(What’s Left of) Our Economy: “Joe Science” – Finally?

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Barack Obama, Biden, Bill Clinton, Congressional Research Service, defense, dual-use technologies, George W. Bush, infrastructure, National Science Foundation, research and development, science, scientists, technology, {What's Left of) Our Economy

President Biden is a champion of science – everyone knows this, right? He promises to follow it on major issues like the CCP Virus. He’s pledged to boost Washington’s funding of research and development. He’s blasted his predecessor for neglecting this responsibility. (See here for examples of the last two statements.)  And the scientific community the world over is brimming with confidence that greater respect from the White Houe and more resources are on the way.  (See, e.g., here and here.)

Judging from his remarks unveiling his big new infrastructure plans, it looks like Mr. Biden will indeed bolster the federal government’s support for science and technology. And that’s great news, because such efforts will be crucial to meeting any number of big public policy challenges and seizing equally important opportunities. Dealing with enviromental threats, beating back the China challenge, and boosting the nation’s productivity – its best hope for raising living standards on a sustainable basis – are just a few that come to mind.

And if you’re one of those who believe the Feds can’t do anything right, you need to learn some history. Washington has a formidable record both on the basic research and applied research sides. (Here’s an impressive list from America’s National Laboratories system, and it doesn’t even include major advances fostered by other agencies in medicine, agriculture, aerospace, and information technology – some of which are summarized here.)

Mr. Biden also is unmistakably right about America having fallen behind on these fronts. But what he hasn’t told you, and what his scientific backers seem to have forgotten, is that in the last roughly quarter century, federal science and technology spending in toto never stagnated as much as during the administration he served as Vice President.

The data below are calculated from the annual research and development budget requests made by U.S. Presidents going back to the Clinton years. (For the data from 1998 through 2015, see the National Science Foundation reports archived here.  For the later data years, see the annual Congressional Research Service reports here, here, here, here, here, and here.)

Since Congress has the authority to raise or lower these requests, these figures don’t measure actual federal research and development spending by year. But they do shed light on how much various Presidents sought to spend, and by extension how greatly they valued nurturing such activity, how much they believed they could convince Congress actually to appropriate – and, by implication, how hard they were willing to push to achieve these goals.

In this vein, during his second term, Bill Clinton’s overall annual federal research and development budget requests rose by a total of 15.54 percent.

During the eight years of George W. Bush’s presidency, such Executive Branch requests increased by 43.91 percent.

For the eight years of Barack Obama’s administration? These requests climbed by 6.56 percent.

And under supposed science denier Donald Trump? They were up 20.82 percent.

Some important qualifications need to be made here. The big Bush increases were driven by major new asks for defense-related R&D (think “September 11,” “Global War on Terror,” and “Iraq”). Indeed, during his administration, such spending grew from 52.47 percent of total federal research and development spending to 58.97 percent. And when you draw this distinction, the Obama (-Biden) record looks better if you value civilian research over military. Here’s how recent Presidential requests compare on that score.

Clinton civilian requests: +25.67 percent

Bush civilian requests: +24.24 percent

Obama civilian requests: +34.26 percent

Trump civilian requests: +19.07 percent

But the Obama-(Biden) record doesn’t look that much better, especially than the Trump record. After all, that 34.26 percent increase took place over eight years, not four. And the Obama-Bush comparison, and other Obama comparisons, need to take into account the ever-blurring line between defense and non-defense-related research and development, because so many new technologies can be used in both fields and spur progress in both. That is, advances in defense knowhow can and do produce spin-off effects in the civilian world, and vice versa.

It still remains to be seen how the Biden infrastructure plan translates into specific research and development budget requests. But for now at least, Americans can be grateful that the Joe Biden of 2021 seems to be much more of a science and tech enthusiast than the administration he worked for a decade ago. 

By the way, special thanks to Rafal Konapka, who first brought the recent federal research and development trends to my attention.

 

(What’s Left of) Our Economy: Why the U.S. Still Holds the Winning Economic Cards Versus China

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Biden, CCP, China, Chinese Communist Party, CNBC.com, consumers, consumption, demographics, Donald Trump, export-led growth, gross domestic product, IMF, International Monetary Fund, per capita GDP, population, technology, Trade, trade wars, workforce, {What's Left of) Our Economy

Since there seems to be no end in sight to the rise in U.S.-China tensions, it’s especially interesting that two analyses of the Chinese economy and its future that challenge some widely held views on the subject have just appeared. Also noteworthy: They matter greatly for America’s perceived prospects for success, and one of them comes from the Chinese Communist Party (CCP) itself.

More important still:  When you put them both together, the implications look positively startling – and encouraging – for America’s prospects in its economic and technological struggle with the People’s Republic.

The first apparently contrarian information comes from the International Monetary Fund in the form of this chart.

It shows recent and projected trends in U.S. and Chinese gross domestic product (GDP) per capita – that is, how much economic output each country turns out adjusted for population. This statistic is a valuable gauge of economic power and affluence because it reveals which national economies (or the economies of any other political unit) are a certain size simply because their populations are a certain size (big or small), and which economies are doing a particularly good or bad job generating goods and services given how many people are doing the producing.

For example: Let’s say you have one economy with a population of 100 and one with a population of 10,000, and the latter generates twice as much economic output than the former. The more populous country would have the larger economy in absolute terms, but its performance wouldn’t be seen as especially impressive because it took so many people to achieve this result – and indeed orders of magnitude more people than the smaller population economy.

Moreover, the latter economy would have much less wealth to distribute among its own people than the former, and therefore each of its citizens would be a good deal poorer than their counterparts in the smaller economy all else being equal.

But let’s not dismiss the bigger economy’s record altogether. For if the two ever fought a war – all else equal again – the bigger economy would have much more in the way of resources to build and equip a military, and keep it fighting, than the smaller.

Throughout modern history, the U.S. economy has greatly exceeded China’s by both measures, but because of the amazing progress made in recent decades by the People’s Republic and a slowdown in U.S. growth, China has been able to close the gap in terms of the size of the two economies. In fact, many forecasters (as made clear in the CNBC.com post containing the chart), believe that the Chinese will catch up before too long. As indicated above, the implications are sobering for Americans if the two countries come to blows, and by extension for any diplomatic jockeying they engage in – for relative military power always casts a political shadow.

China’s overall catch up has been so fast that you might think that the per capita GDP gap that’s been so large because China’s population has been so much bigger than America’s might start narrowing, too. But the chart makes clear that this hasn’t been the case at all. Indeed, the gap has continued to widen, and is projected to keep widening at least for the next four years.

And this finding and prediction suggests that the unquestionable surge in living standards that China has been able to foster due to its rapid growth – which has led so many U.S. and other non-Chinese businesses to pin their future hopes largely on selling to this huge and supposedly ever-burgeoning market – won’t even come close to American living standards for many years. So if the chart is right, the purchasing power growth of the typical Chinese will stall out at pretty low levels and disappoint many of these corporate hopes.

As a result, fears that a thorough “decoupling” of the two economies resulting mainly from U.S. concerns about over-dependence on an increasingly hostile country will kneecap many U.S.-based businesses and possibly the entire American economy could be seriously overblown, at least longer term. For if the chart is right, these expectations will be revealed as unrealistic no matter what course Washington follows – and even if China displayed any willingness (which it hasn’t) to permit foreign businesses to make any more inroads into its economy than are absolutely necessary.  (See here for the latest – and an unsually explicit – official Chinese designation of “complete” economic self-reliance as a goal.)  

All of which brings us to the second contrarian take on China that’s been expressed recently – and by the Communist Party. It’s a finding from the Deputy Director of a party-run research institute that the country’s “Consumption has already past the phase of rapid increase and will only rise slowly in the future.” And his opinion deserves big-time credibility because he clearly believed that he could express such a downbeat view without getting his head chopped off, or being sent for a few decades to a reeducation camp, or risking punishment for any immediate family and relatives.

In addition, however, Xu cited two specific, interlocking reasons for this judgement: an aging population and a shrinking workforce.  And although he seemingly didn’t mention this, if China will need to temper its plans to generate more economic growth through its own domestic consumption, it will need not only to rely more on the kinds of infrastructure investment he did cite.  It will also need to keep relying heavily on exports – which should ensure that the United States will retain plenty of leverage over the People’s Republic with its tariffs as long as the Biden administration decides to leave them in place. 

None of this means that former President Trump was right in claiming that trade wars are “easy to win,” or that maintaining satisfactory technological superiority will be a piece of cake, either, or that generally the United States can stop worrying so much about China threats on these scores.  But it does mean that if American leaders have the will to prevail – and to advance and safeguard U.S. interests adequately – they’ll have plenty of wallet to use.                                    

 

(What’s Left of) Our Economy: A Labor Shortage-Spurred Tech Revolution in Construction

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3D manufacturing, 3D printing, Biden, CNBC.com, construction, Diana Olick, Donald Trump, housing, illegal aliens, Immigration, labor shortages, Open Borders, productivity, technology, {What's Left of) Our Economy

As known by RealityChek regulars, there’s abundant evidence that behind most claims of lasting labor shortages by U.S. industries, and the resulting insistence tht more immigration is urgently needed, there’s an industry that’s done almost nothing to improve its productivity. (See, e.g., here.)

In other words, precisely because they’ve been able to rely for so long on an ever expanding supply of cheap labor, these industries have had precious little need to keep costs under control by improving productivity – either by developing labor-saving technologies, or adopting more efficient management practices, or some combination of the two. And the result hurts the entire U.S. economy by retarding progress and knee-capping its best chances of fostering lasting prosperity.

That’s why it was so exciting to read a CNBC.com post yesterday describing the beginnings of a possible productivity-improving technological response to labor shortages (and therefore rising labor costs), by one of the nation’s biggest slacker industries – construction.

Correspondent Diana Olick’s report faithfully presented the residential construction sector’s claim that housing has performed well during the CCP Virus period, but that its potential to keep supporting bady needed growth was endangered by constantly rising costs. And she added that, in addition to building materials becoming ever more expensive, so were workers.

What Olick failed to mention was that housing was a quintessential industry that has long enjoyed the option of compensating by becoming more innovative, but gone down the cheap labor road instead. Indeed, an outsized share of its workforce consists of not only immigrant workers, but illegal aliens. And its labor productivity levels are actually down since 1968 – which is no coincidence.

But the Trump administration’s restrictive immigration policies may finally be forcing home-builders and other construction companies to start using their collective noggins to control costs. As Olick reports, the industry is starting to use 3-D printing technology “in a big way.” According to executives whose companies are using the new technology, it can cut costs by between 10 percent to 40 percent. And one big reason, in Olick’s words, is that “3D-printed homes require very few workers, as the printer does the bulk of the construction.”

Her post also mentions that 3-D-built homes promise to be sturdier and more energy-efficient than their conventional counterparts, and generate less construction waste, too. And business has been so good that one executive told her “The biggest challenge…is we are supply constrained. We have more people asking for us to build houses than we know what to do with now. Every construction system we have is booked up for the next 24 months.”

In fact, from an economy-wide perspective, the biggest, darkest cloud on the horizon is that President Biden’s Open Borders-friendly immigration policies will flood the labor market with low-skill workers again and take the pressure off the construction industry – and other productivity laggards. That result would richly deserve to be called “Build Back Worse.”

Our So-Called Foreign Policy: Why U.S.-China Tech Decoupling Needs to be Kept Simple

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AI, artificial intelligence, Biden, Biden administration, China, decoupling, National Security Commission on Artificial Intelligence, Our So-Called Foreign Policy, tech, technology

“Let’s you and him fight” is about the best expression of cynicism I know of. It’s also often great advice when dealing with a law-of-the-jungle-type situation like world affairs, where advancing your country’s interests without incurring much or any risk is a tactic that’s hard to beat.

As a formula for America’s response to the threat posed by China’s advances in artficial intelligence (AI), though? It’s completely unacceptable because it inevitably results in some portions of the population or the economy or the society or all three making all or most of any sacrifices needed to achieve an important national goal, and others getting off scot free or close to it.

And that’s a big problem with an otherwise very valuable new report from a federal government advisory committee on Chinese progress in this game-changing technology. On the one hand, the authors do a great job in explaining why permitting to narrow America’s lead in AI any further could be disaster for national security and prosperity, and for freedom around the world. As a result, they compellingly argue, grappling with this reality requires “comprehensive, whole-of-nation action.”

On the other hand, although they insist on a massive mobilization of U.S. energy and resources, they also maintain that “The United States can compete against China without ending collaborative AI research and severing all technology commerce.” Not only does this position make no sense whatever, given the Chinese ambitions for AI supremacy the Commission describes and the consequences of Chinese victory. It also means, conveniently, that the U.S. tech sector – from which many of the commissioners come – can keep making big bucks doing business with China.

More fundamentally, though, even if this square-circling policy framework wasn’t so sure to keep lining the pockets of many of the authors, it would still suffer from the intrinsically paralyzing qualities of the idea of “competition” as a guide to or aim for America’s approach to China. Simply put, the idea of competition is simply too complicated.

If you consider this perspective too cynical, or too dogmatic, or both, check out the following from the National Security Commission on Artificial Intelligence:

According to the commissioners, AI is more than “a single technology breakthrough” or even “general-purpose technology.” It nothing less than a “field of fields” that “holds the secrets which will reorganize the life of the world.’” And not surprisingly, “America’s military rivals are integrating AI concepts and platforms to challenge the United States’ decades-long technology advantage. We will not be able to defend against AI-enabled threats without ubiquitous AI capabilities and new warfighting paradigms.”

That’s because “AI applications will help militaries prepare, sense and understand, decide, and execute faster and more efficiently. Numerous weapon systems will leverage one or more AI technologies. AI systems will generate options for commanders and create battle networks connecting systems across all domains.”

Chief among these AI-progressing rivals is China, which the report says “possesses the might, talent, and ambition to surpass the United States as the world’s leader in AI in the next decade if current trends do not change.”

Specicifally, “China sees AI as the path to offset U.S. conventional military superiority by ‘leapfrogging’ to a new generation of technology. Its military has embraced ‘intelligentized war’––investing, for example, in swarming drones to contest U.S. naval supremacy. China’s military leaders talk openly about using AI systems for ‘reconnaissance, electromagnetic countermeasures and coordinated firepower strikes.’ China is testing and training AI algorithms in military games designed around real-world scenarios.”

Nor would Chinese AI superiority pose military threats alone:

“Authoritarian regimes will continue to use AI-powered face recognition, biometrics, predictive analytics, and data fusion as instruments of surveillance, influence, and political control. China’s use of AI-powered surveillance technologies to repress its Uyghur minority and monitor all of its citizens foreshadows how authoritarian regimes will use AI systems to facilitate censorship, track the physical movements and digital activities of their citizens, and stifle dissent. The global circulation of these digital systems creates the prospect of a wider adoption of authoritarian governance.”

Further, its AI push is such a priority for China that it’s determined to succeed by hook or by crook. The Commission reports that Beijing “is executing a centrally directed systematic plan to extract AI knowledge from abroad through espionage, talent recruitment, technology transfer, and investments.” Also crucial to China’s strategy: It “continues to pervasively steal American IP-protected technological advances through varied means like cyber hacking of businesses and research institutes, technological espionage, blackmail, and illicit technology transfer.”

Yet the AI report also observes that “The U.S.-China competition is complicated by the complex web of supply chains, research partnerships, and business relationships that link the world’s two AI leaders. Dramatic steps to sever these ties could be costly for Americans and reverberate across the world. The relationships between American and Chinese academics, innovators, and markets are deep, often mutually beneficial, and help advance the field of AI. Moreover, it remains in the U.S. national interest to leverage formal diplomatic dialogue about AI and other emerging technologies and to explore areas for cooperative AI projects that will benefit humanity.”

Worse, “Broad-based technological decoupling with China could deprive U.S. universities and companies of scarce AI and science, technology, engineering, and mathematics (STEM) talent, sever American companies’ efficient supply chains, and cut off access to markets and capital for innovative firms.”

Therefore, the report expresses confidence that “The United States can compete against China without ending collaborative AI research and severing all technology commerce” and that America’s goal regarding China should be “targeted disentanglement as just one element of its overall approach, which, if applied judiciously to key sectors, can help build U.S. technological resilience, reduce threats from illicit technology transfer, and protect national security–critical sectors.”

The Commission even goes so far as to recommend establishing “a high-level U.S.-China Comprehensive Science & Technology dialogue” that would

>”Identify targeted areas of cooperation on emerging technologies to solve global challenges such as climate change and natural disaster relief; and

>Provide a forum to air a discrete set of concerns around specific uses of emerging technologies while building relationships and establishing processes between the two nations.”

Unquestionably, seeking this balance and these mutual gains is appealing in theory, and it would certainly create the best of all possible worlds for U.S. tech companies that profit hugely from their current business with China and clearly envision much more to come, but whose every existence is threatened by the aforementioned predatory Chinese policies. But there’s no reason to believe that this panglossian result can actually be achieved.

In the first place, the report claims that “China’s campaign to explit U.S.-based research violates the research community’s core principles of integrity, openness, accountability, and fairness.”  That doesn’t sound like a terrific basis for mutually beneficial AI cooperation to me. 

Second, as the Commissioners note, “AI is the quintessential ‘dual use’ technology—it can be used for civilian and military purposes. The AI promise—that a machine can perceive, decide, and act more quickly, in a more complex environment, with more accuracy than a human—represents a competitive advantage in any field. It will be employed for military ends, by governments and non-state groups.”

In effect, they’re acknowledging that even the most seemingly benign AI progress fostered by Sino-American cooperation can and will be used by China for military and other threatening ends. It’s true that the reverse could hold, too. But who’s willing to take the chance that the Chinese would be as generous sharing any knowhow that could be used against it as the United States will be? And who seriously believes that a lobby-friendly Washington could exercise the kind of control over U.S. technologists that the dictators in Beijing will exercise over their Chinese counterparts – assuming that scientists and companies with long histories of enthusiastic voluntary tech transfer to China will end or even curb these activities outside this official dialogue setting?

And above and beyond these dual-use complications, the notion that the United States can successfully compartmentalize its China AI and broader tech policies so precisely and expertly seems bound to create a rerun of America’s approach to date. Even under the Trump administration, the diversity of interests and voices that inevitably shape decisions in a pluralistic, democratic U.S.-style political system kept blurring and otright undermining Washington’s focus. The product has long been much more incoherence and half-at-best-measures than either effective checks on China’s power or strong commitments to the kinds of government- and economy-wide tech promotion that’s rightly urged by this Commission – and by many others before it.

In other words, even years after China’s malign intentions became clear to a critical mass of American political and business leaders, they’ve continued to permit bilateral ties (in the Commission’s words) to be “complicated by [a] complex web of supply chains, research partnerships, and business relationships….” In turn, that’s the main reason why, to quote the report again, “The U.S. government is not prepared to defend the United States in the coming artificial intelligence (AI) era.”

In a previous post, I criticized the Biden administration for describing the U.S.-China relationship as a competition because the term is

“so intrinsically ambivalent (especially in the realm of world affairs) that its much likelier to confuse than to provide useful policy guidance. In addition, competition is a concept that evokes the playing field, where both victory and defeat have ultimately trivial consequences, rather than the fundamentally anarchic and much more dangerous international landscape. Consequently, its use tends to downplay even stakes otherwise defined more threateningly.”

This AI report greatly adds to the evidence that treating America’s dealings with China as a competition (including President Biden’s latest version: an “extreme competition”) can only lead Washington down a dangerous dead-end. It’s effectively contending that, even though China literally is seeking the United States’ defeat and domination, it’s still interested in helping Americans cure cancer or save the world from climate change, and that therefore current U.S. policy need only a large number essentially tweaks to keep safeguarding national security and prosperity adequately. And it assumes that American policymakers are skilled enough to achieve the needed “calibration” of rivalry and cooperation. (Watch this term turn into a favorite of U.S. officials and pundits – especially the globalists – going forward.)

I’m much more impressed with former boxing champion Mike Tyson’s observation that “Everybody has a plan until they get punched in the mouth.” In other words, what looks great on the drawing board – or on the word processor – tends to fall apart when it confronts reality.

The lesson to be learned isn’t that planning and strategizing isn’t necessary. Instead, it’s that particularly in high-stakes situations, the conceptually simplest plan will likely be the best. When it comes to the China challenge, including  artificial intelligence interactions between the two countries, that means spending much less time trying to thread needles, and more time figuring out how to shut down the transfer of superior U.S. knowhow to China as completely as possible.

(What’s Left of) Our Economy: An Open Borders Mainstay Gets (Kind of) Woke on Immigration

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amnesty, automation, illegal aliens, immigrants, Immigration, Open Borders, productivity, technology, The Economist, wages, {What's Left of) Our Economy

I’ve always felt that one of the most convincing ways to win an argument is to  spotlight instances of sources that normally oppose one’s positions actually agreeing with them. And I just stumbled onto an especially startling example that appeared about a year ago in the The Economist.

It’s often valid to view such dated material as old and therefore irrelevant news. But in this case, The Economist‘s February, 2020 feature titled “Immigration to America is down. Wages are up. Are the two related?” really is a landmark still worth examining, and for at least three reasons.

First, if there’s a single set of policies identified with this British magazine it’s staunch support for free trade. In fact, The Economist was founded in the mid-19^th century precisely to convince the United Kingdom to dismantle its longstanding tariffs. Not surprisingly, the magazine has also always backed the freest possible immigration flows.

Second, February, 2020 was just before the CCP Virus and the massive economic shutdowns it triggered swept over the United States. So The Economist was commenting on trends when the economy was normal by most definitions, and after three years of Donald Trump’s presidency.

And third, of course, even though a substantial return to a pre-virus normal economic normality is now widely expected sometime this year (whether or not President Biden’s virus relief bill and other “Build Back Better” programs are fully enacted or not), the new U.S. administration clearly is determined to turn the immigration spigots back on.

So it really was pretty startling to come across an Economist article leading off with this paragraph:

“In both 2018 and 2019 [U.S.] nominal wages rose by more than 3%, the fastest growth since before the recession a decade ago. Americans at the bottom of the labour market are doing especially well. In the past year the wages of those without a high-school diploma have risen by nearly 10%. Intriguingly, this has come as America has turned considerably less friendly to immigrants, who are assumed by many to steal jobs from natives and lower the wages of less-educated folk. The two phenomena may be connected….”

Moreover, in recent years, “It appears instead that the overall decline in the foreign-born population is a result of falling numbers of low-skilled migrants…. That is probably a consequence of policies implemented by President Donald Trump, as well as the off-putting effects of his rhetoric on foreigners.”

Not that The Economist endorsed this proposition wholeheartedly. The article correctly notes that “many factors” lie behind these wage increases. Indeed, that’s true for most trends in the economy and elsewhere in our big, complicated world. But it turns out that most of the reasons for skepticism about immigration policy’s decisive role cited in the piece are pretty flimsy when examined closely.

For example, minimum wage increases – and their benefits – have by definition been enjoyed exclusively by lower-income workers overall in the United States. But the magazine also has found that average wages in occupations that are especially low-skill-immigrant-heavy (e.g., construction and landscaping work) “are rising considerably faster than wages in other low-paid jobs.”

In addition, The Economist cites findings from the Brookings Institution (hardly a restrictionist organization itself) that “five big metro areas saw absolute declines in their foreign-born populations in 2010-18” and its own research showing that “wages in those areas are now rising by 5% a year….”

Perhaps most important, the magazine’s initial conclusion about the connection between fewer low-skilled immigrants and higher wages for the established national low-skill workforce is qualified with the phrase “but only for a while.”

In this vein, The Economist points to research allegedly demonstrating that during and after past “occasions when America has clamped down on immigration,” the results “ultimately [offered] little benefit to native workers—and may even harm them.” Yet some of these historical episodes – e.g., the freeze and follow-on restrictions on immigration from China that began in the late-19^th century, and expulsions of Mexican workers during the Great Depression of the 1930s – seem  marginally relevant at best to the U.S. economy today.

Even odder, the overarching lesson drawn by The Economist from this and related studies supports a claim made by current-day restrictionists (like me) that wide-open immigration policies retard productivity growth by enabling many industries to use cheap labor as an earnings- and profit-making or boosting crutch, rather than innovate their way to greater success.

According to The Economist, “In the short term, native workers may well see a wage boost as labour supply falls. But businesses then reorient production towards less labour-intensive products; natives take jobs previously occupied by foreign-born folk, which may be worse paid; and bosses invest in labour-saving machinery, which can reduce the pay of remaining workers.”

Yet logically, anyone supporting this position logically must also think that improving productivity and promoting technological progress doesn’t ultimately benefit entire economies – including workers initially displaced. Is The Economist really supporting such stick-in-the-mud-ism?

The answer, strangely, as readers learn in the very next paragraph, is “Of course not.” Because the article proceeds to claim that “Both low- and high-skilled migration are linked with higher productivity.” In other words, higher productivity is a long-run economic blessing after all, and it’s improved both by reducing and increasing low-skill immigration. Got that?

Of course, change at a single magazine, no matter how influential, is no guarantee of policy change.  But such publications aren’t often called opinion leaders for nothing.  And although rhetorically, the Biden administration seems as set as ever to supercharge U.S. immigration flows, maybe it’s no coincidence that its recent  stance on the southern border looks every bit as confused as this Economist take on immigration.       

Our So-Called Foreign Policy: Why Scalpels Won’t Cut it Against China

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Biden, China, China Strategy Group, decoupling, Donald Trump, Eric Schmidt, EU, European Union, FDI, foreign direct investment, Germany, Google, health security, Made in America, manufacturing, multilateralism, national security, Our So-Called Foreign Policy, semiconductors, Silicon Valley, supply chain, Taiwan, technology

Yesterday’s RealityChek post argued made clear that one of the two recent blueprints for China policy offered to President Biden from the foreign policy and technology establishments suffered from crippling internal contradictions.

The second effort, from the Silicon Valley-dominated “China Strategy Group,” can be read more profitably by the President, because popping up here and there are some insights that are genuinely valuable especially since they come from analysts once strongly supportive of what they themselves call the pre-Trump strategy of “near-unbounded integration.”

Principally, the group, which notably is co-chaired by Google co-founder Eric Schmidt, calls for recognizing that “some degree of [U.S.-China] disentangling is both inevitable and preferable. In fact, trends in both countries—and many of the tools at our disposal—inherently and necessarily push toward some degree of bifurcation.” In other words, it’s endorsed a limited version of what’s now commonly called economic and technological decoupling.

In addition, it argues that both this decoupling, along with tariffs that it acknowledges may be needed to push back against certain Chinese offenses and provocations, should be pursued even though they will entail costs – a refreshing and crucially important departure from the long-time pre- and post-Trump consensus in the mainstream American political, business and policy communities that any increased consumer or producer price, or loss of even a smidgeon of market share in China resulting from retaliation from Beijing, proves conclusively the folly of placin any significant curbs on doing business with the People’s Republic.

Finally, the group points out that efforts to rebuild domestic supply chains to reduce reliance on China for critical goods must involve “more than a focus on the end products. Safeguarding key technologies requires the United States to define and secure the entire ecosystem of production, from fabrication to supply to talent to cutting-edge innovation.” In other words, Washington can’t simply seek to become self-sufficient, or largely so, in face masks or ventilators or semiconductors. It needs to become self-sufficient or largely so in all the materials, parts, and components required to make these products.

Yet many of these important insights (and useful recommendations for restructuring the U.S. government to foster the competition with China more effectively) are kneecapped by equivocation and a resulting failure to understand that sometimes policy scalpels cut too finely, and some policy needles are too small to be threaded – especially considering the “all of society” drive China’s totalitarian system is making to gain global technology leadership, and the dangers to America’s “security, prosperity, and way of life” Chinese success would create.

For example, the group emphasizes that decoupling policy mustn’t invite “escalatory cycles of confrontation, retaliation, or unintended conflict” or overlook those areas “where cooperation, collaboration, and exchange with China is in our interest, as severing ties and closing off the United States to the ideas, people, technologies, and supply chains necessary to compete effectively will undermine U.S. innovation.” At the same time, the authors acknowledge that China will respond to any further U.S. decoupling moves “more aggressively” precisely because “China’s leaders understand U.S. dependency as an important source of leverage.”

So although in principle, this omelet can be made without breaking many eggs, Beijing won’t be cooperating in fact. And the circle can’t be squared with clever phrase-making like “navigating the asymmetric competition” that look satisfactorily reassuring on paper and in speeches to conferences but that need to survive the body blows that will inevitably be delivered by reality.

The group’s approach to Chinese investment in the United States (whether in the form of creating new businesses or taking over or contributing capital to existing firms) illustrates the other big drawback of granular approaches when it comes to China: They ignore how any Chinese entity big enough to play in any foreign market, and especially America’s, is under Beijing’s thumb in every important respect.

As a result, there’s no point in taking the time and expending the resources to follow the group’s recommendations to figure out which Chinese tech platforms (whose importance it emphasizes) are and are not violating American privacy standards or conducting misinformation campaigns dangerous to democracy, or censoring content Chinese authorities don’t like, or helping suppress human rights in China or anywherer else, or stealing valuable data, or helping terrorists and criminals launder money; or whether these activities matter enough to merit official U.S. attention, or whether troublesome practices can be negotiated away through talks with Beijing on technical and other fixes.

In this instance, Washington should stay out of the black holes of setting priorities and especially monitoring and enforcing agreements, and assume that by simply banning these platforms from operating in the United States and in fact prohibiting all Chinese entities from owning U.S. hard assets. The latter step would add the benefit of shielding participants in America’s economy from competition with subsidized, market-distorting outfits from China. At the very least, Chinese entities should be required to prove that they’re not controlled or subsidized in any way by Beijing, or engaged in the above malign activities, before gaining entry.

In addition, despite the group’s understanding that entire manufacturing eco-systems, not just final products, need to be rebuilt and nurtured to ensure supply chain security, it appears to underestimate just how widely these relationships extend. After all, most of the numerous inputs to goods like mechanical ventilators (like its controls, power sources, monitors, and alarm systems) depend on big and complex supply chain and manufacturing eco-systems themselves.

Further, just as before the pandemic, few expected face masks and surgical gloves to become products vitally important to the nation’s well-being, the list of critical goods is likely to change and grow over time as new threats emerge. Therefore, the group is correct in warning that “any product or service could be termed essential to national security in an extreme hypothetical.” But what’s the basis for confidence that many products or services can safely be ruled out, and that such hypotheticals will always remain extreme?

At least as important, like the Biden administration, the group’s determination not to ruffle too many international feathers has also clearly led it to back the notion that the definition of “Made in America” for supply chain purposes should actually mean, “Also Made in Lots of Other Countries” that it considers trusted suppliers. Unfortunately, many of the countries so classified imposed export controls on critical medical goods during the pandemic’s first wave last spring. That is, when cooperation was most needed, they built walls – meaning that their trustworthiness isn’t exactly ironclad.

And as then President-elect Biden learned when the European Union rebuffed his entreaty to consult with Washington before signing an investment agreement with China, the allies remain determined to fence sit in the U.S.-China technology competition. The group acknowledges that the list of anti-China partners “may include all of the [European Union], though in some cases EU position/member states’ positions are too ambiguous today with respect to China for inclusion in all instances, and members may need to be considered on an individual basis.” But simply stating this position and its EU-splitting ambitions is enough to make clear its absurdity – especially since the EU country most reluctant to cooperate against China is economic kingpin Germany.

None of this is to say that all trade with (as opposed to investment in hard assets from) China should be cut off completely, or that international cooperation can be of no use to the United States in its struggle versus the People’s Republic. In particular, (and due largely to recklessly indiscriminate free trade policies), America urgently needs products and knowhow now dominated by foreign producers (notably Taiwan’s semiconductor manufacturing industry, and Japanese and Dutch suppliers of key microchip production equipment and materials). And if other countries are willing to cooperate with Washington on various China containing initiatives at acceptable prices, more help is indeed better than less. But the United States will never safeguard its interests adequately without realizing that multilateralism can’t be an end in and of itself, and that against monumental threats, axes are usually more effective than scalpels.

(What’s Left of) Our Economy: U.S. Manufacturing Revival Plans Still Need Trump-like Tariffs

Tags

Buy American, carbon tariff, carbon tax, Dan Breznitz, David Adler, health security, infrastructure, Joe Biden, manufacturing, manufacturing trade deficit, research and development, supply chains, tariffs, taxes, technology, The New York Times, Trade, {What's Left of) Our Economy

I was thrilled to see today’s op-ed piece on U.S. manufacturing in The New York Times, and not just because co-author David Adler is a good friend. I was also thrilled to see it because a careful reading reenforces the essential notion that all the worthy proposals made by policy analysts and politicians lately (including apparent President-elect Joe Biden) on reviving industry will either come to naught or greatly underperform without steep, and indeed Trump-like, tariffs to shut a critical mass of imports out of the economy.

Those domestically-focused manufacturing revival measures have included more federal funding for research and developments, greater federal efforts to help smaller manufacturers in particular learn about and access research breakthroughs in academia and existing government labs, measures to help these smaller industrial firms access capital more easily, tax breaks to foster production and innovation in the United States, and more ambitious and better enforced Buy American requirement for federal purchases of manufactured products. In general, I’m strongly supportive, and have even criticized the Trump administration for giving them short shrift (even on the tax front, where the big 2017 cuts should have come with more investing and hiring strings).

From knowing David, I feel sure that he backs these intiatives, too; indeed, the article concentrates tightly on the Buy American slice of this agenda. And the piece gratifingly (but probably unknowingly) endorses an idea that I’ve made for many years, but that has gotten zero traction: requiring “all manufacturing industries to disclose how much of their sourcing and critical production takes place in the United States.” After all, how can Washington make the right manufacturing policy decisions when it relies so heavily for such crucial information from crumbs self-servingly cherry-picked by offshoring-happy companies themselves?

Yet as also suggested by David and co-author Dan Breznitz – who studies innovation policies at the University of Toronto – except for the Buy American proposals, the standard raft of manufacturing revival plans could work to  stimulate more production and supply, but pays inadequate attention to ensuring that all that supply is actually bought – which would eventually make companies think twice about producing more.

The authors place much stock in government’s ability to soak up this output, and so does Biden – who on top of making sure that more of what government currently purchases is American-made, has pledged to spend “$400 billion in his first term in additional federal purchases of products made by American workers, with transparent, targeted investments that unleash new demand for domestic goods and services and create American jobs.”

The former Vice President correctly contends that these measures will “provide a strong, stable source of demand for products made by American workers and supply chains composed of American small businesses.” The history of U.S. industrial policy also shows that early guaranteed government purchases helped new industries demonstrate the usefulness of innovative products that eventually interested the private sector and produced enormous new markets for their products on top of federal contracts. (Think “computers” and all the hardware and software used pervasively now not only in technology sectors but in virtually the entire economy.)

But U.S.-based manufacturers turned out just over $2.35 trillion worth of goods in 2019 (the last full pre-CCP Virus year). And the manufacturing trade deficit that year was $1.03 trillion. So unless it’s supposed that that 2019 level of domestic manufacturing production is remotely adequate (and clearly, the manufacturing policy reform supporters don’t), or unless they believe that government should buy much more of the output than the $400 billion Biden proposes over not one but four years (to sit in warehouses?), generating more private demand for industry’s output will be essential as well.

As indicated above, David and Dan Breznitz argue that more detailed, accurate labeling will help by enabling more consumers and private businesses to act effectively on their naturally strong preferences for Made in the USA goods – not only out of patriotism, but because of reasonable convictions that their quality and safety are superior. I remain all in favor, but the immense popularity of imports among both classes of customers (made clear by the huge and chronic manufacturing trade deficits) despite numerous news accounts over the years of shoddy, outright dangerous foreign-made products (especially from China), demonstrates that much more will need to be done to spur demand for U.S.-produced manufactures.

RealityChek regulars will not be the slightest bit surprised that I’m ruling out overseas demand as a promising net new source of customers for American domestic manufacturers. Unfortunately, the persistence of the huge manufacturing trade deficits is also evidence that most of America’s international trade partners are far too devoted to the health of their own industrial bases to permit major U.S. inroads. In fact, if anything, they’re likely to step up their own efforts to strengthen their own domestic industries by further curbing U.S. and other foreign competition. And that’s where the tariffs come in.

Not that David and Dan Bernitz, or Biden, overlook the need for U.S. market protection entirely. The former, for example, call for “Stopping predatory pricing by foreign manufacturers” – which entails slapping tariffs on these usually government-subsidized artificially cheap goods. The latter makes similar points, and has also mentioned a carbon tariff on products from countries that base their competitiveness on ignoring “their climate and environmental obligations.” (At the same time, Biden could use a similar levy to punish domestic companies that don’t measure up in his administration’s eyes climate-wise, leaving the net benefit to U.S.-based manufacturing minimal.)

Moreover, to ensure adequate domestic supplies of the healthcare goods needed to fight the next pandemic, simple stockpiling of products by government will be necessary. And since practically everything wears out over time, or becomes outmoded, lots of re-stockpiling will be necessary. Meanwhile, it should go without saying that many of the government purchases of manufactures will be used for critical national purposes – like repairing and building all kinds of traditional and technology infrastructure systems, and producing whatever new military equipment or refurbishing of old equipment the new Congress and the likely new administration wind up supporting.

But these are of course public purposes, and since the United States is still a strongly private sector-driven economy, that’s what’s inevitably going to determine the success of most manufacturing revival efforts. So unless manufacturing revivalists want government to play a veritably dominant role in production and consumption decisions, their strategy will employ tariffs – but not in a targeted, sector-specific, and reactive way, much less as an afterthought to domestic initiatives. Instead, they’ll be proactive, come in a flat-rate form, and stand high enough to encourage plenty of new market entrants that it makes sense to join established enterprises in vigorous, overwhelmingly domestic competition for America’s immense pool of customers.

Our So-Called Foreign Policy: Biden Multilateralism Looks Ever More Muddled

Tags

alliances, Antony Blinken, Biden transition, China, decoupling, globalism, international institutions, Jake Sullivan, Joe Biden, multilateralism, Our So-Called Foreign Policy, technology

Attention to anyone in touch with the Biden foreign policy transition folks – I’m offering a deal.

I’ll stop charging that its top members (and especially Cabinet and similar nominees) keep spouting patently and dangerously vapid globalist foreign policy ideas if they provide some evidence that something other than patently and dangerously vapid globalist foreign policy ideas are going to shape their upcoming stewardship of American strategy and diplomacy.

So far, however, the evidence keeps showing that they have a long way to go, starting with Secretary of State nominee Antony Blinken. In his remarks accepting the position (subject to Senate confirmation of course), this quintessential Clinton and Obama administration retread spoke movingly about his family’s Holocaust roots, but committed one of the cardinal sins of not only diplomacy but any policymaking or politicking: He advertised weakness.

On top of failing either to mention or – more likely – recognize that the international cooperation and multilateralism that’s he’s elevated from a foreign policy tactic to a goal in and of itself will inevitably have content, and that therefore America will often need to play hardball in order to ensure favorable outcomes, Blinken emphasized that “as the President-elect said, we can’t solve all the world’s problems alone. We need to be working with other countries. We need their cooperation. We need their partnership.”

It was nothing less than an open invitation for U.S. friends, foes, and neutrals alike to assume that such problem solving efforts matter more to the United States to them, and that they can therefore repeatedly roll Washington by playing hard to get, and often simply stonewalling until the United States caves in to their stances.

And if you think that America’s wealthy, powerful, and influential allies, whose agreement will be rucial to the success of any international cooperative efforts, would never sink to these tactics, you need to learn some Cold War history. Even when the free world faced a Soviet threat that all of its members viewed as existential, countries like (then) West Germany and South Korea, which literally lived on the front lines, successfully free-rode for decades on Washington’s defense guarantees because U.S. leaders continually spoke and acted as if they’d maintain these military (including nuclear) umbrellas at all costs because they were vital to America itself.

To make matters even weirder, shortly before the election, Blinken – the fetishizer of international cooperation and multilateralism — justified these globalist priorities with an argument drawn straight from the very foundation of America First-ism, at least as I’ve defined it.

I’ve written that America First is the foreign policy approach most suited to the United States is one understanding that, although the United States is not strong, rich, and or smart enough to create a benign global environment or meet truly global challenges all by itself, it is plenty strong, rich, and smart enough to remain safe and prosperous in a world sure to stay anything but benign.

So imagine how surprised I was to see this Blinken statement at a foreign policy conference in October, when he was firmly established as a leading Biden spokesman: A new administration’s approach to world affairs would include “humility, because most of the world’s problems are not about us, even though they affect us.”

Now there’s nothing inherently wrong with addressing overseas situations that “affect us,” as opposed to representing mortal threats. If opportunities arise for the United State to better its lot, it’s of course reasonable to pursue them. But they shouldn’t be pursued until U.S. leaders ask themselves whether the best way to achieve such goals is by joining international cooperative efforts, or relying on any foreign policy approaches at all, rather than trying to build up its own capabilities and reducing its own vulnerabilities. As I’ve also written, in many instances, the latter, America First-y approach will be the superior or more promising, if only because the nation will always be able to influence its own affairs much more effectively than the affairs of others.

Finally, even when Biden aides do display some awareness that U.S. foreign policy needs to be something more than a content-free quest for cooperation, regardless of the stakes for Americans, they haven’t made much progress on figuring out what this content should be – or sharing the results with the public.

More than a year ago, the apparent President-elect’s choice for White House national security adviser, Jake Sullivan, wrote in the leading journal Foreign Affairs, that the central task of U.S. China policy must be to find a way to establish a modus vivendi with Beijing recognizing that the People’s Republic is here to stay as a great power. He stated that “Such coexistence would involve elements of competition and cooperation,” which sounds like yet another glib formula for emphasizing means over end. But Sullivan did specify that America’s policies must identify and seek outcomes favorable to U.S. interests and values.”

On broader matters, Sullivan even contended that “Going forward, Washington should avoid becoming an eager suitor on transnational challenges. Eagerness can actually limit the scope for cooperation by making it a bargaining chip.” Hopefully, he’ll communicate this “Don’t advertise weakness” to Blinken and the rest of a Biden administration.

So that’s progress. But in the year that’s passed since this piece came out, we’ve heard little from Sullivan or anyone else connected with Biden on what will be acceptable to a new adminstration and what won’t be, and less in the way of plausible tactics for achieving these goals or creating these conditions.

For example, Sullivan’s description in his article of ways to deter a Chinese attack on Taiwan – or other targets in Asia – demonstrates no awareness that Beijing’s ability to hit the U.S. homeland with large numbers of nuclear weapons looks formidable enough to inhibit conventional American military responses strong enough to threaten Chinese gambits with defeat.

Sullivan allows that Washington will need to use “some enhanced restrictions on the flow of technology investment and trade in both directions,” in order to “safeguard its technological advantages in the face of China’s intellectual property theft, targeted industrial policies, and commingling of its economic and security sectors.”

But because Sullivan’s overarching goal appears to be avoiding the “Balkanization” of “the global technology ecosystem by impeding flows of knowledge and talent,” he’d place limitations on these curbs that would result in a piecemeal response to a systemic threat. And even individual restrictions that are approved would surely be watered down to the point of ineffectiveness thanks to Sullivan’s insistence that they be “undertaken in consultation with industry and other governments” – two groups that have displayed not the slightest inclination significantly to disrupt business with China that they’ve each found tremendously lucrative.

And in fact, Sullivan ends up ignoring his own sage advice about the limits of international cooperation and multilateralism for their own sakes by declaring a faith in their capabilities that looks stubbornly blind. Why else would he end his article with these declarations?

“Establishing clear-eyed coexistence with China will be challenging under any conditions, but it will be virtually impossible without help. If the United States is to strengthen deterrence, establish a fairer and more reciprocal trading system, defend universal values, and solve global challenges, it simply cannot go it alone. It is remarkable that it must be said, but so it must: to be effective, any strategy of the United States must start with its allies.”

Which sounds like we’re back to Blinken-ism. With my offer still firmly on the table.

(What’s Left of) Our Economy: Are Businesses Closet Techno-Nationalists?

Tags

CCP Virus, China, coronavirus, COVID 19, decoupling, General Electric, globalization, innovation, nationalism, tech, technology, Wuhan virus, {What's Left of) Our Economy

Even if these poll findings are as off as many of the surveys of the 2020 election vote were, they’d still be pretty astounding. After years of multinational companies all over the world (including and perhaps especially in the United States), proclaiming that promoting innovation requires ever greater cooperation with partners across borders, General Electric’s (GE) latest annual survey of business views on the subject turned up strong support for what it calls a protectionist perspective.

It’s definitely something to keep in mind the next time you hear the China-coddling corporate Offshoring Lobby insist that a major U.S. economic decoupling from the People’s Republic would cut America off from an increasingly important source of technological progress, or the Open Borders-friendly Cheap Labor Lobby claim that restricting the inflow of foreign technology workers would deny them and the national economy as a whole access to many of the world’s best talent.

GE has been conducting these studies since 2011, and this year has looked at the subject twice – in January and September. In toto, the views of corporate innovation executives from 22 countries ranging from Kenya to the United States were sampled. (The January poll reported results from 22 countries and the September follow up from ten.)

Among the most startling results:

>This past January, fully 66 percent of the U.S. executives who responded considered that the country is “self-sufficient, and does not need to rely on other countries to innovate.” By September, this figure had climbed to 78 percent.

>In China, the comparable figures were 56 percent and 52 percent, respectively – meaning that, at least according to this GE study, China’s confidence in its technological autonomy has declined.

>Going global, in September, 69 percent of respondents reporting that their national governments had become more techno-protectionist in the last six months said that these policies had “a positive impact on innovation.” Viewed from the opposite end of the policy spectrum, only 41 percent of respondents reporting that their national governments had become less protectionist during this period considered this shift to have benefited innovation.

>In September, nearly all (94 percent) of the respondents from that month’s smaller sample agreed that “a protectionist stance is important to help address the major economic problems in this country created by the pandemic” and an equal percentage believed that such policies are “important to help the domestic economy recover.”

One reason for this support of techno-protectionism might be the widespread belief that it’s increasingly become the way of the world. Fully half of the September respondents told GE that “their government has taken a more protectionist stance during the COVID-19 pandemic” with only 13 percent reporting movement in the opposite direction and 34 percent perceiving no change.

At the same time, the GE poll revealed a deep ambivalence in business ranks about the virtues of tech self-sufficiency. Notably, 86 percent of the September respondents agreed that “More partnerships across countries will help drive progress on innovation.” And half worried that “Restrictions on movement of people/goods/services” were “a major cause for concern regarding innovation progress.”

One possible reason for the continued belief in the value of international collaboration: seemingly strong confidence that techno-nationalism (at least in their home market) will be a flash in the pan. Only 22 percent believed that such protectionism would last more than three years.

These results hardly exhaust the list of unexpected findings from the GE report. In fact, you’ll be seeing some more of them on RealityChek this week. But the discrepancy between them and the almost unamimous endorsement for the free movement of technological knowledge across borders from the corporate community deserves much more attention, and represents evidence that many of the globalist public positions taken by these executives’ companies and businesses stem from concern not for for the national interest, but for their own already healthy bottom lines.

Our So-Called Foreign Policy: China Advice that Biden (Unfortunately) Could Take

Tags

America First, Barack Obama, Biden administration, China, decoupling, globalism, Joe Biden, Our So-Called Foreign Policy, technology, Trump, University of California at San Diego

Since due to Election 2020’s results, the United States may be at a turning point in China policy, a new report from a bunch of supposed experts assembled by the University of California at San Diego that would ordinarily deserve obscurity merits some coverage. Not that any of the analyses or policy recommendations in this blueprint for a post-Trump approach make much sense, or even hang together coherently.

Instead, Meeting the China Challenge is most noteworthy for unwittingly showcasing key reasons why America’s strategy for the People’s Republic failed so dangerously for so many decades until an America First-y President won the White House – and why its recipe for renewed blundering previews much of a likely Biden administration approach.

Right off the bat it needs mentioning that Meeting flunks the important test of accountability. The “Working Group on Science and Technology in U.S.-China Relations” that wrote it is filled with Obama administration veterans and other backers of the pre-Trump strategy. Further, the University’s 21^st Century China Center that’s one of two co-sponsors (along with the corporate funded Asia Society) declares that its mission is “enhancing U.S.-China relations.” That’s an appealing goal in the abstract, of course. But in practice, even in the best of circumstances, it’s represented the kind of gauzy globalist hopium that tends to give short shrift to specific, concrete uniquely American interests.

And since this strategy’s long-time pursuit created circumstances not remotely qualifying as “best,” an intellectually honest team of authors would have asked itself why its previous recommendations turned out so badly, what lessons it’s learned, and how they can be applied to the U.S.-China policy landscape today. Since the report addresses none of these questions, readers are fully entitled to ask why this group’s advice should be taken seriously now.

Substance-wise, Meeting the China Challenge sets the stage for permitting it actually to worsen by foundering on one of the biggest policy rocks that have undercut other leading criticisms of the Trump approach.

Specifically, although the report does a surprisingly good job of portraying the China challenge as systemic and genuinely menacing, it generally calls for responses that are piecemeal and subordinate to that overarching objective of “enhancing the relationship” – including preserving opportunities to cooperate on “shared interests in such global issues as economic growth and stability, climate change, and public health.” In fact, the Working Group is convinced that “Permeating every facet of the U.S.-China relationship will be crucial capabilities in science and technology that will feature both intense rivalry and necessary cooperation.”

I’d be the last one to rule out categorically any overlap between U.S. and Chinese interests, or the possibility of threading the above policy needles. But as yesterday’s post explained, international cooperation has content, and if Washington wants to make sure that it unfolds on terms acceptable to Americans, it will need the relative power to wield the needed leverage and drive the necessary bargains.

More fundamentally, though, Meeting the China Challenge‘s optimism on cooperation assumes maintaining a degree of policy compartmentalization that even the authors seem to doubt ultimately can be maintained – as indicated by the following passage:

“We recognize that the United States faces real and growing security threats from China. While we hope that radical decoupling will never be necessary, and understand that such a step would have dire consequences for the global and American innovation systems, we would be foolish to ignore the possibility that it may become unavoidable. Unless and until such a decision is made, the role of the scientific and tech community [and presumably the U.S. government] should be to pursue worldwide collaboration in accordance with practices that mitigate the risks from openness.”

The big and obvious problems are that (1) maintaining a (pre-Trump) business-as-usual posture on “worldwide collaboration” risks permitting further Chinese catch up with the United States and (2) even if Washington wakes up to the need for decoupling before it’s too late, does anyone truly believe that American strategy can shift quickly enough to preserve an adequate edge?

The weaknesses of Meeting the China Challenge hardly stop here. The authors, for example – just like ostensible President-elect Biden – also put way too much stock in mobilizing allied support and working through international institutions like the World Trade Organization (WTO) to manage the China risks it perceived – even though the lucrative economic ties many of these allies have created with Beijing (often at the United States’ expense) will surely keep them firmly on the fence for the foreseeable future. And precisely because they’re so compromised, the international institutions these countries numerically dominate will keep resisting in effect outlawing Chinese transgressions.

Other recommendations are much better – e.g., bolstering “U.S. innovation capabilities through meaures ranging from increased funding for fundamental research to selective upgrading of our production system.” But these are anything but distinctive nowadays.  (See, e.g., the bipartisan support described here for reviving domestic semiconductor manufacturing prowess.)  

But the most insightful observation made by Meeting the China Challenge underscores a challenge that continues to defy the authors themselves and other globalists: the “expert community has serious homework to do if it is to get right…foundational issues for the bilateral relationship….”