed to care about government budget deficits, Trump was kind of a dick, etc.

But it all comes down to the role of the populists. Populists on the right are a mixed bag of folks that in general are very unhappy with some state of affairs. Their issues shift and manifest differently, but ultimately it can be summed up that they believe someone is screwing them and/or the country and they want it to stop. NOW! That typically makes them prickly on issues cherished on the Left – race, changing cultural norms, immigration, government intervention in their economic lives. But it also makes them prickly on issues traditionally owned by the Right – big business, banking, a government that does too little. The rise of social media didn’t simply allow the Bernie Sanders crowd to make an over-sized splash in the political pool, it also enabled the populists of the right to seize control of the Republican primary system and put their man on the ticket.

Trump’s rise to prominence was only possible because of the populist rise, and the populists broadly distrust not just the Left, but other portions of the Republican alliance. The populists’ reliable outrage combined with Trump’s trademark political-wind-detection and volatile personality has largely ejected the fiscal, national security and business factions from the Republican coalition – not to mention the Trump White House. All that is left are the populists and the narrow-issue categories of pro-lifers and Evangelicals.

Trump has figured out that the American political landscape is now so fractured – Democrats, Republicans and centrists all – that this narrow base is sufficient to sustain him in a first-past-the-post system in the short term. While many find Trump’s tweeting and shouting and rambling press conferences shocking and offensive and bewildering, he is not speaking to the “many.” He is speaking to this base, and so long as he keeps speaking to them they will stick with him to Armageddon.

This is obviously not sustainable in the long run, but that doesn’t mean it is not normal. The coalitions that make up the two American parties are not carved in stone. A quick read of American political history indicates this is the fifth time the two parties have broken down. Each time they reform with a different mix of factions. Keep in mind that before these seismic, party-smashing upheavals went down last time in the 1930s and 1940s, the African-Americans were Republicans while business leaders were Democrats. Times change. The parties change with them. But such change hardly happens overnight. Historically speaking, these political interregnums last about a decade. We are barely in year three.

Combine this with other things going on in geopolitical space. The entire basis of America’s Cold War strategy was to induce cooperation among a broad, global alliance of countries to hem in, beat back and in time strangle the life out of the Soviet Union. The Americans did this not simply by providing physical security for their allies, but indirectly subsidizing them with a network of global trade expressly designed to maximize the allies’ advantage to the determent of American economic interests. Faced with such an existential threat, American foreign policy during the Cold War was thoroughly bipartisan. Both parties supported the creation and maintenance of the global Order.

It all worked great and the Americans were able to win the conflict without a war. In the nuclear age that was no small achievement.

But it also means the entirety of what makes the modern world work – global supply chains for shipping, manufactures, finance, agriculture, energy and other raw materials – is an unintended side effect of a security strategy that achieved its goal back in 1989. And since the Americans are the only country capable of maintaining the military and economic structures the global system needs to survive – and because the Americans do not necessarily need those structures themselves – the whole thing is falling into Disorder.

American foreign policy today is mismatched by any possible definition. The global Order has run its course and the Americans have no replacement, leading to strategic drift.

That’s before the breakdown of the bipartisan consensus of American foreign policy.

That’s before the breakdown of both American political parties prevented the Americans from even having a conversation about how they might theoretically move on beyond the Order.

That’s before the rise of the American populists of the Trump coalition accelerated the abandonment of the old Order.

That’s before the factions most interested in the minutiae of foreign affairs – the business and national security conservatives – found themselves both without a party and ejected from being able to influence the White House.

A decade with the Americans out of the picture is ample time for the world to go completely to shit. Much of my work these past few years has been about just that devolution: what a world without America looks like.

But the Americans’ internal political discombobulation will end in time. Their parties will reform. They will have a foreign policy again. In fact, at least one of those parties may already be taking form – raising some possibilities both for the future of American politics and America’s place in the world.

See Part 2: From Order to Disorder… in America and Part 3: Beyond Democrats and Republicans.

Today’s story begins with the once-behemoth that is the American retail firm, Sears. In the last week of September Sears’ stock dipped below $1 a share, reducing the company’s market value below $100 million. Sears may still linger on a bit, but when a big firm falls into penny-stock territory, its outright liquidation is a foregone conclusion.

Sears (originally Sears, Roebuck and Company) is the iconic store of the American modernization experience. As a relative latecomer to the world stage, Americans got in on the industrial revolution significantly after most Western European nations. The vast majority of Americans lived on farms until late in the 19^th century. Urban Americans had access to manufactured goods, but in rural regions most people made their own clothes and tools – or tapped the expertise of craftsmen in local towns. Most of these in-town purchases were managed via general stores where managers, knowing farmers had no alternatives, gouged on pricing, credit terms and selection.

Enter Sears.

Sears sourced manufactured goods from American cities (and abroad) and built a distribution network deep into every nook and cranny of the American territories. Starting with luxury goods in 1886 and rapidly moving into everyday products, by turn-of-the-century Sears’ 500+ page mail order catalogues had become ubiquitous not just in cities, but in farmhouses. It was Walmart and Amazon all in one. Sears completely overhauled what Americans considered to be centuries-old economic norms and pushed cheap, high quality manufactured goods into every single home. Sears quickly became America’s largest firm and largest employer. Quite unwittingly, Sears started the United States on the long path to urbanization, the industrial age, and the destruction of the local retail store.

(Incidentally, when the British Empire brought its manufactures to German lands, the economic dislocation helped start a German civil war. So anytime you think Americans can’t handle transformative economic stress, please try to keep it in perspective.)

Sears’ near-death today is part of a similar economic transformation. Just as Sears was a physical manifestation of the Industrial Revolution, Sears’ end is part of the Digital Revolution. Gathering, processing and distributing information has been the bugaboo of corporate systems as long as there have been firms with a reach further than they could see. The steamship and telegraph obviously helped, but managing anything big first and foremost requires an information system.

The Digital Revolution thus far has reduced the cost of storing information to nearly zero. In the early 1980s storing a gigabyte of data cost roughly $500,000 and I think that’s without accounting for inflation (economists and techies don’t always have the best relationships when it comes to data comparisons). Today storing that same volume of data costs roughly three cents. Information transfer costs follow a similar path (part of why all publicly available email clients are available at no-cost).

With information now being in effect free, the biggest restraint on industrial expansion became… humans. Someone still needs to analyze and distribute the data, and then check up on the results. Humans in the data chain have become the general store managers of our time, gatekeepers to the consumer that escalate prices. Enter algorithms, designed from day1 to remove humans from the data management equation. With the elimination of those pesky human barriers, the Digital Revolution reached out into the real world of sales and distribution and killed the job-destroying monster that preceded it. That’s remade how we design, order, manufacture, transport and warehouse goods. It allows us to instantly transmit architectural plans, military orders, payroll, and cat videos as well as get two-day (or less) deliveries for free.

The problem with algorithms is twofold. First, we have yet to figure out how to program in value judgements and ethics. Second, anything that introduces a hiccup into the information flow – say, fact-checking – increases the cost to something above zero. Just as Sears’ systematically cut out costs, algorithms and the human decision-makers who design and manage them see the human element as a block on progress. Something to be ruthlessly excised.

That has set up Silicon Valley for the mother of all government smack-downs.

Let’s divide the American political spectrum into four rough blocks: the center-left, center-right, populist-right, and populist-left – and then look at how their view of Silicon Valley has radically shifted during the past three years.

America’s center-left originally adored Silicon Valley because they were corporate titans with social agendas that matched the center-left’s general political views – particularly when it came to social policies on issues such as education, gay rights, and multiculturalism. The center-left – epitomized by politicians such as Chuck Schumer and Diane Feinstein – saw Silicon Valley as remaking corporate America from within.

But as information transmission became free, this happy marriage collapsed. Silicon Valley resisted anything that might infringe upon information flow, including flows that harmed issues the center-left valued. For example, Russian attempts to spawn race riots or shift the direction of a presidential campaign, or the ISIS live-streaming of executions, or disinformation campaigns blaming train derailments on Hilary Clinton after she lost the election. Consequently, the center-left hasn’t simply dropped its support for the Valley, it now sees the valley as a threat to democracy itself. The Valley’s chronic misogyny in the age of MeToo doesn’t help the Valley’s case with the center-left either.

America’s center-right – represented in Washington by folks such as Paul Ryan and Mitch McConnel – similarly were wedded to Silicon Valley’s aura. In the Valley the center-right saw a heavenly manifestation of what could be achieved with American know-how and new technology and a spirit of entrepreneurship in a low-regulatory environment.

This happy marriage has also ended. At first it was about politics: Valley CEOs started to get a bit too public with their enthusiasm for left-leaning issues, and charges erupted that some in the Valley were censoring right-leaning political viewpoints on platforms they controlled. But the center-right’s concerns soon deepened to something much more fundamental: much of the Valley committed to never working for the American government – most notably the intelligence community and the Defense Department. But Valley services remained fully available for sale so their work could benefit other government’s programs.

The idea that the political liberalism of Silicon Valley is better served by allying with Xi Jinping’s dissident eradication systems or Vladimir Putin’s systematic repression than the U.S. military requires mental contortions the center-right considers unfathomable. The center-right now doesn’t merely question the Valley’s ideology or even its patriotism, but its sanity. The most pro-business part of the American political spectrum is now firmly anti­-Silicon Valley. Concerns about cybersecurity and the regulations those concerns will likely spawn is only the icing on the cake.

But as much credence as there is to the points of America’s centrist politicians, the concerns of the American populists are actually more valid.

The populist right started out furious with Silicon Valley. Whether the politician is Ted Cruz or Donald Trump, the Main Street verses Wall Street discourse is not only a powerful one, it is broadly accurate. The current manifestation of Silicon Valley is fundamentally designed to remove as much human labor from the economy as possible. It – statistically – is the greatest job-destroying machine in American history.

The populist left is, if anything, even more angry at the Valley. Algorithms and robots don’t pay taxes, but their profitable outputs still accrue. This concentrates the income of what used to benefit human laborers to the operators and designers back in San Jose. Politicians like Bernie Sanders and Elizabeth Warren are fundamentally correct when they assert this is a leading reason for America’s deepening economic inequality.

All four factions are correct. All four factions are edging towards policies that would revoke the Valley’s unlimited license via some sort of constraining regulation.

Tesla is probably in the greatest danger. Technically, Tesla is a car firm, but its valuation and finance-raising systems mirror Silicon Valley rather than Detroit. That gives it access to ridonkulous amounts of cash – something necessary to pioneer fundamentally new technologies – but lands it with the metrics of a conventional automotive firm. Therein lies the rub.

When it comes to evolving ethics in a dynamic regulatory environment, most investors go with what they know. They know Tesla is a badly-run company that has yet to figure out how to move metal around its own factory floor. They know Tesla has almost never met a production goal. They know Tesla cannot break into the mass market (the cheapest available Model3 is at fifty grand, with the subsidy). They know Tesla’s technology and materials science is insufficient to its goals. They know Tesla faces stiff, rising competition from more experienced market players.

They know Tesla is led by a CEO whose social media strategies mirror a broadly-disliked president. They know Tesla’s CEO has bet the firm’s future on a political ideology that provides subsidies that will not last. They know Tesla’s CEO sees no problem cross-subsidizing the firms of family members. And they know Tesla’s CEO has settled with the SEC on charges of stock manipulation which cost the firm that has never made a profit $20 million. There is no shortage of preexisting business norms and regulations that could bring Tesla down. Should the investment community ever believe Washington is coming for Silicon Valley, they will ditch the weak players first. It doesn’t get weaker than Tesla – ergo why the short-selling of Tesla is already so intense.

Facebook comes in second, and not simply for the role they’ve played in Russiagate. The firms’ unfettered and enthusiastic raping and selling of customer data has not simply shown no ethical constraints, but we now know Facebook actively markets its user data to scammers. Not via the web – dark or otherwise – but by sending sales reps to scammers’ convention and closing deals in person. The public trust has been lost. The question in my mind isn’t will Facebook be eclipsed and displaced by a rival, but will there be prison time for some of its executives?

Twitter may have a brighter future. Unlike Facebook, TeamTwitter admitted the role it played in Russiagate fairly early on and has taken steps to roll back the damage. Such public admissions combined with a sense of genuine regret – or at least a reasonable digital facsimile of regret – stand in stark contrast to Facebook whose grudging, plodding steps have the feel of a six-year-old who thinks moving a single pair of underwear to the hamper has cleaned up his room and thus should be allowed to go back outside to play. Are Twitter’s actions and contrition deep and fast enough? That’s a political question, but I give points for effort.

One likely path forward in regulation is the modification of Section 230 of the Communications Decency Act. To make a very long and technical legal explanation short, Section 230 stipulates information technology platforms are not publishers, and so are not responsible for any content they pass along. Without 230 we’d not have an Internet economy since all our infotech platforms would be liable for the accuracy of everything in every webpage, blog post, pop-up ad and email.

To date, there have only been three carveouts: copyright infringement, child pornography and sex trafficking. Silicon Valley fought those carveouts tooth and nail, asserting first-amendment rights issues, but mostly being concerned about costs. The hilarity of deliberate inaccuracies currently punctuating American political information systems – Russiagate being the prime example – are pushing many political factions to consider a fourth carveout for foreign election interference. And while with some very skilled coding an algorithm can be taught to look for prostitutes, I’m guessing that determining whether an ad that slams or celebrates Hillary Clinton or Donald Trump is accurate will require the sort of judgement call only a human can make. And humans don’t work for free.

Amazon probably faces less pressure, and probably has more time. Yes, AmazonPrime and related subsidiaries are a very visible part and parcel of the whole job-destroying ethos that motivates Silicon Valley. But three issues pop up:

First, the damage to American retail is largely done. A stiff roll-back at this point would probably be counterproductive. And this is hardly the first American retail revolution: general stores to Sears to Walmart to Amazon. At each step the process is more capital intensive but less labor intensive with slimmer margins. Where do you draw the line? Do you draw a line? (A change to how Amazon is taxed, however, is an excellent idea).

Second, Amazon would operate in the red if not for a single unit that has nothing to do with getting a hairdryer to you: Amazon Web Services. AWS is the data management portion of Amazon which is wrapped up in nearly every dataflow for every business in the country. It is well-run, faces competition, and has next to nothing to do with the retail arm. Splitting the two so that the wildly-profitable AWS cannot cross-subsidize the barely profitable (and until recently, unprofitable) Amazon Retail makes a wildly great deal of sense for all players. It would certainly preserve the value-added portion of Amazon that generates lots of new sources of economic activity rather than gutting old sources.

Third, Amazon is everywhere. I don’t say this to imply U.S. government entities cannot bring it down, but instead that Amazon’s retail activities are in every American county, complete with dozens of distribution centers and tax relationships. Should the regulatory floodgates open the result will be a thick, self-ambulatory tangle of regulations at the city, country, state and national level. It will be a rancid mess that Amazon leadership will be able to exploit to buy time and – most importantly – to shape in a way to mitigate end-impacts upon the firm.

Of the big boy digital firms, that leaves Google, whose recent actions put it into a category all its own:

Recent defections from Google’s development teams have exposed the firm’s work on a project they call Dragonfly, a search engine product for the Chinese market. Allegedly, Dragonfly tags certain search terms the Chinese government chooses that it thinks might indicate dissident behavior such as “how do I get a Canadian visa?” or “what happened in Tiananmen Square in 1989?” or “what is Falun Gong?” It then packages the request with other search data on the person in question, complete with IP and physical addresses and phone numbers and forwards the information on to the Chinese state. It’s a degree of privacy violation and government monitoring of civilians that would have disgusted Orwell.

If – and I emphasize the word “if” because I do not have a Dragonfly-style program covering Google HQ – Dragonfly is real, Google is in serious trouble. Collaborating with a dictatorship that is sliding into a cult of personality so complete Hitler would have salivated over the program violates every ethical and political norm of every political faction in the United States. Anything that puts Elizabeth Warren and Ted Cruz on the same side during Senate hearings should get everyone’s attention. And Google’s executives’ refusals to confirm or deny Dragonfly’s existence while under oath before Congress tends to shift my thinking that this is less bureaucratic bungling and more greed so all-consuming it constitutes treasonous behavior. It is exactly the sort of massive corporate miscalculation that has triggered catastrophic government crackdowns on major American firms in the past. The breakups of Standard Oil and Bell come to mind.

And it would happen under President Donald Trump. Make no mistake. Trump is no longer part of the party of the businessperson. Things in America have changed in politics too…