The Shanghai Cooperation Organization.

Posted on September 30, 2022 by jsh54

Modern history (1500–) instructs us to think of the Nation-State as the natural form of political community. That isn’t true. Once upon a time there were supra-national communities like the Medieval and Early Modern Empires. To take one example, the Russian Empire (and the Soviet Union) once encompassed European Russia and Siberia, Ukraine, Belarus, eastern Poland, and the Baltic states, but also the Central Asian states of Kazakhstan, Uzbekistan, Tajikistan, and Kyrgyzstan. Such empires disintegrated during the Twentieth Century.

In their place arose the idea of supra-national communities. The post-1945 development of European integration has set an example for others seeking strength in a supra-national group. European integration advanced from the 6-nation European Coal and Steel Community of 1948 to the 27-nation political and economic union of today. No one has yet found the path to an equivalent unity. It hasn’t stopped countries from pursing joint action.

The Shanghai Cooperation Organization (SCO) is one such effort. In 1989 the collapse of the Soviet Union, marked by the secession of many parts of the Soviet empire, created a potential vacuum of power in Central Asia. In 1992, Russia, Armenia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan signed a Collective Security Treaty. In 1993, Azerbaijan, Belarus, and Georgia joined. The Collective Security Treaty Organization (CSTO) was born in the nadir of Russian power.

Competition between Russia and China for dominance in the region raised the real possibility of future wars. In 1996, as a safeguard against this danger, Russia and China, with Kazakhstan, Kyrgyzstan, and Tajikistan dragged along, formed the “Shanghai Five” group. Its first achievement came in a “Treaty on Deepening Military Trust in Border Regions” (1996), followed by a “Treaty on Reduction of Military Forces in Border Regions” (2017). In 2000, the Five agreed “oppose intervention in other countries’ internal affairs on the pretexts of ‘humanitarianism’ and ‘protecting human rights’.”[1] In 2001, Uzbekistan joined and the group became the “Shanghai Cooperation Organization.”

After 2001, the reckless American foreign policy[2] set off alarm bells in the region. This might be thought of as the “push” influence on decisions. Since 2013, China’s “Belt and Road” infrastructure initiative has aggressively extended its presence through much of Central and South Asia. This might be thought of as the “pull” influence on decisions. India and Pakistan both joined in 2017; Belarus, Iran, and Turkey plan to join in the near future.[3] It is an alliance of those discontented with the American-led international order.

Can an organization of authoritarian states with disparate interests build something real?

[1] Probably inspired by American and European intervention in the Bosnian Civil War (1992-1995).

[2] The failure to capture or kill Osama bin Laden at Tora Bora, followed by the decision to remain in and to transform Afghanistan; the attack on Iraq and the botched occupation, leading to civil war and Kurdish separatism; the overthrow of Libya’s dictator, followed by the abandonment of the country to civil war; and the support for the dissidents in Middle Eastern societies during the failed “Arab Spring” movements, including pressing for the overthrow of the Egyptian dictator Mubarak. So, yes, “reckless.” Or wanton. Or dough-headed.

[3] India purchases 60 percent of its military arms from Russia and has an on-going border dispute with China; Belarus is a Russian client-state; Iran is at odds with the United States and sells much of its oil to China; Pakistan has security interests in Afghanistan, a hostile relationship with India, and a deep involvement in China’s “Belt and Road Initiative”; Turkey has been at odds with the EU and the United States for a long time.

Democracy and Authoritarianism 2.

Posted on September 29, 2022 by jsh54

How do Democracy and Authoritarianism compare in addressing long-term and major problems? Climate change offers itself as one example, crowding to the front, waving its arms, and going “Me, me, call on me!”

American solipsism might lead people to think that Authoritarianism beats Democracy like a carpet during Spring cleaning. As one reporter for the New York Times phrased it in July 2022, “the United States’ climate plans collapse[ed] under the opposition of a senator who represents one half of one percent of the population.”[1] In fact, other democracies have been very aggressive in adopting policies to fight (or just adapt to) climate change.

On the other side, China has announced “one dramatic climate policy after another.” In the theory of Innocents Abroad, it can seem that policy is formulated “without the fuss of legislative horse-trading or infighting.” Really? China’s government is very much a black box, so it is difficult to tell what goes on inside the government. The history of the Chinese Communist Party is full of factional disputes over issues of revolutionary theory, but also of substantive policy decisions.[2] Why would it be different now? Just because you don’t see the horse-trading or infighting, doesn’t mean that none takes place.

Another problem arises with the considerable difficulty in implementing those policies. Beijing doesn’t often lay down the law to provincial leaders. They seem to have learned their lesson about central planning when carried to an extreme.[3] Instead, they offer guidance documents or aspirational goals.[4] Local officials have to figure out what the guidance means and how to achieve the goals, especially when goals conflict. On the one hand, China needs economic growth, so China needs electricity. On the other hand, Zi Jinping has committed China to reducing greenhouse gas emissions. Green technologies aren’t in a position to step in right this instant to power machinery and light cities. What to do? No sooner was the ink dry on the Paris Climate Accord than state-owned enterprises and provincial governments forged ahead with the long-standing policy of building coal-fired power plants.[5] Now Beijing’s pursuit of “zero Covid” have led to years of rolling regional lock-downs that have battered the economy.

The American climate legislation blocked by “a senator who represents one half of one percent of the population” was President Biden’s “Build Back Better” bill (BBB).[6] That bill included $555 billion for clean energy and climate change provisions. In August 2022, the “a senator” agreed to a bill that dropped many provisions of BBB, but included $391 billion in spending on energy and climate change. Leaders of environmental groups lauded the bill as “historic” and “transformative.”

So, if you’re not writing for a 5:00 PM dead-line, maybe democracy still works.

[1] Max Fisher, “Are Democracies Better or Worse at Handling Big Crises?” NYT, 27 July 2022. Pedantically, the plan “collapsed” under the opposition from 51 senators representing 44 percent of the population.

[2] Sure, the losers get sent to a rice paddy until the wheel turns. I can just see Progressive Democrats slobbering over “Joe Manchin, rice paddy” like Homer Simpson over donuts.

[3] See, for example, the “Great Leap Forward.” That caused any number of real crises for China. Somewhere between 15 and 55 million people died. Great Leap Forward – Wikipedia

[4] I once saw a yard sign in Cambridge, MA that read “You can’t hug a child with nuclear arms.”

[5] Other examples include the failed attempt to reduce steel production and the failed effort to reduce water pollution.

[6] Lot of Bs there. At least he’s not Bill Biden.

Democracy and Authoritarianism 1.

Posted on September 29, 2022 by jsh54

“Does democracy or an authoritarian system perform better in times of crisis?”[1] There is no question that democracy is to be preferred to authoritarianism under normal circumstances. Just ask the Uighurs or the Ukrainians.

Is democracy superior to authoritarianism in all circumstances? This is a question with its own history. The Depression of the Thirties tested democracy and found it wanting. Many political systems fractured under the immense stress of the human suffering caused by economic disaster. Democracies collapsed where they had weak roots. Where democracy survived, it did so by expanding the role of government in insuring the general welfare.[2] In the authoritarian states like Stalinist Russia or Nazi Germany, either the economic crisis never occurred or the country emerged from it much more swiftly than did the democracies. There followed another great crisis, the Second World War. Here, the authoritarian states again out-performed the democracies by miles—until they didn’t.[3] Since 1945, democracies have bult an economic and political model that has out-performed authoritarian governments hands-down. Witness the collapse of the Soviet Union and the post-Mao tossing overboard of old thought.

Contemporary discussions of the question get muddled. For one thing, they can wander off course into long-term comparisons that take the question of the superiority of Democracy versus Authoritarianism seriously. Aside from the rulers, who would willingly live in an authoritarian state? Still, some political scientists have argued that authoritarian or semi-authoritarian states can suppress short-term thinking and democratic friction to impose better economic policies. Others have argued that the two systems perform roughly the same over-all.

To take another, more apposite example, climate change is not a “crisis.” A “crisis” is a time-sensitive moment of decision and action.[4] Climate change is a grave long-term problem. The first several years of the coronavirus pandemic were a real crisis: individuals and governments had to act right now to avoid a potential re-run of the Black Death.

If you take measures like excess deaths, then democratic and authoritarian states seem to have done approximately equally well at responding to the pandemic. This reflects the un-even performance of countries within the category of both democracies and authoritarian states.

If you take other measures, like economic performance, then democracies greatly out-performed the very model of a modern authoritarian state, China. Zi Jinping’s reliance on lock-downs instead of effective vaccination contributed to the current “cratering” of the Chinese economy.[5] This further discredits the “Asian model,” already brought into question by the financial crisis of 1997.[6]

In any event, this isn’t a discussion that could be held in China or Iran.

[1] Max Fisher, “Are Democracies Better or Worse at Handling Big Crises?” NYT, 27 July 2022.

[2] This was true in both the United States of the New Deal and in Conservative-governed Britain. Expanding government had the unintended effect of expanding the authority of un-elected civil servants.

[3] See the classic exposition in Gordon Wright, The Ordeal of Total War, 1939-1945 (1968). “Nothing concentrates the mind so well as the prospect of being hanged”–Roughly from Doctor Johnson. .

[4] See: Crisis – Wikipedia The term is often abused in journalism. See: Rudiger Graf and Konrad Jarausch, Graf jarausch crisis en 2017 – „Crisis” in Contemporary History and Historiography (docupedia.de)

[5] Fisher, “Are Democracies Better or Worse,” NYT, 27 July 2022.

[6] See: East Asian model – Wikipedia

Anti-Semitism and American foreign policy.

Posted on September 28, 2022 by jsh54

By the end of the 19^th Century, huge numbers of Jews wanted to emigrate from Eastern Europe. Zionism—the belief in creating a Jewish nation-state in Palestine–arose as one possible destination. However, Palestine belonged to the Ottoman Empire, which opposed European immigration to its territory. As a much-to-be-preferred alternative among the emigrants, 4 million of them came to the United States between 1880 and 1920. Then, the Ottoman Empire joined Germany and Austria-Hungary during the First World War. In a moment of desperation, Britain announced its support for the creation of a “Jewish national home” in Palestine.[1]

In 1922, two leading Republican foreign policy experts, Henry Cabot Lodge and Hamilton Fish, sponsored a Congressional resolution supporting a Jewish homeland in Palestine. Walter Russell Mead sees this resolution as “launching a tradition of official American support for Zionist aspirations in Palestine that a long line of presidents from both parties have continued.”[2] However, Lodge strongly opposed immigration from Southern and Eastern Europe. He helped write the immigration law of 1917 that began the restricting of immigration. That process peaked in the Immigration Act of 1924, which cut Jewish immigration by 90 percent.[3]

In the Thirties, Arab nationalist resistance to European immigration, which turned violent just as Britain tried to deal with the prospect of wars with Germany, Italy, and Japan, led Britain to slam the brakes on most further immigration.

In the wake of the Holocaust, In June 1945, the Jewish Agency in Palestine asked the British government to admit 100,000 Jews in European refugee camps to Palestine. Sensitive to the hostile Arab response, the British declined. In August 1945, after a brief survey of the camps by an American delegation, President Harry Truman asked the British to admit 100,000 survivors of the Holocaust to Palestine. Again the British resisted. Truman could have passed the issue to the newly-established successor to the League of Nations, the United Nations. He did not. He pressed for creation of an Anglo-American Commission of Inquiry. The commission worked in the shadows of the prospective negotiations over an American loan to a bankrupt Britain.[4] It should surprise no one that Truman used the commission’s report to successfully pressure the British to admit 100,000 Jewish refugees to Palestine.

After the war, most Americans remained deeply opposed to increased immigration. In December 1945, Truman used a Presidential directive to by-pass Congress: Displaced Persons were accorded priority within the existing quota system. As a result, 35,000-40,000 Jewish refugees were admitted by mid-1948. Only after Israel was established and recognized by the United States, did a series of Displaced Persons Acts (1948, 1950, 1953) allow some 600,000 refugees into the country. Of the almost 400,000 admitted by 1952, only 16 percent were Jewish (i.e. about 60,000). In the same period Israel took in over 600,000 people.[5]

It is possible that early American support for Israel sprang from ugly anti-Semitism.

[1] Known as the “[Sir Arthur] Balfour Declaration” after the British Foreign Secretary who announced the policy.

[2] Walter Russell Mead, “A Century of U.S.-Israel Ties,” WSJ, 6 September 2022.

[3] See: Immigration Act of 1924 – Wikipedia

[4] See: Anglo-American loan – Wikipedia

[5] 100 years of Aliyah (Immigration) to Mandatory Palestine and the State of Israel, between 1919 and 2020 – Aliyah – Wikipedia

Homage to Ambrose Bierce.

Posted on September 24, 2022 by jsh54

“Remain in Texas”: the policy on asylum-seekers adopted by the Democrats as a successor to President Trump’s inhumane “Remain in Mexico” policy.

“Navel Observatory”: official residence of the Vice President of the United States, whose current Occupant was charged by President Joe Biden with resolving the problem posed by the huge influx of illegal immigrants that began with his election.

“Bidenvilles”: the collection of homeless shelters, municipally-rented hotels, military barracks, tent encampments, freeway underpasses, and–potentially–cruise ships used to house the asylum-seekers bussed North by Republican governors of border states.

Public Opinion in September 2022.

Posted on September 23, 2022 by jsh54

The scalding televised hearings of the House 6 January Committee had been held and the FBI had staged its “Raid on Mar-a-Lago” to recover the purloined secret documents. In an early September 2022 poll, better than half (53 percent) of respondents had a negative view of Donald Trump, while a slim minority (44 percent) had a favorable view.[1] Better than half said Trump’s post-election actions threatened democracy, while better than a third (38percent) said he had had a right to contest the election outcome. Just over half (51 percent) thought that Trump had “committed serious federal crimes,” while more than a third (38 percent) thought that he had not committed serious federal crimes.” Asked whom they would support in a 2024 rematch between Trump and Joe Biden, 45 percent favored Biden and 42 percent favored Trump.

The poll also asked about specific polices.[2] The respondents were evenly divided on legal immigration, with 44 percent supporting the Democratic position and 44 percent supporting the Republican position. On illegal immigration, 51 percent favored the Republican position, while 37 percent supported the Democratic position. Among Independents, 51 percent favored the Republican position. More than half of the respondents said that they agreed with the Republican Party on illegal immigration, and half of the respondents favored building a wall along the Mexican border. Of these, 20 percent identified as Democrats and 46 percent identified as Independents.

When it comes to the economy, a clear majority of voters (52-38 percent) agree more with Republicans rather than Democrats. Furthermore, a large plurality of voters (49-31 percent) assign greater importance to economic issues than to social issues in deciding their vote for Congress in November 2022.

On crime and policing, Republicans led Democrats 47 percent to 37 percent. Independents leaned Republican by 49 to 31 percent. On guns, a narrow plurality (47-43 percent) said they agree more with Republicans than with Democrats, but they even more strongly either oppose or favor (49-46 percent) banning semi-automatic weapons. On the latter, 23 percent of Democrats oppose a ban, while 29 percent of Republicans support a ban.

Voters massively (61-30 percent) reject gender dysphoria, believing that gender is what a person is born as rather than psychological identity. Americans remain conservative in their approach to aspects of sex education. They overwhelmingly oppose classroom instruction on sexual orientation and gender identity in elementary school (70-27 percent) and are divided on middle school (54-44 percent), but narrowly support it in high school (56-42 percent).

On only a few issues do Democrats have the bulge on Republicans. On climate and energy policy, the Democrats have a clear edge (50-31 percent) if not a clear majority. Voters massively (62-30 percent) oppose the Supreme Court’s overturning of Roe v Wade. Similarly, 62 percent support making abortion always or mostly legal. In contrast, 31 percent say abortion should be mostly or always illegal. The opponents include 34 percent of Republicans and 63 percent of Independents.

A recent forecast gives the Republicans a good chance of capturing the House.[3]

[1] Ruth Igielnik, “Pro or Con, Voters Have Not Wavered on Trump,” NYT, 23 September 2022.

[2] See: Microsoft Word – NYT Siena National PR 9-19-22 — FINAL.docx

[3] 2022 House Forecast | FiveThirtyEight

Migrant Drop-Offs.

Posted on September 22, 2022 by jsh54

Illegal immigration to the United States has fluctuated across time.[1] It fell sharply after the beginning of the “Great Recession.” Subsequently, the Trump administration cracked down hard on illegal immigration. This became a principle grievance of Democrats. So, in 2021, illegal immigration jumped up sharply after the election of President Joe Biden. The US Border Patrol reported “catching” 1.7 million people who had crossed the Mexican-American border. The Border Patrol didn’t actually “catch” most of them. Instead, the immigrants looked for Border Patrol officers to whom they could surrender.

Under American immigration law, any foreigner who reaches the United States has the right to apply for asylum. To do so, they have to state that they fear persecution or violence if they are forced to return to their home country. Once the immigrant files the initial claim, then the government begins a process to deciding if the claim is valid. If the claim is accepted, then the immigrant is allowed to remain in the United States. However, the immigration system is massively back-logged. It will be years before asylum-seekers have their cases decided. In the meantime, the immigrants are free to go wherever they want. Humanitarian groups have paid for immigrants to travel somewhere else for many years. State governments that want to immigrants to do their waiting elsewhere can pay for the immigrants’ travel to some destination.[2]

Currently, about 8,000 illegal immigrants/asylum-seekers enter the United States each day. Early in Summer 2022, the Department of Homeland Security (DHS) drafted a plan to begin moving the immigrants to “interior” cities (like Los Angeles). One news report says that DHS has grown tired of White House foot-dragging on doing even the preliminary work to prepare for this plan.[3] Now, according to the Border Patrol, about 1,300 migrants per day have been crossing near El Paso, Texas alone. The processing center is swamped. Beginning on 7 September 2022, Border Patrol agents began dropping off illegal immigrants near the city’s bus station. It’s a not-so-subtle hint that they should go somewhere else in the United States.[4]

Republican governors have started sending bus-loads of migrants to “sanctuary cities.”[5] Recently, Florida governor Ron DeSantis sent a small plane-load of illegal immigrants from Venezuela to Martha’s Vineyard. Texas governor Greg Abbott sent a busload of illegal immigrants from Central and South America to the sidewalk in front of the official home of the Vice President. These and other state-paid migrant movements have been roundly denounced by Democrats as “inhumane” and as “political stunts.” However, so far, “no evidence has surfaced that the migrants boarded the flights or buses unwillingly.”

Apparently, large-scale migrant movements are coming. One way or another.

[1] See: https://en.wikipedia.org/wiki/Illegal_immigration_to_the_United_States

[2] Zolan Kanno-Youngs and Eileen Sullivan, “Were the Migrant Drop-Offs Legal? It’s Complicated,” NYT, 17 September 2022.

[3] Julia Ainsley, “Friction between White House and Senior Homeland Security officials mounts as migrant borders crossings soar,” NBC News, 15 September 2022. Friction between White House and DHS officials as migrant numbers rise (nbcnews.com) The high numbers are unlikely to continue. If they did, then the US would be on track to receive 2.9 million illegal immigrants in the course of a year. Hilariously, one DHS proposal is to fly the recent arrivals to the Canadian border. Let them figure it out from there.

[4] Julia Ainsley, “Migrant Surge Overwhelms Border Patrol and Shelters in El Paso,” NBC News, 13 September 2022. Migrant surge overwhelms Border Patrol, shelters in El Paso (nbcnews.com)

[5] Sanctuary city – Wikipedia

Venezuelan Refugees.

Posted on September 19, 2022 by jsh54

Henry Ford once griped that “History is just one damn thing after another.” Well, yes in the sense that all events have prior causes. Seen in historical perspective, Venezuela provides an example.[1] Spanish “conquistadores” showed up in what would become Venezuela in 1522 and the area remained under Spanish rule until 1811. For the next century and a half, Venezuela went through the whole lamentable experience of the Spanish American republics. Two things sent Venezuela down a different course. First, at the dawn of the petroleum revolution in 1914, drillers discovered immense oil reserves. Second, in 1958, Venezuela broke with the regional pattern of dictatorships and established a democracy. The two developments interacted constantly thereafter.

Oil exports came to amount to 80 per cent of the country’s exports, drawing-in vast amounts of money. That money accounted for about two-thirds of Gross Domestic Product (GDP) and better than half of the government’s revenue. It didn’t get distributed very equitably, but it did create a lot of jobs and an expanded middle class. After 1945 relative prosperity made Venezuela a magnet for immigrants from southern Europe and other South American countries.

After several previous swings at the pinata, Venezuelans established a democracy in 1958. The oil money helped ease social conflicts until the “oil shocks” of the 1970s left the country richer than ever, richer than people could imagine, richer than anyone could manage. Spending soared, borrowing soared, the 1980s brought a fall in oil prices, a fall in incomes for ordinary people, and struggles over how/whether to pay the country’s debts. The turmoil continued through the 1990s until Hugo Chavez won the presidency in 1999.

Chavez led Venezuela until his death in 2014. His policies nicely illustrate Margaret Thatcher’s rebuke to the British Labor Party: “Socialism is fine until you run out of someone else’s money.” In this case, the first “someone” was the oil industry; later “someones” were private businesses and the middle class. Since the death of Chavez, his acolyte Nicholas Madura has doubled-down on Chavez’s policies. Economic chaos led to massive suffering across all of society. Mounting political resistance has been met with violence and populist authoritarianism.

It will surprise no one that lots of Venezuelans left the country. The big surge began with young professionals who saw no future for themselves in Venezuela except poverty or jail. More recently, it has expanded to include people from the lower classes. These are the very people that Chavez, then Maduro, claimed to be trying to help.

The number of Venezuelans living abroad rose from 400,000 (2005) to 600,000 (2015); then it jumped to almost 1.7 million (2017). Since then it has continued to rise to perhaps 6 million people.[2] Another way of looking at it is through the lens of total population. Total population rose from 24,192,000 (2000) to 30,082,000 (2015), then fell to 28,436,000 (2020).[3] That is, population grew by about 400,000 a year until 2015; so it should have been about 32 million in 2020. Instead, it fell by about 2 million in absolute terms and by 4 million in comparison to what it should have been.

One refugee crisis among the many of our age, but no less tragic or noteworthy.

[1] William Neuman, Things Are Never So Bad That They Can’t Get Worse: Inside the Collapse of Venezuela (2022).

[2] See: Venezuelan refugee crisis – Wikipedia

[3] See: Demographics of Venezuela – Wikipedia

My Weekly Reader.

Posted on September 15, 2022 by jsh54

Couple of bumper-stickers from days of yore on the subject of free speech: “Who ever knew Truth put to the worse in a free and open encounter?” and “Does a book displease you? Refute it.”[1] Still, these are just one opinion on the subject. Equally representative is the rant against those who publish “foolish, ignorant, malignant, libellous (sic), mad, impious, and subversive ideas.”[2] The ideas seem self-evident, as do the contemporary applications to Donald Trump’s lies about the 2020 election.

These statements arose in response to the invention of the printing press.[3] “Bad ideas” and “bad speech” had been around for a very long time. Governments had dealt with them on an “ad hoc” basis.[4] The printing press allowed the mass publication of books at a comparatively low price. The audience expanded. Soon, the Protestant Reformation emphasized mass literacy.[5] The audience expanded again. From the 16^th Century on, governments struggled against the flood of books that some people did not want other people to read. To avoid being drowned,[6] they developed the technique of delegation.[7] Printers, comparatively few in number, were held responsible for the authors, numerous as flies in an outhouse. This could work so long as all countries followed the same rules. However, as has often been the case with agreed production limits in OPEC, somebody always cheated. The Dutch, in particular, often published books that the neighboring French wanted banned. The market (smugglers, book-sellers with “something in the back room that might interest you”) did the rest.[8] The printers of today are Facebook, Youtube, and Twitter. They face a great deal of political pressure to either weed-out or stop weeding-out contested speech.

Recently, the Pew Research Center reported that, in 19 advanced economies, a median of 70 percent of respondents see the “spread of false information on-line” as a “major threat.” Younger people are much more likely to regard this as less of a threat than do older people. In the United States, 75 percent of people 50 and older regard it as a major threat, while 56 percent of those 18-29 see it that way. Similarly, younger Americans who follow social media express less concern about made-up news as a factor in politics or as a worsening problem.[9]

Perhaps young people are dopey or old people are technophobes. Or maybe young people know a skunk when they smell one. As Milton and Voltaire seemed to believe of all.

[1] John Milton and Voltaire respectively.

[2] Erasmus.

[3] Jonathan Marks, “How Dare You Say Such Things,” a review of Jacob Mchangama, Free Speech: A History From Socrates to Social Media (2022), WSJ, 10 February 2022. Marks is a professor of politics at Ursinus College and a tireless defender of liberal education.

[4] Witness the unfortunate Socrates and Jesus of Nazareth incidents. Not that more recent governments haven’t pursued the same solution. Witness Leon Trotsky and Salman Rushdie.

[5] Even if mass literacy did not become a reality until much later on.

[6] One censor, exhausted and half-blind, lamented that “What we need is a halt to printing.” Couldn’t put that genie back into the bottle.

[7] What I know about this comes from “A Police Inspector Sorts His Files: The Anatomy of the Republic of Letters,” in Robert Darnton, The Great Cat Massacre and Other Episodes in French Cultural History (1984).

[8] Later, in the Soviet Union, with its tightly controlled borders, people resorted to “samizdat.”

[9] See: Three-in-four across 19 countries view global climate change as a major threat to their country | Pew Research Center and 6. Younger Americans and those who prefer social media for news feel less concern about the issue of made-up news | Pew Research Center

The Asian Century 23.

Posted on September 15, 2022 by jsh54

Who knows best, government or the markets?

Governments have a larger range of concerns than do markets; among them is the need to promote the national welfare. National “welfare” includes national security as well as material prosperity.

For many years, people believed in the great benefits of comparative advantage and global trade. For example, Americans could devote themselves to producing high-value goods (like computer software) while farming out the low-value goods (like textiles or computer chips) to developing economies. In a nutshell, the United States became dependent for some key products—both for economic prosperity and national security—on Asian manufacturers. This didn’t mean only China. Japan, South Korea, and Taiwan especially became vital suppliers.

In some Asian countries, conditions could allow corporations to ignore or subordinate investor concerns about short-term factors like return on investment, quarterly earnings reports, or stock prices. They may have had a different attitude toward capital than the prevailing view in the United States. They saw it as abundant, rather than scarce. Moreover, they were in the control of families, or part of a web of allied companies, or had the backing of their governments. In the United States on the other hand, capital markets held the whip hand.[1]

Chinese assertion in the western Pacific has belatedly cast into doubt the virtues of comparative advantage and global trade. The supply-chain mess attending the Covid pandemic showed what could happen if anything disrupted trade in vital commodities. Now the United States has launched a major effort to rebuild its position in the manufacture of semi-conductors.[2]

In economic theory (and practice), markets allocate resources best. Investors (whether the idle rich or public employee pension funds) will be happy with high returns and unhappy with lower returns, whatever the cause. Capital markets (like Wall Street) allocate capital to the places where it will earn the highest return.

Companies can be asset-heavy (like steel-makers) or they can be asset-light (like owners of some form of intellectual property—social media platforms, movie studios, software designers).[3] In recent decades, the returns on investment in asset-light companies has been tremendous. So that is where a lot of investment has flowed.

In recent decades, economies of scale required the construction of enormous semi-conductor computer-chip factories (fabrication plants or “fabs”). Only such plants could produce a return on investment that would satisfy investors. They cost a lot of money, in the area of $10 billion each. Hard-pressed to obtain capital and unable to scale-up, lesser American producers started off-shoring production to China and Taiwan.[4]

At least two questions arise. First, can government subsidies counter the force of the market? Second, America has lost ground in many areas of “advanced manufacturing,” not only in semi-conductors. What about those other industries?

[1] Greg Ip, “In U.S. Chip-Making Push, Wall Street Shrugs,” WSJ, 15 September 2022.

[2] The Chips and Science Act, July 2022, allocates better than $50 billion in subsidies to the chip fabricators.

[3] Examples of the latter include computer chip-designers, chip-design software producers, and chip-making machinery makers. That last one is a mouthful.

[4] One manufacturer claims that his company is at a 30-50 percent cost disadvantage against Asian competitors.

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Monthly Archives: September 2022