Storm Warnings

I’m not sure I buy the argument that Alfredo Ortiz is making in his post at RealClearPolitics—that Joe Biden is the contemporary reincarnation of Jimmy Carter but he does cite some concerning indicators:

Last week, the Philadelphia Federal Reserve’s Manufacturing Prices Paid Index reached its highest level since March 1980, when Carter was in office. Numerous other indicators, including rising bond yields and elevated commodity prices, suggest high inflation is coming. The latest Empire State Manufacturing Survey shows input prices rising at the quickest pace in almost a decade.

Even liberal economists such as Larry Summers worry that the recent $1.9 trillion spending package, ostensibly for COVID-19 relief, may “set off inflationary pressures of a kind we have not seen in a generation.” According to Patricia Mosser, a former Fed economist and now a Columbia University professor, “Uncertainty about medium-term inflation is very high right now.”

Under Carter, America suffered double-digit inflation, significantly hurting the middle class, savers, and creditors. Small business owners were forced to rapidly raise prices just to try to maintain their bottom lines, alienating customers and making budgeting a nightmare.

Since Biden was elected, average national gas prices have skyrocketed, increasing by about 40% to nearly $3 a gallon. Biden’s strong opposition to traditional energy, reflected by policies such as ending the Keystone XL pipeline, rejoining the Paris climate agreement, and banning drilling on public lands, has contributed to this pain at the pump.

There’s a pretty reliable inverse correlation between retail gas prices and U. S. economic growth. Nonetheless, I don’t think that Joe Biden is that much like Jimmy Carter. I tend to assess presidents based on foreign policy and my take on Carter was that he was trying to manage U. S. foreign policy on the basis of moral suasion alone which, unfortunately, is a doomed prospect in this fallen world. There are lots of other differences. Joe Biden is a lawyer; Jimmy Carter an engineer. Carter was a Washington outsider; Biden’s the consummate insider. Carter is an Annapolis grad and served in the Navy; Biden has no military experience. I see few indications that Biden’s foreign policy will be much like Carter’s. The opposite if anything.

I don’t believe that presidents have much to do with U. S. economic growth other than as cheer captains. For that you should look to the Congress which does, indeed, influence the U. S. economy.

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Yemen, Farewell

I’ll give you the TL;DR version of Gregory Johnsen’s piece on Yemen at Brookings: Yemen is no more. He discusses a country in seven fragments but why not 17 or 70? Here’s his conclusion:

The nation-state system is the key building block of diplomacy, international relations, and national security. The United States, like most countries, is set up to deal with other nation-states. The military prefers to work “by, with, and through” local partners. But what happens when there is no partner on the other side, when the gulf between what Yemen’s internationally recognized government claims and what it actually controls becomes so great the fiction of a single state finally collapses?

The answer isn’t clear, but increasingly in countries like Yemen, Syria, and maybe even Libya, it is a question the U.S. is going to have to solve.

That supports a point I made some time ago. Without harsh authoritarian dictatorships there’s a stretch of, essentially, ungoverned territory that stretches from the Hindu Kush and covers most of the Middle East and North Africa. Those are areas well-suited for terrorist bases. The Ottoman pacified that area for about a millennium and we’re still feeling the vacuum left by the collapse of the empire.

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What “China Model”?

It takes a lot of throat-clearing for Richard Bernstein to get to the point in his analysis of the “China model” for economic development at RealClearPolitics but he does, eventually. Here’s the kernel of the piece:

“I basically don’t believe there is a China-centric model of growth,” Nicholas Lardy, a specialist on China at the Peterson Institute for International Economics in Washington, D.C., said in a phone interview. In his most recent book, “The State Strikes Back,” Lardy challenges the narrative of Chinese efficiency, arguing its political system’s insistence on control has led it to invest in inefficient and often unprofitable state-owned enterprises, rather than in the private sector where most growth is generated.

“The ‘China model’ is one in which you have a very dynamic private sector with a very bad, resource-consuming state sector that doesn’t show much sign of improvement,” Lardy said. “So in that sense you could say that China does have a model, but it’s not one that many people would want to emulate.”

concluding:

The basic question, of course, has to do with a key element of the “China model,” the authoritarian control exercised by the CCP and the country’s constantly reiterated claim that this has always been indispensable to “the miracle of development never seen before in human history.”

There is no “control” in this experiment, no proof that had China become more democratic, its economic record might actually have been better. The experience of South Korea and Taiwan suggest that it may well might have been, and that an authoritarian political system wasn’t necessary.

It wasn’t necessary unless, of course, you were running it in which case it was vital.

For the last 30 years I’ve been warning that the risk China faces is that they’re following the same path the Soviets did. In the 1930s the Soviets achieved enormous economic growth by moving relatively unproductive labor resources from agriculture to manufacturing. China has done the same thing, becoming the low cost provider of labor with an effectively inexhaustible supply. That phase has ended—they still have an effectively inexhaustible supply of labor but they’re no longer the low cost provider and for the last decade of so they’ve been bolstering growth with enormous borrowing. How long that can continue is anybody’s guess. You also can’t remove labor resources from agriculture indefinitely and maintain the degree of food self-sufficiency the Chinese authorities have wanted.

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Perception and Reality Matter

In an article at Politico Zack Stanton interviews Andrew Selee, president of the Migration Policy Institute. I agree with a lot of what Mr. Selee has to say, disagree with some but this passage particularly caught my attention:

For migration movements, reality trumps perception. Perception matters, but people don’t usually move 2,000 miles or spend $6,000—the only money they have, plus money that they borrowed from relatives or “financial institutions” like prestamistas, or “loan sharks”—people don’t do that, and they don’t take a dangerous journey unless they think they can get in. There was a perception that with Biden, the border would be more open. And then the reality was that some people actually did get in. The perception of the change, coupled with just enough reality of change, allowed the smugglers to sell this.

I mean, smugglers are smart and unscrupulous marketers. They can’t sell what doesn’t exist, but they can exaggerate what does. I lived in Tijuana for around six years, and I had neighbors who were smugglers. I worked with the Mexican YMCA back then. We had a home for migrant youth, and I was the one gringo there. A father would call us and say, “José is going to get picked up by a close friend of the family,” and these guys would show up — and it’d be the same “family friend” who picked up someone else last week. We got to know these guys. We’d hang out, have a cup of coffee. They are smart, smooth marketers. But as good as they are at selling their wares, they can’t sell what doesn’t exist. When there’s a real change on the ground, they’ll exaggerate that; they can exaggerate how easy it is to get in. But if nobody is getting in, they can’t completely make it up. The reality of change mattered as much as the perception of it.

which echoes things I’ve been saying here, as many of Mr. Selee’s remarks do.

There are a number of areas in which I part company with Mr. Selee, however, and many are related to path dependence. What happened in the past limits the choices we have now. In 1965 you could make a very good case that we could use a lot more immigrants. Wages were rising as was the marginal product of labor and those had been the case for a century. Income and wealth equality were reasonable. Healthcare and education were relatively inexpensive. About 4% of the population were immigrants.

Fast forward to today. Wages for the lowest earners have been flat for decades and, contrary to the claims of those who demand sharp increases in the minimum wage, the reason for it is rather obviously the slack labor market produced by mass immigration from Mexico and Central America. Our income and wealth inequality are now more like those of a Third World country than of a European or Anglosphere country. Costs of healthcare and education have been rising faster than the non-healthcare or education sectors and have been doing so for decades, so much so that both are increasingly unaffordable for ordinary people let alone for the working poor. The percentage of immigrants in the country is around 15%. The last time it was this high we slammed the door shut for nearly a half century.

If we’re going to be able to improve the circumstances of blacks and immigrants already here while preserving legal immigration and accepting legitimate asylum seekers (as opposed to economic migrants), we need to control illegal immigration and that becomes increasingly the case with each new illegal immigrant. The situation is different than it was two years ago or five years ago because the circumstances are different than they were two years or five years ago.

There is an urgent necessity for the Biden Administration to broadcast an unequivocal message: we will control our borders and we will enforce our laws. Can the administration retain the support of open borders advocates, have the humane policies that Candidate Biden advocated, while doing what’s necessitated by today’s conditions?

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States 0; H. R. 1

The editors of the Wall Street Journal are not favorably impressed by the U. S. House of Representatives’ election reform bill, H. R. 1. Their opposition is not based on partisan grounds:

Over the weekend, the Daily Beast posted an article by Jessica Huseman of Votebeat, a nonprofit news group covering electoral issues. She calls H.R.1’s tenets “laudable” but says the bill “was written with apparently no consultation with election administrators, and it shows.” An unnamed Democratic state-level official is quoted as saying that he’d follow the law: “But I can’t guarantee it’s not going to be a total clusterf— the first election.”

Ms. Huseman knocks H.R.1’s “alarmingly prescriptive solutions,” its “deeply unrealistic time frames,” and its added costs with “no assured long-term funding.” How’s this for reportorial color? “Election administrators used the F-word a lot during my chats with them,” she writes, “frustrated because they’ve eagerly sought federal funding and basic attention to their offices, only to be handed impossible goals.”

concluding:

Fifty states have their own voting laws, and it makes no sense to micromanage them all from Congress, down to the glue on the envelopes. Democrats have dumped H.R.1 on the public as a half-baked brainstorm because they’re in a rush to rig the rules to their advantage.

I don’t know what the House’s motivations are. I’ll give them the benefit of the doubt and suggest they’re trying to avoid a repetition of the 2020 presidential election in future elections. They won’t accomplish it this way. In all likelihood the Supreme Court will declare a law with the provisions of this bill an unconstitutional arrogation of state powers to the federal government; the most they can hope to accomplish by it is to regulate federal elections, complicating already complicated discrepancies between state and federal election law, cf. “provisional ballots”.

I will say that H. R. 1 demonstrates the good sense in the provision in Newt Gingrich’s “Contract with America” of 25 years ago: no unfunded mandates. If you want to reduce opposition to your mandates from the states, pay for them.

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How Many Americans Have Had COVID-19?

In an op-ed in the Wall Street Journal Marty Makary says that federal public health officials are overestimating the time it will take for the U. S. to achieve “herd immunity”:

Anthony Fauci has been saying that the country needs to vaccinate 70% to 85% of the population to reach herd immunity from Covid-19. But he inexplicably ignores natural immunity. If you account for previous infections, herd immunity is likely close at hand.

Data from the California Department of Public Health, released earlier this month, show that while only 8.7% of the state’s population has ever tested positive for Covid-19, at least 38.5% of the population has antibodies against the novel coronavirus. Those numbers are from Jan. 30 to Feb. 20. Adjusting for cases between now and then, and accounting for the amount of time it takes for the body to make antibodies, we can estimate that as many as half of Californians have natural immunity today.

The same report found that 45% of people in Los Angeles had Covid-19 antibodies. Again, the number can only be higher today. Between “half and two-thirds of our population has antibodies in it now,” due to Covid exposure or vaccination, Mayor Eric Garcetti said Sunday on “Face the Nation.” That would explain why cases in Los Angeles are down 95% in the past 11 weeks and the positivity rate among those tested is now 1.7%.

Undercounting or removing the many Americans with natural immunity from any tally of herd immunity is a scientific error of omission. When people wonder why President Biden talks about limiting Fourth of July gatherings, it’s because his most prominent medical adviser has dismissed the contribution of natural immunity, artificially extending the timeline.

which in turn motivated the question that is the title of this post. The honest answer is neither we nor the federal public officials nor, as far as I know, anyone else actually knows. What we do know is that about 8% of the population has been confirmed as having had COVID-19. There are significantly higher estimates of how many people have contracted the disease, for example, this one at News-Medical:

World health experts have long suspected that the incidence of COVID-19 has been higher than reported. Now, a machine-learning algorithm developed at UT Southwestern estimates that the number of COVID-19 cases in the U.S. since the pandemic began is nearly three times that of confirmed cases.

The algorithm, described in a study published today in PLOS ONE, provides daily updated estimates of total infections to date as well as how many people are currently infected across the U.S. and in 50 countries hardest hit by the pandemic.

As of Feb. 4, according to the model’s calculations, more than 71 million people in the U.S. – 21.5 percent of Americans – had contracted COVID-19. That compares with the substantially smaller 26.7 million publicly reported number of confirmed cases, says Jungsik Noh, Ph.D., a UT Southwestern assistant professor in the Lyda Hill Department of Bioinformatics and first author of the study.

but, that, too is just a guesstimate. I might have more confidence if I saw the actual algorithm used to produce the results. The true number (which has changed since I started writing this post) could be higher than that, lower than that, or about right.

Arguendo, let’s assume that the true number is something between 8% and 21.5%. Picking a number at random, let’s say 15%. How many of the remaining pool of 85% of the population would need to be vaccinated before herd immunity is achieved? We don’t know the answer to that, either:

The percentage of people who need to be immune in order to achieve herd immunity varies with each disease. For example, herd immunity against measles requires about 95% of a population to be vaccinated. The remaining 5% will be protected by the fact that measles will not spread among those who are vaccinated. For polio, the threshold is about 80%. The proportion of the population that must be vaccinated against COVID-19 to begin inducing herd immunity is not known. This is an important area of research and will likely vary according to the community, the vaccine, the populations prioritized for vaccination, and other factors.

Taking the pessimistic estimate of 95%, that would suggest that as many as 80% of the population would need to be vaccinated. Taking the most optimistic possible view based on present knowledge it suggests that the number would be between 55% and 72%. Clearly, it makes a difference.

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What About Wealth Inequality?

I think that Phil Gramm and John Early are guilty of finessing the actual issues in their op-ed in the Wall Street Journal on income inequality:

We have shown on these pages that Census Bureau income data fail to count two-thirds of all government transfer payments—including Medicare, Medicaid, food stamps and some 100 other government transfer payments—as income to the recipients. Furthermore, census data fail to count taxes paid as income lost to the taxpayer. When official government data are used to correct these deficiencies—when income is defined the way people actually define it—“income inequality” is reduced dramatically.

We can now show that if you count all government transfers (minus administrative costs) as income to the recipient household, reduce household income by taxes paid, and correct for two major discontinuities in the time-series data on income inequality that were caused solely by changes in Census Bureau data-collection methods, the claim that income inequality is growing on a secular basis collapses. Not only is income inequality in America not growing, it is lower today than it was 50 years ago.

While the disparity in earned income has become more pronounced in the past 50 years, the actual inflation-adjusted income received by the bottom quintile, counting the value of all transfer payments received net of taxes paid, has risen by 300%. The top quintile has seen its after-tax income rise by only 213%. As government transfer payments to low-income households exploded, their labor-force participation collapsed and the percentage of income in the bottom quintile coming from government payments rose above 90%.

I would point out that the situation is quite different with respect to wealth inequality:
Gini coefficient of net wealth in the United States (left panel); intra-cohort Gini index across years in the United States (right panel). Source: Survey of Consumer Finances
Fifty years ago half of the national wealth was in the hands of half of the people. Now half of the national wealth is in the hands of a tiny fraction of the people. I think that kind of disparity is corrosive to a society like ours.

It has a number of causes including far too many poor immigrants coming into the country, over-financialization of the economy, and perverse incentives. I recognize that we can’t completely level wealth or incomes in the society but the present trajectory is completely wrong. And, contrary to the preferred policies of the Congressional Democrats, it can’t be solved through taxation. It will require changes much more basic than that including in some areas they consider sacrosanct.

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Net Zero is Baloney

While I disagree with some of the observations that she makes later in her Washington Post op-ed I agree with Rachel Kyte’s opening point—pledges of “net zero” emissions are baloney:

Even top climate diplomats aren’t immune to misusing the phrase. Mark Carney, former head of the Bank of England and a climate adviser to the British prime minister, declared this month that Brookfield Asset Management, where he is an executive, has already achieved net zero. “The reason we’re net zero is that we have this enormous renewables business,” he said, and thus “all the avoided emissions that come with that” offset existing investments in entities that emit carbon.

That is not net zero. (To his credit, Carney walked back his statements after public furor.)

So what should count as net zero? A goal of net zero should mean cutting emissions to zero, as soon as possible. If not immediately possible — which is understandable, especially for utilities, heavy industry and agriculture — then a goal of net zero means implementing a realistic plan for transitioning to zero for all greenhouse gases while finding offsets for residual emissions.

Offsetting emissions is basically a scam:

Nature has its limits; there’s only so much land available for tree-planting. And carbon-capture technology is extremely expensive, and thus not deployable at scale yet.

The strategy I have advocated in the past is R&D aimed at making carbon-capture technology affordable. We’re not going to develop more land. She uses Shell Global as an example:

Shell announced it’ll achieve net zero by 2050 in part by “planting forests the size of Spain” (while continuing to produce oil and increase its natural gas production). Spain is approximately 50 million hectares. The United Nations estimates there’s only about 500 million hectares of land available for forest planting. Ten percent of available land for just one company is not sustainable — and beggars belief.

And then we get to where I disagree with her. Here’s what she wants to do:

First, we need enforceable international rules, independently adjudicated and based on science, free from industry influence — think a climate World Anti-Doping Agency with teeth.

The rules need to make clear that carbon must first be removed. Where there is no prospect of getting to zero in the medium term, residual emissions will need to be offset. We will need to agree what residual emissions are. Offsetting should preferably be by a method where the carbon is removed and stored for the long term.

Offsetting is a critical buffer and should be regarded as a precious space — one that should only be used for difficult-to-abate emissions. Offsetting cannot be a crutch for firms wanting to extend business as usual or countries slow-walking the transition to carbon neutrality.

Can you imagine China submitting to an international agency? They won’t even fulfill the commitments they made to gain admission to the WTO 20 years ago. They might say they’ll conform; what they’ll actually do is something different.

And it’s hard for me to imagine a policy more likely to lose Democrats their House and Senate majorities and, possibly, along with them the White House than for the Biden Administration to pledge to subordinate U. S. law to such an international agency.

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Boot’s Strategy

While Max Boot’s strategy for competing with China, expressed in his most recent Washington Post column:

First, end the covid-19 outbreak. Nothing has done more to foster a global image of the United States as weak and incompetent than the fact that we have more covid-19 deaths than any other country. What a difference a change of administration makes. The number of vaccinations per day has increased from fewer than 818,000 on Jan. 20 to more than 3 million on Sunday. That’s a 267 percent increase in just 60 days. The United States has become a world leader in vaccinations, with 38 doses administered per 100 people, compared with only 5.4 doses per 100 people in China.

Second, revive the economy. Because China stopped the spread of covid-19, its economy grew by 2.3 percent in 2020, while ours shrank by 3.5 percent. But Biden’s growing success in combating the pandemic, combined with the $1.9 trillion stimulus package approved by Congress, should turbocharge the economy. Economists surveyed by the Wall Street Journal predict torrid 5.95 percent growth this year — the strongest pace since 1984.

Third, unify the country. This will be tougher, but Biden is off to a good start by refusing to engage in the GOP’s culture wars and pursuing popular initiatives such as his stimulus bill — which has 70 percent support in the country despite the lack of any GOP votes in Congress. Biden’s job approval rating is at 55.1 percent — far higher than Trump’s ever was — and Republicans are struggling to figure out how to attack him.

Fourth, reinvigorate America’s alliances. The administration is making this a priority. Before the Alaska summit, Blinken and Defense Secretary Lloyd Austin visited two U.S. allies in Asia — South Korea and Japan — and Biden convened a virtual meeting of the so-called Quad with Australia, Japan and India. Confidence in the United States has surged among our allies since Biden’s election. The Pew Research Center reported in January: “Large majorities in Germany (79 percent), France (72 percent) and the UK (65 percent) say they have confidence in Biden to do the right thing in world affairs — a dramatic change from the low ratings Trump received.”

Fifth, reorient defense spending. The United States spends a lot on defense — $714 billion in fiscal year 2020 — but much of it goes for “legacy” systems such as aircraft carriers, short-range fighter aircraft and tanks that would be unlikely to survive a war against an adversary such as China equipped with precision-guided missiles, cyberweapons and other high-tech systems. Classified Pentagon war games “strongly suggest” that the United States would lose a conflict with China. Catching up requires, as retired Adm. James Stavridis and former Marine Elliot Ackerman argued in The Post, “investing in offensive cyber capabilities, smaller platforms, drone and stealth technology and artificial intelligence.” We can’t do that and maintain all of our expensive, existing capabilities.

Sixth, safeguard our technological edge. We can’t take that for granted, given that, from 2000 to 2017, China’s research and development spending grew by more than 17 percent a year while America’s grew only 4.3 percent a year. The National Security Commission on Artificial Intelligence, chaired by former Google CEO Eric Schmidt and former deputy defense secretary Robert Work, recently came out with a report that has important recommendations for how the United States can remain a tech leader. Its proposals include doubling research spending on artificial intelligence, reforming the immigration system to attract “highly skilled immigrants” and expanding domestic manufacturing of semiconductors. Congress can begin by passing a bipartisan Senate bill to expand funding for the National Science Foundation and to give it more of a technology focus.

is framed as things that might actually be accomplished, I think they vary from foregone conclusion to materially impossible.

The pandemic will end but it will end by becoming endemic. In that sense the outbreak of COVID-19 in the U. S. will never end. The economy will revive as soon as government (at all levels) allows it to. How fast, how strongly, which sectors of the economy will recover and which will never recover are different matters. I think Mr. Boot is overestimating what is actually going to happen, largely because he does not appear to understand how either government spending or the U. S. economy works. I also think that Mr. Boot’s view of how to assist the economy in recovering would be somewhat different than mine which would largely consist of proposing it get the heck out of the way. Increasing corporate income taxes is probably not the best strategy for fostering economic growth. Neither is focusing on reducing carbon emissions. I didn’t mention it in my last post but one of the secrets of our success has been abundant cheap energy.

The United States has not been unified in any meaningful sense other than for a few days following 9/11 since the end of World War II. I believe it would require an actual existential threat against the U. S. to unify the country. The present approval rate of the American Rescue Plan Act of 2021 is a lousy gauge for unifying the country. The ARRA was popular initially, too, but its popularity waned sharply over time and not just for partisan reasons.

I don’t believe that Mr. Boot recognizes it but his fourth and fifth suggestions are in diametric opposition. His recommendation to “reorient” defense spending is a lot more than that. It would be an abrogation of America’s grand strategy over the last 250 years which includes maintaining freedom of navigation. Extending that grand strategy to include freedom in telecommunications is one thing; abandoning our large Navy in the interests of doing it is something else entirely. Make no mistake: that Navy is really the only thing we have to offer the Quad countries. Without it we’re not much more interesting to them than Chile. I have suggested revisiting our need for a large, standing but I recognize that would mean doing a lot of things differently than we do now which Mr. Boot does not seem to appreciate. I’m skeptical that the United States government is temperamentally suited to engage in largescale offensive cyber capabilities. And artificial intelligence? That has been touted as right around the corner since I was in grad school which is now more than 50 years ago. Contrary to popular beliefs the main developments in AI over that period have been due to cheap hardware rather than any new insights into AI as such. Just as a for instance, neural nets have been around since 1958. I think that an AI breakthrough will remain elusive for years to come. I sincerely wish I had persuaded somebody to take me up on my wagers of some years back that there wouldn’t be a single street legal fully autonomous vehicle anywhere in the U. S. by 2020. There wasn’t and the latest test runs have been pretty catastrophic. A car that can park itself is still not a fully autonomous vehicle.

I agree that we need to reshore manufacturing of semiconductors. It’s something I’ve been saying for the last 30 years. It’s unclear to me how we can maintain our technological edge as long as we allow the Chinese to maintain their 24/7/365 cyber espionage programs not to mention their ordinary human espionage. Like the Soviets before them, all it takes to turn U. S. assets is money.

Unlike Mr. Boot I think we should be capitalizing more effectively on our strengths rather than putting a futile attempt at shoring up our weaknesses. But that’s material for a different post.

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What Was “Our Formula for Success”?

In his new York Times column Tom Friedman laments that the Chinese have lost respect for the United States because we’ve “stopped following our formula for success”:

At last week’s Alaska meeting between America’s and China’s top diplomats, Chinese officials made it quite clear that they no longer fear our criticism, because they don’t respect us as they once did, and they don’t think the rest of the world does, either. Or as Yang Jiechi, China’s top foreign affairs policymaker, baldly told his U.S. counterparts: “The United States does not have the qualification … to speak to China from a position of strength.”

Surprised? What did you think, that the Chinese didn’t notice that our last president inspired his followers to ransack our Capitol, that a majority of his party did not recognize the results of our democratic election, that a member of our Congress believes that Jewish-run space lasers cause forest fires, that left-wing anarchists were allowed to take over a section of downtown Portland, creating havoc for months, that during the pandemic the U.S. printed money to help its consumers keep spending — much of it on Chinese-made goods — while China printed money to invest in even more infrastructure, and that gun violence in America is out control?

Which brings me to the 2022 Winter Olympics, scheduled for China.

A rising number of voices are beginning to suggest that we boycott the China Games. I have sympathy with that call, as we watch China crush the infrastructure of democracy in Hong Kong and use internment camps to brutally suppress Uyghur Muslims in Xinjiang with utter indifference to world opinion. How do we just ignore all that and focus on ice skating?

But here’s the thing: The competition that we really need to focus on winning is not the 2022 Olympics but the 2025 Olympics.

Oh, you haven’t heard of the 2025 Olympics? They are not on your NBC calendar? Well, they are on Chinese President Xi Jinping’s calendar. Xi unilaterally declared the 2025 Olympics in 2015 and suggested that there would be only two competitors: China and America. It was an initiative that Xi’s government called “Made in China 2025.”

He goes on to advise:

But my message to my fellow Americans is: We now have to return to and double down on what was our formula for success.

And that is: educating our work force up to and beyond whatever technology demands; building the world’s best infrastructure of ports, roads and telecommunications; attracting the world’s most energetic and high-I.Q. immigrants to enrich our universities and start new businesses; legislating the best regulations to incentivize risk-taking while curbing recklessness; and steadily increasing government-funded research to push out the boundaries of science so our entrepreneurs can turn the most promising new ideas into start-ups.

It’s unclear to me how he decided those things were our formula for success or, indeed, how he measures success. Presumably, it wasn’t by increases in GDP:
Statistic: Annual growth of real GDP in the United States of America from 1930 to 2020* | Statista
Find more statistics at Statista

There’s quite a bit to unpack there. I’ll focus on these:

  • Chinese respect
  • Friedman’s formula
  • Our actual formula
  • Our national goals

The Chinese authorities do not respect us, never have, and never will. How could they? We’re not them and we’re not Chinese. Furthermore they see our civil liberties and diversity as liabilities rather than assets. As final nails in our coffin our lack of willingness to enforce our own laws and their confidence that they can breach our digital security any time they care to are damning.

Fortunately, I don’t care whether they respect us or not. It concerns me that they may no longer fear us. IMO that would be a grave error on their part.

My guess is that arriving at his “formula” Mr. Friedman was only looking at our national ability to “accomplish big things”. The United States is now almost 250 years old. Over that entire period the only times in which anything resembling the items in his formula were national priorities were during World War II (the Manhattan Project) and during the 1960s (the Mercury and Apollo Programs). In aggregate that lasted about 20 years. It’s a bit of a stretch to call that “our formula for success”.

I would say our actual formula for success was more like:

  • Import as little as we can. Impose tariffs on foreign goods to ensure that’s the case
  • Ensure that the entire U. S. is a large free trade zone.
  • Restrict immigration to the “high-I. Q.” people he mentions.
  • Education, healthcare, and physical infrastructure are primarily state and local responsibilities.
  • R&D are primarily the responsibility of private companies and individuals
  • The responsibilities of the federal government are limited to national defense (narrowly construed), foreign relations, ensuring the soundness of the dollar and U. S. credit, and enforcing federal laws.
  • Don’t invade other countries or occupy countries where the people hate us.

I will freely concede that our greatest period of national accomplishments and growth was also marked by racial discrimination and injustice. Can those be reconciled? Mr. Friedman seems to take that as an article of faith. I would hope so but it remains to be seen.

In conclusion I would suggest that I agree with Mr. Friedman that we have gone astray but I think I part ways with him in just how we have gone astray. I don’t think it’s in “accomplishing big things”, maximizing the DJIA, maximizing GDP, maximizing population, or maximizing the wealth of a small number of ultra-wealthy people. Or gaining the respect of the Chinese authorities. I think it’s in ensuring a decent life for all Americans and that people have the freedom to work out their own hopes and dreams.

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