John Maynard Keynes
John Maynard Keynes believed that ideas, hospitality, travel, knowledge and science should move freely between nations. if a country could reasonably produce something physical it needed, it should. Trade should exist, but be kept to a minimum.
I’d like to highlight something Matt Stoller (the anti-trust guy) recently wrote:
In May of 2020, the Chinese Communist Party (CCP) declared its economic strategy, using the phrase “dual circulation.” Dual circulation meant fostering a domestic productive apparatus that is independent of foreign technology and finance, while making sure the rest of the world is dependent on Chinese control of key supply chains, whether it’s shipping, railroad construction, electric batteries, or solar panels. Chinese ‘grand economic strategy,’ in other words, is to operate as a giant monopoly on which the rest of the world must rely.
Matt says this isn’t about Trump, but notice it’s from 2020. It is about Trump: Trump in the first term, with his anti-Huawei sanctions. The Chinese realized they were vulnerable and the national effort became making sure they controlled all their own critical supply chains. Having seen how the US used financial sanctions and supplier boycotts, they regrettably decided to reverse the situation.
Now what one needs to understand is that after WWII American controlled most of the key supply chains outside of the Russian bloc. They had over 50% of the world’s industry. If you wanted something, you have to get it from them. Over time, this franchise expanded, first back to the Euros, as they re-built their industry, then to the Japanese, Taiwanese and South Koreans. All of these nations were firmly American vassals. Not allies, vassals with military bases in their countries.
The West, led by America and the USSR had all the advanced tech. In the 70s the USSR fell behind, they couldn’t manage the digital revolution happening, and then the USSR collapsed and the West, really America, ruled unchecked.
If you wanted any advanced tech: planes, cars, computers, weapons, etc… it had to come from America or one its vassals. The US effectively had “dual circulation”, especially since it also had full control of the international finance system and could lock anyone out at will.
This wasn’t theoretical, US sanctions on Iraq in the 90s under Billy Clinton killed at least hundreds of thousands of people. I once talked to an Iraqi oncological pediatrician from the 90s and her incandescent rage over all the children who died of cancer she couldn’t save because of American sanctions was so hot it blotted out the sun.
Once such sanctions had been rare (though there are cases back in the 50s.) The most notable is the multi-generation trade blockade of Cuba.
But from Clinton on use of these sanctions became routine, “Treasury’s Wars.” Millions died, many more were impoverished.
So, China has learned from the evil master. And it has decided that if there is such a weapon, it will have it and use it and no one else can have it.
Everyone who rages against this is correct. No country should have this power. Not America. Not China. No one.
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What should be the case is a trade regime where everyone makes most of what they need. Need medicine? Make it in your country. (Shut up about prices, if the supply chain is domestic then almost all that crap that MMTers go on about becomes true. Prices are irrelevant, it’s all in money you print.) To the largest degree possible, everyone makes what they need. Smaller countries will have a harder time, and trade-states like Singapore obviously can’t, but this is what a good world looks like.
This maximizes political autonomy, too. You can’t be blackmailed by other countries. Spread nukes around, and much military force goes off the table too. (And they are going to spread. The US has taught everyone that if you have nukes you’re safe, and if you don’t, you’re dinner.)
So. China is teaching the Western world the same lesson America taught China and Africa and Iraq, and Iran and Cuba. We: Europe, the Anglo countries, South Korean, Taiwan and Japan, were inside the bubble during the period when the US allowed its vassals decent lives. (Oh, they destroyed Japan’s tech and industrial lead, they gutted Britain after WWII, they forced Canada to destroy its world leading aviation industry), but overall, if you were on the inside of the “Golden billion” or, early, “the golden 500 million”, life was pretty damn good.
America used the whip, its vassals jumped to obey and everyone else was poor.
Then Americans got stupid and thought that China was like Japan, they could ship their industry there, makes lots of money and if necessary bring China to heel if it got out of hand.
Wrong. Morons. I and others warned about this for decades, how stupid it was, but no one in power listened. Probably a good thing, since it led to a billion people getting out of poverty, but it’s not going to be fun for those us living in the West.
So: the weapon is being wrested from the old hegemon’s palsied hands, and being wielded by the apprentice, the new master, the new hegemon.
Bow, insects, the new lord is here. And no, America isn’t going to get its hegemon status back, nor should anyone who isn’t American want it to.
The actual solution is Keynes solution. No one should have the weapon—the power—because every country should make, grow and dig as much of they need as possible, using trade only for what they genuinely can’t make or for luxuries they can do without in a pinch.
Feral Finster
Taking all that as granted, what the upshot would be is that those who control the resources would be the de facto hegemons.
Can’t sputter coat a circuit board without gold. Can’t do a lot of things without petroleum. Some things can be substituted, but you get the idea.
Ian Welsh
Non continental powers trade that between themselves for those resources in such a model. Some current vassals already have almost all resources they need: Australia and Canada, for example. Many African countries.
Feral Finster
Very few countries are not dependent on resources from outside, and if they attempted autarky, they would be. Russia being about the only exception I can think of off the top of my head.
But yeah, you’d need trade.
Jefferson Hamilton
“Then Americans got stupid and thought that China was like Japan, they could ship their industry there, makes lots of money and if necessary bring China to heel if it got out of hand.”
Isn’t it just possible that the people making these kinds of decisions weren’t stupid per se, they knew what would happen and just didn’t care because they would be made fantastically rich by it and able to insulate themselves from any real repercussions, for as long as they lived, which at this point isn’t that long?
anonymous
ian please add another donate method, can’t pay by card, it keeps loading.
paypal is also infuriating when it requires login and always trying to trick you with conversion options.
patreon is friendly to most users(i think it uses stripe?), i even supported a guy based in China, with chinese bank card, no problems.
Jan Wiklund
On the other hand, I think you should need to have at least 100 million people within your borders to live completely without trade. You see, industry is about economies of scale, and a medium sized country can’t produce everything with economies of scale. It will have to barter, or be poor, like North Korea.
The trick is, I believe, to be able to produce things that others will need as much as you need their things. It is also about being able to use the newest technologies, because it is there the profits are.
For a traditional industrial country I think you will need some 20-30 million people to do that. For a new industrializing country you will need a lot more.
Ian Welsh
Anonymous: most other methods don’t work in Canada. If you use a VPN, try turning it off, that often fixes the loading issue.
If you’re Canadian, interac would work, otherwise email me at ianatfld-at-gmail-dot-com and I can send you a mailing address.
elissa
It would seem that your formula applies only to nation states that are quite large in area and at a certain level of technical development. Other than USA, Russia, and China, some of those which come to mind are France, Brazil, Australia, South Africa, India, Canada, Turkey; maybe Indonesia and Iran. Near-autarky is a huge luxury greatly dependent on geography, population, and benign neighbors. For the others, some sort of vassalage is almost inevitable in this dangerous world of ours where psychopaths routinely rise to the top of governments.
KT Chong
“Rare earths are not rare. They are actually everywhere.”
Not quite right. Some rare earth elements (REEs) are not rare — but some truly are. Light rare earth elements (LREEs) like cerium, lanthanum, neodymium, and praseodymium are relatively abundant and found worldwide. Heavy rare earth elements (HREEs) such as dysprosium, terbium, yttrium, and gadolinium — the actually rare rare earths — are not.
HREEs are especially critical for high-performance and high-temperature permanent magnets, which are essential for advanced military technologies. This is why China’s recent export controls target HREEs, not LREEs.
The U.S. (and Canada) primarily have LREEs, typically concentrated in hard-rock deposits. These are widespread and not geologically rare.
In contrast, HREEs are mainly found in ionic clay deposits — located primarily in southern China, Myanmar, parts of Southeast Asia, and Australia. These deposits are genuinely rare, and the U.S. has virtually none. America can improve extraction and refining capacity through investment and technology, but it cannot create new geological conditions.
Moreover, rare earth processing and refinement require advanced, specialized technology. The West often boasts about its lead in semiconductor or lithography technology, yet overlooks the fact that China has an enormous head start in REE processing technology.
China is estimated to be 20–30 years ahead of the West in LREE processing, and 30–40 years ahead in HREE processing.
In other words, China will catch up — and eventually surpass — the West in semiconductor technology (previously thought to take 5–10 years, but Nvidia CEO Jensen Huang recently remarked that China is now only “nanoseconds” behind after returning from China) and lithography (10–20 years) long before the West can overcome China’s 20–40 year lead in REE processing.
Japan and South Korea — both engineering powerhouses — as well as Australia have been trying since the early 2010s to replicate China’s REE processing capabilities, especially for HREEs. After more than a decade, they have made little progress and have largely given up due to high costs. Even Australia, despite having both LREE and HREE deposits, sends most of its rare earths to China for processing and refinement.
In short: the U.S. will not overcome its reliance on Chinese HREEs — certainly not within our lifetime.
Ian Welsh
Smaller nations are advised to trade among themselves, not relying on major hegemonic powers. Since they are mutually vulnerable to each other, there is a certain security. They should still make/grow/dig as much as they can.
Feral Finster
@Jan: not to mention, you’d have some countries with a raging glut of one product or input, and other countries with shortages of that same product and input bottlenecks.
Angola would have more oil than it can possibly use (not sure about refining capacity), plenty of local farm products, and no computer chips.
Speaking of computers – how would intangibles, such as software, work? Does each country need to develop its own homegrown computer industry to avoid being strangled by Microsoft? Tempting, I admit.
Moreover, such a system would entail an enormous duplication of efforts. Belgium would need its own tire factory (preventing rubber shortages was the real reason the US rationed gasoline in WWII), Holland its own factory servicing the Dutch market, etc.. Not sure how either Belgium or Holland is going to get rubber or other inputs to run these factories, and both are already net energy importers before any talk of autarky. Regardless, you think that the environment is in bad shape now….
Ian Welsh
Eh, Canada used to refine a lot of rare Earths. Gallium, iirc, which comes from aluminum production, was one of them. We made tons of that stuff, in my lifetime. I remember.
We could do so again, but who’s going to sign the long term contract? America? We can’t trust them to keep any deal they make. But we could make small amounts for ourselves just by going back into aluminum refining. We mine Bauxite, after all, and we used to refine a ton of it.
Ian Welsh
African countries would simply trade what they need among themselves, without involving a hegemon. They certainly have ALL the necessary minerals. And borders in Africa are damn artificial. Join a few together and you have a super-state. Africa is HUGE. Most people don’t realize, as Mercator makes it look far smaller than it is.
The rules of physics aren’t different in Africa. China had no chip industry to speak of 25 years ago, and a subpar one 10 years ago.
You trade only for what you need. You people are full of why it can’t be done, spend more time figuring out how to do it, or accept that you’ll always be vassals to some hegemonic power, whether China or America.
KT Chong
In February 2025, China announced that it possesses over one million metric tons of thorium (Th) in Bayan Obo, Inner Mongolia — the same region where China mines most of its light rare earth elements (LREEs). Thorium is a highly radioactive and toxic byproduct that naturally co-occurs with LREEs. Its radioactivity and toxicity were the main reasons the U.S. outsourced rare earth mining and processing to China in the first place.
The key point of China’s thorium announcement in February wasn’t just the amount discovered — it was what it implied. China has spent decades trying to solve the problem of managing radioactive waste. Now, it appears to be on the verge of converting and mass-deploying thorium as a (not-so) “green” energy source — one theoretically capable of powering the world for 100,000 years or more. It’s “not-so” green because it’s still nuclear, but it’s far cleaner and safer than oil or petroleum.
China’s dual-circulation strategy likely includes exporting thorium-based energy to make other countries dependent on China for their energy supply. China’s not-so-long-term plan: to replace and eventually collapse the global petro-energy system — and take the U.S. economy down with it. “Not-so-long-term” because China plans to begin mass deployment of thorium energy both domestically and internationally by 2030. I figured that out soon after China’s thorium announcement, but more and more observers are catching on — and American neocons and pundits are now starting to panic.
Anyway… when China made that thorium announcement, people got excited about and preoccupied by the energy potential but completely missed the other big revelation. As mentioned, thorium co-occurs with REEs. Based on known geological and mining data from Bayan Obo, the LREE:Th co-occurrence ratio is about 156:1 — meaning for every one part of thorium, there are roughly 156 parts of rare earth elements.
This ratio suggests that if China has over one million metric tons of thorium, it must also have well over 150 million metric tons of associated REEs from the same deposit. Even using a conservative LREE:Th estimate — say a 50:1 LREE:Th ratio and assuming not all LREEs are recoverable — China’s officially reported 44 million metric tons of Total Rare Earth Oxides (TREO) (about 34% of the global total of ~130 million tons) still looks like a serious underreporting.
That’s just a hunch — but I’m surprised more people haven’t yet put one and one and one together. I used AI to run some calculations and estimates: China’s true TREO could be roughly 3.5 times larger than what has been publicly reported — meaning around 150–160 million metric tons instead of 44 million. If so, China alone might possess more than the entire officially known global REE reserves (≈130 million tons).
China has probably underreported its TREO for strategic reasons. Thorium energy already poses a massive threat to America’s petro-dollar–based global hegemony. If the U.S. fully realized how much REE China truly has — and how closely it ties to the thorium energy program — the CIA would never stop parachuting agents into Inner Mongolia to stir up a color revolution.
bruce wilder
I wouldn’t make too much of Trump’s treatment of Huawei as a wake-up call for China. If anything, I suspect that the seemingly sudden advent of Huawei on the forefront of a broad range of “high tech” key product technologies was the wake-up call for Silicon Valley. I am an avid consumer of high tech gadgetry and was well-aware that Huawei were beginning to offer markedly superior products at unbeatable prices. If I had been a 5G or 6G cell fanatic, my hair would have been on fire, circa 2018.
It was the western leadership(s) that were caught off-guard and it is telling in a way that it was the dark side of the Deep State that reacted dramatically and with violence. A large part of American political leadership remains not just asleep but comatose as far as the collapse of economic hegemony is concerned — obviously, that comatose state is the result of parasitic disease as the domestic U.S. economy relies on financialization.
The Chinese communist party invested heavily in correctly understanding the architecture of first world economic dominance and high income economies. And, multinational business corporations and supply chains were identified early on as key elements. They have been building Chinese multinationals for a long, long time. And, they certainly recognized the assault on Huawei as the Empire Striking Back.
No diss on Matt Stoller, but I think his self-consciously populist framing perhaps distorts his analysis of how a multinational builds economic power and how significant that power is for bolstering national income and shifting the terms-of-trade. “Monopoly” with its image of a sole seller in a marketplace, imo, obscures the securing of technological and political capability with a focus on rent-seeking.
Purple Library Guy
Eh, I think thorium’s gonna be a footnote. I’m sure China will make some thorium reactors, just for insurance, and to rub the West’s nose in the fact that the world has been trying and failing for decades to make thorium reactors that work and now it seems likely China will pull it off. But nuclear power plants of whatever stripe are expensive and slow to build, and novel ones are more expensive and slower. By the time they get a couple thorium reactors up and running, solar and to some extent wind, plus batteries, will have eaten the power production sector completely. It’s just going too fast, and too cheap, for anything new to catch up.
I’m in agreement with the general thesis that countries are better off producing as much of what they need as at all practical. There can be plenty of quibbles about just how much is possible for any given country, but the principle is sound.
spud
here is how smaller countries managed their trade before bill clinton,
https://www.lankaweb.com/news/items/2021/09/14/wither-the-sri-lankan-economy/
now there was of course some coercion happening before hand, but with the W.T.O., it became written in stone, and down went the world into un-payable debts and poverty.
Pakistan is another, along with lots of others, who could be secure food wise, then got forced into cash crops, to try to raise money to offset un-payable trade debts.
i can remember when bill clinton got real mad at japan for not discontinuing there rice subsidies, he touted Thailand as a rice growing power house, that could feed the Japanese, then along came a drought, and Thailand crops failed, and japan was able to provide enough rice, so that other countries did not starve.
as far as the MMT crowd is concerned, many view imports as a asset, not a liability.
they are not to happy with Steve Keen and Bill Mitchell that view imports as liabilities.
under free trade, government no longer has sovereignty and democratic control. government is now subservient to capital, they now are the enforcers of free trade for capital.
https://fpif.org/free-trade-regime-oligarchy-action/
as Bill Mitchell points out, yes its free trade. what is free trade? its unfettered capital.
https://billmitchell.org/blog/?p=34677The case against free trade – Part 1
free trade is fascism, when a government enters into a free trade treaty, essentially they are entering into a treaty not with fellow sovereign countries, but with corporations.
under free trade, government no longer has sovereignty and democratic control. government is now subservient to capital, they now are the enforcers of free trade for capital.
https://www.citizen.org/article/more-information-on-the-world-trade-organization-wto/
Keen,
https://www.youtube.com/watch?v=aipeG-QQXEs
my own opinion on fascism, and it mirrors free trade, its the elevation of capital over sovereignty, labor rights, and civil society.
Mark Level
If Trump is stupid enough to invade Venezuela with boots on the ground in hopes of a regime chanbe, I have to wonder if most or all of Latin America would revolt against the Yanqui hegemon, knowing they are next on the menu. As Max Blumenthal recently noted, the Nobel War Committee recently awarded the idea of a regime change in Venezuela, and the true person making the decision would be little Marco Rubio, not the increasingly unstable and confused Trump.
I saw Garland Nixon not long ago, maybe on Nima’s program, and he shared he spent lots of time in Venezuela, most recent visit in 2021 or 22, and they are proudly advertising the populace’s politics via murals, the 2 most popular being: promotion of Iran and Iranian-Venezuelan economic and political mutual support, 2nd depictions of Barry NotSane Obama with devils’ horns and fangs . . . funny how Dinesh D’Souza and that crew used to claim Barry was a covert sympathizer with the non-white masses, an “anti-colonialist” no less! To be fair, like the rest of the losers he did exhaust the US in endless, failed wars.
Nixon also emphasized how large Venezuela is, with varied terrain, plus mountains and jungle, I think I quote him accurately as he said US involvement there would be “like Vietnam on steroids”. And as far as War Criminals go, nobody of Trump’s “best people” could hold a candle to McNamara’s intellect, a genuine throwback which the hegemon will never see the likes of again. (& Mac still fucked it up.)
Many have pointed out that Russia is way too far away from Venezuela to provide effective aid, I assume that mostly (but not entirely) applies to China as an ally also. But any Trump “victories” will surely be Pyrrhic as the Bush-Cheney invasion of Iraq remains, having given the Shi’a at least a couple allied countries to oppose the Saudi-Sunni dreams of exterminating the “heretics.”
Were Latin America not constantly having retro-fascist regimes installed such as in El Salvador, Argentina, etc. it could be a considerable trading bloc, and the areas under the aegis of BRICS may succeed in time.
Trump just backed off a squidjum in sending Tomahawks to Ukraine (maybe) and creating the conditions for nuclear exchanges in Eurasia. But he will bumble around and start shit elsewhere, he knows no better and craves world attention, even if it’s negative it still feeds the giant void of his insecurities.
Oh, and when I was cortando (picking, literally cutting) el cafe in Nicaragua in 1983-84, we would sing the Sandinista National Anthem before climbing the (small) mountain: “Luchamos contra el yanqui, el enemigo de humanidad!” True then, remains true now. Will China become such a supreme villain as Ian suggests? Maybe in time, but not as quickly, methinks.
Rootless Cosmopolitan
Not much to quibble with here… just a few additional thoughts.
China is eating America’s lunch largely because it was able to think strategically and reinvent itself when Maoism hit a brick wall. Deng put the country on a path of unprecedented economic development and that resulted in hard times initially but the CCP promised that after a period of hardship the country would prosper and so far it has delivered on that and the Chinese state never abandoned the Chinese people to the full force of the capitalist market. The USSR, in contrast, stuck with Marxist-Leninist dogma and when that didn’t work out as envisioned it had no other strategy up its sleeve and the ensuing crisis led to its terminal decline and subsequent dismembering by both homegrown and foreign capitalist gangsters. Putin put the brakes on the worst of the plundering that began during the Yeltsin era but Russia is still a country run by oligarchs and its economic and military power is a far cry from the Soviet Union at the height of its power.
America’s Achilles heel is that it sees itself as an eternally superior civilization that has no need to improve or reinvent itself. This means that unlike the communist Chinese, who studied and learned from western capitalism and created the mix and match system that powers their economy today, the US is a prisoner of its own hubris and is stuck in a spiralling doom loop with no way out because it refuses on principle to learn and update itself. In this way it is very much like the Soviet Union which was also set in its ways. But by adopting American-style capitalism “with Putinist characteristics” Russia could make a modest comeback after the USSR’s collapse. The US is in a real pickle because its immense arrogance and shortsightedness means it is incapable of reinventing itself as the system it champions collapses.
China is not infallible of course and the “China can do no wrong” boosterism that’s become popular as of late is a bit silly. For all of its dedication to renewable energy and high speed rail construction China is still following a consumer capitalist trajectory and is gobbling up vital resources to build mountains of consumer junk that nobody needs. Don’t even get me started on electric cars which despite not consuming fossil fuels on a daily basis are in no way “environmentally friendly.” But compared with the sclerotic USA and its collection of has been vassal states China’s flexibility and ability to sustain periods of hardship without tearing itself apart gives it much greater chance of getting through the next century reasonably intact.
Jorge
@Mark Level – aha! The “Sandalista” has been spotted!
Jorge
from the urban dictionary:
“A pejorative nickname given to the political pilgrims from the West who travelled to Nicaragua during the 1980s in support of the Sandinistas, based on their tendency to wear sandals.”
‘We know these kids have good shoes in their luggage, but they wear the shitty sandals with soles made from tires just to look cool.”
Ventzu
Matt Stoller has had an unhinged antipathy towards China for a long time, casting it as ann evil communist regime trying to destroy the US.
So far China has focused on developing its country, going green, and generally agreeing more cooperative win win agreements with other countries. Perhaps they are biding their time to reveal their evil intent . . . But then again, perhaps they have just recognised that the only way to subdue a 500 year evil empire is economically rather than a kinetic war.
Having said that hierarchical societies of whatever hue, inevitably seem to become corrupt at the top, and then greed becomes the predominant driver of personal, corporate / market and international relations. I think that is called progress.
Ian Welsh
It may go kinetic, for sure. A lot will depend on the US and China. The cut off of rare earths, if it looks to be permanent or multi-year means almost no military production is possible till the West ramps up its own rare earth production (a much harder task than it looks since they are mostly byproducts of massive refining operations), and that means the US has to go to war NOW or never.
Probably write an article on it next week.
Never would be preferable, but American leaders may not see it that way.
Mark Level
Gracias, Jorge, y de acuerdo. Yes, I was an early-20s Sandalista, the late, lamented Spalding Gray also was and wore the name proudly, which I will too. I came by it honestly though, my mom was Spanish and I could “pass” 98% of the time, which I could about 2 months in once my Spanish was good. (6 month trip almost to the day, Texas to Mexico then Guatemala, Honduras, and Nicaragua.) My mom and grandma wouldn’t talk about it, they were even darker than I was and I guess faced terrible racism and teasing (grandma in the 1920s-30s, mom in the 40s-50s) which I really didn’t. (Teased one time in high school, no big deal.) 23 & Me later vindicated what only one great-aunt would tell me, that their side of the family was “Mediterranean.”
In my early teens I was a bookish nerd and was obsessed with the Mediterranean countries (partly because my dad was an unpleasant, martinet German I’d bet, and we had a horribly ugly German name), some of this is instinctual I guess. I certainly don’t want to sound like a racial essentialist, I’m more Irish than anything (25%) and they are at least tough, scrappy people, had to be given the oppression they suffered under.
Here’s the thing, though, I never wore sandals, ever. I was punk since 1977, I heard Richard Hell and the Voidoids’ Blank Generation a few weeks before the Sex Pistols broke, it was like Paul on the road to Damascus. By age 20 I worked first in an Oil Pipe Inspection yard rolling big Pipe sections around and onto a tube to be X-rayed wearing steel-toed boots, then I was on boats in the Gulf servicing the rigs with pipe, drilling mud, groceries etc. so I kept that look. Didn’t attend my first punk show in New Orleans until early-83, there were no venues for that (that I knew of) in Morgan City, Louisiana or Port Arthur, Texas (a hellish place, must’ve contributed to Janis J. checking out early.)
Beyond the boots I had short, cafe-con-leche hair (never did bald, hated the Skinheads), a black bracelet with spikes etc. (Not that that’s how I dressed in Central America). I had many older hippie friends, I liked some of their politics and disdained other elements.
Now I have a Hispanic name to honor my mom’s heritage and I live in Santa Fe, NM. My Spanish is decent (recovering after 4 years in Northern Minnesota, a mistake in my life trajectory, it was a climate refugee situation, beautiful place, dumb, cold people, mostly, a good music scene and fresh air but little else to mitigate it.)
I hope to be living in Mexico early next year, one of my haunts from younger days. When I lived in Norcal between the late 80s and 2021 I’d go down there many summers for 4-6 weeks. When I turned 58 my skin lightened (except on my arms which remain caramel-colored), and other Latinos stopped stopping me to ask directions or whatever en espanyol on the street. Que lastima! Los Estados Unidos es jodido, as Ian points out, karma is to some extent real (there’s a sandals-adjacent idea) and what this country has sown will now be reaped ad nauseam.
Glad to have a fallback that is more warm, humanist and tranquilo as a cultural alternative. Got my hair cut yesterday at a salon where the 4 staff, one woman and 3 men, only she speaks any English, fluent in fact, una Guera, must be German or something on one side, blonde. The guys were teasing each other in a kind way, she’d try to engage me in English at times but I stuck 100% to Spanish, I’m going adelante and not atras. Some people here immediately accept me, others don’t. No big deal. What do I care? Yo soy que yo soy, as Popeye used to say. I won’t change to Marco el Nivel on this site, though, no need to undo what works.
Ventzu
Ian, I doubt it will go kinetic, because the US wouldn’t dare fight a peer competitor. Even the Taiwanese aren’t going to be so stupid as to be proxies. They will of course pursue asymmetric warfare against China, and try to pick off smaller, resource rich countries that are friendly to China.
China does not seem minded to intervene directly to help such countries (Iran, Venezuela), so the rare earths sanctions is the next best thing. The question is will the lure of business tempt them, when Trump comes begging.
Failed Scholar
You don’t need to go very far to see what a world of countries trading for (mostly) their own needs, where most were making their own products, looked like. That’s literally how things worked up until 1980 more or less. I still have some of my parent’s household appliances from 1970 (still working!) and all of them were built in Canada, a relatively small market of ~20 million or so back in those days. A bunch of other consumer goods too like clothing, thermoses, tools, furniture, a vacuum, camping gear, telephones, etc. ALL of this stuff was made in Canada within living memory, and most of our consumer goods were like that until the 1980s. It’s funny to me how Canada’s economy has supposedly ‘grown’ massively since then yet this country could barely make 1000 pairs of pants nowadays.
The big difference is price (and quality). If you look at household appliances as an example, my dad’s chest freezer was bought from Eaton’s (‘Imperial’ brand, their own house brand I understand) in 1970, and probably cost the equivalent of $3-4K CAD in today’s money. That got you a full size chest freezer that was probably made by John Inglis and Company in Toronto or Laval, and that was built so well that it still works 50 years later. An equivalent Frigidaire chest freezer today (a made in China especial?) at Costco is priced at $826.99, and I can guarantee you it will be in a landfill 50 years from now.
I have their electric range, also from Eaton’s circa 1970s, and would have been priced similarly in the $3-4K CAD range equivalent today, whereas an equivalent size at Costco today is $799. Likely landfill filler in 10 years.
That’s how it was barely 50 years ago, we built most of our own consumer and industrial products and somehow that system worked great with high employment that paid well enough that people could afford the products they made even if they were priced a lot more than equivalent stuff today. I know it worked because my parents lived through it. The 1960s and 70s there was so much manufacturing employment in and around Toronto that you could find a job in a day – my father and his group of friends literally would quit their jobs by the afternoon if it sucked and would walk over to the next factory and find another job by the end of the day. None of the ‘we’ll take your resume and string you along’ bullshit that we have today – the funniest thing to me was how my dad wouldn’t even fill out company application forms unless he was sure he would be hired, just a quick “look buddy you gonna hire me or not?” and leaving if the company was non-committal. ¯\_(ツ)_/¯
It’s amazing the kind of society that we lost (or more properly had stolen from under us).
Anyway, most ‘industrialized’ countries operated the same way (hence *industrialized*). Even small countries like Sweden had their own domestic carmakers and bus makers and consumer goods. Hell, Sweden was big enough apparently for TWO carmakers! (Volvo and SAAB), and that’s with barely 9 million population.
I think where this kind of trade/industrial policy wouldn’t work today is in industries where the scale makes the products possible at sub insane levels of prices. Most modern electronics goods would fall under this category, as microchip plants are incredibly capital intensive – just look at TSMC’s latest chip plants which are pushing $30 BILLION each to build, and the inputs aren’t possible without a truly globe spanning supply chain. Scale is king in this business, which is why people like Nvidia’s CEO are whining about getting cut off from China. China was ~50% of the entire world’s semiconductor demand last I checked, so scale at that level might actually allow them to build an entirely domestically sourced semiconductor supply chain.
To give you a sense of how Chinese scale works in solar panels, check out ‘AutoExpert’ John Cadogan, an Australian auto industry youtuber, who went to a Chinese solar panel factory (skip to @7:30 to get to the factory part) https://www.youtube.com/watch?v=9NnXqf6s3VY . 35gW yearly capacity at one factory!
Jan Wiklund
It is also not only about big or small, it is about industrial or not.
It is well known that if an industrial country trades with a non-industrial, it’s the industrial one that gains most (Raúl Prebisch, Alice Amsden, Erik Reinert). The non-industrial is forced even further into trading raw materials, and doing that doesn’t pay because there is no economies of scale involved in it, and no learning.
Countries should trade only with countries on the same development level as themselves. Or, if they trade with countries on a more developed level they should be very careful.
Wim Roffel
China has been aware for a long time that its rise would run into American resistance. The Belt & Road Initiative was aimed at making the country less vulnerable to possible American manipulations. Deng’s warnings about keeping your head down as long as possible in order to prevent the US from noticing your power and seeing you as a threat had the same aim.
It will be hard for the West to resist China. Joining forces in something like the EU would seem the obvious solution. But the EU is a failure so that is not a good model. This kind of “cooperation” leads to a situation where a leading coalition call the shots and as that coalition favors its own interests you get stagnation. The obvious solution would be an organization where the leadership is chosen directly but the composing countries have lots of constitutionally guaranteed autonomy.