Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Author: Ian Welsh Page 8 of 406

Tiresome Reminder of China’s Tech and Industry Lead

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On February 25, 2025

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China has the lead in about 80 percent of tech fields:

China has a “stunning lead” in 37 out of 44 critical and emerging technologies as Western democracies lose a global competition for research output, a security think tank said on Thursday after tracking defence, space, energy and biotechnology.
The Australian Strategic Policy Institute (ASPI) said its study showed that, in some fields, all of the world’s top 10 research institutions are based in China.

There is every reason to believe this will be nearly 100% in a decade or so. China is now catching up in pharma, for example:

Among the drugs in clinical research worldwide, approximately 35% are original or co-developed by Chinese companies, ranking second globally.

 

Then there’s the universities:

It’s all over, except the screaming. The US is, under DOGE, cutting science funding. Oh, administrative overhead needed to be reduced, no question, but you don’t do that by suddenly slashing it 75 percent or so, that leaves no time to adjust.

Tech and science, as I have tiresomely pointed out over and over again, always moves to the country with the manufacturing floor lead. There is a delay, but it is now past.

Meanwhile, as of 2024 China controls 35 percent of industrial output, up from 31 percent in 2022.

China is moving towards the sort of economic and technological dominance the US enjoyed after World War II. It’s that significant.

And notice that the tech and science lead is accelerating.

Everything in geopolitics, economics and trade needs to take this into account. Nothing is more important except ecological issues.

People talk about a multipolar world, but what is actually happening is a new cold war, with the American side weaker and more backward. The USSR lost not because of some mythical inferior system, but because it started behind and stayed behind, with less population and fewer resources. It competed in some techs for a while, but was never able to establish a sustained lead in any significant number.

People wonder why I suggest most countries should be cutting a deal with or at least slightly aligning towards China. It’s because they’ve already won, and being on the stronger, more prosperous side is superior to being on the weaker, less prosperous side. Further, the sooner countries cut a deal, the better that deal will be.

The US is flailing about with the remains of its power, but the closest analogy to its position is Britain in 1918. The American Empire still exists, but everyone with sense can see that its days are numbered. The analogy isn’t perfect, there’s no Great War, and America is a continental power, but the same power overhang without the ability to sustain it exists.

This informs everything: There’s the US withdrawal from Europe, which is underway; The French being kicked out of Africa, because China can supply everything they need; America’s attempts to cannibalize its vassals for as much tech and industry as they can get; and so on.

America’s currently pressuring Taiwan and TSMC to give them their two million fab tech. 85 percent of Taiwanese oppose this, but the US is piling the pressure on.

Thing is, in time, it won’t matter. China’s catching up anyway.

America’s burning down its old Empire to try and stay in the game. But its vassals are fools if they cooperate. There is nothing the US can offer at this point which is worth the long term cost of submitting to US looting. This is true of Ukraine as well, by the way, and it appears they’re going to sign a minerals deal with Europe instead of the US, which is not ideal, but at least they won’t be screwed both ways to Sunday.

Disentangling from a flailing, declining Empire is dangerous and difficult. But it has to be done, by anyyone with any sense. Give America its splendid isolation as it falls into decline, or join it.

 

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Germany’s Merz Is A Moron, But at Least He’s Got Some Guts

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On February 24, 2025

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So, Merz is likely Germany’s next Chancellor. He’s said one good thing:

“My absolute priority will be to strengthen Europe as quickly as possible so that, step by step, we can really achieve independence from the USA.

“After Donald Trump‘s statements, it is clear that the Americans, or, at least Trump’s American demographic and this administration, are largely indifferent to the fate of Europe.”

Excellent. The first step in recovery from being a slave, or vassal, is admitting the problem and deciding to stand up.

The problem is that Merz is rabidly anti-Russia, pro-Israel, and stupid. If Germany wants to re-arm, it has to stop its de-industrialization, and that means it needs cheap energy, which right now can only be supplied by Russia. Then, it needs to massively invest in tech and science, because it’s far behind China, the US, Japan, and South Korea. Its industry is almost all legacy 20th century industry.

If Europe’s going to re-arm, where will they get their weapons from? The US? China? Russia? They have to have their own arms industry.

Germany’s been doing a pretty good job of moving to electrification, but during this transition, they’re going to need cheap oil and gas. They also need to invest in new forms of nuclear power which are safer and cheaper, in order to provide an electrical backbone (and to catch up in tech).

All of this is going to take a lot of money, and Germany will need to force companies to stay in Germany and invest in research and new products. That means raising taxes on the rich and corporations, and re-jiggering the tax code to force reinvestment of profits into research and new production.

Merz isn’t the sort of guy who’s going to want to put top marginal tax rates back up to 80 or 90 percent, end stock options, smash CEO and exec pay, and so on.

Still, at least Merz has got it through his thick head that America is Europe’s overlord and something should be done about that.

But actually, stopping Germany’s decline requires making Russia a trade partner, not an enemy. The same goes for almost all of Europe. Until Europeans get over their paranoid delusions about Russia, they’re going to continue their decline. Again, the same goes for China. If Europe insists on being hostile to both Russia and China, even as the South doesn’t want to do business with them, there is no path to save the “garden.”

 

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Open Thread

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On February 22, 2025

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Use to discuss topics unrelated to recent posts. No vax/anti-vax.

Understanding DOGE’s War Against the 20th Century

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On February 21, 2025

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To understand DOGE, it’s best to start with Reagan. Reagan reduced regulation massively, and where he couldn’t get rid of laws, he and his successors just stopped enforcing them regularly. This took steam over time. So, for example, there was some anti-trust action up until George W. Bush. In fact, without anti-trust actions, there would be no Microsoft as we understand it. IBM had MS write the operating system for the IBM PC because they had been hit by anti-trust action repeatedly and wanted to avoid it. It’s not like IBM couldn’t write its own operating system

Gates himself engaged in repeated violations of anti-trust law, and most of it was allowed to slide; eventually the Feds went after him. The case was going badly for him, but George Bush Jr. ordered it shut down.

Generally, regulations do impose a cost, and in return, the public receives a benefit. There’s also some benefit to corporations, because regulations increase trust. But as time goes by, people assume companies are trustworthy, and regulations start seeming like pure cost.

Cut regulations, and you increase profits. It’s often that simple. The decay of trust which loses money takes decades, and the profits are now.

Likewise, when you cut government workers, the work usually still needs to be done. Contractors take over, and they charge more and usually do a shittier job, if not immediately, but certainly in due time. Here in Toronto, where I live, half the garbage collection was given to private enterprise. At first, they were cheaper, but within ten years, why, they were more expensive than union work, though somehow the actual workers were getting paid less. Strange, that.

Nor is the Federal bureaucracy in any significant way bloated:

The chart above is in absolute numbers, which means the size of the federal workforce, relative to population, has been declining. You wonder why you’re getting bad service? That, plus contractors, is why.

All of this, of course, doesn’t include the fact that Musk was under investigation by multiple agencies. This Grok (his own AI) generated lists from February, amuses:

Before the election, Musk said:

Billionaire Tesla and X boss Elon Musk suggested Monday that he will end up behind bars if Vice President Kamala Harris beats former President Donald Trump in next month’s election.

“If he loses, I’m f—ed,” Musk told Tucker Carlson of the Republican nominee in an interview broadcast on X.

“How long do you think my prison sentence is going to be?” the world’s richest man quipped. “Will I see my children? I don’t know.”

Perhaps more important is the larger picture of financial enforcement. Musk wants X to be an “everything app,” which includes making it a payment system, and in effect, a bank. Like Crypto-entrepreneurs and many others, he wants the profits of a financial corporation without the oversight, including without the FDIC deposit insurance.

Tech bros have spent over 30 years staring at financial elites and seeing how rich they are, they’re salivating for some of that easy money. Destruction and intimidation of regulatory agencies is what is required to make it truly happen. Remember that Musk and other politically active tech-bros like Peter Thiel made their first bundle from PayPal.

Finance firms have been the most politically powerful special interest group since at least the 90s, but they are being replaced by politically-connected tech firms — an industry they helped birth, and billionaires who would not exist without tax and financial law changes spear-headed by Wall Street.

DOGE’s purpose isn’t to cut costs. It’s to open up new profit opportunities, attack resisting parts of the deep state, and remove legal risk from breaking the law. That’s all. It’s why the second part of the government shut down entirely was the Consumer Financial Protection Bureau.

The idea, as always, has been to end the reforms which began with FDR’s New Deal and go back to the 1890s. Notice how obsessed Trump is with ending income tax and going to tariffs: That’s a 19th century political economy setup.

Welcome to the new Gilded Age, with even richer oligarchs.

 

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If You Go For the King #2: Romania

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On February 20, 2025

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So, Romania’s Supreme cancelled their previous Presidential election, ostensibly due to Russian interference.

The guy who won last time, however, will probably win the next election in May. He recently stated:

Westerners don’t seem to get how you do lawfare. If Democrats and/or the deep state were going to prosecute Trump and his associates, they needed to make sure Trump wound up in jail and unable to run for President. The purges which have happened since his re-election are only logical: Why wouldn’t he try to destroy the people and the mechanisms they used to go after him?

Same thing with Romania. Cancel the election, then don’t lock Georgescu up? Were they smoking their own crack? Did they genuinely think something would change the numbers in the next election?

I think what Pakistan has done to Imran Khan is despicable, but once you break norms and go after someone who normally would be beyond bounds, you have to finish the job — which the Pakistani deep state (military) did: They threw him in prison on essentially bogus charges.

Western liberals are good at foreign coups and whatnot, but they haven’t quite figured out how to use lawfare properly against truly powerful people in their own countries. That, I suppose, is a good thing, but it is rather pathetic, and it isn’t a weakness shared by their domestic opponents.

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Understanding the Russian-American Ukraine Peace Negotiations

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On February 19, 2025

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Let’s take a look at these negotiations in more detail. First, a summary of Secretary of State Rubio’s:

  • Ending the conflict in Ukraine will require “difficult and intense diplomacy” over a long period of time.
  • Ending the conflict in Ukraine will require concessions from all sides and is only possible with their consent, the conditions must be “acceptable”
  • Trump wants to end the conflict in Ukraine fairly and not allow it to resume “in 2-3 years”
  • The EU must be at the negotiating table at some point, as it imposed sanctions against Russia
  • The future of the negotiation process on Ukraine will be determined by the willingness of the parties to “keep their promises”, this will be shown in the coming weeks
  • Ending the conflict in Ukraine will open the way for Russia and the US to cooperate in economics and geopolitics
  • There have been no significant US-Russia contacts for almost three years, the meeting in Riyadh laid the foundation for future interaction
  • Work to restore the activities of Russian and US diplomatic missions could be quite quick
  • Restoring the normal operation of the US and Russian diplomatic missions is the “next stage” of the negotiation process between the two countries, since the US considers it impossible to negotiate with Russia on Ukraine without the normal operation of diplomatic missions

This is all remarkably sensible, actually, and the idea that the two great powers with the most nuclear weapons did not have regular diplomatic contacts was always dangerous and stupid.

As discussed here before, the American intention is to make Europe provide peacekeepers and pay for reconstruction, and America hopes to force Ukraine to sign over a large amount of mineral rights, though Zelensky has, quite rightly, so far refused to do so.

Meanwhile, there’s this piece of wishful thinking:

The United States is trying to “break up” Russia’s alliances with Iran, China, and North Korea. This was announced by Keith Kellogg, the US President’s special representative for Ukraine, during a conference in Munich, CNN reports.

Some commenters think that this is what America and Russia want — an end to the above alliances and:

What Putin wants: No NATO membership, (non-negotiable), 4 oblasts in Ukraine and Crimea, including territories not currently occupied by Russia

What Trump wants: Break ties with China (non-negotiable), join US sanctions on China

I’m reasonably certain ending the alliance with China and joining US sanctions on China is a non-starter, and if that’s non-negotiable, then there isn’t going to be a deal. China, North Korea, and Iran all helped Russia when Russia desperately needed help. It is no exaggeration to say that if China had not supported Russia’s economy, the anti-Russia sanctions would have worked, and Iran and North Korea provided weapons and munitions the Russians desperately needed while they were ramping up domestic production.

While simultaneously trying to cut this deal, Trump is turning on long-term allies, threatening them with sanctions — and in the case of Greenland/Denmark, even saying he refuses to rule out using military force. America’s record of keeping agreements is abysmal.

Over the decades of observing Putin, I’d say that he values reliability more than almost anything else. The Iranians, North Koreans, and Chinese are reliable. America is not.

In negotiations there’s a concept known as BATNA: your Best Alternative To A Negotiated Agreement.

Russia’s is simple enough: It’s winning the war. Unless America is literally willing to go to war with Russia, there’s nothing they can do to stop Russia from winning, and then impose a peace after a Ukrainian unconditional surrender.

What’s America going to do, impose more sanctions? The Russia economy has done better under Western sanctions than it did before the sanction regime. Send more military aid? Cupboards are damn near bare. The only viable threat America has is to hit deeper into Russia, and that’s a real threat, but since such weapons are aimed and fired by Western specialists, that risks war with Russia.

What can America offer as an ally that China can’t? Only a removal of sanctions. That would be valuable mostly if it meant repair of NordStream and renewal of gas to Europe, but America wants to keep Europe as a captive customer for U.S. LNG (which is twice as expensive).

It’s hard for me to see why Russia would agree to get rid of reliable allies, and turn on China in exchange for an agreement from America which Putin must regard as unreliable. Sure, he’d like a negotiated peace, and an end to the war, but Ukraine’s army looks close to collapse. When that happens, Russia will suddenly start taking huge swathes of Ukraine. And “No NATO” is entirely achievable in an unconditional surrender.

Plus, Europe’s politics are changing. Parties which oppose hostility to Russia are coming on strong, and Europe is furious at Trump’s actions, and the words of his proxies. Right now, Europe is still full-on in support of Ukraine, and generally supports an anti-Russian stance, but time is likely to break that unity of hatred.

It’s not that Trump is wrong to want to break up the Russia-China axis. Pushing Russia into China’s camp was one of the greatest unforced errors of post-Cold War diplomacy, and an error I’ve written about in the past. With Russia in China’s camp, anti-China sanctions cannot work, because Russia is a land-based supplier of the food, mineral, fuel which cannot be interdicted.

But the ship has sailed. You can’t undo almost 50 years of anti-Russia policy overnight, because the last 50 years have proved to Russia that America can’t be trusted to keep agreements and, overall, China is far more reliable.

Suppose Russia cooperates against China, and America does manage to take out China. Who do you think would be next? Who does Putin think would be next?

So if joining anti-China sanctions really is non-negotiable, then these talks will fail. My guess is that this negotiation point isn’t actually required or non-negotiable, and that Trump really wants this war over one way or the other. But if this requirement is non-negotiable, the war will continue.

Meanwhile, restoring proper diplomacy between Russia and America is a good thing. We’ll see what comes of it.

 

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Understanding Canadians’ Reaction to Trump’s Threats

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On February 18, 2025

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Most Americans don’t understand why Canadians are so angry about Trump’s actions, and his talks of annexation.

I think hockey illustrates it well. Back in 2014, the singer who sang the American anthem’s mic failed at a hockey game. Canadians finished the song:

Just recently, fans at a Montreal game booed the anthem.

Here’s the thing: Ordinary Canadians thought that America was Canada’s friend.They really believed this.

Thus, hearing Trump’s threats, and seeing how many Americans back them, and how Americans deride and insult Canada, they feel betrayed.

The opposition to joining the US is in super-majority territory: over 80 percent. Canadians like being Canadian and think our society and form of government is better than America’s. They know Americans think the opposite, but it never occurred to most of them that America would try and force Canada to give up its sovereignty, or economically attack Cnanda.

Of course this is foolishness. America has never had friends and never will. It’s an antagonistic nation of bullies, and they have a long record of invading and bullying other nations. But ordinary Canadians, like ordinary people everywhere, don’t really think such issues through. Americans are a lot like Canadians and Canadians consume a ton of American media and tended to identify with America.

Personally, I’ve always been worried that America would turn on Canada, and since the ’90s I’ve been pushing for Canadian policy to recognize that. So, if we can avoid an invasion, I’m somewhat pleased that Trump has torn off the mask and shown the barbarian beneath. Even if the political elite is still in denial, it pushes us towards understanding the world more realistically. There is only one country that can credibly threaten Canada, and it’s been that way for as long as Canada has existed. Hell, since before Canada was formed.

Oh, and Americans: America doesn’t protect us from anybody but America. For Canada, NATO is and always has been nothing but an American protection racket. A proper Canadian military wouldn’t be an expeditionary force designed to help American overseas wars; we would lend naval and air support, with a lot of icebreakers, and an army primarily trained for insurgency to defend the only country in the world which has ever been a threat to us.

But I agree. Canada should spend a lot more on its military. We just shouldn’t spend it on US tech, as Canadians have begun to recognize:

Defence experts warn that The United States controls many of the key systems onboard Canada’s new warships, allowing the Americans to hold this country hostage over future upgrades or even the provision of spare parts.Taxpayers are spending as much as $80 billion on a new fleet of Canadian Surface Combatants to be constructed at Irving Shipbuilding.

The heart of each of the warships is the command management system, which controls weapons, radars and other intelligence-gathering equipment.

Originally that high-tech system was supposed to be Canadian-made and under the full control of the Canadian government.

But that was switched out for a made-in-the-U.S. technology called Aegis, allowing the Americans full control and oversight of the supply of parts, modifications or future upgrades, industry officials confirm.

“This is what happens when you exclude Canadian companies: You find yourself potentially being held hostage,” explained Alan Williams, the former procurement chief at the Department of National Defence. “We don’t control the (combat management) system; the Americans do. Who knows what they are going to demand from us?”

Other Canadian defence industry officials acknowledged the same concerns — they asked not to be named as they did not want to jeopardize ongoing contracts with the federal government.

You don’t make your military dependent on the good will of the country that is the primary threat,and you get what you pay for.

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Europe and Ukraine Aren’t at the Peace Table; That Means They’re on It

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On February 17, 2025

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Russia and America are going to have a peace summit about the Ukraine war — without Ukraine or any European country. This is slightly less ridiculous than the previous peace summit, which didn’t include Russia because Russia can fight on without anyone but China’s support, whereas if the Ukraine tried to fight on without US support, it’s cooked.

Well, sort of. Ukraine is cooked any way you look at it. It was always going to lose the war, and that hasn’t changed.

What’s amusing about the what’s being floated is that Europe is supposed to send the peacekeepers and pay for the reconstruction of Ukraine and the US is supposed to… well, maybe get some of Ukraine’s wealth, though Zelensky has quite rightly refused to sign that deal.

Interestingly Zelensky had, at first, expressed willingness, but when he got to the White House, it turned out that he was being offered nothing in return. It seems the Trumpian right feels that Ukraine has been taking advantage of America and owes it.

So, the US, which was the primary actor behind the Maidan coup and Ukraine’s actions since then which contributed to the war, who was almost certainly responsible for cutting Europe/Germany off from Nord Stream gas through sabotage, wants the Euros to foot the entire bill for ending the war.

Any European leader willing to chew down on this has less than zero self-respect.

And the sheer chutzpah of saying that Ukraine has taken advantage of America reminds me of the guy V.P Cheney shot apologizing to him. None of this would have happened if the US hadn’t pushed for it every step of the way, and the US and UK were responsible for Ukraine not taking an early, far better peace deal.

The issue, of course, is that neither Europe nor Ukraine can sustain the war without American support. It’s lost, but the Euros could veto the deal if they could keep the war going alone and drag it out enough that it was worth Putin dealing with them.

There is another way, of course. Europe could offer Putin an end to sanctions and repair of NordStream. They could ask China to be the peace guarantor, which makes sense because China is, actually, the only country Russia has no choice but to listen to. They could cut a deal with China at the same time.

Then they could leave NATO and build their own militaries up. Kick out 90% of all American diplomats and all remaining post-USAID NGOs at the same time, to help avoid the inevitable coup attempts.

All this requires is either a modicum of self-respect or a scintilla of self-interest. When Europe’s power has disintegrated to the point where they don’t even have a seat at the table on how a war being fought on their soil should be ended, it’s either a wake-up call, or the end of Europe’s significance.

More realistically the best hope is that multiple European governments fall and are replaced by those who have enough pride or self-interest to strop grovelling.

Europe has no prospect of being what it once was. But it could be a regional great power. It’s that, or returning to what it was for much of history, a meaningless Eurasian peninsula full of barbarians.

 

You get what you pay for. This blog is free to read, but not to produce. If you enjoy the content, donate or subscribe.

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