Those Stubborn Facts: How the U.S. Lost the Global Semiconductor Manufacturing Tech Lead

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capex, capital spending, China, infotech, innovation, Intel, investment, manufacturing, microchips, national security, Samsung, semiconductors, South Korea, Taiwan, Taiwan Semiconductor Manufacturing Company, tech, Those Stubborn Facts

“North America-” (i.e., U.S.-) Owned Firms’ Share of Global Semiconductor Capital Spending, 1990: 31 percent

“North America-” (i.e., U.S.-) Owned Firms’ Share of Global Semiconductor Capital Spending, 2019: 28 percent

“Asia-Pac/Others*- Owned Firms’ Share of Global Semiconductor Capital Spending, 1990: 10 percent

“Asia-Pac/Others*-Owned Firms’ Share of Global Semiconductor Capital Spending, 2019: 63 percent

*Excludes Japan. Includes Taiwan, South Korea, and China

(Source: “A Path to Success for the EU Semiconductor Industry,” by Michael Alexander and Thomas Kirschstein, Roland Berger, February 12, 2021, https://www.rolandberger.com/en/Insights/Publications/A-path-to-success-for-the-EU-semiconductor-industry.html)

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

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Cato Institute, China, education, entrepreneurs, Germany, H-1B visa, immigrants, Immigration, India, innovation, Israel, Japan, skills, South Korea, start-ups, Taiwan, technology, Washington Post, Worldometers.info, {What's Left of) Our Economy

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.      

Our So-Called Foreign Policy: Grave Doubts Still Justified About Japan’s Reliability Against China

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alliances, allies, Asia-Pacific, Biden, burden sharing, China, deterrence, globalism, Indo-Pacific, Japan, Our So-Called Foreign Policy, semiconductors, South Korea, Taiwan, Yoshihide Suga

The more I read about last week’s summit in Washington, D.C. between President Biden and Japan’s Prime Minister Yoshihide Suga, the more I’m reminded of that expression ”putting lipstick on a pig.” For far from the unalloyed success described by the Biden administration and so many of the press accounts (see, e.g., here and here) the results of the meeting can easily be seen as just the latest sign that, from the U.S. standpoint, the so-called alliance between the two countries still can’t be counted on to pass what must be the acid test of such relationships – and at a time when Tokyo’s support looks more important than ever.

The reason Japan’s contribution counts can be summed up in one word: Taiwan. As known by RealityChek readers and many others, the island has emerged in recent years as the world’s leader in the knowhow needed to produce the world’s most advanced semiconductors. These devices of course are not only the electronic brains of all those wonderful high tech devices we all enjoy using – and need. Microchips also control most of the highest tech weapons in America’s military arsenal, and the ever more capable versions that will be turned out by factories (or “fabs”) on Taiwan and, to a lesser extent, in South Korea, will power the cutting edge weapons that will determine victory and defeat on the increasingly electronic battlefields of the future.

If Taiwan was located, say, in the Caribbean, its semiconductor manufacturing leadership mightn’t be such an urgent problem. But it’s sitting in the South China Sea a scant 100 miles from China, which has not only become a powerful rival to U.S. interests in Asia and all over the world, but keeps sounding increasingly determined to take control of the island – which it regards as an outlaw province.

Once upon a time (when Taiwan wasn’t nearly so important), the United States could be sure of deterring a Chinese invasion or military operations aimed at resting major concessions from Taiwan’s government, or of actually defeating such Chinese actions. Now, though, as RealityChek reported years ago, the U.S. nuclear edge needed for high confidence deterrence is gone, and it’s widely agreed that the non-nuclear military gap has narrowed considerably as well – especially for a conflict in China’s backyard.

Which is where Japan (and other U.S. allies in the Asia-Pacific – now more often called the Indo-Pacific region) come in. It would greatly increase the odds of both U.S. deterrence, and victory if need be, if Washington could count on Tokyo to fight alongside America’s military if a war over Taiwan heaven forbid broke out. This is the acid test I was talking about up top. Any military planning for war needs to know for sure what assets it can absolutely rely on when the shooting starts and what assets are only “maybes.” And the results of the Biden-Suga summit left way too many maybes.

It’s true that Japan has added significantly to its military strength in recent years – though such a wealthy country can afford to spend much more. It’s also true that Japan has agreed to take on more responsibilities for preserving security in that Indo-Pacific region. Moreover, the joint declaration issued by the two governments after the summit specifically mentioned “the importance of peace and stability across the Taiwan Strait and [encouraging] the peaceful resolution of cross-Strait issues.” Similar recent statements by Japanese officials during Mr. Biden’s term are widely considered breakthroughs in terms of Tokyo’s recognition of the situation’s gravity.

Suga actually added in remarks to reporters following the summit that “We agreed to oppose any attempts to change the status quo by force or coercion in the East and South China Seas [where Taiwan is located], and intimidation of others in the region.” So that sounds like a somewhat more assertive description of Japanese intentions on Taiwan.

But “oppose” could mean all sorts of things – a stern diplomatic note, a few sanctions. Maybe a very stern note. Or lots of sanctions. Neither Suga nor any other Japanese leader has said “If China attacks Taiwan, we’re sending in our troops, too.” In other words, uncertainty over Japan still leaves American war planners with a big problem.

And much more is involved here than my own personal skepticism. As noted here, even if Japan ultimately agrees only to provide logistical and other forms of non-combat support to U.S. forces fighting over Taiwan, itse home islands would run major risks. For due to China’s “ability to launch missiles to virtually anywhere in Japan,” Beijing could target “bases that the U.S. military would rely on for executing operations” and inflict major casualties on Japan.

Further, Tokyo’s distinct reluctance to voice full-throated condemnations of Chinese human rights violations and even atrocities for fear of disrupting lucrative economic ties raises even stronger doubts as to Japan’s willingness to participate in a full-fledged war with its leading trade partner. Indeed, in a post-summit event, Suga repeated another recent mainstay of Japanese diplomatic rhetoric:  “[W]e must work to establish a stable and constructive relationship with China.”

Given these considerations, it should be apparent that words alone simply can’t resolve legitimate doubts about Japan’s real intentions or likely responses to outright Chinse aggression anywhere in the region except for its own territory. 

I’m a foreign policy realist – someone who emphasizes the inevitably central role played by unsentimental, frankly selfish, judgments about concrete interests in all countries’ formulation of their foreign and defense policies. So I’m the last person to complain about Japan’s continuing caution and hedging as such. I can think of many compelling reasons for Japan to become more gung ho – e.g., does Tokyo really want to see China’s thug totalitarian government as the kingpin of its own neighborhood?. But this is a judgement for the Japanese people and their leaders to make.

Japan’s fence-sitting obviously also represents a challenge for American diplomacy, and President Biden has made improving cooperation with allies a centerpiece of his foreign policy. But major skepticism is justified as to whether he and his aides can turn Japan into a military ally worthy of the name, since their globalist emphases on alliances can too easily turn into prizing smooth ties for their own sake, as opposed to firm insistence on greater burden- and cost-sharing that’s bound to ruffle feathers at least in the short term. In fact, signs of such alliance fetishizing have already appeared in administration agreement to ease pressures on both Japan and South Korea for paying the costs of hosting U.S. forces clearly essential to these own countries’ defense.

And in this vein, this foot-dragging by Japan (and most other ostensibly staunch U.S. allies, too) raises a crucial question for Americans. Should they keep allowing their leaders to keep prodding and cajoling these countries in the hope that someday they might demonstrate plausible reliability?  Or should they conclude that the meager results of literally decades of prodding and cajoling mean that the success that’s so desperately needed should be written off as a pipe dream? As shown by rising tensions over Taiwan in particular, the clock is ticking – and quickly.

Our So-Called Foreign Policy: Return of the Lippmann Gap?

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alliances, allies, Biden, burden sharing, China, defense budget, Democrats, Donald Trump, Europe, globalism, Japan, Lippmann Gap, NATO, North Atlantic treaty Organization, Our So-Called Foreign Policy, progressives, Russia, soft power, South Korea, Walter Lippmann

No, it’s not the title of a newly discovered Philip Roth novel. Instead, the ”Lippmann Gap” is a phrase coined by scholars to describe the result of a country’s aims in foreign policy exceeding the means available to pursue them.

It was named after the twentieth century journalist, philosopher, and frequent adviser to leading politicians Walter Lippmann, who called attention to its frequency and dangers in his classic 1943 book, U.S. Foreign Policy: Shield of the Republic. (P.S. In this post, I described a major flaw in Lippmann’s thinking, but he was right about the importance of establishing a sustainable relationship between a country’s ambitions and its ability to realize them.)

Troublingly for Americans, and for other countries that have long relied on the United States for protection, evidence has emerged that the gap could soon return in a big way under the Biden administration – whose principals, including the President, are typically described as diplomatic “adults in the room” making the welcome return to power after the dangerous tumult of the Trump years.

The evidence consists of reporting (see here and here) that the administration later this spring will submit a defense budget request that seeks no new funding over last year’s levels. Of course, this reporting may turn out to be inaccurate. Or the Biden-ites could still change their plans even if it is currently accurate. In addition, negotiations with Congress, which needs to approve these plans, could result in some increases.

Moreover, a flat defense budget request is by no means necessarily bad news for anyone, except for whichever defense contractors lose expected sales to the Pentagon. For example, the Defense Department has long been notorious for wasteful spending. And adopting different priorities, or more efficient weapons and other equipment, could well provide America and at least most of its allies with just as much “bang for the buck” as previously, as changing circumstances produce a shift in deployments from missions judged to have lost some of their importance to missions seen to have become more significant. In fact, I’ve long favored major cuts precisely because the nation spends way too much seeking objectives – like shoring up the defense of Western Europe – which haven’t been necessary in decades, and indeed in theory create greater dangers than they can address.

But there’s no reason to think that such considerations would be driving forces behind a reported Biden defense spending freeze, or near-freeze. And this is where the Lippmann Gap comes in. Because there’s every reason to believe that Mr. Biden intends to expand America’s foreign defense commitments on net, and because in at least one major reason of concern, the main potential enemy (China) keeps strengthening its militaty and has been acting more aggressively in recent years, and because a major object of China’s expansionist aims, Taiwan, has become the manufacturer of the world’s most advanced semiconductors – the computer chips that serve as the brains of an explosively growing number of civilian and defense-related products.

What other conclusions can one draw from the President’s repeated globalist assertions that “America is back,” and that in particular, it means to reassure allies around the world that allegedly become unnerved about U.S. reliability after four years of being (rightly, in my view) harangued by Trump attacks on their own skimpy defense spending, and threats to leave them in the lurch unless their alleged free-riding ends? (P.S. – not only weren’t these threats carried out, but as I noted in this article, in some noteworthy ways, the former President actually bolstered America’s alliance-related foreign military deployments.  Mr. Biden, meanwhile, has decided, at least for now, to let Europe’s members of NATO – the North Atlantic Treaty Alliance – Japan, and South Korea all off the burden-sharing hook, as made clear here, here, and here.)

Indeed, a flat or even reduced Biden defense budget request might come about in part from pressure from Democratic progressives to cut spending significantly. Fifty House members of his party have just urged him to reduce the defense budget “significantly.” And their rationale has nothing to do with the aforementioned potentially sensible reasons for cuts. Their case for a smaller U.S. military emphasizes that

“Hundreds of billions of dollars now directed to the military would have greater return if invested in diplomacy, humanitarian aid, global public health, sustainability initiatives, and basic research. We must end the forever wars, heal our veterans, and re-orient towards a holistic conception of national security that centers public health, climate change and human rights.”

I’m all for many of these particular aims, and also strongly support developing new definitions of national security and how to achieve and maintain it. But the Biden administration seems likeliest not to redefine national security significantly, but at most add these new domestic-oriented objectives on to the existing list of traditional goals. Therefore, if the progressives get even some of what they want, the effect inevitably would be to assume that “diplomacy, humanitarian aid, global public health, sustainability initiatives, and basic research” can substitute adequately for military force in carrying out an American foreign policy agenda that’s growing, not contracting.

Whether or not I believe this (I don’t), or you the individual reader believes, this is beside the point. U.S. adversaries seem unlikely to be impressed with these forms of what political scientists call “soft power.” Hence China keeps boosting its own military budget, and Russia responded to Obama administration Europe troops cuts by invading Crimea and attacking Ukraine.

U.S. allies are reacting skeptically, too. For example, European leaders evidently worry that Trump’s election revealed a strong popular U.S. desire to shed many global defense burdens that the Biden victory hasn’t eliminated. Therefore, there’s been increasing talk, anyway, in their ranks about reducing reliance on U.S. hard power by building up their own. And as I’ve repeatedly written, that would be great for Americans. But it’s sure not part of any Biden plans that have been made public.

A defense budget request fully reflecting the President’s bold “America is back” vow wouldn’t make me especially happy. But it would be far better than one that reopens or widens (depending on your views of current U.S. capabilities) a Lippmann Gap – and indicates to both domestic and global audiences that he really means to carry out globalism on the cheap.

Our So-Called Foreign Policy: An America Last Troop Agreement with South Korea

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alliances, allies, Biden, China, Cold War, deterrence, Donald Trump, Japan, North Korea, Our So-Called Foreign Policy, South Korea, Soviet Union, tripwire

The United States and South Korea have negotiated an agreement on sharing the cost of basing U.S. troops on the peninsula, and the outcome raises the question of why the Biden administration bothered to negotiate in the first place. For the agreement simply endorsed the offer made by the Koreans under the Trump administration. In fact, it clearly signaled to America’s other security allies that under Mr. Biden, the United States will revert to its pre-Trump policies of permitting them to skimp on outlays for their own defense, thereby needlessly exposing the American homeland to the risk of nuclear attack by the adversaries these alliances are supposed to resist.

Let’s begin by remembering why the link between these decades-old alliances and nuclear risk exist in the first place. As I’ve written repeatedly (and most comprehensively here), it resulted from an early-Cold War period American decision to give up on the hugely expensive idea of using U.S. conventional military forces to deter threats posed by the old Soviet Union, China, and North Korea, and rely instead on intimidating these foes by brandishing nuclear swords.

Non-nuclear U.S. forces, however, still played a vital role in this strategy. Their purpose was serving as “tripwires.” It was the prospect of their being destroyed by their superior enemies that was deemed likely to spur U.S. Presidents to use the nukes to save them, and creating the prospect of escalation to full-scale, intercontinental nuclear exchanges that would prevent the initial aggression to begin with.

Of course, if such deterrence failed, and a full-scale nuclear war broke out, the U.S. homeland would probabl become a casualty. But in those days, the gambit wasn’t completely crazy. In the first place, the security of the allies being protected (mainly Western Europe and Japan) was arguably vital to America’s own security. In the second place, for most of the Cold War, the United States possessed either a nuclear monopoly over the potential adversaries, a meaningful edge, or parity. And even the latter was considered adequate to keep the nuclear retaliation threat credible. In the third place, during the early Cold War decades, the allies – all of which were devastated by World War II – simply couldn’t mount serious defenses of their own.

These days, though, the alliances situation has changed dramatically. Most of the allies can still be considered vital assets for the United States. And all of them are now wealthy enough to build militaries capable of self-defense. But they choose not to, preferring instead to rely on those American military tripwires to deter attack and use their national resources elsewhere, thereby ensuring the continuing nuclear threat to the United States.

Significantly, the major ally that always and still has the least significance to America’s safety and well-being has been South Korea. In addition, the ally-adversary wealth gap is clearly widest between South Korea and its economically impoverished, Stalinist northern neighbor. But because of Seoul’s defense free-riding, because North Korea now has built an impressive nuclear arsenal and is nearing the capability of reaching the continental United States with its missiles, and because not even the alliance-skeptical Trump administration elected to remove the tripwire and thus eliminate any reason for North Korea to threaten, much less actually strike, U.S. targets, the alliance-related nuclear danger to America remains and (given North Korea’s unpredictability, could well be greatest) where running this risk is least justifiable.

Not that the Trumpers ignored the situation completely. Before his administration began, the former President did reveal some awareness of alliance-related nuclear security problems – especially in Asia. And although this theme quickly vanished from the list of stated Trump alliance concerns, he did vigorously press all the major allies, including South Korea, to boost their military budgets and pay more of the costs of hosting U.S. forces. In fact, during his term, the former President continued his pre-inauguration threats to remove some of the American forces from South Korea in order to turn up the heat on Seoul. (He actually ordered a troop drawdown from Germany for the same reasons).

The allies – including South Korea – and their enthusiasts in the bipartisan globalist U.S. foreign policy establishment predictably cried “foul,” contending that Trump had turned American alliance policy into a base exercise in “transactionalism” and “shakedowns,” and none more loudly than candidate Joe Biden last year. In an October op-ed for a South Korean new agency he made clear his determination to return to pre-Trump coddling regardless of the nuclear risk to his own country.

“As President,” he promised, “I’ll stand with South Korea, strengthening our alliance to safeguard peace in East Asia and beyond, rather than extorting Seoul with reckless threats to remove our troops.”

And unfortunately for anyone who would put America’s security first, he’s been true to his word. The latest agreement specifying South Korea’s payment level for the 28,500 American troops stationed in harm’s way right up against the Demilitarized Zone that divides the peninsula had run out in 2019. Deadlocking the talks since then had been Trump’s insistience that Seoul roughly quintuple its last agreed-on figure of about $920 million annually to about $5 billion, and consent to renegotiating the amounts each year rather than every five years. (One news account reported that this demand didn’t come from Trump himself, and that the administration eventually decided to call for a 50 percent first-year hike.)

Biden’s solution? Secure a marginal increase from 13 percent to 13.9 percent in the last annual payments offer reportedly made by South Korea. Thereafter, Seoul will boost its yearly contributions at the same rate as it increases its defense budget – which of course by definition remains woefully inadequate, since despite some recent military spending progress clearly spurred by America First-fueled anxieties, it would still require South Korea to depend on American support. (Incidentally, different accounts of the exact terms have been reported here and here.)

The result? The South Koreans are happy that the Biden administration is dealing with them in “ mutually beneficial and rational manner” and not in “a transactional fashion.” A State Department spokesperson was tickled that the deal has kept the “Biden-Harris Administration’s commitment to reinvigorating and modernizing our democratic alliances around the word to advance our shared security and prosperity.” The Mainstream Media’s globalism cheerleaders are impressed that Mr Biden is farsightedly willing to “cut allies a break to build unity in competition against China and Russia.”

And Americans are still one temper tantrum by Kim Jong Un away from either sitting by and watching nearly 30,000 of their soldiers overrun in an invasion, or trying to save them from total destruction and South Korea from armed conquest with nuclear attacks that could bring a North Korean warhead down on a major American city…or two…or three.

P.S. All indications are that the Biden administration is going to stage a rerun with Japan – though as indicated above, this ally is at least more important than South Korea.

Our So-Called Foreign Policy: It’s Official. Uncle Sucker is Back

Tags

alliances, allies NATO, America First, Biden, deterrence, Donald Trump, Japan, North Atlantic treaty Organization, Our So-Called Foreign Policy, South Korea

If you think this title is too harsh, and especially if you agree with his view that maintaining U.S. alliances must be central to American foreign policy-making, you need to ask yourself this: How can some of the major points President Biden made in his speech Friday to an audience containing heads of major allied governments accomplish anything but keep the United States needlessly paying outsized costs for these arrangements and even worse, running major risks that include nuclear attack, for no good reason whatever?

As known by RealityChek regulars, downsides of American security alliances both in Europe and Asia that arguably were acceptable during much of the Cold War period have become terrifying and – because stemming from stubbornly hidebound thinking and consequent policy inertia – downright inexcusable more recently. That’s because physically devastated allies literally helpless against aggression in the earliest post-World War II decades, but nonetheless retaining vital economic and therefore military potential, had fully recovered by the mid-1970s, and because their continued defense free-riding led Washington to station sizable military units (and their dependents) directly in harm’s way.

The idea was that this U.S. presence’s very vulnerability to superior conventional forces from the Soviet Union and North Korea would deter aggression to begin with. Forit would all but force a U.S. President to approve saving these American lives with nuclear weapons – whose use could trigger an all-out mutually devastating conflict.

This gamble could be defended when the United States enjoyed clearcut nuclear superiority over the Soviets, a nuclear monopoly and near-monopoly over the North Koreans and Chinese, respectively – and when allies and their potentially crucial assets were still down and out. But for many years, the nuclear gap has  closed in Europe and the the monopoly and near-monopoly in Asia vanished, and all allies in question have been amply wealthy enough to defend themselves. So Washington’s refusal to adjust means that the nation could well see nuclear warheads land on its soil because the Europeans, Japanese, and South Koreans have been permitted to be military deadbeats. Could any policy be more recklessly perverse, or determined to reward irresponsibility and cynicism?

Despite loudly griping about allied defense free-riding, raising the temperature in periodic defense burden-sharing negotiations, and rearranging some troop deployments in Europe, Donald Trump never frontally and comprehensively challenged the status quo, at least while President. Would a second term have been different? Who knows?

What is clear, especially from this latest speech by Mr. Biden, is that the United States will now be doubling down on this entire literal Americans Last strategy.

For not only did the President repeated the pre-Trump standard Washington endorsement of the core principle of the North Atlantic Treaty Organization (NATO) that “An attack on one is an attack on all. That is our unshakable vow” – which inevitably tells the allies that they can continue free-riding militarily to their heart’s content and count on American protection no matter how potentially disastrous the consequences for the American people.

He actually praised “Europe’s growing investment in the military capabilities that enable our shared defense” even though these expenditure will be definition be utterly inadequate as long as their level leaves a military gap that American conventional and nuclear forces still need to fill.

Further, in declaring that he would not view U.S. alliances as “transactional” he assured America’s so-called partners that their relationships with Washington need involve no give and take whatever, thereby guaranteeing that these opportunistic governments would raise their chronic free-riding to much loftier levels, and that Americans would bear more of the costs and risks of these arrangements than ever.

And most foolishly of all, Mr. Biden explicitly told the Europeans (and consequently the Asians) that, after the stormy Trump years, it was up to the United States “to earn back our position of trusted leadership.” That is, the kinds (long overdue) burden- and therefore risk-sharing criticisms made by the former President were completely illegitimate, and that whatever ailed the alliances resulted from Trump’s America First words and (much more modest) deeds, not from decades of allied risk- and burden-shirking.

Of course, Mr. Biden’s words were actual U.S. policy for decades before the Trump years. That’s why these arrangements became so dysfunctional from any sensible American standpoint in the first place. But by making this approach explicit, and giving the Europeans and Asians official license for their longstanding “heads we win, tails America loses” priorities, the President has not only gravely weakened his own country’s safety and prosperity. He’s destroyed whatever legitimate hopes ever existed that multilateralism and collective security could ever adequately serve any reasonable definition of American interests.

(What’s Left of) Our Economy: Why China Really is Like Nazi Germany

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Albert O. Hirschman, allies, Biden, China, dumping, Information Technology and Innovation Foundation, intellectual property theft, Japan, multilateralism, NATO, Nazi Germany, nuclear umbrella, Robert D. Atkinson, sanctions, South Korea, tariffs, tech industry, technology extortion, Trade, tripwire, Trump, {What's Left of) Our Economy

Because Nazi references can be so irresponsibly inflammatory, and therefore have been so often abused, I haven’t yet compared the threat posed by China to the rest of the world to that posed by Nazi Germany. (In my view, these comparisons have been used even more recklessly lately in U.S. domestic politics, chiefly to describe former President Trump and his views and policies.) So even though the People’s Republic, its ambitions, and its burgeoning capabilities do scare the living daylights out of me (and should scare you), I was nonetheless pretty surprised to see precisely this comparison just made by Robert D. Atkinson.

Atkinson is the head of a technology-focused Washington, D.C. think tank who I’ve known since the early 1990s. I’ve admired some of its work and haven’t been so crazy about other examples of its output, but I’ve never, ever considered him a boat-rocker, much less a rhetorical bomb thrower. In fact, my criticisms of the numerous studies and articles issued by his Information Technology and Innovation Foundation stem from my view that they’re way too cautious when it comes to countering China’s wide range of predatory economic practices (which include predatory technology policy practices like the theft and extortion of intellectual property).

And I’ve attributed much of this caution to the Foundation’s donor base – which is dominated by the U.S. and in some cases foreign tech and manufacturing companies that have worked so hard to send so much production and employment, and (voluntarily) so much technology to China for decades. It’s true that many of these firms are now crying foul as Beijing in recent years has aimed to strengthen its own entities’ positions at the foreigners’ expense. Yet their stubborn opposition to the unilateral Trump tariffs and some key sanctions on the Chinese tech outfits that have been major customers made clear their vain hope that they could somehow have their China cake and eat it, too.

Yet here comes Atkinson in the Fall issue of The International Economy (a publication that’s as – proudly – establishment oriented as they come) with a piece titled “A Remarkable Resemblance” likening China’s international economic policies to those of “Germany for the first forty-five years of the twentieth century” – which of course include the twelve Nazi years (1933-1945).

As the author argues, Germany during these decades was:

“a ‘power trader’ that used trade as a key tool to gain commercial and military advantage over its adversaries. Likewise, China’s trade policy is guided neither by free trade nor protectionism, but by power trade, with remarkably similar strategy and tactics to those of 1940s Germany. Understanding how Germany manipulated the global trading system to degrade its adversaries’ capabilities, entrap nations as reluctant allies, and build up its own industries for commercial and military advantage, just as China is doing, can shed light and point the way for solutions to the China challenge.”

Atkinson reports that this description of German policies came from a 1945 book by the important economist Albert O. Hirschman, which concluded that “[I]t’s is possible to turn foreign trade into an instrument of power, of pressure, and even of conquest. The Nazis have done nothing but exploit the fullest possibilities inherent in foreign trade within the traditional framework of international economic relations.”

The author rightly observes that

“Hirschman’s key insight was that some countries— in this case Germany under three very different government regimes from 1900 to 1945—focus not on maximizing free trade or even on protecting their industries, but on changing the relative power of nations through trade to achieve global power. Germany’s policies and programs were designed not only to advance its own economic and military power, but to also degrade its adversaries’ economies, even if that imposed costs on their own economy relative to a free trade regime.”

Germany also consistently sought, as the author points out “to make it more difficult for its trading partners to dispense entirely with trade with Germany, thus creating dependency.” And if that’s not enough to convince you about the comparison with China today, Atkinson himself notes that the German policy recipe also included massive industrial espionage, and Hirschman identified a major element as the equally massive dumping (selling at prices way below production costs) of goods into foreign markets to destroy overseas competition.

Atkinson’s diagnosis of the problem is so spot-on that it makes his recommended solution especially disappointing. Kind of like President Biden, he believes that the best internationally oriented option by far (on top of more effective support for U.S. industry, which I strongly support) is forming a “NATO for trade” that would be

“governed by a council of participating [free trading] countries…if any member is threatened or attacked unjustly with trade measures that inflict economic harm, DATO [the “Democratically Allied Trade Organization] would quickly convene and consider whether to take joint action to defend the member nation.”

I’ve already pointed out that the consensus on standing against China economically among America’s allies is way too weak to enable such multilateral approaches to succeed. But as long as we’re talking in terms of NATO – the military alliance between the United States and much of first Western and now Eastern Europe – and the Cold War, let’s not forget two other big problems. First, NATO (and this also goes for America’s security ties with South Korea and Japan) was never so much an alliance as a protector-protectorate relationship. The vast bulk of the heavy lifting was always done by the United States.

This allied security dependence in turn has produced the second major obstacle to a DATO’s effectiveness. Because the United States coddled allied defense free-ridingcand opened its markets one-sidedly for so long, the allies’ protectorate status was substantially cost-free economically, and even came with trade rewards no other country could remotely offer. (In addition, as I’ve also written, the creation of an American nuclear umbrella combined with the stationining of U.S. “tripwire” forces on the NATO frontlines in Germany also greatly minimized the military risks of siding with Washington.)

Today, however, economic power between the United States and the allies is more evenly distributed, and the allies’ profitable trade with and investment in China has, as noted in my aforementioned writings, greatly increased the economic price they would pay for lining up against China.

Still, by comparing the China threat to the Nazi threat, Atkinson’s article significantly bolsters the case for the United States escalating its response to the “all of society” level – or at least intensifying it qualitatively. Let’s just hope, as the author writes, that this time around the United States fully awakens a lot faster.

Our So-Called Foreign Policy: Trumply Deranged Coverage of a Trump Security Policy Win

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alliances, allies, America First, burden sharing, deterrence, Financial Times, globalism, James White, Joe Biden, military spending, North Korea, nuclear weapons, Our So-Called Foreign Policy, South Korea, tripwire, Trump

I know that there’s lots more to say about last week’s outrageous Capitol Hill riot and its political and even broader fallout, but sometimes a news development comes along that’s so underappreciated and at the same time so poorly reported that I just couldn’t resist weighing in right away.

I’m talking about decisions being made in South Korea to become more militarily self-reliant, and the way they were reported in the Financial Times a week ago. The article, by Edward White, had it all as far as my Trump-y, America First-type worldview is concerned: an (apparently unwitting account) of signs of a clearly emerging potential triumph for this approach to U.S. foreign policy; a comparably stinging (and unwitting) rebuke of its globalist counterpart; a complete failure to mention the benefits for the United States (as opposed to the impact elsewhere) coupled with  attempts by globalist supposed experts focusinf singlemindedly on the downsides and ignoring the consequences for Americans; and just plain sloppy journalism.

As known by RealityChek regulars, the news that long-time military ally (or protectorate, depending on your point of view) South Korea is revving up its defense spending is an unalloyed good for Americans. For decades, Seoul’s skimpy military budgets, which remained modest despite the country’s phenomenal economic progress, required the United States to supply the conventional forces needed to defend it against a North Korean attack.

The large American troop contingent stationed right at the Demilitarized Zone, directly in the North Koreans’ invasion path, might have made sense when Washington had no reason to fear any conflict going nuclear, and indeed viewed its possession of these arms as a pillar of its strategy of protecting South Korea by deterring aggression (because North Korea had no nukes of its own that could hit the U.S. homeland in retalition). But since North Korea is at the least so close to possessing this capability, the American units have turned into a tripwire all too likely to expose Americans to these risks, thereby rendering the U.S. nuclear guarantee a prime example of policy masochism. (This post described the changing Korean peninsula and overall Asian security environment, and its implications for U.S. strategy, back in 2014.) 

As also known by RealityChek regulars, President Trump has displayed some awareness of this situation, and, as White has reported, has pressed the South Koreans to get their self-defense act together – though in his often typically incoherent way, focusing almost entirely during his term on securing more South Korean financing of the expenses of deploying the U.S. forces on the peninsula than on planning to withdraw, and thereby eliminate the nuclear risk to America that their presence creates.

But White’s article cites evidence that Seoul has interpreted Mr. Trump’s harangues about rip off-obsessed allies as a clear sign that the United States is no longer a reliable ally, and that South Korea needs to build the manpower and especially weaponry it will need if the United States flies the coop. Especially interesting is the apparent South Korean conviction that these preparations must be made even though alliance fetishizer Joe Biden will become President on January 20.

Clearly, nothing could be better for the United States, and just as clearly, Trumpian impatience – following decades of coddling free-riding by globalist American leaders – deserves most of the credit. Even if Biden has no intention of withdrawing the American troops and bolstering his own country’s security, at least one major argument against such a step would be eliminated if South Korea became self-reliant.

But none of this side of the equation will be found in the article. Instead, South Korea’s stated new strategy is depicted as an regrettably inevitable result of “Mr Trump’s treatment of long-term allies.” And of course, grave risks abound, including the chance that “The build-up could send unintended signals of aggression or weakness, inviting miscalculations or adventurism from countries including North Korea, China and Russia.”

Typically, however, these experts ignore the screamingly obvious: If the U.S. troops leave, any miscalculations or adventurism would be problems for South Korea and its neighbors, not for the United States.

As for the sloppy journalism, that comes in when White tries to show that South Korea has already been an impressive military spender:

“South Korea’s annual defence bill is already high compared with those of many countries of a similar size and wealth. Military spending as a percentage of government expenditure was 12.7 last year, according to Stockholm Peace Research Institute data, ahead of 9.2 per cent in the US and the UK’s 4.5 per cent.”

To which the only serious response is, “Seriously?” Because why should anyone except an apologist care how Seoul’s defense spending compares with similarly sized or wealthy countries, much less with the United States’? After all, almost none of these countries lives in what’s probably the world’s most dangerous neighborhood, with an utterly deranged, nuclear-armed regime right next door for starters? Given South Korea’s (great) wealth, and North Korea’s impoverishment, the only important gauge of the adequacy of Seoul’s military budget is whether it can meet South Korea’s needs. And obviously, there’s a long way to go in this respect.

Moreover, even anyone who puts any stock in the numbers mentioned by White needs to ask themselves why the emphasis is on percentages of government spending? What actually counts is percentage of gross domestic product (GDP, or the entire economy). Because it’s the share of total national resources devoted to defense that genuinely makes clear the priority it enjoys. And with 2.7 percent the figure for highly insecure South Korea, according to the latest available data, and 3.4 percent that for the highly secure US of A, the only accurate way to describe defense as a South Korean priority is “not real high.”

Don’t get me wrong: As a sovereign country, Seoul has every right to skimp on defense spending. It also has every right to try to make another country bear an outsized measure of cost and risk for this decision. But the equally sovereign United States has every right to refuse to keep playing Uncle Sucker, especially when North Korea’s nuclear weapons make the stakes so potentially catastrophic. America’s outgoing President understood this, however imperfectly. Anyone believing that America’s security (especially from nuclear attack) needs to come first for Americans should be hoping that the nation’s incoming President quickly gets on this wavelength.

Our So-Called Foreign Policy: Out of the Mouths of Generals

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alliances, America First, Associated Press, Blob, China, deterrence, globalism, Jim Mattis, Joe Biden, Mark Milley, North Korea, nuclear umbrella, Our So-Called Foreign Policy, Poland, South Korea, Soviet Union, tripwires, Trump

Here’s one that genuinely justifies that over-used term, “You can’t make this up.”

Practically ever since President Trump assumed office, his globalist foreign policy critics have been attacking his claims that maintaining the status quo with U.S. security alliances couldn’t be a top priority of American foreign and national security policy. In this vein, they contemptuously derided as “transactional” his belief that rather than viewing these arrangements as vital ends in and of themselves, Washington needed continuously to make sure that they were creating at least as many benefits as problems for the nation.

Indeed, fetishizing alliances was so deeply embedded in the consciousness of the globalist bipartisan U.S. foreign policy Blob that Jim Mattis, the retired Marine Corps General who served as the first Trump Secretary of Defense, based his resignation largely on the argument that the President did not share his “core belief…that our strength as a nation is inextricably linked to the strength of our unique and comprehensive system of alliances and partnerships.”

So imagine my surprise upon reading an Associated Press story Thursday reporting that U.S. Army General Mark Milley, Chairman of the Joints Chiefs of Staff (the nation’s top military office), has recommended that Washington – obviously meaning the probably incoming Biden administration – should reconsider “permanently positioning U.S. forces” overseas in instances where these servicemen and women are not actively engaged in combat.

Now it’s true that Milley, at least reportedly, was never especially tight with Mattis in particular. But in this age of political generals and admirals, he couldn’t have risen through the ranks this high had he dissented significantly from the globalist line. And Milley has spoken of the need for U.S. alliances in pretty urgent terms himself.

But there he was this past week, giving a speech on the future of warfare that not only called for more selectivity in creating and maintaining an American military footprint abroad, but basing this proposal largely on his unhappiness – and this is the real shocker – that the so-called forward deployment of these units has usually been accompanied by the families of soldiers, sailors, and airmen, and therefore places them in harm’s way.

His position is a shocker because, as I’ve explained before, stationing spouses and children so vulnerably has been a linchpin of globalist strategy toward alliances. They play a crucial role in turning the units they’re linked with into genuine tripwires – forces whose likelihood of defeat at the hands of much larger and stronger invaders like the Soviets or the North Koreans would give an American President little choice but to use nuclear weapons to avert disaster.

Of course, this approach didn’t stem from itchy nuclear trigger fingers in Washington. Quite the opposite: The working assumption was that the high probability of U.S. nuclear weapons use would deter conventional military aggression to begin with. And the probability that their attacks would wind up killing American non-combatants as well as troops was seen as an even stronger forcing event for nuclear weapons use – a situation that, in strategic parlance, would make this contingency more credible, thereby further inhibiting (or, again using strategy-ese, deterring) enemies from striking.

Skeptical? This is exactly why countries like Poland have been urging recent American Presidents to replace the policy of rotating various U.S. units in and out of their lands with big, permanent deployments. And weirdly and alarmingly, Mr. Trump has taken some steps in this direction.

I’ve concluded that, although the creation of such so-called nuclear umbrellas was defensible during the Cold War, when it was used to protect genuinely vital regions like Western Europe and Japan, and when its use in Asia was aimed at prospective foes that lacked nuclear retaliatory forces, it’s recklessly dangerous today. For the Soviet Union is an increasingly distant memory, many major U.S. allies are amply capable of their own defense, Asian adversaries have become able to strike the American homeland with their own nuclear weapons, and the security of South Korea in particular is no longer crucial for the United States’ own safety and well-being (as opposed to Taiwan, which, as I’ve recently argued, has moved into this category because of its world-class semiconductor manufacturing capability).

Not even the America First-y President Trump has gone remotely this far in actually changing U.S. alliance policy. Yet there was Milley, including in his remarks the statement that if war came with North Korea, “we would have a significant amount of non-combatant U.S. military dependents in harm’s way….I have a problem with that.”

The General didn’t make the needed follow-on case that the presence of these civilians has turned these alliances into “transmission belts of war” that could easily go nuclear and bring on the incineration of entire American cities. But an administration that followed his recommendations would greatly reduce this unnecessary potential danger.

So whether Milley recognizes the full implications of his stance or not, all Americans should hope that he keeps pushing this position as he continues as Chairman of the Joint Chiefs past Inauguration Day, and that even some of the globalist enthusiasts of the Biden administration start listening.

Our So-Called Foreign Policy: Already, a Biden Misstep

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alliances, allies, Asia, Asia-Pacific, China, Demitri Sevastopulo, East China Sea, Financial Times, globalism, Japan, Joe Biden, Northeast Asia, Our So-Called Foreign Policy, Senkaku Islands, South Korea, Taiwan, Takeshima Islands, Yoshihide Suga

Now wait a second! For decades we’ve been hearing that possible President-elect Joe Biden is a foreign policy genius! Or at least that during his (47?) years in public life, he’s gained encyclopedic knowledge of the world and especially its flashpoints. (See, e.g, here.)

And just last night came the news that the former Vice President may have needlessly thrown the Northeast Asia security scene into major confusion over whether his administration will or won’t defend the Senkaku Islands.

Never heard of the Senkaku Islands? I’m tempted to forgive you. After all, they’re little than a bunch of uninhabited islets and rocks in the East China Sea. Although the surrounding fishing grounds seem to be fertile and there may or may not be undersea energy resources nearby, in and of themselves, their economic importance at present appears marginal.

Their strategic importance, in terms of controlling sealanes close to the economic goliath of Northeast Asia could be greater. But if so, we begin approaching why the Senkakus should be closer to your radar screen. For the islands are claimed by no fewer than three countries: Japan (which currently “administers” them, China, and Taiwan. The first is a formal U.S. treaty allly, the second has become arguably America’s chief strategic rival both in the Asia-Pacific region and globally, and the third an historical part of China that Beijing seems increasingly determined to regain – and by force if necessary.

Moreover, since the Obama administration clarified the matter in 2014, it’s been U.S. policy to regard the Senkakus as Japanese territory that, under the terms of the two countries’ security arrangement, the United States is bound to help Tokyo defend against attack. And in principle, this includes nuclear weapons use – a major concern since the likeliest attacker these days, China, has lots of nukes of its own capable of reaching the U.S. homeland.

Or is this still U.S. policy? As widely reported yesterday, Biden issued a statement reaffirming the 2014 commitment (made of course when he was Vice President). At least that’s what new Japanese Prime Minister Yoshihide Suga claims Biden told him in a phone call. But as alertly caught by the Financial Times‘ Demitri Sevastopulo,

“In a summary of the call provided to the media, the Biden transition team said the president-elect had ‘underscored his deep commitment to the defence of Japan and US commitments under Article V’ [of the security agreement] but did not refer specifically to the Senkaku. A transition team spokesperson declined to comment beyond the content of the summary.”

Isn’t this exactly the kind of confusion an experienced foreign policy hand should know how to avoid? And in particular, one who’s made “renewing” and “restoring” these arrangements after four years of a supposedly destructive Trump approach a hallmark of his global strategy?

Nor does the confusion stop there, for the Senkakus aren’t the only disputed islands in Northeast Asia. Don’t forget the Takeshima Islands. Or should they be called by their Korean name – Dokdo? Because they’re claimed by both North and South Korea, as well as Japan. Since South Korea is a U.S. security ally on a par with Japan, do they qualify for American-aided protection, too? If the North Koreans attempt a grab, that would seem like an easy call. (Of course, never forgetting that the North Koreans may well possess nuclear weapons that can hit the continental United States, too – or soon will.)

But what if South Korea attacks them and Japan invokes its U.S. treaty obligations? Wouldn’t Tokyo have every reason to believe that the Senkaku formula applies to the Takeshima/Dokdos, too? And what about the reverse situation – a South Korean attack? Would a Biden administration spokesperson be content to leave those countries in the dark about America’s real policy, too?

These scenarios may seem far-fetched. But only a little while ago, so did a pandemic that would kill hundreds of thousands of Americans and millions around the world, and cripple the U.S. and global economies. I don’t recall the September 11 terrorist attacks being widely predicted, either.

Precisely because, for a globalist alliance worshipper like Biden, there are no easy answers to the Senkakus and Takeshima issues (and please don’t take my use of the Japanese names as an endorsement of Tokyo’s claims), the best maxims to follow are “Do no harm” and the closely related “Keep them out of the news.” Worrisomely, they’re two maxims that the ostensible master strategist who might become America’s next President seems to have completely forgotten.