Our So-Called Foreign Policy: More Reasons to Doubt Those “China Century” Predictions

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Predictions that China will soon overtake the United States as the world’s largest economy are now commonplace (see, e.g. here) – and understandably so given how much faster than America the People’s Republic has been growing in recent decades. As a result, I was startled six weeks ago when I came across data punching lots of holes in this forecast, and called attention to them in this post.

Still, as I explained, the implications were mainly economic – indicating that Americans and their businesses had much less to fear than widely supposed from a substantial U.S. decoupling from China because the Chinese people’s overall purchasing power would be hard-pressed to keep growing nearly as fast as generally assumed. That was because China’s gross domestic product (GDP) per capita – the amount of wealth it was creating for each of its huge, one billion-plus population – was growing at distinctly unimpressive levels. In fact, it was 

In terms of overall national power, however, and China’s consequent ability to threaten American national security, I noted that plenty of reasons for worry remained – because the narrowing of the U.S.-China gap in terms of the actual sizes of their economies meant that China’s ability to pour resources into its military and its security-related tech industries continued to threaten to surpass America’s.

But this week, new figures – on China’s population – have called these concerns into question, too, at least over the long run.

The data – China’s own new census – revealed that the People’s Republic’s population growth has slowed to a crawl. The numbers bested some forecasts – which anticipated Beijing reporting an actual population decline. But because this near-population stagnation has resulted largely from trends unlikely to be reversed any time soon (mainly the regime’s draconian multi-decade population control policies and the major rise in living standards that China unquestionably has achieved), they also add to the evidence that the People’s Republic is heading into a period of long-term population shrinkage. In turn, this fall-off – coupled with the weak China per capita GDP growth mentioned above – indicates that its world’s biggest economy status could be surprisingly short-lived.

The math underlying this analysis is pretty simple – and since the time frames are long, the specific results should by no means be taken literally. But the story they tell differs so dramatically from the current conventional wisdom, and because one of the key assumptions looks conservative, they deserve to be taken seriously.

Let’s begin with those per capita GDP figures. According to the World Bank, in 2019, it was $65,298 for the United States, and $10,217 for China. And let’s look at recent population predictions that have attracted considerable attention. They come from the prominent medical journal The Lancet, and peg the U.S. population growing by some three percent between 2017 and 2100, and hitting 335.81 million, but China’s population falling during the same period to just 732.89 million – a nosedive of nearly 50 percent.

That’s stunning enough by itself, but take a look at what these numbers would do to the two countries’ GDPs. Let’s assume that America’s GDP per capita in 2100 stays at its 2019 level of $65,298. Multiply that by the 335.81 million U.S. population, and you get an economy whose total output is $21.93 trillion (before accounting for inflation). If China’s GDP per capita stays the same, this calculation produces a GDP for the People’s Republic of just $7.48 trillion before inflation That is, its economy would be just a third the size of America’s. Moreover, this means that the economy gap will have doubled, since China’s $14.280 trillion GDP as of 2019 was two-thirds the size of America’s $21.433 trillion (again, according to the World Bank).

Granted any number of non-economic and economic developments over the next eight decades could make this scenario completely meaningless. But leaving out those utter unknowables, it’s significsnt that one plausible knowable suggests that the U.S.-China economy gap may become even bigger in 2100. And that’s the fact that the data I cited in March (from the International Monetary Fund) show that since 1980, that U.S.-China per capita GDP gap has widened substantially. If that trend continues (as opposed to per capita GDP differences staying exactly where they are now, as my scenario assumes), then by the turn of the next century, the United States would stand even further ahead of China. In principle, the military potential gap would widen strongly as well.

And just as crucial to keep in mind: If China’s population plummets by nearly half by 2100, big time decline will have to have begun long before, which translates into a relatively brief spell of Chinese superiority in terms of that military potential. Further, this Chinese edge may be even more fleeting than these dry numbers indicate, since the United States by all accounts maintains Number One in that regard now, and military potential doesn’t turn into military strength overnight.

Nonetheless, there’s still a worrisome paradox to keep in mind. Precisely because China’s long-term prospects aren’t terrific, some leading strategists (see, e.g., here and here) argue that Beijing will be sorely tempted to capitalize on its relative gains to date and momentum to achieve high priority goals in the short-term – like taking over Taiwan.

I personally have no idea. And I’m the last person to preach complacency in China policy. In fact, I’m glad to see that the American political system has begun wakening to the dangers posed by China’s economic, technological, and military advances. But excessive pessimism has never led to any victories in any kind of struggle or competition, either, and hopefully The Lancet data will reinforce U.S. leaders’ confidence that if success in handling China isn’t guaranteed, it’s entirely achievable.

(What’s Left of) Our Economy: The Big Missing Reason for the Big Jobs Miss

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As reported widely, the big miss marking last Friday’s official monthly U.S. jobs report (for April) ignited a heated debate among politicians, economists, and many others over why the U.S. economy created so much less new employment that month (266,000 net new positions overall) than generally estimated (in the million neighborhood). At the heart of this debate: Do the many positions employers consistently say they’re struggling to fill amid a continuingly high jobless rate mean that the enhanced unemployment benefits offered throughout the pandemic are discouraging Americans from returning to the workplace?

What I’m not seeing, however, is anyone asking whether this is the right debate. It’s increasingly obvious to me that it’s not.

It’s easy to see why those who answer yes are viewing the issue far too narrowly. Surely some unemployed workers are content to stay at home because they’re currently making more from jobless payments than they were making from their previous employer. That should be clear from the number of businesses raising wages to fill the shortages they’re experiencing. (I’m not saying that these raises are or aren’t long overdue or otherwise deserved; simply that the higher pay and other incentives employers are offering can only be interpreted as companies recognizing that the enhanced benefits have, to a degree, increased the relative attraction of remaining on the employment sidelines versus reentering the job market.)

At the same time, is it reasonable to ignore all the other major reasons for this big labor market anomaly? Like ongoing fears of catching the CCP Virus at the workplace, or the need to stay home with school-age children forced to learn remotely? And don’t forget all the uncertainties created by the sudden stop-start nature of the virus-era lockdowns on the economy.

Yes, a rapid U.S. reopening is taking place now. But all over the world, infection surges are producing new economic curbs. Can you blame workers for wondering whether shortly after they leave the unemployment and benefits rolls, their new workplace will need to close, or cut back on its operations, leaving them in the lurch while they either seek other jobs or file for new benefits?

It’s easy to see that all of these developments and circumstances and uncertainties and outright fears are keeping U.S. labor seemingly scarce. You can also add to the list the likelihood of growing skills mismatches in the American economy – that is, the numbers of jobs requiring more or different skills outgrowing the number of workers possessing these skills, and the numbers of companies replacing low-skill jobs with automation of some kind. Not that the resulting mismatches inevitably will be with the nation forever, or even long term. But they’re unmistakably present now.

So maybe the problem is simply too complicated for government to address? Or we’ll simply need to wait until a stable post-CCP Virus normality returns and labor markets start clearing as usual? It seems reasonable that the purely skills-based mismatches will defy ready solutions – unless America’s education system suddenly gets a lot better at preparing students for the economy they’ll be facing, and businesses get more serious about training and retraining workers, and turn  away from needlessly insisting on lofty credentials for jobs that don’t require anything close.

It’s also possible – though that’s the most I’m willing to say – that spreading automation will eventually help businesses become so much more productive that they’ll be able to turn out more products and services, and that this very success will generate all sorts of new jobs whose appearance can’t be predicted with any precision now. (My reservations stem from concerns that the newest forms of automation, especially artificial intelligence and super-sophisticated robotics, are qualitatively more capable of displacing many more kinds of labor than previous technological breakthroughs.)

As long as the federal government and the states remain willing to provide generous unemployment benefits (and other supports), the resulting situation would at least keep most of the jobless adequately fed, clothed, and housed. That’s a big “if,” though, for reasons economic (e.g., maybe Washington can’t keep borrowing and spending massively much longer?) and social and cultural (e.g., maybe ever longer term unemployment will start to produce more in the way of pathological behavior like drug abuse, violent crime, and worse classroom performance from students from families on the dole?).

Consequently, the more progress can be made returning the unemployed to work, the better, and however difficult the challenge of eliminating the purely or largely skills-based mismatches, Americans and their leaders shouldn’t overlook where policy can make a big difference. And the above analysis indicates that one big difference can be made by the U.S. government, and especially its public health authorities.

Specifically, they need finally to stop their CCP Virus alarmism and energetically spread the word that due to a combination of high and mounting degrees of various kinds of immunity, mass vaccinations, and the highly varying nature of the virus’ infectiousness and lethality, normality is unquestionably returning. Further, and crucially, although certain groups of Americans – like the elderly, and those with certain underlying medical conditions – are still too vulnerable and must be protected with special measures, the Biden administration and its health experts should acknowledge that nearly all others can safely return to normal activities because the already low odds of even getting the disease, much less suffering significantly from it, have now plunged to rock bottom.

In other words, Washington should announce that work places are safe to return to, bricks and mortars businesses are now safe to patronize, in-person schooling is just fine for both students and teachers and administrative staff alike, (thus solving the childcare dilemma), and that lockdowns have become a thing of the past.

Instead, of course, you’ve got a Centers for Disease Control and Prevention (CDC) that seems stuck in hyper- (and increasingly unscientific) caution territory, not to mention decimating its own message about vaccines’ effectivness by admitting almost no behavior payoff whatever; and a President and leading figures of his own party continuing to wear facemasks even in settings that “the science” had made crystal clear are as safe as they can be for the fully vaccinated.

To top if off, the President’s chief medical adviser, Dr. Anthony S. Fauci, has just taken pains to speculate that Americans may start wearing facemasks to guard against all sorts of respiratory diseases on a seasonal basis. Given this administration’s record so far, it doesn’t seem all that far-fetched to worry that new CDC guidelines along these lines, plus recommendations to resume some forms of social distancing, and even new business curbs, could quickly follow if this kind of Chicken Little-ism isn’t stopped. For now, though, no wonder so many Americans are still scared stiff of the virus.

It’s becoming more and more common to compare President Biden and his ambitious plans for “Building the U.S. Economy Back Better” with Franklin D. Roosevelt and his New Deal programs.  (See, e.g., here and here.) But it’s hard to imagine Mr. Biden succeeding to any lasting degree if his CCP Virus policy doesn’t start reflecting one of FDR’s most and most deservedly famous insights: “[T]he only thing we have to fear is fear itself.”

Following Up: Gun Sense Still Lacking in the Crime/Violence/African Americans Debate

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Everyone (like me) worried about the metastasizing influence of race-panderers can give thanks that so many are so completely, and indeed stupefyingly, incompetent. Otherwise, merchants of division like Northwestern University journalism faculty member Arionne Nettles and her enablers at The New York Times might be overwhelming favorites to tear the country apart for good. All the same, the more they push claims (I’m getting fed up with the pseudo-sophisticated term “narrative”) that are not only flagrantly phony but transparently contradictory, the more they obscure genuine and important failures and inequities that need fixing.

Nettles and The Times editors who considered her piece on African American victims of “gun violence” worthy of publication in this form took only a paragraph and a half to blow up their own case that big cities across the United States have seen a recent “rise in gun violence – perpetrated both by civilians and police officers” that’s taken an especially heavy toll on black children and teenagers.

They’re of course right about these tragedies and their scale. But the obvious insinuation that “civilians and police officers” share even remotely comparable blame is demolished by the observation that

In one especially alarming spree last summer, Chicago police officers shot five people in just two months. And shootings and murders in the city were up more than 50 percent overall in 2020 compared with 2019; 875 people died from gun violence – a record high. A majority of the city’s victims (78 percent) were Black.”

Let’s assume that every one of the five Chicago police shootings mentioned here was totally unjustified. Let’s also state categorically that unjustified shootings by police are way more disturbing than other types of shootings because law enforcement must be held to a much higher standard. Are Nettles and The Times still seriously contending that the two categories of violence are on anything like a par, even as threats to African American lives?

More important, these and similar passages – along with Nettles’ interviews with African American mothers who have lost children to such violence – add powerfully to the evidence that, as I’ve argued before, the overwhelming problem here isn’t “gun violence” at all. Instead, it’s a culture of violence and broader irresponsibility that’s gained a strong foothold in too many Black neighborhoods, and whose importance keeps being ignored by supposed champions of American minorities.

A handful of data points from recent (2018) national (FBI) law enforcement statistics clinch this case. First, of the 328.24 million total U.S. population estimated by the Census Bureau that year, 76.3 percent were white and 13.4 percent African American. That’s a ratio of nearly six-to-one. Yet that year, reported Black homicide offenders in one-on-one incidents actually slightly outnumbered their white counterparts in absolute terms (3,177 to 3,011).

Almost as stunning: Of the 2,925 Black homicide victims that year, nearly 89 percent were killed by other Blacks. Nearly 81 percent of the 3,315 white homicide victims in 2018 were killed by whites, so it’s clear that American killers principally go after members of their own race. But relatively speaking these figures – combined with Nettles’ accurate observation that Blacks are much likelier to die in firearms incidents than Whites – reveal not a gun violence crisis afflicting so many African American communities. They reveal an African American violence problem.

No one can reasonably doubt that racism’s legacy and the resulting lack of economic opportunity and poverty play a big underlying role. As I (and many others) have written, the racial wealth gap alone is yawning, owes much to discrimination, and generates affects that have lasted generations. It should be just as hard reasonably to doubt, however, that something other than poverty is responsible.

Look at Chicago. In 2019, according to the U.S. Census Bureau, its Black poverty rate was 26.3 percent – that’s much higher than the overall poverty rate for the city (16.4 percent), or the national African American poverty rate (18.8 percent). So even though there seems to be a Chicago-specific problem on top of a poverty problem, even in Chicago nearly three fourths of the Black population lives above the poverty line. That hardly means affluence, but it’s hardly destitution, either.

Moreover, the Chicago Black poverty rate is down considerably from 2010’s 33.6 percent (although the city’s overall poverty rate fell faster during this period). Yet the city’s numbers of homicides and its homicide rate have roughly doubled during the subsequent nine data years, and in Chicago, the vast majority of the killers (as with the victims) are African American.

As suggested above, moreover, Nettles’ ham-handed treatment of the “gun violence” and homicide issue is all the more inexcusable because the author’s interview subjects do a decent job of reinforcing the case that there does exist a serious race-based policing problem in this country. Not that the African American women with which the author spoke are entirely free of denialism about what’s plaguing their neighborhoods. There’s Shanice Steenholdt, who seems to believe that Australia-like gun control laws would turn her city of Houston into a replica of the small Australian town in which she lived for a time where she “didn’t feel like [she] had to worry about gun violence.” There’s Chicago’s Diane Lasiker, w appears to think that the big problem in her city is that it seems “to want to keep the Police Department separate from the community.” Her fellow Chicagoan Chez Smith and Flint, Michigan’s Marcia McQueen put much stock in “offering conflict resolution techniques” to their communities’ youth.

But the story told by Atlanta’s Cora Miller of her husband’s arrest (in Minnesota) reinforces the case that it’s much too common for completely innocent African Americans to be mistreated by police. As I’d written last August, I’ve heard first-hand accounts of such episodes from Black friends who have experienced it first hand – on top of South Carolina Republican U.S. Senator Tim Scott’s experiences with Capitol police. If these individuals – who are all highly successful by any reasonable definition – can be harassed for no good reason, imagine how often everyday folks just trying to get by face these indignities and indeed dangers.

So let’s by all means get policing up to snuff. Let’s by all means identify the most effective ways in which government and business can help foster opportunity in needy Black (and other) communities. But let’s also never forget a voice who has passionately argued that

“no matter how much money we invest in our communities, or how many 10-point plans we propose or how many government programs we launch — none of it will make a difference, at least not enough of a difference, if we don’t seize more responsibility in our own lives.”

In case you’re wondering, his name is Barack Obama.

(What’s Left of) Our Economy: Strong Crosswinds Roil the New U.S. Manufacturing Jobs Figures

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It’s tough to imagine a U.S. official monthly jobs report giving off so many conflicting signals about the health of domestic manufacturing and its outlook than the one that came out this morning (for April).

On the one hand, the sector’s 18,000 jobs loss was its worst monthly performance since the identical January setback. On the other hand, the problem was heavily concentrated in the automotive sector, which has been forced to cut back production due to the ongoing global semiconductor shortage. On the other, other hand (!), this shortage is unlikely to ease for many months. On still another hand, the revisions were strong. And some key manufacturing industries continued a recent pattern of solid results. At the same time, even removing the automotive results would still leave the rest of domestic manufacturing’s April employment performance decidedly weak.

I could go on in this vein – and will below.

The decisive automotive/semiconductor effect on the April manufacturing figures becomes clear enough upon realizing that this sector’s 27,000 sequential employment loss was considerably greater than manufacturing’s total on-month job decline. Nonetheless, even had automotive held its employment line, the consequent 9,000 manufacturing job increase would have been unimpressive at very best.

And yet there are those revisions. March’s initially reported 53,000 monthly manufacturing payroll increases – the best such figure since last September’s 55,000 – are now pegged at 54,000. Even better, February’s initially downgraded (from 21,000 to 18,000) monthly employment increase has now been revised all the way up to 35,000.

As a result, domestic industry has now regained 63.83 percent (or 870,000) of the 1.363 million jobs it shed during the height of the CCP Virus pandemic in spring, 2020. It’s still behind the private sector overall (which has recovered 66.88 percent of its pandemic peak employment loss), but still ahead of the overall economy’s (called the non-farm sector by the Labor Department, which issues the monthly jobs reports) 63.26 percent.

The only major April manufacturing jobs loser other than automotive was the small wood products sector (7,200). The big fabricated metals products industry saw employment fall by 2,900 on month in April, but the drop followed a large March gain that’s been downwardly revised but still stands at a strong 10,400.

The machinery numbers were downright encouraging, and that matters because as I keep reminding, this subsector’s products are used not only throughout the rest of domestic manufacturing, but in other important parts of the economy like construction and agriculture. Its April employment boost of 3,700 followed March job creation that was upgraded strongly to 5,400.

In the big miscellaneous durable goods sector, a catchall category that includes everything from surgical equipment and supplies (like personal healthcare protection equipment – PPE – more on which later) to jewelry to gaskets and fasteners to musical instruments, payrolls jumped by 12,600 – their best monthly performance since its 15,300 advance last July.

And two other significant manufacturing employers –miscellaneous non-durable goods and the big chemicals sectors (whose output is also used all over the economy) – each generated enjoyed healthy payrolls increases of 4,300 in April.

Even the industries closely related to the fight against the CCP Virus, whose employment performance since the pandemic’s arrival generally have disappointed, showed some signs of job-creation life in April.

The overall pharmaceutical industry added 1,500 jobs on month in March (the latest available figures) and Februay’s improvement remains a strong 1,700. Since the last pre-pandemic month (February, 2020), this sector’s payrolls have grown by 3.11 percent.

Hiring slowed in the pharmaceuticals subsector containing vaccines – from 1,300 sequentially in February (unchanged from the first estimate) to 500 in March (also the latest available figures). But these companies’ employment is still 6.77 percent higher than in that last pre-pandemic month of February, 2020.

The employment signals were mixed in the manufacturing category containing PPE goods like facemasks, gloves, and medical gowns. Monthly job creation in February was downgraded from zero to a loss of 100, but March’s results (also the most recent) came in at 900, and this sector now employs 8.75 percent more workers than in February, 2020.

In an aerospace industry troubled for years by Boeing’s safety woes, the recent jobs figures are literally all over the place. The latest (March) results show that payrolls for aircraft fell month-to-month in March by 1,800 – surely reflecting the continuing virus-generated slump in air travel. But February’s upward revisions were nothing less than stunning – skyrocketing from a jump of 1,000 to one of 11,700. Fluctuations – though more modest – were also evident in aircraft engines and parts, and non-engine aircraft parts.

Yet as confusing as the new manufacturing jobs figures have been, the future seems just as cloudy. Optimism remains justified by developments like the enormous amounts of stimulus still pouring into the U.S. economy, by the apparent certainty that a major injection of infratructure spending is (finally) on the way, and by the continuing reopening of the economy spurred by vaccinations and less consumer caution.

Even so, the semiconductor shortage is not only here to stay for some time, but has affected many other industries other than automotive. The rate of U.S. vaccinations is slowing and the virus – including the new variants – appears likely to stage something of a comeback when the weather cools again in the fall. Air travel may never recover to pre-virus levels, which will harm not only the aerospace industry per se, but its vast domestic supply chain. And higher taxes and many more regulations could well hit U.S.-based manufacturers – at least until the Congressional elections of 2022.

On balance, I’d still bet on a bright future for domestic industry – mainly because all the sentiment surveys show that manufacturers themselves are full of confidence, and because President Biden has kept in place all the Trump China and metals tariffs that have priced much foreign competition out of the U.S. market. But I’m far from willing to bet the ranch.

Our So-Called Foreign Policy: The Unanswerable Question Driving Biden’s China Policy

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Two of the first maxims of strategy in world affairs (and probably in some other realms, too) are that (a) intentions and capabilities are fundamentally different and that (b) the former are much harder to gauge than the latter. These rules of the road in turn lead promptly to a key lesson: The greater the extent to which plans are based on intentions, the likelier they are to produce failure.  

The difference between measuring intentions and capabilities and the resulting policy implications matters crucially these days. For the evidence keeps mounting that the Biden administration is relying more on gauging China’s intentions in formulating its approach to the People’s Republic (PRC) and less on the much sounder foundations of assessing Beijing’s wherewithal and, most important, how this capacity’s dangers to specific U.S. interests are evolving – including over Taiwan, the newest and scariest bilateral flashpoint.  . 

The reason for focusing on capabilities is no great mystery. Figuring out how strong or weak a country’s military and economy are entails dealing with matters that are readily measurable to begin with. Although dictatorships like China’s in particular often go to great lengths to present misleading economic data, and misinformation about the state of their armed forces, the PRC’s competitiveness can be judged pretty dependably by tracking its interactions with other economies – e.g., its export performance, its attractiveness as a magnet for foreign investment. And U.S. intelligence is good enough to determine roughly how many soldiers and weapons, and the quality of the latter, that China could bring to bear in various contingencies.

Even more obvious – and important – is the case for deciding on U.S. interests. For whatever a potential adversary’s overall capabilities, why should Americans care about those that can’t plausibly affect whatever goals and missions that the United States decides it values?

Identifying what China’s leaders want is a qualitatively different and more formidable challenge. Good intelligence can provide some valuable information, as can face-to-face dealings with Beijing’s representatives. But ultimately, measuring intentions is an exercise in mind-reading, and it’s rendered all the tougher because of the secretiveness of China’s political system and the cultural gaps dividing East Asian countries like China’s and their western counterparts like the United States.

Which is exactly why the Biden administration’s strategy toward the PRC is so troubling. A heavy emphasis on intentions is clear from at least two of its features.

The first is its obsession with playing word games to define how it wants the relationship with China to develop, which in turn faithfully reflects the globalist position that achieving various types of relationships with allies, adversaries, and countries in between should be a high foreign policy priority. As I’ve written previously, that’s a great way to substitute form for substance, and to rationalize failure to achieve or preserve particular valued objectives in the here and now for the sake of payoffs stemming from a sense of mutual obligation that could be entirely unilateral and imaginary, over a time frame that tends to keep lengthening. Think of it this way – it’s easy to avoid rocking the boat if you don’t care who owns or controls the vessel.

The Biden administration, however, has taken relationship fetishizing to a whole new level. How else could one reasonably characterize all the time and effort it’s devoted to terming U.S. dealings with Beijing as a “competition,” or an “extreme competition,” or “a steep competition,” or a “stiff competition” (see here for the last two) or a relationship that will be, in Secretary of State Antony J. Blinken’s words, “competitive when it should be, collaborative when it can be, adversarial when it must be.”

Why do the Biden-ites think anyone cares or should care? In particular, why do they think China cares or should care? Do they have any evidence of much thinking in Beijing along these lines? Or that any Chinese definition of a desirable relationship relationship would be remotely acceptable to the United States?

If anything, the President’s declaration that Chinese dictator Xi Jinping “is deadly earnest on [China] becoming the most significant, consequential nation in the world. He and others, autocrats, think that democracy can’t compete in the 21st century” can only mean he thinks that win-win ties are the last things on Beijing’s mind. Unless Mr. Biden believes that Xi is just interested in purely verbal bragging rights?

The second feature of Biden foreign policy that reveals a potentially dangerous emphasis on intentions is the refusal of the President and his top aides to define U.S. interests with any specificity – or even to speak concretely about the very idea of purely U.S. interests.

Their rhetoric is peppered with phrases like Mr. Biden’s claim that during his first phone call with Xi, “I made absolutely clear that I will defend American interests across the board.” But you’ll search in vain for meaningful elaborations beyond “I also told President Xi that we’ll maintain a strong military presence in the Indo-Pacific, just as we do with NATO in Europe — not to start a conflict, but to prevent one” – which of course refers to American commitments that have been in place for decades, not to anything new, much less that reflects concerns heightened for any reason.

What you will find – ad nauseam – are statements like Blinken’s declaration that the United States is “committed to leading with diplomacy to advance the interests of the United States and to strengthen the rules-based international order. “That system is not an abstraction. It helps countries resolve differences peacefully, coordinate multilateral efforts effectively, and participate in global commerce with the assurance that everyone is following the same rules. The alternative to a rules-based order is a world in which might makes right and winners take all, and that would be a far more violent and unstable world for all of us.”

Blinken of course might be entirely right on the merits. But it was more than a little interesting that the Chinese response to his remarks – which took place at that confrontational bilateral March meeting in Anchorage, Alaska – emphasized that the rules-based order is nothing more than a system selfishly “advocated by a small number of countries”; that “The United States itself does not represent international public opinion, and neither does the Western world;” and no doubt most important, “the United States does not have the qualification to say that it wants to speak to China from a position of strength.”

In other words, as the Chinese see it, whatever Washington’s view of “right,” what matters is that it lacks the might to create or maintain it over China’s objections – which evidently are legion.

None of this is to say that specifying concrete interests is a guarantee of foreign policy success. But how else can that goal be achieved without setting out objectives considered vital to the nation’s security and prosperity, communicating them abroad in no uncertain terms, and ensuring that enough power is available to prevail when they’re threatened whether Americans guess correctly about potential adversaries’ intentions or not?

And these questions have moved to the forefront lately because Sino-American tensions are rising steadily over Taiwan – the world’s new leader in semiconductor manufacturing technology, which near neighbor China views as a renegade province. Worries are understandably rising that Washington and Beijing might stumble into a conflict that neither truly seeks. If the Biden administration could straighten out its own thinking about Taiwan and other U.S. interests in the Indo-Pacific region, the odds of such an unnecessary catastrophe could at least be considerably reduced.    

 

Glad I Didn’t Say That! Biden Keeps Following The Trump on China Trade

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China is the big winner of Trump’s ‘phase-one’ trade deal with Beijing. True to form, [then President Donald] Trump is getting precious little in return for the significant pain and uncertainty he has imposed on our economy, farmers, and workers.”

Candidate Joe Biden, January 15, 2020

 

President Joe Biden’s chief trade negotiator pledged to build off the deal with China reached under Donald Trump and said that….[the] Biden administration respects the continuity of the so-called phase-one agreement….”

Bloomberg.com, May 5, 2021

 

(Sources: “Biden Slams Trump-China Trade Deal as Lacking on Key Disputes,” by Jennifer Epstein, Bloomberg.com, January 15, 2020, Joe Biden Blasts Trump Phase One U.S.-China Trade Deal – Bloomberg & “Biden Trade Chief Pledges to Build Off Trump’s China Agreement, by Eric Martin, Ibid., May 5, 2021, https://www.bloomberg.com/news/articles/2021-05-05/biden-trade-chief-pledges-to-build-off-trump-s-china-agreement?srnd=economics-vp)

(What’s Left of) Our Economy: The Virus Keeps Trade Figures, Like the Whole U.S. Economy, on a Roller Coaster

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Since I keep writing that U.S. trade figures – as well as other economic data – have been and continue to be thoroughly distorted by the sudden stop-start nature of the CCP Virus-era economy, it seems time to replace my usual monthly format with one that shows just how out-of-the-ordinary trade flows have become.

The best evidence? The latest (March) monthly changes in imports reported today by the Census Bureau. Although the understandable headlines for the press coverage of this release focused on the record shortfalls in the overall trade gap ($74.45 billion) and in the goods shortfall ($91.56 billion), to me, the real story for March concerns the big, practically across-the-board jumps in American purchases from abroad – which of course also owe in part to the long-awaited easing of big (virus-related) backups in the West Coast ports through which so many goods enter the nation from Asia. (This congestion has also hampered American exports.)

So on to the March import figures. For combined goods and services, these purchases rose by 6.34 percent sequentially, to $274.45 billion. The absolute total is an all-time record, and the monthly increase the biggest since July’s 10.88 percent, when the economy was starting its first reopening phase.

Goods imports alone grew by 6.98 percent on-month in March, to $234.44 billion. That advance was also the biggest since July, when they surged by 12.31 percent. And the actual March level was the highest on record, too.

Interestingly, the import flows affected most by tariffs and other U.S. trade policy decisions – in goods other than oil – climbed a bit more slowly in March than overall goods imports: by 6.48 percent, to an all-time best (worst?) $217.69 billion. As with that non-oil goods category, the sequential rise was the fastest since July (12.18 percent), but these inflows rose only half as much.

The CCP Virus effect seems to have been especially pronounced in manufacturing. March imports of industrial goods hit a record $207.59 billion, and soared by 22.98 percent sequentially. That increase was the biggest since March, 2015 – when a 23.44 percent rise largely represented a February slump caused by harsh winter weather. By contrast, manufactures imports grew strongly last July, too – during the first economy-wide virus rebound – but by just 12.08 percent.

Within manufacturing, advanced technology imports in March, at $44.54 billion, fell short of their all-time high ($47.25 billion in October, 2018). But the sequential increase of 24.06 percent was the greatest since that weather afffected March, 2015 (24.87 percent).

March goods imports from China expanded a healthy 18.23 percent sequentially in March. But the $40.23 billion monthly total was well below record levels, too. This increase was also way less than the 59.02 percent rocket ride these purchases took in April, 2020, but that occurred when China’s economy was rebounding from its own CCP Virus lockdown. So the March figure could indicate that the Trump tariffs have started to fail.

At the same time, March goods imports from Asia-Pacific countries as a whole (a U.S. government grouping that includes China) ballooned by 25.11 percent on month – considerably faster than China’s increase, and their biggest monthly rise since that weather-affected March, 2015 (32.43 percent). That’s evidence that the Trump tariffs have indeed kept disadvantaging China.

As a result, even if the March trade figures simply extend an already lengthy string of CCP Virus-era official U.S. economic data, and say little about the economy’s fundamentals or even the effectiveness of U.S. tariffs, it still seems valuable to me to be reminded every now and then just how out-there these statistics remain.

Im-Politic: How Social Media Could Really Fight Misinformation

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During the last three weeks alone, major national news organizations have issued important corrections admitting that they’ve gotten two front-page stories completely wrong, and another has been caught red-handed in a comparably important misstep.

Contrary to two New York Times reports, the Biden administration has confirmed that there was never any credible intelligence indicating that Russia was paying Taliban-linked militants in Afghanistan bounties for killing American soldiers – and therefore no good reason for former President Trump to raise the issue with Russian officials. Contrary to claims in the Times, the Washington Post, and NBC News, the FBI never warned former New York City Mayor and Trump personal lawyer Rudy Giuliani that he was being “targeted” (i.e., “used”) in a Russian misinformation campaign. And contrary to Fox News, the Biden administration has no plans to require Americans to reduce their consumption of red meat sharply.

And it’s not like these are the only badly dropped balls by such news organizations in recent years – or even close. Moreover, since there are no evident penalties for such incompetence or bias (or both), there’s no reason to suppose that the media’s performance will impove significantly. Indeed, it’s clear that the most troubling kinds of “Who guards the guardians?” questions are being raised by these incidents, since it’s the news organizations themselves who – sensibly – are supposed to serve as our democracy’s watchdogs over its other main instit utions. Unless you want any government agencies, at any level, stepping in to play this role?

But perhaps not all hope is lost – at least in principle. For there are powerful actors in America who have tried to stop the spread of misinformation: Facebook and Twitter. As widely known, they’ve taken it on themselves to identify cases of misinformation, label them for users, and on a regular basis punish the perps by limiting their access to their enormous and influential platforms. Why can’t they apply the same policies and practices to journalists and even entire news organizations that admit major mistakes, or whose mistakes have been admitted by politicians or others who have made or benefited from consequent allegations?

Any number of criticisms can be made about how these social media giants currently go about fighting misinformation, ranging from their questionable expertise on subjects they rule on, to the biases they bring to these exercises, to the broader matter of whether most of the transgressions they’ve spotlighted are misinformation at all – as opposed to expressions of opinion or interpretations or analyses of events or data that are completely legitimate.

But when it comes to journalistic retractions or corrections, none of these problems should arise – because the error has already been acknowledged. Similarly, it should be easy for such technologically advanced companies to track and tag repeat offenders, whether individuals or entire organizations, with contemporary versions of (truly deserved) Scarlet Letters.

Equally easy should be justifying suspending them or kicking them off for good if they don’t mend their ways. Indeed, it would be a valuable service to the reading, viewing, and listening public, and because the use of social media is so crucial to news organizations’ business models, would create powerful incentives for journalists to use anonymous sources in particular much more responsibly.

Ideally, in a free market system, quality news would eventually and consistently prevail over the alternative by customers rewarding the good performers with bigger audiences that fattened their bottom lines, and penalizing the bad performers by tuning them out. But for whatever reason or combination of reasons (like growing partisanship or more general political polarization, and the resulting tendency of news consumers to follow only ideologically congenial news outlets), it’s not happening. And when news organizations do report on their industry critically, they rarely shine the spotlight on themselves – and wind up in “Coke versus Pepsi”-like dogfights, or thinly disguised ideological vendettas.

Since in theory, anyway (yes, I keep using this kind of qualification), the social media companies aren’t competing directly with either legacy or on-line news organizations, their misinformation monitoring needn’t be so self-interested. And if they stuck to calling out admitted corrections and retractions or other unmistakably debunked scoops, they’d steer clear of any genuine controversy.

Maybe just as important: If Facebook and Twitter won’t reorient their content policing to focus on or even simply add this relatively simple task, everyone will be entitled to wonder whether their main concern all along has been fighting misinformation, or simply the kinds they don’t like.

(What’s Left of) Our Economy: Is More Immigration Really the Key to America’s Tech Future?

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One of the most compelling – and most often made – arguments in favor of higher U.S. legal immigration levels has to do with innovation. Supposedly, without encouraging ever more foreign workers to move to America, the nation will never be able to maintain its global technology leadership, and ultimately an acceptable, much less improved, degree of prosperity. (See, e.g., here and here.)

Part of the rationale for a welcoming posture, as indicated above, has to do with policies toward highly skilled and educated immigrants in particular (like those admitted under the H-1B program), and the special visa quotas allotted to them. But as the Washington Post editorial board recently made clear, there’s a more general view that immigration is especially good at providing America with “a steady supply of working-age strivers” and that “This nation’s prosperity, pluck, ambition and effervescent character are the products of more than 100 million immigrants who have sought better lives in the United States since its founding.” In other words, immigrants are far more likely than the native-born population to possess the risk-taking and general entrepreneurial traits that lead to so much technological progress.

I’ve already debunked one aspect of these claims here, but because they keep popping up, I keep thinking more about them, and have come across more data that not only casts further doubt on the technology-related need for more immigrants, but that indicate that the immigration cheerleaders are putting the cart before the horse.

For instance, it’s widely agreed that the U.S. tech sector is considerably healthier than Germany’s. In this vein, a widely followed global innovation index issued each year by a United Nations agency ranks the former third in the world and the latter ninth. Ninth isn’t so bad, but it’s at the least curious in this regard that for decades at least, Germany has admitted many more immigrants as a share of total population than has the United States.

Indeed, in 1990 (a good starting point, since current Germany came into being with the reunification that year of the former Federal Republic that comprised the nation’s western part and the former Communist run east), Germany’s immigrant inflow of 1.256 million represented 1.59 percent of the new country’s 79.054 million inhabitants. The 1.536 million green cards awarded by the United States that year accounted for only 0.60 percent of its 252.120 million people. (My official sources for German and U.S. annual immigration totals are here and here, respectively. For population, I used the reliable Worldometers.info website.)

But maybe Germany has made up some ground on the United States during this nearly three-decade period? Not according to this study last year from the Cato Institute – one of America’s foremost supporters of much more lenient U.S. immigration policies. If you look at Figure 2, you see that in 2018, Germany was lagging the United States just about as badly in the number of patents it received in the United States (still the world’s most important market for technology) as it was in 1990.

There doesn’t seem to be much evidence that its relatively large immigration inflows have given Germany much of an edge in entrepreneurship, either. As of 2019, according to this source, Germany’s business start-up rate was less than half that of the United States.

This chart, moreover, makes clear that it’s not just the U.S.-Germany comparison that mucks up the ostensible relationship between tech prowess and entrepreneurship on the one hand, and immigration levels on the other. After all, in 2019, India’s start-up rate was also much higher than Germany’s – even though India is much better known for sending folks abroad than for attracting them. Foreigners aren’t exactly flocking to live in China, either, yet its start-up rate matches Germany’s.

That Cato Institute study provides more complicating international comparisons. That Figure 2 shows that as of 2018, Israel has forged into the lead as the country receiving the largest number of U.S. patents. And its performance started taking off in the mid-1990s. Yet in 1995, when Germany and Israel were roughly on a par in their ability to receive American patents, the 76,361 immigrants Israel admitted in 1995 equalled 1.36 percent of its population of 5.619 million – not far from relatively un-innovative Germany’s figures. By the time it became the international leader, Israel’s immigration rate had fallen to 0.32 percent of its 8.972 million population – much lower than that of Germany, which had become a clear als-ran on the U.S. patent scene – and roughly the same as the recent U.S. rate which has been decried as so woefully inadequate.

And look at the other top performers in Figure 2 other than the United States and Israel. Taiwan hasn’t been anything close to an immigration magnet, either, and ditto for South Korea. As for Japan, it’s long been known as one of the most xenophobic countries in the world (as noted in that Washington Post editorial).

What do the non-U.S. “patent tigers” identified by Cato have in common? As author Jonathan M. Barnett puts it:

Short on consumers, resources, and labor (and saddled with geographic separation from key consumer markets), the patent tigers (especially Israel and Taiwan) were compelled to specialize in innovation-intensive segments of the global supply chain in which ingenuity, rather than labor or natural resources, conferred a competitive advantage.”

As a result, as widely agreed, they’ve worked hard to create top-notch educational systems for their own populations. German education is highly regarded, too, but it’s often observed that its history and culture in particular have discouraged self-starters.

The lessons for the United States seem pretty clear here.  On the one hand, it’s got lots of the overall population, raw materials and domestic markets that the patent tigers lack.  On the other, unlike Germany, it still enjoys an entrepreneur- and innovation-friendly culture.  If Americans did a much better job of educating their own people, especially in the math, science, and technology fields, they should be able to keep its global technology edge even while controlling immigration more tightly. 

If, however, the nation continues to coddle underperforming school systems, especially at the primary and secondary levels, the argument for relying on immigration to fill the tech gap will look all the stronger.  And in a supreme irony, the ready availability of highly skilled and educated immigrants will keep reducing national incentives to get the national education act together.      

Glad I Didn’t Say That! Another CCP Virus Chicken Little

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“I’m going to lose the script and I’m going to reflect on the recurring feeling I have of impending doom” about trends in CCP Virus cases, deaths, and hospitalizations.

–Rochelle Walensky, Director, U.S. Centers for Disease Control and Prevention, March 29, 2021

 

Change in U.S. CCP Virus cases, March 29-April 28, 2021: -16.01 percent*

Change in U.S. CCP Virus deaths, March 29-April 28, 2021:-25.86 percent

Change in U.S. CCP Virus hospitalizations, March 29-April 27, 2021: +2.08 percent

*All figures are seven-day moving averages

 

(Sources: “Walensky Fears ‘Impending Doom’ as COVID Cases, Deaths Tick Up Again,” by Shannon Firth, MedPageToday.com, March 29, 2021, https://www.medpagetoday.com/infectiousdisease/covid19/91853 and “COVID Data Tracker,” U.S. Centers for Disease Control and Prevention,https://covid.cdc.gov/covid-data-tracker/#datatracker-home)