I agree with a lot of what’s in this piece at Founder’s Broadsheet but not this:
Populist nationalists in the Republican Party and socialists in the Democratic Party both believe that government should intervene to protect society’s members from the disruptive effects of economic development. They both believe that government can do a good job at this. Both share a delusive nostalgia for a bygone manufacturing era that cannot possibly return — as manufacturing becomes more capital-intensive and dependent on fewer but better educated workers.
[…]
We certainly need to thwart Chinese theft of US trade and defense secrets, but if China wants to take over and subsidize the production of our low-tech manufactures so our workers can move up in the division of labor, so much the better. It’s the Chinese theft of US trade secrets in advanced and military-related products that should concern us and their attempts to thwart the marketing of these products where our companies attempt to do so in China.
The emphasis is mine. It would be fine if that were happening but it isn’t and the author must surely know it. Just look at any monthly Bureau of Labor Statistics Employment Situation Report. Manufacturing jobs have been replace by service sector jobs requiring even lower skills and paying considerably less. I’d like to see his model of how that is good for most Americans.
The problem of our self-destructive relationship with China is not merely that the Chinese are capitalizing on our investments by letting us do the R&D, it’s that they’re using what they gain to force the U. S. economy into an dead end niche. We are a very diverse country and we need an equally diverse economy, one in which there’s room not only for professional and highly-skilled manufacturing workers but less-skilled workers, primary production, and agriculture.
“force the U. S. economy into an dead end niche.”
Or as they say about Russia, a third world country with a first world military.
I say use the tariffs, I also think it will be difficult politically for future Presidents of any stripe to lift them completely.
I agree with everything except the implication that China cannot innovate. Probably a third or more of all the research produced by our universities is actually done by Chinese nationals, mostly MS and PhD candidates, but also by Chinese faculty. Huawei is an example of a Chinese company that is technically superior to it American and European competitors, and its technology is Chinese grown.
That is not to say they don’t steal everything they can; they do. But Americans are displaying the same sort of contempt for Chinese abilities that we did for the Japanese in 1940. The difference is that we are in the inferior economic position today, and we are the ones that would lose a war of attrition.
The most important economic program of our time is the now combined Russian Eurasian Union and the Chinese OBOR. That is the future of Eurasia and the new world hegemon.
To riff off of Bobs point…
I’ve written before about my crusty thesis advisor and our topic. My job was to do the kinetics. How fast can sulfur diffuse into iron at fluidized bed boiler temperatures? The other side was the thermodynamics. How much sulfur could be dissolved in iron? If that didn’t work you ain’t got nuthin’. Both pieces were fundamental, industrial grade primary research. Nobody knew the answer. The thermo side was being done by PhD candidate Jen Dong Du. Now I know what you are thinking. But no, he wasn’t Irish. (Although we called him Red. 😈 ). Chinese. And that was approximately 40 years ago. Bob is correct.
That all said… Daves following is spot on, but people don’t want to acknowledge it because the implications are icky.
“The problem of our self-destructive relationship with China is not merely that the Chinese are capitalizing on our investments by letting us do the R&D, it’s that they’re using what they gain to force the U. S. economy into an dead end niche. We are a very diverse country and we need an equally diverse economy, one in which there’s room not only for professional and highly-skilled manufacturing workers but less-skilled workers, primary production, and agriculture.â€
I am not quite so optimistic about China’s future. To date a lot of what they have done is catch up growth. Not sure how far they go without liberalizing the economy a bit more. Then add in that we have gone out of our way to help them. That said, size does matter.
Steve
The Han Empire has to import food, and the swine flue epizootic is making things even worse. It is currently engaging in ethnic cleansing of its Uighur subjects in western China and thus is winning no friends among the Muslim peoples. The vast majority of its R & D is performed overseas, much of it stolen. It has implemented a social credit/surveillance system that the nations of Orwell’s 1984 would have been envious of, a scheme which will not just crush dissident thought but eventually all thought, including that needed for innovation. The Seven Gorges Dams are a colossal catastrophe waiting to happen if an 8+ quake hits. It has stolen a significant chunk if not a majority of its people’s savings by holding down bank interest rates while allowing unofficial inflation to outpace those rates. Xi has temporarily scared the other princelings into reluctant complaisance and acceptance of his rule with targeted anti-corruption campaigns against potential rivals, but if the trade war starts seriously hurting those princelings’ bank accounts, things could get very bloody very fast. An attack on Taiwan to rally the people behind the flag, followed by nukes if landings fail, is not out of the question IMO.
OT- The CRS has put out its estimate of the effect of the tax cuts and the repatriation of foreign earnings on our economy.
https://www.everycrsreport.com/reports/R45736.html#_Ref7770171
Steve