Our So-Called Foreign Policy: Meanwhile, Back at the Tech Wars….

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5G, China, Financial Times, Forbes, free trade, globalization, Huawei, Mainstream Media, national security, offshoring, offshoring lobby, Our So-Called Foreign Policy, semiconductors, tech, telecommunications, telecoms, Trade, Trump

Free trade extremists who haven’t been shocked into reality by America’s dangerous levels of dependence on health care goods imports from Chinese and other foreign suppliers (i.e., many of them) just got another whack by a two-by-four from Beijing.

Hot on the heels of a Chinese threat to embargo exports to the United States of pharmaceuticals and drug ingredients needed to fight the CCP Virus has come a new Chinese warning – that American efforts to restrict U.S. and other foreign supplies of semiconductors, other crucial electronic components, and software needed by its telecommunications giant Huawei could trigger “counter-measures” that would damage the U.S. tech sector and the American and broader global economies.

The bad news here is that, just as with the Chinese economy overall with many medicines and their ingredients, government-controlled Huawei has seized world leadership in much of the hardware needed to build next-generation 5G communications systems – which of course have already begun to be installed worldwide. Since state-of-the-art communications is crucial both to economic prosperity and national security, Huawei’s success has triggered alarm bells even among many American leaders who were long happy to support the reckless U.S. trade and related tech policies that enabled China to steal and extort much of the knowhow that build Beijing’s tech sector – and looked the other way as American firms voluntarily transferred much of the rest.  (See here for an especially revealing partial account of this tech policy disaster.)

But there’s good news, too. First, U.S.-headquartered companies still hold what a Financial Times article shows are “strategic chokepoints on Huawei’s phones, from the Android operating system to RF front-end chips and the chip architectures by Arm Holdings….” (To be sure, however, this Huawei dependence is shrinking.)

Second, as reported here in Forbes, Huawei’s overall sales performance outside its home market has been so weak that it’s now “completely dependent on China for its growth.” And thanks to the worldwide recession triggered by the pandemic that of course began in China, and because of continuing national security-driven reluctance by foreign governments to give Huawei free rein in their own markets, the entity’s overseas troubles are likely to intensify. (Note: Because of pervasive Chinese state control, RealityChek refuses to call outfits like Huawei “companies” or “businesses,” as such terms suggest great common ground with enterprises in largely free-market economies.)

At the same time, let’s not whistle in the dark here.  The trade and broader globalization policies responsible for these economic and national security vulnerabilities were pushed so hard so successfully for so long by pre-Trump Presidents and Congresses, that digging out of the present hole will require even more outside-the-box thinking than even the current administration has contemplated. And its task isn’t being made any easier by the efforts of the corporate Offshoring Lobby, its political and think tank hired guns, and the Mainstream Media journalists who still slavishly follow their cues, to yank the country back to globalization business-as-usual.      

Im-Politic: New Evidence that “Hamilton” is (Embarrassingly) Fake History

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"Hamilton", Alexander Hamilton, diversity, Forbes, Founding Fathers, history, Im-Politic, immigrants, Immigration, liberals, Lin-Manuel Miranda, Mike Pence, Ralph Benko, Trump

American elites’ views on immigration issues are just the gift that keeps on giving if you suspect that way too …

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(What’s Left of) Our Economy: How Not to Rate the States’ Economies – & Their Prospects

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California, demographics, domestic migrants, entitlement programs, Florida, Forbes, government workers, immigrants, inflation-adjusted growth, innovation, Medicare, Missouri, New York, New York City, Pennsylvania, population, private sector, productivity, retirees, seniors, Social Security, taxes, William Baldwin, {What's Left of) Our Economy

Thanks to Forbes magazine, it’s possible today to teach a useful lesson about the limits of statistics and the studies they’re based on – especially if those studies seem to be intended to prove a point rather than seek the truth.

The post in question, by former Forbes editor William Baldwin, looks like it makes a claim that’s not only important but irrefutable: U.S. states whose numbers of “takers” (government workers plus recipients of government transfer – welfare – and entitlements payments) greatly exceed the “makers” (private sector workers) are in “death spirals.” But states in the opposite situation have promising economic futures. In particular, employers are much likelier to create the private sector jobs crucial to continued healthy growth in the “maker” states.

It’s easy to understand Baldwin’s reasoning. The private sector undeniably is more innovative and productive than the public sector – two of the main ingredients of that healthy growth. And states with big populations of entitlements recipients (e.g., Medicare and Social Security) are almost by definition states with older populations – raising the question of who’s going to pay for all those benefits for non-working or even only semi-retired seniors. Case closed? Not exactly.

Interestingly, doubts start arising as soon as you eyeball the author’s chart. For example, he places California in the “death spiral” category. Since the Golden State represented 13.40 percent of the entire national economy as of 2014, it’s clearly a crucial example. But U.S. government figures also make clear that California enjoyed inflation-adjusted growth last year (2.80 percent) that was considerably faster than the national average (2.20 percent). That doesn’t sound like much of a death spiral to me. And in case you’re wondering whether 2014 was an outlier, California also out-grew the nation as a whole from 2011 to 2014 – by 7.81 percent to 6.26 percent.

Demographics don’t support Baldwin’s portrait of California, either. According to the U.S. Census Bureau (click here for the various relevant spreadsheets), between mid-2010 and mid-2015, the United States population as a whole as a whole grew by 12.661 million. Nearly 58 percent of the increase came from more babies being born than legal residents passing away, and the rest came from net migration from abroad.

California was responsible for nearly 15 percent of this increase – which means that the state punched above its weight demographically. In 2010, its share of the national population was only 12.07 percent. So it looks like there will be plenty of new Californians to pay for public services and retirement costs. And although many of the nearly 835,000 immigrants to come to the state during this period were illegals, many obviously were not.

The situation in another one of Baldwin’s death spiral states – New York – doesn’t look nearly so dire, either, on closer inspection. New York’s after-inflation economic growth between 2011 and 2014 wasn’t as fast as California’s. But at 6.79 percent, it still beat the national average.

New York also lost a little population from 2010 to 2015 (22,308 residents moved away). But births outnumbered deaths by 1.59 to 1, which is a bit better than the national average. And although just over 653,000 New Yorkers moved out of the state during that period, nearly 631,000 immigrants arrived. Of course, many have been illegal and low-wage. But many others have been foreign oligarchs who have rocketed the New York City real estate market into the stratosphere. In fact, the city’s property and income tax receipts for the fiscal year ending June 30 are so immense that its budget surplus is likely to approach $1 billion. So there’s no revenue shortage there.

Now let’s move to one of Baldwin’s more promising states: Florida. The Sunshine State has handily beaten the national average on 2011-2014 growth (7.07 percent) – although its performance has been affected by the depth of its housing-bust-fueled recession. On the surface, its population trends look good, too – as has historically been the case. In 2010, Floridians represented 6.09 percent of all Americans, but over the next give years, the state’s increase came to 11.58 percent of the national total.

Less good, however, were the internals – especially for Baldwin’s “death spiral” thesis. Florida’s population growth has been powered by immigrants and Americans from other states to a roughly equal extent. Surely wealthy foreigners have been well represented in immigrant ranks along with poorly paid illegals. But anyone who knows Florida knows that many of the domestic migrants have been retirees. That can’t bode well for the tax base.

Florida’s neighbor, Georgia, is another odd Baldwin success story. Its 2011-2014 growth trailed the U.S. average (at 5.32 percent). Yet its population growth (4.16 percent of the nation’s total) was greater than its 2010 share of the overall population (3.14 percent). It’s true that Georgia’s subpar population increase may eventually translate into stronger-than-average growth. But should that be considered a solid bet? Stranger still is the author’s positive assessments of Missouri and Pennsylvania, which have been under-performing both in terms of economic and population growth.

Of course, Baldwin has pegged many states right. But misses that are this big, especially for places like New York and California, make clear that the sources of healthy growth and bright economic futures are much more varied than entitlement spending, government workforce sizes, and even generational demographics. Lifestyle clearly plays a major role – what else explains California consistently defying predictions of economic doom triggered by alarm over high taxes, burdensome regulations, and the like? Along with New York and Washington state (another one of Baldwin’s losers, despite the attractions of Seattle), it’s long likely to remain a magnet for talent, as well as wealth (whether ill-gotten or not).

Although I’ve never met Baldwin, I do know that Forbes has long been one of the media world’s strongest champions of Darwinian free market thinking – and of course an equally ardent opponent to Big Government. So it looks reasonable to me that this ideology overwhelmed a more holistic view of economics and business – which his successors at Forbes might have realized just by looking out the windows of their Manhattan offices.