China is heavily investing in munitions and acquiring high-end weapons systems and equipment five to six times faster than the United States. China is also the world’s largest shipbuilder and has a shipbuilding capacity that is roughly 230 times larger than the United States. One of China’s large shipyards, such as Jiangnan Shipyard, has more capacity than all U.S. shipyards combined.
"U.S. Defense Industrial Base Is Not Prepared for a Possible Conflict with China"
I don’t understand why the US voluntarily gave up its significant advantage in manufacturing. Is it just because it would be impossible to have an industrial base in a world where Asia exists and can produce everything that could be built in the US for 1/5 the cost? In every universe where the US dollar is significantly stronger than the next greatest probable superpower, will that next greatest probable superpower always be in a perfect position to exploit this disparity and become the de facto world leader in heavy industry?
If you can get an extra lambo in your garage, by firing all your factory employees, and move your manufacturing to China, well...what do you think will happen?
This is especially egregious, because the few folks that have enough ethics to not do that, get driven into bankruptcy, by the ones that do.
The general consumer market basically wants cheap. If they can get stuff that does what they want, for less, then they go that way. They aren't particular, as to the source.
The market for High Quality is actually pretty small. People that make good stuff, don't get rich. People that make lots of cheap crap, get very rich.
The only way to reverse this, would be to invoke protectionism (or have a war, which will do that, anyway). That isn't very popular, with this crowd.
Sure, it can be very popular with the people whose specific industries are protected, and there’s many who like it in the abstract - but if you’re the party in power when everything gets more expensive as a consequence of protectionist policies a lot of people are going to be very unhappy with you.
Protectionism is expending resources to direct production to areas where you have weaker comparative advantage — it is, in other words consuming value to force your people to create less value.
There may be very specific cases where very carefully tailored uses of it are good for certain long-term interests or risk mitigation, but mostly it is waste — and extremely subject to corruption from those invested in inefficient industries.
> consuming value to force your people to create less value
That's the "spherical cow on a frictionless plane in a vacuum" of economics.
Protectionism is probably a good idea when the competitor is temporarily subsidizing various industries to build a permanent comparative advantage that can then be abused, either by being an effective monopoly, or by shaping your enemies to be logistically unprepared for war.
Protectionism does almost nothing to prevent that comparative advantage from being built unless all other consuming countries in the market also add a tariff. And most of them will not. Using the WTO to coordinate a response is a much more fruitful way in such a situation (but the WTO has been neutered by Trump).
While you’re not wrong about people’s motivations, or the market’s sentiments, I do think this isn’t the right take on globalised industry. There’s no need to close US factories and move workers - it will happen naturally. For example, nobody closed US auto factories to move production to Japan - the Japanese out-competed the US on price and quality. The same is just starting to happen with electric cars now. Greed may have accelerated this transition, but it was inevitable.
Protectionism necessarily requires import fees for that reason. To offset the price difference you have to make foreign goods artificially more expensive.
>People only think of personal quick gains over long term generational games as has been shown time and time again
Nonsense. It has been shown for much longer and many more times that people have a capacity to act on the long-term. It might involve various social thought mechanisms like religion, moralism, and politics that prevent so-called progress, but evolution often favors societies who act on the long-term. This is a especially true in moments of sudden catastrophe. A classic example is Catholicism in the face of the plague.
> If you can get an extra lambo in your garage, by firing all your factory employees, and move your manufacturing to China, well...what do you think will happen?
I wonder what would happen to a Chinese CEO who pulled a stunt like that? I hear they send the next of kin the bill.
> The only way to reverse this, would be to invoke protectionism (or have a war, which will do that, anyway). That isn't very popular, with this crowd.
Because we know that protectionism with people like those you explained at the top
> If you can get an extra lambo in your garage, by firing all your factory employees, and move your manufacturing to China, well...what do you think will happen?
does not guarantee better products/outcomes. Those who would use basically slave labor offshore for profits, will also do other nasty things for profits at home as well. Not a fan of dichotomy like these.
I want cheap Chinese electric cars here in the US.
> I want cheap Chinese electric cars here in the US.
Not sure I support that broad a statement.
Here in NY, we have had many instances of dangerous building fires, caused by cheap Chinese scooters, which are a favorite transportation mode for folks without means.
A number of these fires caused many families to lose their homes and meager possessions, because one tenant was charging crap batteries.
I kinda hate this "Chinese = crap" narrative, it's naive, it misses the forest for the trees.
Just because they are the biggest manufacturer in the world they also produce lots of crap, it's just statistically more probable that you gonna find lots of crap that's Chinese, but generalizing this over entire industries and all kind of products is just...naive.
It kinda reminds me of that documentary where a Chinese billionaire buys a plant in Ohio to make car glass and American workers looked like crap compared to their Chinese counterparts when it came to the craft, even though they did produce glass before already before the Chinese ownership.
It's the kind of narrative that people pushed on Russian army after their failures in Ukraine claiming huge incompetence and their incoming demise. Or when people were sure their economy was gonna collapse because this and that.
Just saying stuff doesn't make it true.
The longer we keep with those biases the more naive and vulnerable we'll keep being.
Quality control is a LOT lower in China than in the US, and that's even considering the US's bias towards industry in its legislation. This is why chinese electronics catch fire a lot more (than Japanese ones, for example, too).
There's a huge amout of corruption, and almost no regulation.
This is definitely true. I have a friend that runs a corporation that does a significant amount of manufacturing in China. His company is known for extremely high Quality.
He has told me that he does need to hire a lot of folks to ride herd on production; more than in other places, though (he has had many places that run his production).
If he does that, he finds they do an excellent job.
China had a steady supply of cheap skilled labor. Automation has made that less important than it used to be, but back then it was a decisive advantage. At least when combined with good enough quality and sufficient political stability.
One mistake the US did was switching from defined benefit pensions to individual retirement savings. When the stock market is something you hear about in the news, most people don't really care about it. But when you see it in your retirement account balance, it becomes relevant. If outsourcing to China is good for the stock market, you vote politicians who make it easier.
> One mistake the US did was switching from defined benefit pensions to individual retirement savings.
Depending on how the pension system is setup, it could become an indefinite pyramid scheme. You end with countries like Canada (and many in places like Europe) constantly importing immigrant labor just to prop up the older generations' retirement. It kicks the ball down the road.
This happens in any pension system you design. If you invest your retirement savings in stocks, you're not magically wealthy: you're just finding another mechanism to have younger workers pay for older retirees. And if the stocks you buy are heavily invested in foreign countries with authoritarian governments and low birth rates, you're trading one problem for different ones.
No idea what you are talking about. Europe has a wide variety of different pension systems, many are based on stock market investments. Very few countries in Europe takes in significant numbers of migrants, generally Europe is very anti-immigrant.
> Very few countries in Europe takes in significant numbers of migrants
Yes, but that's the biggest EU countries and they take a lot of migrants. Wikipedia says 18% of Germany population are first-generation immigrants. In comparison, in US it's only 14%. For the whole EU the number is around 11%.
> generally Europe is very anti-immigrant.
From what I know about "how to legally immigrate to US" vs "how to legally immigrate to Europe", the latter is much easier. The public sentiment might be there, but the laws say the other way.
Never said it is easy, it's just much easier than immigrating to the US.
Legally immigrating to the US (getting a residence permit) is either a matter of luck (lotteries), extraordinary skills, very long waiting lists, or a combination of these.
On the contrary, immigrating to the EU is "just" finding a job on the local market and applying for some paperwork. And the EU does not discriminate you on the basis of the country where you've been born.
Interesting, thanks for asking. To me the thread's context was that some European countries are "importing" migrants to bolster their pension schemes and that this is a bad thing (why?) An argument about immigration ensued and those often rub me the wrong way, being an immigrant and stuff. The part of "the public sentiment [for stricter immigration controls] is there, but the laws say the other way" is triggering me, too, because it alludes to some kind of "silent majority" which around these parts (ie. Germany) is usually brought up by loud minorities from the far right. I'm not denying that xenophobia is on the rise (here and everywhere) but it is not the sentiment of "the public". Combined with a description that seemed to lament the apparent lack of stricter controls led me to question why it would be important where you are born if you obey the law. Thinking of that, why would it be important if you don't?
Anyhow, revisiting the thread I can see that the post I answered to could be meant differently. I thank you for that and would like to advance my apologies to the OP in that case.
> The part of "the public sentiment [for stricter immigration controls] is there, but the laws say the other way"
...was a response to this quote from original OP:
> generally Europe is very anti-immigrant
and there is "might be there" not "is there" in my post. I just don't really know the public sentiment in Europe enough to argue with original OP, so referred to the laws instead, to show that Europe is not anti-immigrant.
> Combined with a description that seemed to lament the apparent lack of stricter controls led me to question why it would be important where you are born if you obey the law.
It's not! To the contrary, my description was meant to show how harsh US immigration system is compared to the EU's.
> would like to advance my apologies to the OP in that case.
Please, nevermind. Your question was okayish in the context of the thread, plus I'm not the kind of person that can be offended by an Internet discussion.
> But immigrating to the US is difficult even if you're from a rich country like one in the EU.
If you are thinking like my Portuguese friend complaining about how "hard" it was because it took six months to immigrate to the US, you have no idea how hard it is for other people to come to the US legally.
No, I'm talking about being completely unable to immigrate because they can't find an employer to sponsor them. I'm talking about failing the H1B lottery for years and having to leave.
I'm not talking about filing paperwork taking a long time.
I agree it's harder if you're not from a developed country, but it's hard for a lot of people across the board.
> Remember that EU has a free flow of work force, so I expect lots of those 18% will come from Netherlands or France.
What's the point for the native citizen of Netherlands or France in moving to Germany? The quality of life and salaries are similar, but the culture context is just so different between these countries. Completely different languages, different customs, etc. The numbers surely confirm that - the France is in the bottom of the list, and Netherlands are not even included. [1]
Anyway, out of ~14 million foreigners in Germany only 5 million are from other EU states, and most of them (~3 million) are from Eastern European countries (Poland, Romania, Bulgaria, Croatia and Hungary).
> In Sweden at least, immigration was always biggest from neighboring countries (e.g. Finland/Norway)
There are less cultural differences between Sweden, Finland and Norway. At least they have more or less similar languages (ok, Finnish is different, but Sweden is also an official language in Finland).
Out of ~14 million foreigners in Germany only 5 million are from other EU states, and most of them (~3 million) are from Eastern European countries (Poland, Romania, Bulgaria, Croatia and Hungary). [1]
Then, why is it misleading to compare Polish and Romanian immigrants to Germany with Mexican immigrants to US?
Portuguese here, yes we most definitely are. It’s been of the arguments to support immigration by the previous government since they usually are always net contributors to Segurança Social (Social Security).
It's not because a politician say something that it's true, you should know better ;).
The reason why governments promote immigration is because they want to increase the workforce (and in the case of Portugal, replace all the emigrants from Portugal). As the population is aging, if you want to keep cheap labor you need new arms to work, no matter who pays for the pensions.
If you have pension funds that invest on the global financial market, then pensions are being paid by workers worldwide through the companies profits. So the amount of money you get for pension can remain or even increase even if your national population collapses.
But the supply of workers needed to provide the basic goods your aging population needs (including healthcare) shrinks and if you don't accept immigrants you end up with labor shortage (Or you raise the salaries for these jobs, but then the rest of your economy disappears because there's no one working there anymore).
She desperately wanted to avoid "bad scenes" at German borders.
IDK if the book of journalist Robin Alexander "Die Getriebenen" (the driven ones, meaning top German politicians driven by events) was ever translated to English, but that guy had daily access to the Chancellory and describes the situation to a T.
Merkel built her career on media appeasement and an illusion that Germany is in such good hands that nothing untoward can happen to it. It sort-of worked until 2015, when the outside world could not be kept at bay anymore.
Angela Merkel built her career in the GDR under Soviet rule, in case this fact or the eviction of hundreds of thousands of families from their homes in Germany to house those immigrants is of interest to you.
I think she actually did, that and her Christian beliefs. Not all of politics is cynical, sometimes politicians are selfish and unreasonable and act on their principles. There were more fiscally prudent ways for Germany to increase its population for various political and economic ends if Merkel so chose to use them.
Even if the will to have younger blood to fuel the economy is a driver for such a move, it has nothing to do with propping up pensions: in an aging population you'll need people working in your country if you want to keep things running, no matter how your pensions are being paid…
I think it's much better that ordinary people actually are active participants in how money is made and value is created, and have some control of their own destinies, even if that pushes some burden onto the individual.
The alternative is having the worldview that money is something that shows up on your bank account on the first days of the month.
> The alternative is having the worldview that money is something that shows up on your bank account on the first days of the month.
I think that is how normal people (is the term "unsophisticated investors" or does that mean something importantly different?) view sock market investments — sure, it says your investment may go down as well as up, but how many normal people doing investments act like that's true?
If we believed that was true, we wouldn't invest. At retirement, a 100% chance of $X is worth much more than a 50% chance of $2X and a 50% chance of $0.
The average person has a worse understanding of investments than does ChatGPT, including with regard to logical consistency and following the implications of what they say they believe. This is also why so many treat lotteries and pyramid schemes as "good investments".
Even one step up from that, my dad's advice to me was: "Invest in Lloyds bank, if they go under we have bigger problems". We had bigger problems.
(To riff off what some ancient dead Greek philosopher said, the only reason I can meaningfully regard myself as better informed than most, is that I am aware of how little I know).
Chinese cheap labor set a Japanese automation back by a couple of decades. Coming into the 90s, Japan was pushing more and more automation as a way to deal with their declining workforce, then China fully opened up in the late 90s and that was history.
For the longest time Chinese made Toyotas were of much lower quality than Japanese ones, simply due to precision robots being used in Japan for work that was being done manually in Chinese factories. Now that China made is also hitting a demographic cliff, one thinks that maybe again automation will take hold…or maybe Africa and India will develop next.
Defined benefit pensions themselves are set to implode once population growth stops - they are a Ponzi scheme that will break down within a hundred years resulting in at least a reduction in benefits.
Under-funded defined benefit pensions may be a Ponzi scheme. But properly funded (X% of salary per month, calculated to cover future costs) defined benefit pensions are significantly cheaper for a given level of benefits, because they only pay out only until the beneficiaries die. Employee owned accounts (IRAs, 503Bs) are passed on to the next generation. Good for the kids, but not for the parents or the company.
> Don't see how it can "implode" -- the pensions would just get smaller.
Two problems with this:
First, it will get small enough that you won't have a retirement and will work till you die.
Second, reducing pensions tends to be quite unpopular, and when chasing profits for the current quarter, CFO's don't care about the unsustainability of pensions decades down the road. By the time they have to deal with it, it's too late.
Oregon still has a defined benefits pension for its workers, and the problem is here and now. Small towns cannot afford to hire more firefighters, police, etc as their population grows because more and more of the money they have is going into paying out the defined pensions. They keep getting around this problem by taking out more loans to sustain those pensions. Despite the problem being now, they cannot politically reduce benefits for new hires.
Defined benefit and defined contribution plans both have access to the same government bonds and private markets. If a 401k can fund a retirement, so can a pension fund. Likewise, if broad changes to the economy cause a reduction in pension benefits, those changes will also result in reduced benefits for 401k owners.
Have you ever heard about the Jones Act? The US tried to specifically keep shipmaking capabilities, but implementing such protectionism arguably backfired. The point is, what policies would you have implemented to keep that manufacturing capacity?
Financialization is eating the rest of the economy. That is the beast that must be slain if we wish to survive. Since that is not going to happen I think it is wise to instead prepare for the worst.
Some countries will fair better than others, so perhaps move to a country that maintains cordial relationships with both China and the US. I'm preparing by learning how to design and make things so I can do my own manufacturing in-house to minimize dependency on supply lines that could be disrupted. Manufacturing technology is has improved in leaps and bounds. It's much easier that it used to be. And I can do all this from a self sufficient homestead deep in the forest.
> Some countries will fair better than others, so perhaps move to a country that maintains cordial relationships with both China and the US.
I moved to Singapore a while ago. Not for those reasons, but being on good terms with almost anyone certainly is a nice bonus.
Though my question was rather, what policies would a country want to adopt?
> Manufacturing technology is has improved in leaps and bounds. It's much easier that it used to be. And I can do all this from a self sufficient homestead deep in the forest.
Yes, but that's essentially just a hobby or at most craft production. So that is neither competitive as mass production in peace time, nor of much use for mass production in wartime.
(It definitely sounds like a great hobby, though!)
Being on nice terms is a policy. One way is by having a defensive oriented army and not getting involved in conflicts. Big chunks of the world already do this.
While I am treating it as a hobby I do have a garage full of CNCs, 3D printers, laser cutters, a pretty complete machine shop and the ability to do some foundry work. I am not expecting a complete collapse of society, mainly the collapse of the middle class as gradually the things they need get more expensive and they earn less. Being able to make stuff myself is already saving me money - you’d be surprised that for many of the bespoke things I need it is far cheaper to make it myself than send it out to a job shop. The idea is to be able to make replacement parts to contribute to the success of my local community so that it’s in their interest to shield me from whatever is going on beyond my gates.
A mostly self-sufficient homestead isn't a hobby, it's a way of life.
And the user you're replying to is advocating for that way of life because they are predicting a severe downfall in the quality of life for those who stay in the global system.
I have a sneaking suspicion that they're going to be right.
I'm skeptical that market consensus (whatever that really means anyways) is good at predicting events like ecological collapse and deranged authoritarians launching senseless wars of aggression.
> [...] market consensus (whatever that really means anyways) [...]
If we had proper prediction markets for arbitrary events, I would just directly talk about what those prices are. In the real world, we have to look at the prices of existing financial instruments and see which of these can be used as proxies for the events we are interested in.
For some events that fairly easy: if Russian government bonds trade at high prices in 2021, it's unlikely that Russia's dictator will start a senseless war of aggression soon. (In reality, the price of Russia's bonds went down in the runup to the war.)
For other events you have to be more clever: if you want to get a sense of the market estimate for the probability that an asteroid impact (or similar) will erase all life on earth, you can't just look at the price of a straightforward bet that pays out one dollar, if the asteroid hits: most of us would be dead, and the dollar would likely be worthless.
However you can create a bet that has the right structure: Alice gives Bob 100 dollar now, and in five years, Bob gives Alice 500 dollars (but obviously only if the asteroid hasn't killed Alice and Bob). The market price of such a contract can tell you something about the market consensus estimate of a collapse.
My argument wouldn't be that the market consensus is particularly good at prediction, just that it's better than any other prediction mechanism we have; because it can and will incorporate those other prediction mechanisms, and people have a financial incentive to do so.
Btw, why do you think markets would be particularly bad at forecasting ecological collapse? Is there any ecology you are particularly worried about?
> What you describe won't account for a tumour growing in a dictator's head that makes him decide to press the big nuke button one day.
Yes, the market consensus can only reflect the information that available to (at least some) market participants.
Of course, the market mechanisms also give people incentives to acquire that information. Because any informational advantage gets rewarded with money.
> It won't account for a volcano erupting and burying a society in the ashes as happened in Pompeii, or the global equivalent.
It can account for the best estimates we have for the probability of that happening.
Again, I'm not suggesting that market estimates are perfect, nor even necessarily any good. I'm just saying that market estimates tend to be at least as good as any other estimates we have. Ie market estimates tend to be the best ones available.
You can still trade with people when living outside of a city. I don’t expect complete civilizational collapse, there will still be roads and internet, I just like living remote.
With some modifications you can run cars on ammonia which can be made, albeit inefficiently at small scales, from solar power. Perhaps some new catalyst or meta-material would enable a more efficient process.
You can also put a horse in front of your car. It works, but is a bit inefficient. You can feed your horse with grass which you can grow with solar power.
The current processes are not that inefficient, it’s currently commercially inefficient because the margins are small, but if there were issues in obtaining alternative fuels the margins would increase to make micro scale ammonia generation economically viable. There are supposedly already catalysts that exist to make small scale ammonia production competitive even at current margins and there is some interest in using this for solar power energy storage. For me this technology is still in the category of I’ll believe it when I see it. Most people who need ammonia today need a whole lot of it so small scale production wouldn’t make sense even if it was just as efficient. The other issues with ammonia are that it’s rather toxic and pretty easy to make into explosives. Eventually I’m planning on having an excess supply renewable energy so dumping that into ammonia production is a no brainer.
That's good, and enough justification for your lifestyle. No need to come up with stories of imminent global collapse (unless that kind of roleplay enhances your enjoyment of your lifestyle, I guess?)
Bring back something like Bretton Woods. When it ended in the 70s and the dollar was no longer tethered to anything physical, is when the financial system started eating up more and more of the economy. Using the financial system as the middleman for money creation (as opposed to e.g. directly depositing helicopter money into people's accounts, or having a non-inflationary currency) necessarily entailed a continuous transfer of wealth from main street to wall street.
Haha, Bretton Woods wasn't magical. The dollar had long been unmoored in practice, that's why the Bretton Woods agreement collapsed.
So if you see any trends that only show up after Bretton Woods was _formally_ abandoned, then those trends can't have been kicked off by the unmooring.
Probably a policy that directs funds, every year, to building ships and other critical things. Possibly to state owned construction conglomerates. Essentially what already happens with Boeing, Lockheed etc for military aircraft.
The deeper problem is that, while the war isn't happening, the war products are not critical. It doesn't matter whether they work or are delivered. Even the medium scale wars the US did maintain over the past couple of decades to keep the machine going showed that various areas were just fleecing them for inadequate products or regular grift (like the vanishing Afghan government). Much of the Pacific fleet's maintenance budget was being stolen by one guy named "Fat Leonard". This sort of thing doesn't go away until the war is actually critical rather than something you can escape by turning off the news.
I think the US underestimated the capacity of the Chinese to grow this much this fast. To give you an example, India in 1960 had double the gdp per capita of that of China. China now has x5 the per capita of India. That's 10 times more growth than India.
Wall St. read “the End of History” and assumed China would be more invested in friendly relations with their nearest neighbors, so to save costs they punished any western company that didn’t outsource. (Also the politicians weren’t smart enough to stop this.)
Turns out that manufacturing toys, consumer electronics, semiconductors, etc. is very important for future wars that use cheap drones instead of $2,000 155mm artillery shells.
It's not clear that we predicted that shift, so it's a good reason to maintain some manufacturing capability in pretty much all areas, comparative advantage be damned.
Because capitalism has weaknesses and this is one of them. Markets will drift towards efficiency without considering externalities. Markets will not drift towards strategic manufacturing capacity at a higher cost per unit produced without government intervention (subsidies, tariffs.)
So corporations and consumers outsourced because quantity at price beat quality and strategic concerns.
> Markets will drift towards efficiency without considering externalities. Markets will not drift towards strategic manufacturing capacity at a higher cost per unit produced without government intervention (subsidies, tariffs.)
Well, and why would we expect them to take that into account?
Btw, there are good and (mostly) bad ways to do these interventions. Tariffs are especially bad.
A lot of the discussion of these measures also treats all foreigners the same. Eg in practice a chip being produced in eg Canada is virtually as good for national security as one produced in the US. But acts like the 'CHIPS and Science Act' don't see it that way.
If restrictions to trade are so great, why do nations inevitably try to blockade each others ports in a war? Shouldn't that just help the other guy's economy prosper?
What we have is more corporatism than capitalism - the markets are busy working with governments and setting up rackets to extract monopolistic rents. I don't have much experience with China but from my vantage point it does appear that there is quite a lot of competition between companies that does not seem to exist in the US to the same extent.
That's the result of capitalism, though. What else would the markets do? A corporation would be extremely stupid not to do these things. You can't have one without the other. And if the government was somehow incorruptible, as long as there was capitalism, corporations would still do their best to corrupt it.
Large governments increase the agency effect and incentive for corruption. Many smaller governments operating as a federation decrease both of these. It gets to a point where it isn’t worth the effort or risk to try to corrupt the government because you would have to bribe too many people and the payoff is too low.
A claim made by socialist 200 years ago and yet it hasn't actually happened. And the minor amount of 'anti-monopoly' action taken by governments is hard to credit for that.
The reality is that a monopoly is incredibly hard to sustain without government. And even in the cases where something close to it can be created, they can seldomly really push up the price as much as they think.
Historically its governments creating the monopolies most of the time.
> A claim made by socialist 200 years ago and yet it hasn't actually happened.
It kinda did. Large stagnant industries tend to collapse into monopolies. However, this was masked either by new more nimble companies pushing out the incumbents by utilizing newer technologies, or by industries fading away entirely.
So it did but it actually didn't because of literally all the reasons people said it wouldn't. Sure if you remove new competition and technology then its more likely to happen.
Defining monopoly is pretty hard in the first place. Only Will Smith can play Will Smith. Or is he in a market against all black actors? Or all actors? Or is it he also competing against the NBA/NFL?
If a single company exist to provide some service in a small town, is that company a monopoly.
If a company dominates a market for a decade+, is that a monopoly? There is a question of time.
One can answers these question different ways. And even if they are monopoly, sometimes that is not a actually a problem.
There are certainty some cases where some monopoly exist and are harmful. Mostly those are created by governments. However one can certainty have harmful situation in a relatively free market as well.
But I think the argument that there was ever a case to be made that the Marxist idea of all companies merging in a single mega cooperation has never even been remotely true. And you have industries that are reasonably unregulated (in terms of market entry) and still have lots of competition.
So the facts are 100% for sure much more complex then Marx and those that claim 'Capitalism always leads to centralization' believe. Or at least if it does it operates at timescales that makes it unclear that we should act on their recommendations.
Often Standard Oil is the best example people can come up with and they are not even remotely close to taking over much outside of their specialty.
Of course the whole discussion gets even more complex once multiple government (and cultures, and geographies, and climates and so on) are involved and we aren't taking about a single unified market.
"Markets will drift towards efficiency"
Isn't this actually one of the benefits of capitalism ?
Either you let capitalism allocate capital or you let the government -which makes you a communist.
If by benefit you mean existential risk, then yes. A big benefit. Although in the end, these kinds of markets might drift into oblivion as well, by virtue of being conquered by stronger states. So in that sense, it will all sort itself out. You may get slain by by communists, but at least you're not a communist yourself. So there's that.
It was supposed to turn the Chinese into capitalists, and hence into potential allies. They're not communists any more, that's for sure, of course, they're not Western "liberal-democrats", either, which is why the West is in this whole conundrum.
> Isn't this actually one of the benefits of capitalism ?
Is it a benefit if that efficiency turns your industrialized economy into a financialized economy that can't manufacture enough bullets to fight a war that you start?
Yes it is a benefit of capitalism. But capitalism isn't perfect if you are in a long term strategic battle.
That is why states that created capitalism like Dutch and British always had a strong comportment of fiscal-military state where the government made sure that they could defend their country and their trade.
The problem is that if somebody much larger then you comes along, this gets increasingly difficult. Specially if they are part of the same world and market as you. As Britain learned with the rise of Germany and far more so the US.
The US basically invited China, because they were concerned about the Soviets. This was smart in a struggle with the soviets. But unfortunately China was the much larger strategic danger all along.
The good thing is, that if China continues on along the same lines, the US will continue to do pretty well in a China dominated world. Just as Britain do in a US one. And as the Dutch did in a British one.
The question is, if China will behave the same or not in the long term given that they are not democratic and not even slightly germanic.
Imo markets tend to have 2 trajectories. Either the market leader builds a moat that precludes competition (often through semi-illegal means).
Or the companies engange in fierce competition and the big players will either outspend or outproduce or straight up buy their competitors which tends to result in either monopolies or oligopolies with barely any competition.
Exactly. This is why the European single market is so regulated. Not because it is a socialist market, quite the opposite. It wants to save capitalism both from itself and from the protectionism of its states. The European project is a deeply capitalist project.
Capitalism and corporatism is not the same. Corporatism is a bit socialist in it's essence.
In classical capitalism, there aren't two or three monopolistic players that dominate each industry, there are thousands of companies competing with each other. And that competition brings costs down, so no outsourcing is needed.
Nope. That's not at all what those terms mean. Capitalism is not "when competition," and socialism is not "when no competition."
Capitalism = private ownership of means of production
Socialism = collective ownership of means of production
Capitalist monopolies are privately owned. A monopoly is no less privately owned than a minor company in a sector with healthy competition, and there is nothing remotely collective about a monopoly. A lack of competition does not in any way mean that "the people" own the organization. Not theoretically, and not actually.
Collectively owned socialist enterprises are not necessarily free of competition. In fact, heated competition over quotas had a lot to do with many of socialism's worst blunders.
Competition does not remotely guarantee that costs are low by international standards either.
They are orthogonal; it is possible to have socialist corporatism, but there is nothing inherently socialist about corporatism (or inherently corporatist about socialism.)
> I don’t understand why the US voluntarily gave up its significant advantage in manufacturing
We didn't. The US manufactures more than ever. It seems like we gave up the advantage because we let China take over the cheap junk market (before them Japan and Taiwan had that - both have moved up quality though); and we use far less people. A typically factory in 1950 with 2000 workers would now have around 200 to produce the same amount.
Lots of "greed", "stupidity", etc arguments here, but that is too simplistic.
There are other aspects.
* Industry/mining/some types of manufacturing are often dirty business and cause pollution, not something you love to be around. Energy consumption is also high.
* They usually come with many hard jobs that people don't exactly love to do if they have alternatives.
This can be countered with automation, but that comes with high cost and limitations that we are only now approaching solutions for (eg flexible humanoid robots with AI-driven controls).
* The big industrialization craze of the 90ies/early 2000s came about as western markets started to saturate and approach low growth rates. The hope was that lifting new countries out of poverty would create economic opportunities.
This. US deindustrialization can only be understood as a major political shift and, like all major political shifts in the world, it is the product of a conflation of multiple, simultaneous pressures.
Among these are:
1. political leaders exploiting the lucrative US market for foreign relation wins.
2. differential labor costs
3. differential regulatory burdens (health and safety, environmental, etc.)
Manufacturers have had all of these pressures applied and they've responded accordingly. Seeking lower labor costs and lower regulatory burdens is not merely simple-minded "greed." When competitors leverage these affordances they gain an advantage in cost, so others must consider following.
The "gave it up" to make the elite even richer, offshoring everything in the name of returns on shareholder investments.
People like to complain that it's the labour market, that nobody wanted the jobs.. but that's a lie told to stop the masses from organizing and putting some heads on pikes.
When you don't have enemy, you are your enemy. This is exactly what happened in US. Putting the part that work actually been done in US fosters competition, and outsource will always benefit for big corps to kill of competitors in early stage.
I think it’s very easy to explain. The US are some of the worlds greatest sellers of intellectual property which makes for better business, since you only need to invent something once and then you can sell it over and over. The US would prefer to spend it’s time doing more lucrative work.
I don’t even think it’s very clear that recent US efforts to onshore manufacturing, both broadly and within green energy specifically, are even helping it. The US is paying close to a million in extra costs for every job it’s on-shoring, although there is the benefit of improving the US negotiating position and military readiness beyond bolstering employment.
China “cheats” in the sense that they suppress their currency. In theory the profits from successful exports should go back into the Chinese people’s pockets and China should become much richer than it is. But the CCP cannot abide that scenario, so they sell yuan and buy dollars to keep the price down.
In short, Washington abandoned the republic after WW2 and embraced shadow imperialism. It doesn't matter who is working the factories as long as the global elite gets to set the rules and reap the profits.
> Is it just because it would be impossible to have an industrial base in a world where Asia exists and can produce everything that could be built in the US for 1/5 the cost?
It's not impossible, had the US kept capital control and tariffs there would have been no way for Asia to catch-up at all. But the free trade ideology and greed led the US where it is now.
> I don’t understand why the US voluntarily gave up its significant advantage in manufacturing
Because there's a basic heirarchy in capitalism where resource extraction is at the bottom, manufacturing in the middle, and finance at the top, and the higher on that heirarchy your comparative advantage is, the more value you capture out of the global economy.
The US won (or, more accurately, is winning, its not a static state) global capitalism is what happened.
Because the "elite" that actually make US economic policy made a mint on it and could engage in their all time favorite activity in the world:
undercutting and destroying the financial viability of unions and labor
The rich don't actually care about how much money they have, they care about how much money they have relative to other people. Hollowing out the middle class meant while milking profits from cheap overseas near-slave labor? My god, so many billionaire boners.
Why do you think nothing tangible has been done about illegal immigration in, what, 40, 50 years now? Something that massively increases the number of desperate workers to undermine labor supply and union-based manual labor and trades?
As it stands now, this problem will self-correct because manufacturing WILL onshore. It has to. China is dropping the hammer on economic reforms and ratcheting up totalitarian control, to say nothing of demographic bombs, the real estate / regional debt crisis, and the inevitable sanctions from a Taiwan invasion.
Don't worry about the shipbuilding. China doesn't have carriers. They don't have a navy that can leave shore more than a hundred miles or so.
The fact is the US Navy can blockade China's food imports and petroleum (as in, fertilizer so ... most domestic food) shipments in Malaysia at will and ... China starves a couple months later.
The policy that needs to be pursued isn't one of China as a dangerous peer state. That has already passed. The policy is to deal with China as a dangerous collapsing state. It's kind of the same effect (manufactured goods being shut off, reestablishing more domestic production and manufacturing), just with or without overt warfare.
IMO this is an opportunity for greenfield modern manufacturing construction: lots of automation, lots of modern EV-based low cost low carbon transportation and infrastructure, building up the domestic energy industry around alternative energy on a fundamentally cheap basis never seen before.
One way to do this is to intelligently allow the best and brightest in China to immigrate. They'll certainly want to get out...
As for the article, it was a lot easier to crank out airplanes when they were basically automobiles with different body shapes. These weren't turbojets, they were ICE engine-powered prop planes. Yes that handwaves a massive amount of engineering and retooling, but it wasn't like ICE engine designers suddenly needed to learn how chip manufacturing worked.
I don’t know enough to form an opinion but there’s an entertaining geopolitics chap called Peter Zeihan who’s thesis is basically exactly what you’ve said.
He’s one of these folks who are really engaging to listen to and he uses a fun argument style like Simon Sinek where he presents stuff in a way that leaves you to put 2+2 together and feel smart about yourself when you think “aha! 4!” Just before he says “4”.
That argument style seems to be like catnip for me so when I recognise it I have to force myself out of the “well that’s obviously true” mindset I’ve fallen into and go spot check a few of the facts he shares during his opinions. Maybe about 1/3rd of them don’t hold.
It leaves me thinking he’s probably meaningfully wrong but like I say I don’t have enough knowledge to say for sure, just using a simple heuristic of “is this person’s argument consistent?”. I haven’t decided one way or the other, I just rate his thesis “caution, may not be true”
I consume a lot of Zeihan. He's a dramatic clickbait artist in many respects, but his "takes" are nonetheless often based in a lot of truth, just projected too quickly.
He's been saying China would collapse for quite a while, but only recently have I seen a lot of other geopolitical types go from poo-pooing him to essentially agreeing with him.
He still has a very strongly petrodollar/petroleum dominates the economy/alt energy isn't important, but a lot of that is because the tech churn in batteries/solar panels is so rapid. He doesn't really appreciate what sodium ion will bring to the table for example, he still thinks batteries can't scale because of limited cobalt and nickel, which is a two year old take.
He is still a bit too dramatic on open seas piracy/reduction of the US Navy, but I've seen him reduce that take. Really the open seas and global trade are going to disrupt because between Russia in Ukraine and China doing the Taiwan invasion, there's going to be a LOT of global trade disruption.
At this point I agree with his China take because it has four different fronts which are conspiring. Demographic collapse didn't cause Japan to completely fall apart, but demographic collapse + totalitarian incompetence absolutely can.
I also haven't seen as many rebuke videos of his China take, and the US and its megaconglomerates are definitely shortening their supply chain and re-shoring manufacturing already. The most public one is the fab act (which will also expose Taiwan to a higher risk of invasion).
> US Navy can blockade China's food imports and petroleum
It's such an unrealistic comment. Have you seen the new Navy report in Congress? Have you seen the yearly Congress report about Chinese rocket capabilities from the last few months? Have you seen the results of the war games in the South China Sea, most of which were lost by the US?
"US Congressmen: 90% of US fighter jets in the Western Pacific will be destroyed within hours of a US-China conflicts by missiles. The military bases being mentioned are those in Japan, S Korea, Guam and Northern Marianas." [1]
> to say nothing of demographic bombs, the real estate / regional debt crisis, and the inevitable sanctions from a Taiwan invasion.
They are heavily investing in Sub-Saharan Africa because, based on IMF data, it will be the only region in the next few decades experiencing significant population growth. This region is their own 'China.' With increasing automation and a cheap workforce, demographics are not a significant problem. They just poured 53 billion USD into the real estate crisis. To receive sanctions for a Taiwan invasion, first, you need to invade it, and it's not in the short-term interests of either China or Taiwan.
> Don't worry about the shipbuilding. China doesn't have carriers. They don't have a navy that can leave shore more than a hundred miles or so.
Don't worry? If they destroy a US ship, it will take 5-10 years to rebuild it, whereas they will rebuild theirs in a year. This is also mentioned in reports.
Your entire comment is wishful thinking. China is not collapsing, and the data confirms that. [2][3]
1) you can't trust most of China's numbers. They are in full only-show-numbers-that-please-dear-leader mode. The tarriff war that is brewing between the US and China is about China doing some last-gasp production dumping before economic collapse, although that argument could admittedly be dressing up numbers that don't support their arguments of the pro-collapse geopoliticists.
2) China's rattling on Taiwan is very similar to the demographic motivations of Russia's invasion of Ukraine: both are suffering huge demographic collapses soon, so this is the last generation that the country can use for an offensive war. Yes, it is utterly stupid to take a demographic problem of a shrinking younger generations and KILL THOSE PEOPLE IN A WAR to exacerbate the problem, but strongmen just concern themselves with keeping their positions, not how the nation as a whole thrives.
3) Sub Saharan Africa? Like, that is 5,000 to 6,000 miles away? And an area that will become increasingly utterly uninhabitable due to global warming. The Belt and Road is a complete failure, again, because the infrastructure was poor and the payoff isn't there. The countries are just going to walk away from China, and instead of paying them back or restructuring (China won't restructure), they'll join a Western bloc against the Chinese.
Belt and road, for the reasons described about the complete inability to defend multi-thousand-mile infrastructure lines like pipelines and rail, is an impossibility to work in Asia. Even if the political and security challenges are solved (which requires a nice intercooperation and low-war world, which we are NOT headed for right now), it isn't even remotely economically viable.
4) Ultimately war games are meant to be lost. Because that drives the exigent threats to American hegemony that drive the near-trillion-dollar defense and intelligence budgets politically. Yes you don't want to underestimate the enemy, but look at what is going on with the Russian army under decades of totalitarian corruption and incompetence. China is headed down that path, but doesn't want to stop at a neo-western society like Russia has, they want full on North Korean dear leader control.
5) The fact of the matter is that China imports its oil through the Malaysian Staits/Straits of Malacca. Go look at the map. No matter how much shipbuilding China has, no matter how many cruise missiles, they won't get oil through there if the West decides to impose sanctions.
6) Finally, there's India. India of course hates China as well, and India is modernizing its military under Modi and it alone would jump at the chance to choke China in the Indian Ocean.
China is not collapsing overnight. It is not economic armageddon, these things are always slow slides. I mean, in theory it could because mass starvation at the hands of the communist party is in China's 20th century history, and it is actively occurring in North Korea.
The point is that the old world political economic order, and by order I mean stability and structure, not the illuminati evil control council "order", is over. Russia invading Ukraine, COVID disrupting supply chains, and China becoming aggressive and authoritarian ended that. That era, a solid 75 years between bipolar Cold War stability and unipolar post-Cold War is OVER.
Every five years that go by in China will decrease their military effectiveness by a substantial degree, because of authoritarian degradation in chain of command and corruption, because of demographic reductions and disruption.
1. It's not entirely accurate to dismiss all Chinese economic data outright. While there is a consensus that some data might be manipulated, international agencies like the IMF and World Bank, and multinational corporations operating in China, rely on a combination of official data and independent assessments to guide investment and policy decisions. Moreover, the idea of a "last-gasp production dumping" ahead of an economic collapse seems exaggerated when considering China’s consistent economic growth and its strategic long-term planning evident in initiatives like Made in China 2025. Have you read article I linked in Foreign Affairs?
2. I don't buy this argument, they only keep their positions because of the economy growth currently in China.
3. The claim that BRI is a failure and that Sub-Saharan Africa will become uninhabitable and thus, unimportant, overlooks the long-term investments and geopolitical influence China is garnering through these initiatives. The BRI has indeed faced challenges, but it has also led to significant infrastructure developments in participating countries. These nations may face debt issues, yet many continue to engage with the initiative because of the substantial economic benefits and the lack of alternative funding sources for infrastructure.
4. You haven't addressed the Congressional reports, which show that a US vs. China military conflict, including a blockade, does not have an obvious winner.
5. The vulnerability of China's oil imports through the Strait of Malacca is a well recognized strategic concern, often referred to as the "Malacca Dilemma". China has been actively working to mitigate this risk through various strategies, including the development of the China-Pakistan Economic Corridor (CPEC), building pipelines through Myanmar, and increasing domestic energy production and diversification of energy sources. While a blockade of the Straits of Malacca would be significant, it is not an insurmountable obstacle given these mitigating measures.
6. While India might oppose certain Chinese actions, an outright confrontation is not a foregone conclusion given the potential economic and political costs. They do not want to escalate, which you can see based on agreement to use only sticks in border clashes.
> The point is that the old world political economic order, and by order I mean stability and structure, not the illuminati evil control council "order", is over. Russia invading Ukraine, COVID disrupting supply chains, and China becoming aggressive and authoritarian ended that. That era, a solid 75 years between bipolar Cold War stability and unipolar post-Cold War is OVER.
Fully agree.
> Every five years that go by in China will decrease their military effectiveness by a substantial degree, because of authoritarian degradation in chain of command and corruption, because of demographic reductions and disruption.
I haven't read the congressional reports. I am handwaving them away, but mostly because while China can be formidable in regional defense, they simply don't have power projection military technologies yet.
I don't remember the actual numbers, but Japan is heavily increasing its defense budget. This is significant because historically, unlike China/India, if Japan invests in its military, it produces a good military. Japan + India with funded modern militaries is a very legitimate counter to China. In particular India is a sleeping tiger that should be far more influential and productive.
India we won't give our top weapons. Japan we very likely will.
Energy diversity helps in many respects, China can mitigate domestic needs with EVs, solar, and wind, and I guess coal if they want to burn money.
But war and food need petroleum. Pipelines and rail are extremely vulnerable, a single raid can shut them down for weeks or months, they have fixed, limited capacity. If we were talking a 50 million population country, sure. But it's a goddamn billion+ frikking people, and not enough productive land to feed them.
India is a billion plus people, so if it wants to militarize, corruption and internecine ethnic relations be damned, they'll probably have one capabable of worrying China.
Everyone is arming up. NATO nations are reconstructing their military industrial complex in anticipation of Russia beating Ukraine.
I guess fundamentally I see China as a nation that is critically dependent on open maritime trade, and that world is basically over, partially of their own creation. The "Dear Leader" phenomenon is particularly troubling, particularly because Xi sets the stage in 10-15 years for a bloody succession and equally or more autocratic leader that assumes the strings of control.
Most "Dear Leader" countries start from a point of stagnation and then limp along under the repression. China is different, it went through a massive economic expansion due to free trade and relative free will, but now it will sharply regress. If it wasn't so dangerous, it would be fascinating to see what happens.
The Naval War College prof points out that historically continental powers overextend, and then collapse when their central government fails. China has done this something like 5 or 10 times in its long history. Both Russia and China seem to be in the overextension phase. She contrasts to maritime powers like the UK and US that don't need buffer states, and thrive with world trade, while the buffer state syndrome of continental empires inevitably leads to an autocratic paranoid country or corruption/decay.
>Don't worry about the shipbuilding. China doesn't have carriers. They don't have a navy that can leave shore more than a hundred miles or so.
>The fact is the US Navy can blockade China's food imports and petroleum (as in, fertilizer so ... most domestic food) shipments in Malaysia at will and ... China starves a couple months later.
The fact is that China do not have ships because they don't intend to do large scale invasions thousands of miles from home.
US Navy can't blockade China because the have enough missiles to destroy 100 times more ships. And they have the capacity to fab more than 1000 missiles per day.
I agree in many respects that the US surface fleet is basically obsolete against a power with a decent supply of antiship ballistics, but US nuclear submarines are an entirely different matter.
1) China won't care about the starvation of a half billion people. That's the totalitarian effect.
2) That is suicide for the CCP. They may be crazy authoritarian, but they aren't suicidal.
By the same justification, China won't invade Taiwan because we "have atomic bombs and the ICBMs to deliver them". But it's pretty inevitable they will.
The US 5th fleet can just stop policing the Bab-el-Mandeb strait and the various local peoples would hinder maritime traffic through piracy and ransom. Those can't be stopped with ICBMs.
> The US 5th fleet can just stop policing the Bab-el-Mandeb strait and the various local peoples would hinder maritime traffic through piracy and ransom. Those can't be stopped with ICBMs.
While it would be a particularly horrific way to deal with the problem, the local people in the area of the Bab-el Mandeb strait and their capacity to interfere with international shipping can, in fact, be stopped with ICBMs.
A single cross continental pipeline will not supply a nation of 1-point-whatever (statistics are in flux on a monthly basis) billion people.
Ukraine alone can take that out. Cruise missiles, sabotage, special forces, mercenaries. You don't even need to explicitly destroy it, Russians and Chinese build poor infrastructure.
Sarah Paine, a prof at the Naval War college really opened my eyes to this and the Belt and Road. Marine shipping is basically free. Keeping rail lines and pipelines intact over thousands and thousands of miles in Asia through desert wastes, mountains, tundra, and a half dozen politically iffy -stans is not a recipe for efficient trade logistics.
And China and Russia hate each other. Strange bedfellows, but would China want to rely on Russia for oil if it invades Taiwan and Russia has their country's oil supply in a firm iron grip? Putin? Nope nope nope.
> A single cross continental pipeline will not supply a nation of 1-point-whatever (statistics are in flux on a monthly basis) billion people.
As another comment in this thread has already mentioned, they have sufficient local production to fuel their war machine, while restricting other uses.
> Ukraine alone can take that out.
It's actually quite interesting. Are you aware that there is a pipeline running from Russia through Ukraine that pumps Russian gas to the EU? Ukraine earns $800 million USD a year from this. Then, they buy back that gas. Life is a little more complicated than it seems.
> And China and Russia hate each other. Strange bedfellows, but would China want to rely on Russia for oil if it invades Taiwan and Russia has their country's oil supply in a firm iron grip? Putin? Nope nope nope.
It doesn't matter whether they hate or love each other, the only thing that matters is interests. Stalin was called a dictator and a ruthless killer by the West, but when he changed sides, he was suddenly 'Uncle Joe.'
China will only invade Taiwan if the US forces their hand. In the short term, it's against their interests to invade Taiwan, just as Taiwan prefers to maintain the status quo. They know that if they invade, the US can say, 'You see? We told you. Look what they are doing' which would result in sanctions from the US and EU and lead to internal problems. Why would they do it? It's neither logical nor rational, and it goes against their culture. There's a Chinese saying: 'The wise win before the fight while the ignorant fight to win'.
To your point, China is no longer in the Western interest. That is what it is about. COVID has permanently changed the tenor of Chinese-based manufacturing. And the US Government is taking huge steps to start addressing its logistical dependence on China.
Now when I say that, I mean "in 5-10 years for some substantively detectible change" not "next month".
The United States/Americas is quite well positioned for resource independence since the Bakken Shale became so productive. They are globally dominant still militarily. The only weakness is the offshored manufacturing, and as I stated in a different comment, the world that supported China being the manufacturing center of the US is OVER. It died with Russia invading Ukraine, COVID disrupting supply lines, the autocratic power convergence of Xi. End of an era. 75 years of free seas trade "end of history" type thinking is over.
"US forces their hand" ummmmmmmmm what would the US do that would "force their hand"? That's a WEIRD comment. Of course the US is quietly and carefully going to draw down their manufacturing dependence over a decade. Of course China can trump up some Gulf of Tonkin incident or affront to provoke casus belli.
You are ascribing FAR too much intellectual stability to the Chinese government. The Chinese government is now an unopposed Kim-style autocrat. There is only what the dear leader wants, and the dear leader wants to be as Dear a Leader with capital letters as possible.
If invading Taiwan is what dear leader wants and it matches some false rallying war rhetoric that dear leader wants about "restoring China" as it demographically declines, then dear leader will do that. The CCP is actively crushing independent action by China's major corporations. They are installing "thought police" in every country, and the population is being subjected to higher and higher degrees of surveillance and control. This is not conducive to a functioning economy in the long run.
Oh, and as for your proverb: China has already lost the long run. They didn't establish themselves as a benevolent world power and construct their own political sphere. They do not have resource independence. Their demographics are collapsing. Their society is becoming closed, oppressive, authoritarian, and corrupt. And the world that powered their economic wunderkind of free open seas trade is ending.
BRICS by the way is NOT a sphere of influence. Russia and India hate China, South Africa is a western country by nature, and Brazil is an Americas country.
If you can explain how the long term economics of China will survive crushing authoritarianism, isolationism, and a sharp demographic decline, I'm all ears.
In general I don't disagree with your point. People can go to far on China in how powerful they are. But I think you are going to far in the other direction.
You have a lot of confidence in the US to implement smart long term thinking industrial policy. Despite the US having shown to be very bad at that for a long time.
For a country that can seem to figure out how to build a single high speed train line or figure out that having a subway makes a lot of sense.
While the other country builds high speed train lines all over the place and has many cities building more subways then all of the US combined.
We can look at EVs as well. China dominates the supply chain and production.
Yes the US
> If you can explain how the long term economics of China will survive crushing authoritarianism, isolationism, and a sharp demographic decline, I'm all ears.
Authoritarianism increases and decreases over time. China has been well functioning for a while now. Claiming that Authoritarianism is gone ruin everything they do is questionable at best. Our actual insight into China government internals isn't mostly guesswork. Specially as there is lots of evidence that US democracy isn't actually producing fantastic long term thinking.
China isn't actually isolated right now. And they wont be unless they make pretty fundamental mistakes.
The West in totality is also suffering demographic decline. Specially Japan.
Its kind of Ironic that the fear of 'overpopulation' pushed by idiot leftists intellectuals in the West was the greatest strategic weapon ever invented against China.
> They didn't establish themselves as a benevolent world power and construct their own political sphere.
They are increasing their influence in lots of places. And lots of other places are willing to go with the flow. One can imagine a future where Russia, Central Asia, Iran, Pakistan and many South East Asian countries become influenced by China over time. The same goes for Africa.
And places like UAE/Saudi and co aren't actually US allies in any meaningful way and would happily turn to China if they thought it gave them an advantage.
China doesn't need to lead them as the US leads NATO, but if they are all opposed to the 'Western Order' its gone be tough.
> They do not have resource independence.
But they do actually have control over lots of resources and refinement currently that would be incredibly hard for the West to be without. It would take very long for the West to produce sufficient amounts of these things. So I think in practice a divided market would be catastrophic for both sides.
Practically speaking the West does not have resource independence. And even best case, it would take decades to have it.
If China really wanted they could mass produce nuclear reactors and produce carbon fuel as needed. Its only a matter of investment. They have the Uranium/Thorium to do it. And if you do it at scale its not that expensive. If China were actually preparing for a serious war they would do this.
This leads me to think that China and the US will continue to rattle their chains at each other for decades to come with neither actually doing anything to throw over the apple cart.
They’d need to switch to aircraft carriers and fast. The US has 11. China has 2. They are expensive, require specifically trained crews, and air superiority counters all of that shipyard capacity.
Why though? China's building drone carriers instead. Taking down aircraft carriers is of course no simple matter, but hardly infeasible for a super power. The problem with capital ships is that they're just as expensive to replace as they are to build. Also, blowing one up eliminates 9% of the US' AC fleet at a stroke, which would be a big psychological blow. I don't think China is as emotionally invested in its aircraft carriers and built them primarily to show that they could. That said, in any military conflict with China an opponent would be well advised to target their nearest aircraft carrier as early and powerfully as possible for the humiliation factor.
I suppose because you want to have more ships to store your nuclear armed planes in more places around the world. Speed.
Honestly (and unfortunately) if anyone actually did destroy a US aircraft carrier, the counter strike would be immediate and an order of magnitude more devastating.
> the counter strike would be immediate and an order of magnitude more devastating.
The thing is, not many things in the world cost more than an aircraft carrier. What's you're going to blow up? Also, how, short of strategic nuclear war.
Quite. It's hard to see retaliation against a civilian target in a direct response to a military loss, and if an aircraft carrier is sunk in theater there might not be sufficient capacity to respond immediately against military targets.
Everyone gave up on putting nukes on planes: too vulnerable, and quite capable of crashing on their own during routine operations. They're all on ICBMs.
Third is in sea trial and fourth under construction. Also, China doesn't pretend to be global police, so it needs them only in South China sea, while US need to be present in Middle East, Europe and USA also.
That great, so the US, which produces all the oil it needs within its borders, needs to be present in the Middle East, but China, which produces some oil, but not enough to run its current fleet of cars and trucks, let alone fight a war, does not need to be in the Middle East. Interesting analysis :)
Note that Russia's oil does not help China here: the infrastructure in Russia only allows export via European ports, not Asian ports and not over the Russia-China border, though with the construction of a few 5,000-km-long pipelines, I guess that could change in a few years if Russia cares enough.
US isn't in Middle East to protect their oil sources in case of war. US is in Middle East to control oil prices, do policing, help Israel and threat Iran and other regional actors.
I believe Russia and China signed agreements for building gas and oil pipes.
Interesting. From the second link: "Russia currently sends gas to China through the Power of Siberia 1 pipeline, which began operating in 2019 and runs through eastern Siberia into northeast China. Experts say that as China is not expected to need additional gas supply until after 2030, Beijing could drive a hard bargain on price for a second pipeline via Siberia."
Ummm, who's going to make sure all the oil comes from the middle east? It's not like the US needs to import light sweet crude from there since the refineries are made for heavier oil than comes from Saudi or fracking.
What China is really after is slowly pushing out and slowly increase its control in seas around China and its neighborhood. While slowly pushing out and giving itself more options.
China is playing the slow game and they will continue to play it for a long time to come. But of course the slow game also has lots of issues for them as well. Issues with their population, with India, with the regime and so on.
China is in a position not that different from Germany pre-WW1, but arguably even better. But unlike Germany they are not controlled by complete war glorifying idiots. China believes the future is going their way, unlike the Germans who basically believe they would lose out in the long term. They don't have a insane collapsing Austro-Hungary as an ally constantly dragging them into conflict. And nuclear weapons exist.
China has a lot of shipbuilding capacity, but I think it'd be pretty vulnerable to attack. The USA couldn't ramp up shipbuilding capacity overnight, but it could certainly degrade China's ability to build ships overnight. I'm assuming that most of China's ship producing capacity is on the coast, which may be an incorrect assumption.
The thing about building ships is not only does it take forever to build up shipbuilding capacity - it takes forever to build ships.
This should be interpreted as emphasizing the strength of the US Navy though, since it would take years and years for China to possibly match the tonnage of the US Navy even if the US didn’t build anything.
> the USA is VERY competent at deploying to and fighting wars.
I don't think you can extrapolate fighting in Kosovo, Afghanistan, or Iraq to fighting China. If a war were to break out, both sides would be learning a lot of lessons very quickly.
Logistics is under appreciated. And the logistics lessons from fighting real wars are mostly applicable in other wars even if they’re of a different nature.
I don’t think China has a chance until they’ve at least had a practice run with a real conflict somewhere.
Certainly the US has more logistics experience in actual wars, but it's unclear whether it would matter that much in a US-China war.
A US-China war would most likely be fought in the South China Sea. Most of China's supply train would be moving through China, whereas most of the US's supply train would be moving half way around the world through open ocean. It's not clear why the lack of Chinese experience fighting overseas wars or the US's experience moving materiel through uncontested ocean against non-peer adversaries would apply here.
Remember, the last time the US fought a war without uncontested sea routes and naval superiority was WWII.
Back when China consisted primarily of illiterate peasants (only about 20% literacy in 1949) without a significant industrial base (it took China until 2000 to overtake Germany in terms of total GDP).
The last war China was involved in was the relatively small Sino-Vietnamese war in 1979. And the last one before that was WW2.
It would be hard to count all the wars the US involved themselves in during that time.
However, with regards to China Americans seem to be mostly worried about Taiwan. Taiwan is a lot closer to the coast of the PRC than it is to the coast of the US. (On the other hand, the people living in Taiwan are even closer to Taiwan than the PRC is. And they would certainly enter the fray, too.)
For China to take Taiwan, it would represent China doing the most complex surprise invasion that even the US military couldn't probably pull off.
Assaulting a beach head is up there as possible the most difficult thing you can do. In WW2 the Allies got lucky because, Radar, Missiles, and drones didn't exist yet. Taiwan has stacks of weapons, enough to repel and invasion and they also have, jungles, mountains and cities to extend the fighting into.
China doesn't need to take a beach in the first phase. If they gain sea superiority, they can blockade the island and eventually exhaust anti-air defenses with drones until they gain air superiority. At that point defenders wouldn't be able to mass to defend a beach.
Bingo, PRC is not going to start amphib ops until TW has minimal weapons that can repel invasion left. They're not stupidly charging into a Normandy because they have magnitude more radars, missiles, drones etc, enough to make sure TW won't have much of theirs for long. TW is an island 16x smaller than UKR, much larger gap in MiC production vs PRC than UKR vs RU, and unabled to be resupplied via porous land borded by friendlies. TW also thoroughly covered by PRC ISR, including SAR to look through foliage, nearly every inch of which can be hit within 7 minutes with PRC rocketry. Less once PRC establishes persistent drone presence. It's why all the recent analysis depends on TW buying enough time for US+co to enter picture.
The flip side of a contested amphib operation is an uncontested one, which is potentially siginifantly easier than land invasion because there's no where for defenders to hide / ambush. Crossing a shallow strait where subs can't hide is probably easier than US plowing through Iraqi desert where defenders can at least pretend to put up defense by entrenching tanks / digging trenches. It's basically untested sailing if PRC destroys TW platforms that can hit back and lock down with air supremacy.
Also folks should look up TW river map, TW island is broken up into a series of bastions cut up by rivers where connections / bridges can be severed and sections attacked piece meal. If PRC's smart, they'll destroy most of TW weapon platforms that can reach out into water, bombard a few km of map squares of landing site to dust, have drones shoot everything that moves 5km out to carve a landing zone that can't be contested by large or small fires. If PRC smarter, they'd just blockade TW until world realize the only country with enough sealift to supply an island of 24m with food and water is PRC.
As for taking urban centres, look at how Israel is doing in Gaza with 20x population density than TW, theoretically urban combat is suppose to be slaughter vs attacker but if you indiscrimantly bomb and starve the population until they can't put up organized high end fight, then it becomes a managable problem. And again if PRC smart and they have to land boots on ground, they'd likely just siege from outside urban centres and small fires range, and wait for factional struggle and find collaborators willing to do boots on ground enforcement in return for controlling food + water.
I think China won't attack soon. It seems they play a long time game vs Taiwan, where they try to bring Taiwan, closer, weeken it's ties to its allies and slowly making Taiwan to become more dependent on China.
China is convinced they will get Taiwan back and whether that happens in 20,50 or 100 years, that is good enough.
At least until China builds a self sufficient semiconductor industry, I don't think they are going to attack Taiwan.
I don't think they want to go kinetic first either, but I think natural byproduct of PRC military modernizing, and modernizing specifically with taking TW _AND_ fighting US+co in mind, is if things pop off for whatever reason, the escalation will snowball. And it will snowball somewhere very destructive because all parties in this game are ramping up capabilities to deter, but when deterrence fails, there's lots of hardware that's not going to do deterring but shooting.
As for PRC waiting, I think they can wait, even past 2049, PRC centennial, but they're not going to wait for ever. TW indentity growing, a few more generations and culture completely disentangle (aging pro-ish PRC, KMT cohorts not going to be around forever). At some point, PRC isn't going to see TWneses as "fellow Chinese" occupying TW, a Chinese province. But a foreign culture occupying Chinese land, and that's going to generate all manners of opennings for conflict.
On the one hand you have a point, and they're drifting apart culturally - but at the same time Taiwan is not keeping up economically or culturally at all.
If the rate of economic progress stays close to constant, in a decade it's going to be hard to look at the evil communists across the straight who are much better off living standards wise. Taipei is a bit drab and ugly that hasn't seen any development in the last decade. It looks worse than second tier cities in China. Just my surface level impression is that you fly across the straight and people are dressed nicer and look better off on the subway there.
On the cultural front they're also not doing hot.. the domestic culture is anemic. They don't make movies like they did in the 90s. Nobody cares about Taiwan's cultural output (other than bubble tea). The art scene is honestly.. pathetic here. In large part b/c they can't engage with anything historic other than recent history of the White terror. There is an eww factor with regards to engaging with Chinese history - its seen as the culture of the "other" and so you see it in every day life.. no tea ceremony, no hanfu, no interest in history. There is also no real "Taiwanese culture" that would be alien to a Chinese person (I can only think of Pili?). There is some stuff built on top of Fujianese culture.. but it's got no legs so far.
The elephant in the room is that Taiwanese are also starting to consume more and more Chinese media - which was kinda garbage quality for a long time but has vastly improved in the last 5 years. I think this will take off. You can already see it on Tiktok and stuff.. people use a lot more mainland terms and expressions.
If the Chinese were smart they'd build 10-20 ferries and offer people free trips to Xiamen/Shanghai. Most Taiwanese never travel to China and have little sense for the cultural similarities
If the Chinese manage to ramp up chip production then Taiwanese is really screwed. TSMC is some insane percentage of the GDP. The other insane fraction is of course businesses that work in China like Foxconn.. China already has this place by the balls unfortunately
> If the rate of economic progress stays close to constant, [...]
Not going to happen. So far in all economies, catchup growth has inevitably slowed down as they moved to the global technological frontier.
Taiwan was famously one of the Asian tigers. As you already noticed, her growth has slowed down a lot. PR China has seen enormous growth, but has also slowed down in the last ten years or so, and looks to slow down further.
At the moment, PR China as a whole is a lot poorer per capita than Taiwan. Though you can argue that for our purposes here, Taiwanese people would compare themselves to the coastal provinces of PR China.
(Of course, they would also look at Hong Kong as the obvious comparison for a (semi-) independent entity joining PR China. And just going by raw growth, officially joining China doesn't seem to have accelerated HK growth at all.)
My point is that just from .. on the ground "feel" and quality of life .. Hong Kong, Taipei and large Chinese cities are all at rather similar levels (each having their own pluses and minuses). And I don't see them growing at the same rate from here on out.
People keep predicting the slowing of growth in China, but it's not materialized (at least anywhere close to the degree the experts expected). Just over the period of the pandemic I saw personally a huge amount of development and growth in China, while virtually nothing in Taiwan.
I'm just skeptical that once you reach Taiwan's level of development it's some inevitability that growth stalls. There are serious structural problems here in Taiwan that have made it stall (bureaucratic, extreme protectionist trade policy with huge tariffs on imports, little entrepreneurial spirit, anemic art scene, weak work ethic, an extremely non-confrontational culture, etc.).
Similar to Hong Kong, a key economic driver was their function as a bridge between the West and China - but this has become mostly redundant now.
All good things must come to an end. China will stall eventually too, for instance they're getting incredibly bureaucratic now, but they still have some runway.
I'm living in Singapore, which has the interesting distinction of being (mostly) culturally Chinese, but politically independent. Singapore is one of the richest countries on earth (in terms of GDP per capita), and we are working our way up the list of richest cities, too.
> I'm just skeptical that once you reach Taiwan's level of development it's some inevitability that growth stalls.
Growth slows down a lot as you hit the global productivity frontier. Taiwan isn't quite there, yet, but it's a lot closer that mainland China.
I'm not sure what word you want to be using. Roughly and pragmatically speaking, you can catch up pretty quickly (with the right policies), but your per capita (non-oil) income can't really go (much) beyond the US.
Once you reach American levels of prosperity, you will also find yourself reduced to roughly American levels of growth.
That's not zero growth, just very slow growth compared to the preceding years of breakneck catchup growth.
Have a look at eg Japan between WW2 and ~1990, and then from ~1990 to now. Naive extrapolation in the 1980s gave us some lovely cyberpunk, but reality looked different.
You are right that Taiwan at about 33k USD per capita is still quite a while away from the US's roughly 76k USD per capita. And I suspect with the right policies, they could catch up more. Just look to Singapore for what's possible. But even our almost mythical city state has slowed down a lot compared to the halcyon days.
> People keep predicting the slowing of growth in China, but it's not materialized [...]
Just going by official PRC figures, growth has slowed a lot. And that's still compatible with your observation that observed PRC growth was higher than in Taiwan.
> I'm just skeptical that once you reach Taiwan's level of development it's some inevitability that growth stalls. There are serious structural problems here in Taiwan that have made it stall (bureaucratic, extreme protectionist trade policy with huge tariffs on imports, little entrepreneurial spirit, anemic art scene, weak work ethic, an extremely non-confrontational culture, etc.).
Yes, I am glad that Singapore has so far stayed clear of most of these issues. But I'm afraid that eventually, democracy will do us in. Where by 'democracy' I mean giving in to what voters say they want. Protectionism in various disguises is popular with ordinary folks the world over. And so are various measures to weaken work ethics, or to limit migration ('those foreigners are taking our jobs' is a cliched complaint for a reason).
Our Gahmen is far from perfect, but I feel like the strongest policy disagreements I have with them is where against their better judgement they gave in to popular demands.
I just hope that the decline in governance will be gradual enough, that it won't matter for me.
(For comparison, cities like New York or London had pretty poor governance for probably close to a century now (depending on how you look at it) and they are still going strong, even if not as strong as they could have gone.)
I think it's very difficult to compare across countries and using official statistics. Both Tiapei and a place like Chongqing are not at the level of development as Singapore. That's very true. But there are many distorting factors.
For instance on paper the US is very wealthy, but I think this is mostly due to the strength of the currency. An "average" electrical engineer in Taiwan can expect to earn 30K USD a year. That's how much someone without a highschool diploma can make in the USA working in fastfood. I doubt this really functions are a metric of the engineer's productivity. (the US is also not as some natural limit by any stretch of the imagination - it's got absolutely colossal societal issues)
Looking from the outside Singapore seems to have a lot of other challenges. Just due to being a small city state for starters - not to mention the social/cultural factors. I'm not really sure it represents some kind of natural limit. The big Chinese cities are also pooling talent from the vast provinces. While in a city state you're mostly stuck with the talent that's born there
There is also this curious factor that life in Chinese cities is in a sense subsidized by the rural poor. So the middle class quality of life is sustained b/c there are people that are willing to work really hard for very little money. Taking a taxi in Shanghai is infinitely cheaper than taking one in Singapore - b/c there is some guy/girl from the countryside willing to do it for cheap (you have a limited version of that with the Malay and Malaysian Chinese underclass in Singapore). At some point growth will slow as the rural poor become wealthier and life in the cities becomes a bit more expensive
I'm not too familiar with life in Singapore - I've only visited a few times - but it seems to have similar problems to Taiwan with a anemic cultural sphere (growing up people all try to be engineers) and lack of innovation. The only company I know from Singapore is Shoppee - which is basically a low-rent Taobao reseller (without all the innovations of Taobao). Would be curious to hear your thoughts.
I didn't really work intensively professionally in China, but I got the sense there is a lot of experimentation, people just trying stuff out, people starting businesses - at the same time there was a deep appreciation and interest in cultural "things" which was also subsidized extensively by the state. I do wonder how far it can go in a censored environment, but it seems to be flourishing for the moment. I'm sure things will slow down - but I don't feel it's going to slam the breaks and stay at Taiwanese levels of development
And yeah you're right, if it's not the poor getting wealthier then populist measures, regulations and bureaucracy does everyone in eventually :)
I thought Singapore was more like Hong Kong: the real money in a in finance and business, engineering (including programmers) are considered less important and so make a lot less money (they can make more by working in mainland china).
Mainland China definitely seems to value engineers than other Asian countries. They pay better even than Japan, South Korea, and Taiwan in many technical fields, which is why I had so many work mates from those countries when I was working at Microsoft in Beijing.
I've worked in both finance and tech in Singapore, and you can make good money in either field. If you look at stats, they also reflect that Singapore's economy is a lot more diversified than Hong Kong's.
Yeah, could be. I might be in a bit of a bubble. The Universities in Singapore seem to be more known for engineering than their business schools - but that could very well just be my ignorance
> (the US is also not as some natural limit by any stretch of the imagination - it's got absolutely colossal societal issues)
Yes, but empirically the US sits close to the global technological frontier.
> The big Chinese cities are also pooling talent from the vast provinces. While in a city state you're mostly stuck with the talent that's born there
Why would that be? People can move to Singapore, just as much as they can move to any other city. The only thing keeping them out are immigration rules that Singapore herself sets. In fact, Singapore has lots and lots of immigrants. I am one of them.
> For instance on paper the US is very wealthy, but I think this is mostly due to the strength of the currency. An "average" electrical engineer in Taiwan can expect to earn 30K USD a year. That's how much someone without a highschool diploma can make in the USA working in fastfood.
Well, and the currency is strong because there's a lot of demand for it.
> (you have a limited version of that with the Malay and Malaysian Chinese underclass in Singapore).
Not really. If you want to point at an underclass here, looking at our foreign domestic workers (ie maids) and the migrant construction labourers would be much more apt. These days, if you have a Singaporean passport, you only really have yourself to blame.
(People with a Malaysian passport also still have it somewhere easier getting a visa to work in Singapore.)
> Would be curious to hear your thoughts.
I think Singaporeans like to complain, and they don't appreciate their own achievements. Did you know that Sound Blaster / Creative Labs is from Singapore?
The Chinese mainland is an enormous market. Market size is a big factor that helps with growth. That's (part of) how the UK industrialised in the first place, and it's also part of why the US got as rich as they are. (Nowadays the UK isn't exactly a big country, but at the time they represented one of the bigger unified markets. Eg across the channel France, even though it was politically united, was plagued by internal tariffs.)
Computer programmers from Taiwan go to the PRC to earn more money. Heck, programmers from Japan and ROK find they can get more money in China as well with the right specialty. It is just one small segment of their economy, but the money China is willing to spend on tech is no joke, and dwarfs its neighbors in terms of salaries.
Post HK crackdown protesters partying in and shopping in PRC. Lot's of buy China movement generating domestic brands across the spectrum happening. IMO yes, PRC cultural catchet will increase, most next TWers will look at sinicized next gen HKers and realize being "another" priveleged Chinese city not so bad. More new TW democracy dysfunction reveals itself, i.e. sunflower kids getting lesson in majority rule now, more jaded people will realize systems matter less than progress. The force against this is cohort voting math + entire LIO+Authoritarian propaganda layer with 100s of western NGOs on the ground. IMO pro-TW identity/independance bloc going to be too loud and too large past 2049.
> I think China won't attack soon. It seems they play a long time game vs Taiwan, where they try to bring Taiwan, closer, weeken it's ties to its allies and slowly making Taiwan to become more dependent on China.
That might be a sensible strategy. But: sabre rattling now is exactly the wrong way to go about weakening Taiwan's ties with her allies.
I am not that sure anymore. US armaments industry got a bad case of Wall Street in the 1990s and there aren't many factories left. Even though the US is indirectly involved in a big land war with Russia, plus has a lot of purchase orders from other countries, the industry is spinning up at snail's pace. Smaller countries in Europe will wait 10 or more years for their F-35s.
One of the serious diseases of the developed world is bureaucracy. The US has way less of it than, say, Germany (which is almost a fatal case), and maybe it could get rid of it in times of need.
Maybe. But Starship development is still being delayed by licensing, even though said licensing didn't stop the only really serious problem until today (the destruction of the concrete launch pad in Boca Chica).
The US is the worlds largest arms supplier today, and getting more orders all the time. There might not be a lot of factories, but the ones there are produce a lot of stuff.
China is heavily investing in munitions and acquiring high-end weapons systems and equipment five to six times faster than the United States. China is also the world’s largest shipbuilder and has a shipbuilding capacity that is roughly 230 times larger than the United States. One of China’s large shipyards, such as Jiangnan Shipyard, has more capacity than all U.S. shipyards combined.
"U.S. Defense Industrial Base Is Not Prepared for a Possible Conflict with China"
https://features.csis.org/preparing-the-US-industrial-base-t...