Tag: tariffs

BALANCE

It is ironic that Trump has suffered so much from America’s legal system and is unable to see NIMBY mentality and a return to the past will not “Make America Great”.

Books of Interest
 Website: chetyarbrough.blog

Breakneck (China’s Quest to Engineer the Future)

Author: Dan Wang

Narrated By:  Jonathan Yen

Feng Chen Wang aka Dan Wang (Author, Canadian technology analyst and writer, visiting scholar at Yale Law School.)

Dan Wang is a highly credible author of the 21st century economies of China and the United States. Mr. Wang’s mother and father were born in China when the one child policy was the law of the land. Mr. Wang was born in Canada in either 1991 or 1992. Though Mr. Wang may be an only child, his parents advised him that living in China was challenging because of its state control and family planning that restricted their human rights.

Dan Wang has lived in Canada, America, and China.

From 2017 to 2023 he worked as a technology analyst in Hong Kong, Beijing, and Shanghai. As a young man, Wang bicycled across China with young friends. Having been educated in Canada and the United States, growing up in Toronto and Ottawa and going to high school in Philadelphia, he has a broad understanding of the economies of all three nations. Of course, his specialty is technology which gives him a unique understanding of what is happening in America and China today. He graduated from the University of Rochester in 2014, studying philosophy and economics.

Trump’s apparent view of Xi.

After listening to Wang’s book, one begins to understand why President Trump’s perspective is that the world, with emphasis on China, has taken advantage of America’s economic wealth by eviscerating its industrial industries with less expensive product made in other countries. Wang presumes as a person who has an economics education that Adam Smith (the Father of Economics) and Donald Trump are right when they argue tariffs are justified in areas of national defense, or for retaliation. On the other hand, Adam Smith, noted “It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.”

Adam Smith (Father of Economic Theory)

Smith argued if another nation can provide the same product for less cost, a prudent buyer should buy the cheaper product and use money saved to produce a different product. Wang and Trump disagree with Smith because the revenue producer that America turns to is the service industry rather than product development. What is missed by Wang and Trump is that America is the third largest agricultural producer in the world with China and India being the largest. Of course, the difference is that America has 1/3rd the population of China and India, respectively. Lower population and high agricultural production in the United States hugely benefits its economy. More significantly, food, like water, is an essential need of life. The point is that non-food product production is not necessary for living life.

Loss of industrial production to China.

Wang’s and Trump’s argument is that America’s loss of industrial production has made it too dependent on other countries. They either infer or say Americans are forgetting how to manufacture product. They argue American industries are closing because of America’s inability to compete with other nations because of labor and material cost differences. History shows America fails to expand its industries because production of things is provided by other nations at a lower cost. And as Adam Smith noted, “It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.”

Wang decries America’s movement toward a service industry as the basis for economic growth.

America is the richest country in the world, but America has failed to eliminate poverty, house the homeless, feed the malnourished, and provide for the infrastructure needed to improve America lives. One may ask oneself-what is wrong with becoming a service industry nation? Why does America have to return to its past. As Adam Smith noted: “It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.” The future is about being healthy, being housed, fed, and clothed. It should not be about being the richest and fattest minority in the world, particularly when there is an inordinate gap between the rich and poor.

Wang argues America’s economy is diminished, not by reduced industrialization, but by its growth of legalism that reinforces nimby (not in my backyard) litigation.

Delays in public improvements in America are restrained by lawsuits that protect the rich and victimize the poor. An example is the long delays in mass transportation improvements which become more costly with every year that passes before completion. The delays are caused by litigation. When China can build rapid transit in 3 years while it takes 15 or more years in America, one wonders why. The huge investments China has made in massive infrastructure improvements have vastly improved their economy. In contrast, America wastes investment resources litigating mass transportation improvements in California, Washington, and other states by increasing costs from delays caused by litigation. It is like throwing the baby out with the bath water because the number of people who benefit from infrastructure improvement are largely discounted or ignored. Equally appalling is homelessness in America because of NIMBY’ objection to low-cost multifamily housing that could get the homeless off the street. Cost benefit analysis should prevail, not litigation based on interest group objection. In Wang’s terms, American infrastructure decisions should be based on science and engineering like, what he argues, China bases their infrastructure decisions upon.

President Eisenhower.

The fundamental point is that America has lost sight of the importance of a balance between benefit to the public and individual rights. Equality of opportunity is split between the rich and poor with the middle class being too complacent while the rich reap unconscionable reward. Where are the Eisenhower-like Presidents who promoted an Interstate Highway System that created a 421,000-mile interstate highway system?

Trump is no Eisenhower because he wishes to return America to a past rather than look to its future. It is ironic that Trump has suffered so much from America’s legal system and is unable to see NIMBY mentality and a return to the past will not “Make America Great”. Wang’s book explains how China has succeeded in improving their economy while America’s economy is failing.

US/CHINA

The inference one draws from Rudd’s book is that peaceful co-existence will only come from a recognition and acceptance of the cultural differences between American democratic capitalism and Chinese authoritarian capitalism.

Books of Interest
 Website: chetyarbrough.blog

The Avoidable War? (The Dangers of a Catastrophic Conflict between the US and China)

By: Kevin Rudd

Narrated By: Kevin Rudd, Rafe Beckley

Kevin Rudd (Author, Australian diplomat and former politician who served as the 26th prime minister of Australia. He is fluent in Mandarin and received honors in Chinese studies from the Australian National University.)

Kevin Rudd’s title, “The Avoidable War?” is a provocative book, evidenced by its audiobook title’s question mark. The greatest part of Rudd’s book has a neutral and non-committal view that almost makes one put the book down. However, Rudd’s knowledge of the languages of Chinese and English and his many diplomatic contacts with politicians in both cultures entice one to keep listening for a solution to fundamental differences. The last chapters of Rudd’s book are enlightening and have the ring of truth but imply irreconcilable cultures that make a question mark after the title of the book correct but unsatisfying.

Spheres of Influence.

The first part of Rudd’s book puts one off because it reinforces the aggressive warlike foreign policy beliefs of China and the U.S.

Rudd emphasizes China’s military buildup and its intent to expand its sphere of influence in the Pacific theater. Xi’s intention is to expand China’s power and influence. That intent gives one a sense of impending doom. One has to put that feeling aside to get to the last chapters of the book. Rudd explains the vulnerabilities of both America and China may avoid a nuclear war and its cataclysmic consequence but not offer peace.

XI JINPING (GENERAL SECRETARY OF THE COMMUNIST PARTY OF CHINA AND PRESIDENT OF THE PEOPLE’S REPUBLIC OF CHINA.)

Rudd explains the history of Xi Jinping’s rise to power and his actions assure his continuation as the General Secretary of the Chinese Communist Party and President of the People’s Republic of China. Xi served in the People’s Liberation Army for three years, beginning in 1979. Xi earned a bachelor’s degree in chemical engineering in 1979. He pursued a Doctorate in Marxist Theory and Law while working in the government. Xi rose to power in 2012 with his appointment as General Secretary of the Chinese Communist Party. He was elected by the National People’s Congress to the Presidency in 2013.

Rudd infers Xi is a committed believer in a socialist form of communism.

The picture of Xi that Rudd creates is of a leader who acknowledges the value of economic growth while firmly believing in a classless society that melds the strength of government authoritarianism with the skills of Chinese entrepreneurs. Xi maintains the direction of China’s economic growth by eliminating any political opposition from party members or influential entrepreneurs that get in the way of authoritarian socialist communism. Rudd believes Xi will be in power for many years to come.

The tariff war started by President Trump undoubtedly troubles Xi, but one doubts it will change Xi’s international frame of mind.

History has changed since Rudd wrote his book. In contrast to Xi who will likely be President for many years, America limits the office to two terms. This is particularly relevant to the authoritarian influence of Donald Trump in the next three plus years of his second term. Xi recognizes Trump will be replaced by a different President at the end of his last term in office. There will be negotiation on the tariffs, but Trump’s position is weakened by the limit of his term in office.

The faltering reduction of income for Chinese workers and families.

As noted by Rudd, the most important issues facing Xi’s administration is the reduction of income for Chinese workers and families. The immense improvements in average incomes of families in China came from its opening to capitalism which created a more socialist form of communism. That capitalist opening increases pressure on Xi to ameliorate Trump’s U.S. tariff policy. Putting aside President Trump’s false reasoning on creating an international tariff war, one hopes Xi’s need to grow the Chinese economy will aid Trump’s negotiation on tariffs.

Much of Rudd’s book is about China’s economic growth and its intent to acquire Taiwanese territory.

As is well known, the U.S. is ambivalent about Taiwan with many Americans who say “who cares” about their fate and others who believe every nation should be free to choose their own form of government. Now that China has experienced the value of introducing capitalism to communism, Taiwan would be a valuable addition to the Chinese economy. In the history of Mao’s defeat of Chiang Kai-shek in the Chinese Civil War, Taiwan became an island nation in 1949. The nation of Taiwan was built by refugees from mainland China who chose to become an independent capitalist country that eschews communism.

CHIANG KAI-SHEK (CHAIRMAN OF THE NATIONAL GOVERNMENT OF CHINA 1943-1948)

Taiwan’s growth as a tech giant has made them a capitalist economic success. Xi undoubtedly sees the potential of Taiwan’s economic benefit to China’s faltering economy. One concludes from Rudd’s book that the history of Chiang Kai-shek’s followers and their departure from China irks Xi, both from an historical as well as economic perspective.

The primary subject of Rudd’s book is the issue of war with China.

What Rudd is driving for is a rational appreciation of what America should do with the growing international power of China. Rudd implies China will become the equal, if not superior, of the American economy. He believes China will return to its former hegemonic influence, like that of its former dynasties. Rudd acknowledges Xi faces the immense task of returning China’s economy to its recent economic success. He implies Xi will succeed by carrying on with his view of how economic success can be returned with prudent authoritarian control of capitalism with the objective of creating a classless society idealized by communism.

The fundamental point Rudd is making is that China has a culture founded on authoritarianism and chooses to use capitalism in a way that is not democratic.

The surveillance technology of today allows Xi and future China rulers to influence Chinese culture in ways beyond the theoretical interest of democratic governments. The inference one draws from Rudd’s book is that peaceful co-existence will only come from a recognition and acceptance of the cultural differences between American democratic capitalism and Chinese authoritarian capitalism.