President Biden says climate change is the “number one issue facing humanity,†but that we must fight it while still upholding our values, such as human rights. China is testing our ability to honor both goals, by running its solar industry using forced labor linked to an ongoing genocide.
How many goals do you want to accomplish at the same time?
Reduce global warming
Reduce U. S. dependence on Chinese manufacturing
Prevent genocide
and there are many more packed into those two sentences. IMO he’s not giving the Chinese enough credit in this statement:
Inside the administration, there was a fierce debate over the new sanctions, with some arguing that Biden’s ambitious climate change goals could suffer due to a disruption in the solar panel industry. The U.S. solar market might not be large enough to make the sanctions effective. And U.S. manufacturing of solar technology has dropped off a cliff over the past decade.
Of course, that’s largely because the Chinese firms have benefited from unfair advantages, such as cheap, forced labor, government subsidies and cheap energy from dirty coal plants in Xinjiang. Environmental degradation is just one more way Beijing is making the people of Xinjiang suffer to fuel Xi Jinping’s economic ambitions.
I think that’s all true as far as it goes but the Chinese authorities did use the money they made by selling consumer goods to the entire world wisely. They invested in production capability. Now they have dominant positions in hundreds of different sectors and it’s not just due to “cheap, forced labor, government subsidies and cheap energy from dirty coal plants”. It’s also due to being willing to delay gratification. Do our leaders have that much wisdom and tenacity? In contrast we’ve been throwing away the advantages we had and wasting our money in dozens of ways, not the least by financing endless wars without achievable objectives.
Here’s a little graph from the World Bank which might be illuminating:
I have some issues with using parity pricing as a gauge but that’s pretty good as a first approximation. The more we purchase from China, the more we contribute to carbon emissions. It’s darned hard to buy or make solar cells without dealing with China. How practical is it to increase carbon emissions by increasing their production? Especially when you’re talking about consumables.
Before May 2020, M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (3) other checkable deposits (OCDs), consisting of negotiable order of withdrawal, or NOW, and automatic transfer service, or ATS, accounts at depository institutions, share draft accounts at credit unions, and demand deposits at thrift institutions.
Beginning May 2020, M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (3) other liquid deposits, consisting of OCDs and savings deposits (including money market deposit accounts). Seasonally adjusted M1 is constructed by summing currency, demand deposits, and OCDs (before May 2020) or other liquid deposits (beginning May 2020), each seasonally adjusted separately.
Before May 2020, M2 consists of M1 plus (1) savings deposits (including money market deposit accounts); (2) small-denomination time deposits (time deposits in amounts of less than $100,000) less individual retirement account (IRA) and Keogh balances at depository institutions; and (3) balances in retail money market funds (MMFs) less IRA and Keogh balances at MMFs.
Beginning May 2020, M2 consists of M1 plus (1) small-denomination time deposits (time deposits in amounts of less than $100,000) less IRA and Keogh balances at depository institutions; and (2) balances in retail MMFs less IRA and Keogh balances at MMFs. Seasonally adjusted M2 is constructed by summing savings deposits (before May 2020), small-denomination time deposits, and retail MMFs, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.
So, what’s your prediction for the prospects for the Senate’s passing the bipartisan infrastructure spending bill that has been negotiated? I think it’s DOA and President Biden and Nancy Pelosi have pretty much guaranteed that.
Chicago has blown past the record number of homicides year-to-date set in 2016. 335 people have been killed so far this year. That’s about twice as many as were killed in the Tulsa race riots.
Some would say that 1992 or even 1974 were worse but they’re missing something: Chicago’s population was a lot higher then. There are almost a million fewer people living in Chicago than in 1974.
Almost all of the murders have been of young black men and have been perpetrated by other young black men.
I found Thomas Edsall’s New York Times op-ed on the role of education in (economic) success very thought-provoking. It has a number of quite interesting observations and I wanted to comment on it and them. For example, consider this passage on the education as a “lifter of all boats”:
Education lifts all boats, but not by equal amounts.
David Autor, an economist at M.I.T., together with the Harvard economists Claudia Goldin and Lawrence Katz, tackled this issue in a paper last year, “Extending the Race Between Education and Technology,†asking: “How much of the overall rise in wage inequality since 1980 can be attributed to the large increase in educational wage differentials?â€
Their answer:
Returns to a year of K-12 schooling show little change since 1980. But returns to a year of college rose by 6.5 log points, from 0.076 in 1980 to 0.126 in 2000 to 0.141 in 2017. The returns to a year of post-college (graduate and professional) rose by a whopping 10.9 log points, from 0.067 in 1980 to 0.131 in 2000 and to 0.176 in 2017.
I asked Autor to translate that data into language understandable to the layperson, and he wrote back:
There has been almost no increase in the increment to individual earnings for each year of schooling between K and 12 since 1980. It was roughly 6 percentage points per year in 1980, and it still is. The earnings increment for a B.A. has risen from 30.4 percent in 1980 to 50.4 percent in 2000 to 56.4 percent in 2017. The gain to a four-year graduate degree (a Ph.D., for example, but an M.D., J.D., or perhaps even an M.B.A.) relative to high school was approximately 57 percent in 1980, rising to 127 percent in 2017.
He then proceeds with a lot of hand-waving on how increasing technology requires increasing education. He then considers the role of parental strategies:
In their paper “The Economics of Parenting,†three economists, Matthias Doepke at Northwestern, Giuseppe Sorrenti at University of Zurich and Fabrizio Zilibotti at Yale, describe three basic forms of child rearing:
The permissive parenting style is the scenario where the parent lets the child have her way and refrains from interfering in the choices. The authoritarian style is one where the parent imposes her will through coercion. In the model above, coercion is captured through the notion of restricting the choice set. An authoritarian parent chooses a small set that leaves little or no leeway to the child. The third parenting style, authoritative parenting, is also one where the parent aims to affect the child’s choice. However, rather than using coercion, an authoritative parent uses persuasion: she shapes the child’s preferences through investments in the first period of life. For example, such a parent may preach the virtues of patience or the dangers of risk during when the child is little, so that the child ends up with more adultlike preferences when the child’s own decisions matter during adolescence.
Guess what? In societies (or, presumably, sub-societies) in which advancement is nonexistent or unlikely, the authoritarian style prevails. The claim is that in both the United States and China the authoritative style prevails. I seem to recall that in some societies it depends on the child’s age—preschool children are generally treated very permissively but when they start attending school parents become very controlling.
No mention is made in the piece of single parent families which are the norm in some segments of our society.
He goes on to tout spending heavily on early childhood education. Frankly, I’m skeptical. IIRC the gains from Head Start tend to erode very quickly. I will agree with one thing: the heavy federal spending we have been doing on higher education is not worthwhile.
Now I’ll make a few observations. I wish he didn’t include MDs in the calculus. Physicians are outliers. Consider this very interesting chart of real per capita health care spending:
thoughtfully provided by the University of Minnesota. I’m not claiming that physicians account for all of that change but they certainly participate in it. You can come up with lots of explanations for that astonishing change. It is my believe, following Uwe Reinhardt, that “it’s the prices, stupid”. Others point to improved outcomes or other explanations. I also think that Medicare spending is both a cause and an effect in that chart but that’s another subject.
It is a fact that lawyers, engineers, architects, and accountants have not experienced a 25-fold increase in real incomes over the last 90 years. Physicians stand alone among professionals in that regard.
And including JDs isn’t particularly helpful, either, for reasons I have explained before: incomes in the practice of law occur in a bimodal distribution (sort of like a camel’s humps) with the higher incomes being realized by associates and partners with big law firms who graduated from the top law schools. The top law schools are extremely selected in their admissions. You can’t generalize anything from them. Similarly with MBAs. There’s a difference between the income of a Harvard, Stanford, Northwestern, or U of Chicago MBA and an MBA from the U of Pittsburgh. I also suspect that when those outliers are excluded from the statistics on the income expectations of those with post-graduate degrees the picture looks a lot different.
Next observation. IQ is weakly correlative with financial success. What might be called “temperament” or socio-emotional development is much more closely correlated. Does heredity play a role in socio-emotional development? No one really knows.
I’ll close with a question. What are the factors behind economic success? Offhand I would say
Wanting to succeed and putting in the effort to succeed
Socio-emotional development
Social support, i.e. peer pressure
Heredity
Parenting strategy
IQ
Luck
and I think the federal government is more likely to be a hindrance than a help.
Offhand I would say I was extremely fortunate. I was expected to get a college and probably post-graduate education. When my dad died young I put myself through school. I didn’t get much benefit in that regard from being white. I was fortunate in having parents who both were bright, who both had post-graduate degrees, and who adopted the “authoritative” strategy. I’ve always been sort of a non-conformist (or even anti-conformist) so the opinion of my peers has not played much of a role for me.
I would appreciate the thoughts of my readers on this subject.
Mr. Xi’s strategy rests on five pillars. First, he has moved aggressively to take back authority over every industry in his country. Economic actors that had been increasingly independent—especially in technology and consumer services—have been reined in, and he is pressing the private sector to hand over all of its data. Dissenting voices in civil society have been shut down. Potential threats to his leadership from within the party have been suppressed. The full power of the state has been unleashed against Hong Kong and the Uyghurs. And he has sparked a campaign to deploy Chinese history in service to the Communist Party, an effort that has been labeled “the largest mass-education drive since the Mao era.â€
Second, Mr. Xi has established technological superiority as a core national goal. His “Made in China 2025†plan is designed to propel his country into the lead in the technologies that will dominate the global economy in coming decades, many of which have military applications. And he has strengthened the connections between the civilian and military sectors.
Third, Mr. Xi has upgraded his defense forces and extended their reach. The Chinese army is far better equipped than it was a decade ago. The navy is the largest in the world. And China is moving to establish a global system of ports to give its forces access all over the world.
Fourth, Mr. Xi is using China’s economic clout to extend its diplomatic reach. Although the Belt and Road Initiative has yielded mixed results, developing countries and autocratic governments welcome the absence of the environmental and governance requirements that other funders impose. Most recently, while Western countries have concentrated on inoculating their own populations against Covid-19, China has boosted its international standing by shipping millions of doses of its vaccine to countries throughout Asia.
Finally, and most ominously, Mr. Xi has deployed the full force of Chinese nationalism to support the reassertion of his country’s power and to complete its reunification. Last week, 28 Chinese fighter jets and other aircraft conducted exercises over waters south of Taiwan. A successful effort to end Taiwan’s independence by force, once considered improbable, can no longer be ruled out.
I am unconcerned about China but I am gravely concerned about the United States. I wish our leaders realized that U. S. hard and soft power are completely dependent on the U. S. economy. They are downstream from it. With a strong, resilient U. S. economy there is little about which we should be concerned. Without it U. S. influence will continue to erode. We cannot base a strong and resilient economy on consumption and there is no other country from which we might buy one. It is something which we foolishly threw away and which rebuilding will require considerable effort.
Rather than dwell on the quote that I believe Mr. Galston incorrectly attributes to Deng Xiaoping I would emphasize two other quotes, both of which I know to be from Sun Tzu. The first is the title of this post. Here’s the second:
When we are able to attack, we must seem unable; when using our forces, we must appear inactive; when we are near, we must make the enemy believe we are far away; when far away, we must make him believe we are near.
The survey found 82% still expect inflation to rise after the COVID-19 pandemic, versus just 10% expecting deflation. A fifth, 21%, say U.S. inflation will average over 3% over the next 5 years, while 17% see inflation under the Fed target.
So, they don’t believe in central bank infallibility? Heresy!
Biden has a last chance to salvage some of this wreckage when President Ashraf Ghani visits Washington on Friday. He can’t offer Ghani U.S. military muscle — it’s too late for that. But he can pledge financial and diplomatic support that, perhaps, could allow Ghani’s government to avert total collapse. And he can mobilize the international consensus — which includes Russia, China, Pakistan and Iran — against a Taliban military takeover in Kabul.
Biden had hoped for an intra-Afghan peace agreement before U.S. troops departed. He won’t get that, largely because the triumphal Taliban have dragged their feet. Resolution of the conflict — on the battlefield or in negotiations — won’t come until after U.S. troops have left. The Taliban appear startled by the speed of their advance; they have begun privately messaging Americans about the mundane realities of governing, such as operating dams or maintaining a power grid, U.S. officials say.
“I don’t think the president understood how precarious the situation would become†as soon as he announced on April 14 that he planned to withdraw all troops by Sept. 11, says Kagan. Biden’s pledge to remove U.S. military forces came as the Afghan fighting season was beginning. Rampaging Taliban rebels seized about 50 district capitals after May 1. But they’ve held back from capturing big provincial capitals such as Kandahar or Jalalabad, perhaps because they fear U.S. reprisals or maybe just because their forces are stretched.
concluding:
Americans grew tired of this war, but they won’t like scenes of our departure, either. What Biden owes Afghanistan and America both is a frank explanation of what he’s doing — and how he plans to keep faith with the Afghan people to provide as honorable a retreat as possible. But for Afghanistan, and perhaps Biden, too, this will be a summer of pain.
What he doesn’t explain is how that would have been different if we had withdrawn our forces in 2005 or 2010 or 2015. Or in 2025 or 2055 for that matter. Every president since 2001 has promised that we would withdraw from Afghanistan. None of them have ever had a coherent plan for leaving a durable and reasonably friendly Afghan government behind when we did so. There are multiple reasons for that including a) that is beyond our power; b) they had no idea of how to accomplish that; and c) some in the State Department and DoD wanted to stay there forever regardless of what presidents said.
All of these conditions have been in place since we invaded Afghanistan and presidents starting with Bush promised to leave. This was always the way our Afghan adventure would end and everyone not in clinical denial always knew that was the case.
I found Walter Russell Mead’s column in the Wall Street Journal about the vital importance of extending U. S. relations with Azerbaijan something of a head-scratcher. It’s clear to me what Russia’s interest in the Caucasus including both Azerbaijan and Armenia is: Georgia, Azerbaijan, and Armenia were a part of Russia for 200 years. It’s less clear to me what the interest of an energy-independent U. S. might be. I can also see what the interest of Western Europe might be. Is Dr. Mead’s point that we should be pursuing German, French, etc. interests regardless of costs or of our own?
