The question which should worry all experts of world affairs is how do we reshore manufacturing, without triggering the Thucydides Trap with China? It’s a serious question, because for the last thirty years trade has done a great deal to diffuse tension between America and China. The then British Empire and America were able to sidestep this issue, partially because of friendship built up during the Second World War, partly because of historic ties and similar outlooks on liberty- but the far more convincing elements in disarming the Thucydides Trap was the emerging threat of the Soviet Union in tandem with a friendly American industrial policy which saw companies like Ford locate significant portions of their Europe orientated production base in Britain.
Unfortunately, very few of these factors exist between America and China. Culturally, the West and China are aliens, with none of the common language affinity which characterised the Anglo-American relationship. Although the Chinese understand the West very well, most lay Western onlookers are largely ignorant of Chinese cultural nuances. In particular, Westerners lack the insight to see that the Chinese Government is the same thing to most Chinese citizens as the Chinese people and any insult to their government is likely to be taken as a national slight by their people. The only schism between the Chinese people and the Chinese government relates to occasional concerns over corruption, which can usually be traced to the local level.
To understand the Chinese ethos and philosophy, particularly in relation to their perceptions of the West, we need to understand a few basic factors. First, irrespective of the issue of Hong Kong, there are two China’s one comprising of the 300 million or so living in coastal areas, largely cosmopolitan and very much an advanced economy- the other poorer and more ideologically orientated towards Communist doctrine at the party level, despite various ongoing economic development projects managed by a meritocratic class of party technocrats and very able managers.
Second, they see Western democracies as schizophrenic, and increasingly, unreliable in terms of making treaties to which they will stick. They don’t understand the West’s attitude to Islam, which they see as a backward religion and inherent threat, largely as a result of the higher population growth rates found in most religious groups, compared to secular populations. Part of this bias can be traced to Marx and differing cultural interpretations of his attitude to religion- when Marx said ‘religion is the opiate of the masses’ he meant it in terms of the far more sedate and benign apathy engendered within the middle classes through laudanum, rather than through the social destructive and destabilising influence of the opium den. But more broadly speaking, given some of the grass roots incompatibilities of Western value pluralism and Islam, with Islam also possesses more of an inherent tilt towards the religiously political than Christianity, especially through Sharia Law, the Chinese may well have a point.
Another destabilising influence in the relationship is Western media. The friction of the Culture War, with its bipolar attitudes towards China, is always going to impart offense- especially within legacy media which is increasingly forced to rely upon gotcha and clickbait journalism, because of the low levels of trust towards institutional media in many age groups and any non-Democrat affiliation. Much of Chinese etiquette is construed to minimise means of giving offense, and often goes out of its way to help others avoid embarrassment. This finds its ultimate form in the often well-paid jobs offered to foreigners of all nationalities and ethnicities in the form of the somewhat disingenuously named white monkey work- which no Chinese citizen would want to do, because of the shame it would entail, or because of the value adding that can come form having perceived White Western consumers. Regardless, to the Chinese mindset the Western attitude of outspoken criticism and causing shame, can seem needlessly rude and cruel.
Finally, there is the issue of trade and diplomacy, especially when it comes to negotiations and business relationships. Westerners operate on the principal of enlightened self-interest, which is a mistake. Chinese corporate relationships have two settings, friendly and adversarial with a temporary ceasefire in place. With the friend setting, the Chinese can be extraordinarily gracious and operate automatically towards the pursuit of mutually beneficial relationships, almost considering the partner’s position as much as their own, but in the second setting, the default is tough and always contrived to gain maximum advantage. Western negotiators and diplomats would have done better to bear this in mind, rather than to automatically expect adherence to deals and good faith. But perhaps this is overly optimistic, with the Western penchant for acting as the proverbial bull in a china shop, international relations might have been doomed from the start.
So what is the solution to the Thucydides Trap in relation to China? How do we maintain trade engagement and avoid a potentially nuclear World War Three? In a word, Keiretsu. For those unfamiliar with the term, Keiretsu, were the successors to the old pre- WWII zaibatsu in Japan. They were large scale conglomerates in which a collection of corporations could operate competitively against other keiretsu, fulfilling virtually any human need within the conglomerate. They reached their ultimate zenith in the eighties, with Japan playing a huge role in international production.
In this sense, I am talking about keiretsu in the vertically integrated manufacturing model rather than the more horizontal financial model, but with the caveat that I see a newer keiretsu model for manufacturing operating horizontally, in a few specialised spheres across multiple jurisdictions and trade zones, with even head office and design offices split across multiple locations, contributing to a decentralised hub. The model would entail scale in breadth of market and global reach, not through market domination across several sectors.
The benefits of operating separated design, engineering and science cells should be obvious. Whilst we want people communicating across cells, in terms of sharing ideas, the example of tech giants will soon illustrate how a common works culture (especially when of an ideological nature) can inhibit innovation, even if some might claim that it hasn’t done so already. In innovative terms, it often more beneficial to have lots of smaller teams operating independently, than fewer larger ones. It avoids groupthink. Such keiretsu would also be useful for tax purposes, and protect against governments which seek to impose the wrecker’s force upon companies- adding to business resilience.
So how would they work and why do we need them? Well, basically any corporation seeking to diversify or operate across trade zones, would divide the world into a series of trade zones, regions and areas, which each zone supplying its own service and goods needs, even down to parts and supply chains where possible and either outsourcing or exporting to other zones only when unavoidable or where brand reputation and differentiation matters, depending upon the market and the various regulatory hurdles they may face. From a PR perspective companies which can locate assembly in a domestic setting, with parts and supply chains locates within adjacent areas within the same area, are likely to enjoy a significant commercial advantage as large segments of consumer populations insist upon the option to buy locally. To the Left it’s green, to the Right it’s patriotic.
The reason for this new approach is simple- most advanced economies have woken up to the reality that labour is just as important to the virtuous cycle of the market as is the capital. It acts as its own self-feeding ecosystem, or as a coupled system. Otherwise, how do we explain the Chinese economic miracle, when most of their manufacturing barely scrapped a 6% profit margin- only just enough to cover tax, risk and inflation? This answer lies in the multiplier effect of the labour, acting as the seed for all manner of local consumer orientated goods and services.
Most advanced economies now wish to grow their mid to high value manufacturing as they are beginning to realise that their population aren’t blank slates for whom it is not possible to shift large segments into significantly higher band employment, whilst simultaneously realising that while service labour can provide employment it doesn’t provide as income levels anywhere near as high as tradables- with large portions of the male population in particular unsuitable for the higher educational route, retail or service (other than a few highly regarded jobs like cheffing).
There is also an extent to which blue collar workers in Western countries feel betrayed, and it’s leading to political and cultural instability. In this type of global cultural environment it becomes all but impossible to instigate mutually beneficial trade over the mid- to long-term. Ultimately, the only game theory which works is resorting to the new keiretsu acting as distributive third parties, susceptible to the pressure to locate fabrications for domestic and regional markets internally, but ultimately able to create an ecosystem which benefits all nations and peoples in terms of labour, as much as they are able.
There may be resistance from neoliberals on principle, especially with regard to vested interests like finance. But in the West at least, the emphasis on climate change will be a motivating force, because shorter, more integrated supply chains coupled with fabrications plants which are closer to market will drastically reduce the carbon footprint of container fleets and air freight. As an added bonus, less competition between zones, and more competition within them, automatically reduces the competitive disincentive to innovate our way out of bunkers fuels- a horrendously dirty and polluting, but very cheap, transport fuel employed by most elements of maritime transport.
For China, the incentives are equally clear. They are facing the 421 problem with their population. They face increasingly hostile consumer markets abroad, and many Western corporations are looking at reshoring parts of their manufacturing businesses back into the countries which originally made them, or at least to other parts of Asia. At the same time, Western societies have been made painfully aware of just how vulnerable our global transport and supply system is during the pandemic, and they are unlikely to tolerate democratically elected governments which only make a superficial show of trying to address the issue. With the coming midterms, unless Biden changes his policies on tariff exclusions, with 549 separate tariff exclusions for Chinese companies, his Republican opposition is likely to make a meal of his misfortunate positioning.
Ultimately, we need a cooperative system which can sustain and regionalise trade, without the sea of domestic turmoil creating politics and diplomacy which introduces systemic instability and potential conflict. Maslow was wrong not to include labour is his hierarchy of needs, although he probably excluded it because it is the one need which stretches all the way from basic need to self-actualising. And it’s not just individuals who need labour, it’s families, communities and even nations. In our current paradigm, a distributed model of the keiretsu system is the only thing that stands between us and World War III. As sovereign nations we all need to acknowledge that every people needs labour and a system which helps each country maximise theirs without jeopardising others is the only way to leave the Thucydides Trap unsprung.
An interesting and thoughtful essay but I think with some misconceptions. Firstly as you point out the West does not understand Chinese cultural nuances but this is reciprocal. The Chinese don't understand the West either particularly how divergence from the party line can be tolerated.
The second point which I think is relevant is that China is a budding empire aiming to seize as many resources and as much power as it can. It exhibits all the arrogance and recklessness that an expanding empire normally shows. Here in the Asia Pacific we are well aware of the expansionism, bullying and downright naked power grabs that accompany China's growth. The Japanese dispute with the Chinese over the Senkaku Islands is a case in point. There is no historical evidence for Chinese ownership but that hasn't stopped the Chinese government from claiming them.
It's interesting that you advocate a keiretsu approach. Generally this has been acknowledged as a failure leading to corruption and exploitation. It also goes against the Chinese goal which is domination. This what other countries have found with the belt and road initiative. The help and the loans don't turn out to be generous.
Part of Chinese expansionism can be explained by fish. They've depleted their coastal nurseries through a mixture of heavy industry and farming as well as overfishing- and the Chinese demand for fish has long since outstripped their ability to catch them locally. Of course, this is not the only reason- the Chinese fear the type of anti-trade hegemony embargo of its growing trade dominance in the region, of the type enacted by Cordell Hull as a prequel to the War in the Pacific. They are fearful of the strategic prevention of vital component parts like semi-conductors being withheld, particularly as a means of IP enforcement.
The other thing to remember is while in the past the Chinese have been willing to play a waiting game, the ground has shifted in that they now see they only have limited time window in which to enact their goals. For one things countries like Japan are beginning to align against them. For another they have a pending population bomb. It is ironic both Washington and Being believe they will lose the struggle for superpower supremacy, with America's fears focused on decline, and China's centred on demographic change.
I chose the keiretsu model because it was a historical model which worked for a time, but I was perhaps unclear that I saw this being adapted to a distributed model, which was more horizontal than vertical. My reasons for this were simple- without a third party mechanism shifting manufacturing trade from a global to a regional level, I see international relations deteriorating substantially, as an increasing focus on labour as opposed to capital embeds friction between foreign states.
On the subject of corruption and exploitation I wasn't advocating for some of the dodgy financial reporting practices seen in the keiretsu model, but I do think it is perfectly normal business practice to trade the short-term pain of making losses to price your competitors out of the market, in order to achieve greater market share in the long-term. Here in the West, we are too susceptible to the vagaries of speculators in financial markets- it leads to a terminal short-termism which cannot see beyond the quarter or the financial year. Real value is only achieved over the long-term- creative destruction may unleash capital, but this ignores the modern paradigm that it is far easier to release capital from productive assets than it is to turn capital into productive, profit yielding businesses.
Currently, PE ratios hover around 20-25. As someone whose family used to own commercially productive properties, a can assure you that historically PE ratios were closer to 5 to 7, and only rose to x10 for top-rated companies listed at the prestige end of stock markets. Our current level of valuations is structurally unsound- it is only the global surplus of capital which is driving this trend. What investors in companies like FAANG tend to forget is that the market is fickle, and God help you if your consumers decide they really don't like you. We've already seen a taste of this with the Gina Carano incident and Disney+- the only company I would say is largely immune is Amazon, but only because customers love their service.
I take your points, but generally I didn't want to be too China critical because I am sure somewhere there is an AI programmed to look for any references to the Thucydides Trap. It used to be something of a Chinese State obsession. Personally, I would like to see a return to the cautiously friendly rules-based trade which characterised the Kissinger era of globalism. A more macro level analysis of the game theory which governs our economics would lead us to the conclusion that we need each other, especially if we want to conquer the many challenges we are going to face in the 21st century. By now, we should be mining the moon for rare earth minerals.
Indeed I would also like to see a return the Kissinger type trade world but regretfully I don't think it's going to happen. With China what is important is what the party thinks and more importantly what president for life (Emperor Xi) and his coterie want. Here actions speak louder than words and China's actions are aggressive and expantionist.
It really comes down to several factors. The party is repressive and brooks no opposition but realised that out and out repression isn't going to work in an environment like China. Chinese history (and party functionaries are very aware of this) is replete with examples of repressive governments failing. So there is a kind of bargain with the population - accept our rule and your lives will get better. This has worked up until now but the inherent inefficiency of the command and control/communist system means that the bargain is under a lot of strain particularly, as you note, in the hinterland. The Communist Party can't allow more freedom as this would result in an existential threat to itself and possibly the breakup of China. Thus it falls back on nationalism and expansionism. The classic imperial behaviour as it were.
The Chinese fishing fleet is a case in point. It is both a quest for more resources and a naked power projection into other countries territory. Illegal fishing isn't happening without the Chinese authorities approval and direction. It's such a threat that the Indonesians have sunk Chinese fishing boats.
Rightly or wrongly the US is perceived by China as fading. This creates the opportunity for expansion. It assauges the nationalist urges the party has encouraged and nutured. The inefficiency and corruption of the party can be covered up by expanding (providing a bigger pot for everyone) at the expense of weaker nations and by succeeding in this expansion providing an impression of competence. If you succeed in the international sphere you are judged successful at home. I very much see your point about being China critical but one wants to avoid missing the point. None of China's actions are intended to benefit anyone but China and particularly the party itself.
Great comment. One of the unfortunate things about the Chinese system of government is that it lacks the internal tension of a democratic system- in democracies, ruling parties can always point to the other side as say 'well, we might be bad, but just look at those other guys- they're crazy!'. In these circumstances, tension within the population can accumulate in two- either it is focused towards the party or it is directed externally.
My fear with animosity over trade and the reduction in living standards it might be bring, is that it might force Chinese authorities to focus growing internal discontent towards anger at the West. When populations get mad at each other, governments are forced to align their policy inline with the populations sentiments- it's the only way to survive politically, even in authoritarian systems.
And the CCP is paranoid about its population. It's why the survey their population on matters as banal as happiness with the local garbage collection service. The movement to improve air quality sprang almost from nowhere and they are deeply worried that the same might happen again.
One of the problems which the Chinese government has to contend with is changing attitudes by generation. The older generation were rightly terrified of instability and the misery is could bring. The younger generation has no such qualms, many are 'lying flat' on the job, because working hard at education hasn't produced the panacea they were promised. In many ways it's an Asian version of Peter Turchin's elite overproduction.
The authorities are misdiagnosing the problem. What they really want to do is recruit higher IQ female students from poorer countries across Asia, with the promise of training them to become nurses and care workers. It could be a part-private form of self-supporting social care. But the key wouldn't be to create senior citizen activity centres and respite homes for those unable to physically support themselves anymore- instead it's all about providing potential partners for a generation in which many find themselves priced out of the dating game (one needs property to marry as a male in China, and repayments are x46 average earnings).
The malaise amongst the young might be somewhat to do with disappointment over employment opportunities, but the far more decisive factor is a lack of the ability to date for many. The need to import bright girls in significant numbers- and elderly Chinese women probably wouldn't mind giving tips to foreign girls for doing shopping or a little cleaning, if it gave them the chance to introduce the girl to their grandsons...
The failure of government is the inability to look at the underlying humanistic issues beneath the surface.
It's already started especially in respect to Japan. Every so often there would be a surge of anti-Japanese nationalism with a boycott of Japanese business and attacks on the Japanese embassy. This was normally linked to a stupid statement by a right wing Japanese politician concerning the war or the Nanjing massacre. The government (and by this I mean the bureaucracy - the real rulers in Japan) really didn't want to have to deal with this and so shut these people up. The important thing is that the Chinese government had to work hard to shut these outbreaks down. The forces released were very potent. This is part of the reason for the expansionism; to direct passions away from the internal environment. Directing it towards the West is not an issue and this used to happen during the Cultural Revolution. An external enemy or threat is always a useful diversion especially for authoritarian governments.
What you say about dating is interesting. Mainland Chinese girls have a long checklist of characteristics a potential mate should have. These include physical characteristics (interestingly wearing glasses is fine it indicates brains), job, background etc. Whilst there is some room for romance in Chinese society it is limited and dating and marriage is rather a cold business. Chinese men used to prefer poorly educated submissive peasant women. The intelligent independent minded city woman was a bit too much for them to handle. However, with status becoming a more important factor (previously it was enough if you were a party member) there is a need to adjust. This is proving difficult for some.
I presume you have considered all of this carefully and aren’t operating under some anti Chinese bias, but you are using terms for some well understood economic and political concepts in a very unusual way.
“China is a budding empire aiming to seize as many resources and as much power as it can.” Unless you are talking exclusively about some hypothetical future China then the first part is false and the second point is perfectly normal. China purchases resources on international markets, which is not the same thing at all as seizing them. And as power in it’s various forms is required to do literally anything at all and as China has many things it not only needs but morally must do then it needs to gain that power and is morally right in doing so. How can any entity legitimately claim the right to limit the power of another without claiming the right for the other to do likewise ?
I believe it was Lu Xun who said (in the 1930s) that what China needs is first to feed and clothe itself and then to advance. Now that China has the power to feed and clothe itself it needs and will continue to need the power to advance. It is morally wrong for any other nation to stop such an advance, especially if the motivation for stopping this advance is not a threat to that nations own safety by a threat to it’s relative position in the global hierarchy.
“It also goes against the Chinese goal which is domination.”
For centuries, perhaps as long as from the bronze age to the 1800s, China was the largest, richest and most powerful nation in the world. Was this global pre-eminence the same as global domination ? And if so does that apply to other nations in the world or just to China ?
I remember reading in a recent Curtis Yarvin piece that if you want to watch Washington foreign policy analyst’s head spin ask him to explain the difference between The American led global order and American global domination. What are the rules here ? Can we switch around the nations, take out the euphemisms and still make domination sound reasonable ?
“This what other countries have found with the belt and road initiative. The help and the loans don't turn out to be generous.”
And also here;
“None of China's actions are intended to benefit anyone but China and particularly the party itself.”
Are business deals and finance arrangements required to be generous and intended to help the other party ? You maybe aware of this famous Adam Smith quote;
“It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest”
We don’t expect the IMF or the City of London to authorize loans based on benevolence or generosity but on laws and established rational business practices. We should expect Beijing to do the same. Their morality and utility should be assessed rationally on tangible results not abstract ideas of intent. The overall tangible effect of the rise of China not only for it domestically but also internationally has been enormously positive.
Take the case of Australian iron ore exports to China for example. China’s building boom and steel mills have made Australia more powerful, both in the liquid power from the 39 billion dollars it earned last year and in hard power from the Chinese steel that it imported. Without China that power would all still just be red dust in the desert. What nation has the right to restrict Australia’s rights and power to advance ?
I’m well aware of the fallacies of “what aboutism” and false equivalency but what are the rules supposed to be and are they applied equally ?
I’ll finish with one more quote, Immanuel Kant’s categorical imperative
"Act only according to that maxim whereby you can, at the same time, will that it should become a universal law."
So, sit down and negotiate as if you don’t know which team you’re on and which slice of cake will be yours, then you will know it’s a fair deal or a just law.
I may be wrong but what seems to be advocated here is Social Darwinist approach to resources and international relations. This was characteristic of imperial states and frequently led to wars of conquest, exploitation and gross inefficiency. There is nothing wrong with China trying to advance but it should not be at the expense of other smaller nations. China also exists in an international environment with other nations and a limited resource pool. If China were competing fairly this would be of no issue but evidence indicates this is not so. What is your opinion on the illegal 9 dash line encompassing the Spratley Islands or the murder of non-Chinese fishermen in the same region? Are these to be considered acceptable acts?
If I read your initial paragraphs correctly this is exactly what you are advocating. Furthermore, I get the impression that you also seem to advocate that no other power has the right to resist China ('It is morally wrong for any other nation to stop such an advance'). This is very much an imperialist perspective. All nations have different levels of power and leverage but all also have duties and responsibilities as well as rights. The imperial power ignores its duties and responsibilities which is what China is currently doing.
It might be instructive to read T. H. White's 'The Once and Future King'. It's probably one of the best expositions on power and its consequences.
I do advocate for a Darwinist approach in social and international relations, it’s nothing personal about Darwin of course, it’s just that he articulated certain facts of reality that people need to be aware of in order to work with them. I don’t think humans should work against nature anymore that a beetle or a dog should.
I rather like the old stoic metaphor that said the relationship of people to nature (or God) is like a dog tied behind a cart. It can run with the cart or get dragged behind it and suffer in the process.
Natural selection isn’t the brutal fight of all against all as some might have you believe, mutually beneficial cooperation is everywhere. Bees aren’t stealing pollen from flowers, they are engaged in a mutually beneficially symbiotic relationship with them. I think the iron ore trade between Australia and China is analogous, they both get something out of it that they wouldn’t have otherwise.
If you are aware of a smaller nation that has suffered from it’s relationship with China then I would like to hear of it because I’m not aware of any. Certainly the relationships could be more beneficial but that’s considering a hypothetical, the answer to which would be more trade and cooperation not less.
As for the maritime border disputes in the South China seas, there are many parties that dispute that have borders conflicts with each other, China is only one. Possession of those islands has never been settled and an important part of that dispute and why it has become “hot” now is the fact that we now have the technology to exactly define maritime borders to a degree that just wasn’t possible in the past.
These disputes can be settled and I believe will be settled by mutually agreed laws, perfectly in alignment with natural selection.
It’s also very brazen for a nation that is not party to the dispute to weigh in and make judgments on it especially when that nation (such as the United States) does not agree to be bound by the rules (The United Nations Law of the Sea) they expect others to follow.
As for fishermen being “murdered” that’s an odd and provocative word. I’m aware of fishermen being killed (or at least of reports of it) here is one regarding a Vietnamese fisherman killed by Malaysian forces;
Was he murdered ? I can’t say. Murder has a very specific meaning, it’s a homicide contrary to the law. I don’t know enough about the specific circumstances to say if it’s murder or not and I doubt you do either.
As for Imperial power or Chinese power, it is wrong to oppose Chinese power simply because it’s Chinese power (or Imperial). It has to be judged on the particulars of the situation. A power isn’t wrong because it’s imperial (or imperial because it’s wrong) it’s just a system of organization that may or may not work. It could be the case (in fact probably is the case) that any organization of power will over reach and collapse as it reaches the hard limits of what it can achieve, but that’s social Darwinism at work again. But we have to reach above and beyond or particular partisan or parochial concerns and align ourselves with greater powers.
I note the illegality of the 9 dash line was rather glossed over. A general comment about other disputes also won't really wash. No other nation has arbitrarily created such a zone. No other nation has built an artificial island as a power projection platform. It is within this zone that Chinese ships have rammed and sunk various nations fishing boats leaving the surviving crew members to die. This kind of behaviour is not that of a nation willing to respect laws. The 9 dash line was declared illegal by the PCA in 2016. China rejected that judgement but you refer to mutually agreed laws. The last time I checked China was a member of UNCLOS. The case was brought by The Phillippines by the way.
The issue with empires is that they take. They use force to take and the force is not exercised in nice ways. Empires expand, they are inherently inefficient and need a constant source of raw materials and commodities to survive. Other nations are perfectly justified in resisting them and even banding together to resist. China could of course try to cooperate and compete on the open market. This would be a perfectly legitimate behaviour in the situation. Instead it shows that internationally it is still immature and mired in the past by acting in an imperial manner.
Good point about the 'murder'. We are brothers. We have been evolving towards prosocial behaviour. Not fast, enough it appears. I am not a great fan of the great filter, but it might at least explain some small part of the Great Filter. I have recently been investigating theory of rape- you wouldn't believe the cruel truths I've discovered.
54% of women are raped before their 18th birthday 50% of paedophiles are under 25 and of above average appearance- young love is occasionally a problem, but most theses guys are serial.
Thank you for your insightful comment. Knowing nothing about keiretsu myself, it’s helpful to have the balance of your knowledge about it with Geary’s.
I agree with your overall comment and you bring up the elephant in the room with your second point. China is acting aggressively, whether it’s Taiwan, the India border, Senkaku etc. Hard to see how they would be placated with their own sphere of influence.
Taiwan is a leverage point meant to make America fold on trade- which they have, despite the rhetoric- those 549 specific tariff exemption were the goal, at least until 2025.
I think you have done some excellent work here, with the basic “Keiretsu” concept providing a skeletal frame work for solving some much larger social problems.
The Thucydides trap and re-developing manufacturing may not even be the most pressing problem it can help solve, or at least it’s a higher order problem and as the keiretsu model of both vertical and horizontal integration could scale right down to the neighborhood or street level, it could also solve pressing social problems there.
I'm “just spitballing here” but how do these ideas strike you ?
Churches, volunteer associations and schools keiretsu integrated with city services such as fire, police and city works for environmental, quality of life and law enforcement problems. Labor and local knowledge go up the chain, expertise, accreditation(legal authority) finance (or at least banking services) go down the chain to local nodes or modules that could also expand horizontally to fill gaps in adjacent areas.
I have been watching clips of “The Wire” recently and this piece got me thinking. I realize it’s not a peer reviewed academic journal but it’s pretty damned good and anyway that’s the way I get a lot of my information.
In this clip a large amount of forensic evidence in a crucial multiple homicide case has been ruined after the city cut the lab’s budget and a temp worker lacked some literacy skills. This got me thinking, how much does it really take to run a crime lab and could it be done on the local level ? Sure, a part of it would require advanced scientific training but only a part. I have difficulty in believing that the majority of their work can’t be done by technicians with the intelligence and talents of a decent plumber or HVAC worker.
The difficulty would be in the training, support, accreditation and certification. This could be provided vertically, from higher up in the chain along with part time support from experts for the particularly tricky jobs.
Nodes or modules in the network that are over worked in their area would be supported by other horizontal nodes with spare capacity. Each node could have a contract with their local political authority but not an exclusive contract so they would be at least partially independent. Office space and utilities are provided locally, specialized hardware and consumables are provided by another node in the network.
It’s just one example of course, but I think the basic model is sound and could fit a myriad of situations.
'This got me thinking, how much does it really take to run a crime lab and could it be done on the local level ? Sure, a part of it would require advanced scientific training but only a part.'- we really benefit here from universities- they've been at the forefront of several high profile criminal cases. It's also a bizarre benefit of the fact that the UK, whilst great at innovation, is terrible at monetisation. There is never a lack of companies willing to help fund our forensics in public/private partnerships, with a view to monetising it for the rest of the world. Ironically, one of the reasons for the cut-backs you mentioned, is the growth of Police Departments holding huge amounts of BodyCam footage with cloud services.
Funny, you should mention devolved and localised services, one of the things I've been thinking about recently is larger construction companies running a type of small firm franchise model, where the local firm gets to use their supply chain and business infrastructure for a fee.
I had one guy feel me out about becoming a doctor. Apparently our local university, the UEA was working in co-operation with university hospital resources to churn out doctors from 40 year old plumbers, and anyone who has the intelligence. I'm sure the same thing could be done with forensics, and in general our universities need to become more technically orientated.
Good comment. On the subject of churches and community centres, we should scrap welfare as it currently exists and convert the main three welfare types into an income supplement for the poor. For the average eligible recipient these three benefits work out at $7K per year. Instead of welfare stopping with the first dollar earned, it should be scaled out as people earn, at a rate of between 25c and 33c per dollar.
More people would work, because we would be removing the disincentive. There public labour could be diverted to more useful things, like manning 24-7 mental health lines (which otherwise costs a lot in police and EMT resources). Having been unemployed for a short while and having volunteered to work with the unemployed as part of a short stint volunteering with a charity, I can say that although there are some who are lazy, for the most part it is a matter of chronic demoralisation- many believe they have nothing of value to offer.
This is where the churches and community centres would come in- they could host weekly 12 steps style group sessions aimed at getting people back into work, with the help of voluntary mentors. A conservative I know told me that since welfare came in, employment in the bottom quintile has dropped from 70% to 36%. Of course, some of this is deindustrialisation, but I can't see why, by removing the main disincentive to work, we wouldn't see this figure rise to around 60%.
I used to be a big Andrew Yang fan- I now accept that his UBI plan is unworkable because it costs too much, but my far more modest scheme would be cost neutral, help people back into work and raise income levels for the poorest. Besides, we already know these types of things are incredibly popular- when Gordon Brown removed the 10% tax band, he only cost the average low income worker around £300, but he was despised for it- people in all parts of the economics spectrum thought tit was needlessly callous. People like the idea of helping people less fortunate than them, provided the money doesn't contribute to bureaucracy and provided it goes to people who are trying to work.
“To understand the Chinese ethos and philosophy, particularly in relation to their perceptions of the West, we need to understand a few basic factors. First, irrespective of the issue of Hong Kong, there are two China’s one comprising of the 300 million or so living in coastal areas, largely cosmopolitan and very much an advanced economy- the other poorer and more ideologically orientated towards Communist doctrine at the party level, despite various ongoing economic development projects managed by a meritocratic class of party technocrats and very able managers.”
I don’t know Ilia. There’s different ways to interpret this paragraph. The main one for me was ideology differences between the west and China. I personally get the feeling that China tries more toward understanding our ideology than we do toward understand theirs. There’s obviously a major power shift going on yet the US current administration may not be let’s say the best at recognising a need for more nuanced and diplomatic co-operations. Other than the weakest Presidency anybody can remember we have seen Kamakazi Kamala go over to Vietnam and insult them so much they’re ambassadors immediately contacted the Chinese to show allegiance to them. But the best example I can think of to outline a lack of character in understanding the shift in global dominance is Victoria Nuland’s current diplomatic trip to Russia.
Nuland is detested in Russia who hold her responsible for the Mahjong coup in Ukraine. She’s married to Robert Kagan and is a neocon high priestess. The US had to take various Russians off their sanctions list in order for Moscow to even accept her there, such is she despised. The Russian deputy foreign meeting described the meeting they had earlier today in terms of Nuland making all kinds of strong demands and not listening when they outlined reasons why they would not agree. She lectured them (she speaks Russian fluently) and made insistent demands. The talks went so bad that the Russians are talking about a degradation in relations with the US that are so bad that they may cut diplomatic ties entirely. Complete relations breakdown situation.
Anyways this is a prime example of what not to do. The US could of chosen no worse a diplomat and one must on that note ask the question why her? But my initial point was that great diplomacy at this level by great diplomats is there as a go between of statesmanlike gentlemen that are the best of representatives of ones nation and the larger the need for sensitivity the higher calibre required of such a diplomat; people that understand a lot of the nuance and complexities of another nations concerns and who can tactfully find that all important middle ground.
What the US has done has sent a neocon Royal ideologue to a peace-making opportunity. So what message does that send? With Russia and China’s romance getting cosier and militarily and financially as strong as the US which is weakening by the day, is it not of supreme importance that these people lose the attitude and recognise the importance of what the implications of their positions are and make some effort to understand what China and Russia is and are. I’m sure they understand us quite well by now.
"Most advanced economies now wish to grow their mid to high value manufacturing" this is not true. The ones in EU do not. They have succumbed to the green, red, trans and covid lunacy whereas already one of these plagues on its own could bring us down. Covid mandates just made very very apparent that the West is not what it thinks it is. The freedoms that helped us to achieve the wealth we enjoyed are gone. That makes efficient work difficult and open discussions almost impossible. Then there is the energy policy in most of EU but specifically in Germany. This has a potential to bring the whole EU crashing down and there is no sign of Germans slowing down on that. They openly want to dismantle industry - from policies known to me from recent history it is only equal to NK original sins and to Pol Pot's one. The commies from the past learned after few years and few millions deaths (in China these were few dozens millions) what they should in any case avoid. German greens are not there yet.
Plus industrial and economic policy is not the only thing to be taken into account. Biden making impression that the only coherent act he is capable of is shitting his pants is a perfect for a moment of truth. Aggressive Chinese military exercises may be a sign that US either gets its act together or will have to see if its military and economy can cope with fall of Taiwan.
I concur with most of your viewpoints, especially the intrinsic value of having a job. How do you see the impact of AI and the possible job redundancies this could entail?
I've thought long and hard about this one, and share your concern over automation. I think one of things we will have to do is engage in a form of business archaeology. Basically, every time a new innovation is introduced it wipes out most of the existing market suppliers- primarily because of price, but also because the older product is seen as staid and unfashionable. To think that there was a generation which ripped up old red quarry tiles (which are worth quite a bit) in order to replace them with lino.
But here's the thing, over time these defunct businesses might otherwise find there was a market for their goods. Our Western societies could do yesteryear surveys to see which types of products people might begin to buy again. To an extent this already exists- you can buy some pretty nice handmade wood furniture online- but I would imagine that there might be an even larger market for it, if people were more cognisant of the options.
How to attract the seed money for it, though? Maybe give large estates an inheritance tax exemption for high labour investments, or make high labour goods made since the incept date inheritance tax exempt, as heirlooms. If anything, we need to speed up the rate of global labour creation- the main cause of deforestation is poverty, although thankfully this has slowed in the past decade: https://www.humanprogress.org/what-do-the-numbers-show-about-global-deforestation/
Yes but I was thinking specifically of its effect on economic growth not directly but indirectly. As you put it;
"Otherwise, how do we explain the Chinese economic miracle, when most of their manufacturing barely scrapped a 6% profit margin- only just enough to cover tax, risk and inflation? This answer lies in the multiplier effect of the labour, acting as the seed for all manner of local consumer orientated goods and services."
I believe this is a very important point which western companies don't often fully understand. This lack of seeding would be the immediate effect of AI on an economy and in my opinion one that is often overlooked. I am not anti AI by any means, it is part of our development but I do see some downsides if it is not thought through. Specifically as western companies chase profit at all costs and would likely use this technology as a way to increase said profits to the detriment of the economy as a whole. Additionally China is far more advanced with this technology than the west is, what possible threat does that hold for us?
Hmm. Well, I think that first technology eats labour then it eats capital. It's Eric Weinstein's thought, but a good one I think. The only exception seems to be with branded goods, where the brand owner gets to keep an impressive level of profit margin. The problem is as labour shrinks, so will its market. This is one area where Western and Chinese customers tend to differ- younger Chinese will stint on basics for the prestige the brands bring, Western customers wont.
With respect to who owns the best AI it depends upon how it's used and how wise the user is- the game theory would suggest that the world needs a degree of inequality (income differentials create labour, both in an intra- and inter- sense), but broadly speaking we also need stable advanced consumer economies in both the East and the West.
Clearly you’ve given some thought to the issues involved here and have come up with a novel idea about what to do, however I have some questions and potentially some pushback.
First, I’d like to say that one factor in averting or bringing on the next world war is what happens with Taiwan.
Setting that aside, you seem to be suggesting essentially that large corporations form vertically integrated supply chains similar to Carnegie back in the day, localized and regionalized, creating their own spheres of influence. Within each sphere, a conglomeration would essentially be a monopoly, is that correct? And conglomeration would essentially agree amongst themselves to divide the world into spheres of influence and not to compete with one another? Meaning that everybody gets a piece of the pie and nobody takes a bite of someone else’s piece?
If that’s your suggestion, I can see some problems arising.
I also have to ask what role governments play? Do they create and maintain the spheres? Do they align with the conglomerations to rule each sphere with some kind of corporatism?
There wouldn't be monopolies, but many companies might conglomerate to achieve regional scale and resource sharing. But the market is heading that way anyway- just look at Amazon.
It's more of a decentralised cell type structure I'm thinking of, with specific cells located within the region they are trading into. Basically, having localised fabrications facilities and innovation centres, allows for all manner of productivity and design innovations, although on the design front it would be highly likely that design would likely become externalised and bought-in for many companies.
Perhaps I wasn't clear- I was talking about a more horizontal model, where companies diversified their assembly and parts function into specific trading zones, rather than locating them in one central hub, and trading into other zones.
An interesting and thoughtful essay but I think with some misconceptions. Firstly as you point out the West does not understand Chinese cultural nuances but this is reciprocal. The Chinese don't understand the West either particularly how divergence from the party line can be tolerated.
The second point which I think is relevant is that China is a budding empire aiming to seize as many resources and as much power as it can. It exhibits all the arrogance and recklessness that an expanding empire normally shows. Here in the Asia Pacific we are well aware of the expansionism, bullying and downright naked power grabs that accompany China's growth. The Japanese dispute with the Chinese over the Senkaku Islands is a case in point. There is no historical evidence for Chinese ownership but that hasn't stopped the Chinese government from claiming them.
It's interesting that you advocate a keiretsu approach. Generally this has been acknowledged as a failure leading to corruption and exploitation. It also goes against the Chinese goal which is domination. This what other countries have found with the belt and road initiative. The help and the loans don't turn out to be generous.
Part of Chinese expansionism can be explained by fish. They've depleted their coastal nurseries through a mixture of heavy industry and farming as well as overfishing- and the Chinese demand for fish has long since outstripped their ability to catch them locally. Of course, this is not the only reason- the Chinese fear the type of anti-trade hegemony embargo of its growing trade dominance in the region, of the type enacted by Cordell Hull as a prequel to the War in the Pacific. They are fearful of the strategic prevention of vital component parts like semi-conductors being withheld, particularly as a means of IP enforcement.
The other thing to remember is while in the past the Chinese have been willing to play a waiting game, the ground has shifted in that they now see they only have limited time window in which to enact their goals. For one things countries like Japan are beginning to align against them. For another they have a pending population bomb. It is ironic both Washington and Being believe they will lose the struggle for superpower supremacy, with America's fears focused on decline, and China's centred on demographic change.
I chose the keiretsu model because it was a historical model which worked for a time, but I was perhaps unclear that I saw this being adapted to a distributed model, which was more horizontal than vertical. My reasons for this were simple- without a third party mechanism shifting manufacturing trade from a global to a regional level, I see international relations deteriorating substantially, as an increasing focus on labour as opposed to capital embeds friction between foreign states.
On the subject of corruption and exploitation I wasn't advocating for some of the dodgy financial reporting practices seen in the keiretsu model, but I do think it is perfectly normal business practice to trade the short-term pain of making losses to price your competitors out of the market, in order to achieve greater market share in the long-term. Here in the West, we are too susceptible to the vagaries of speculators in financial markets- it leads to a terminal short-termism which cannot see beyond the quarter or the financial year. Real value is only achieved over the long-term- creative destruction may unleash capital, but this ignores the modern paradigm that it is far easier to release capital from productive assets than it is to turn capital into productive, profit yielding businesses.
Currently, PE ratios hover around 20-25. As someone whose family used to own commercially productive properties, a can assure you that historically PE ratios were closer to 5 to 7, and only rose to x10 for top-rated companies listed at the prestige end of stock markets. Our current level of valuations is structurally unsound- it is only the global surplus of capital which is driving this trend. What investors in companies like FAANG tend to forget is that the market is fickle, and God help you if your consumers decide they really don't like you. We've already seen a taste of this with the Gina Carano incident and Disney+- the only company I would say is largely immune is Amazon, but only because customers love their service.
I take your points, but generally I didn't want to be too China critical because I am sure somewhere there is an AI programmed to look for any references to the Thucydides Trap. It used to be something of a Chinese State obsession. Personally, I would like to see a return to the cautiously friendly rules-based trade which characterised the Kissinger era of globalism. A more macro level analysis of the game theory which governs our economics would lead us to the conclusion that we need each other, especially if we want to conquer the many challenges we are going to face in the 21st century. By now, we should be mining the moon for rare earth minerals.
Indeed I would also like to see a return the Kissinger type trade world but regretfully I don't think it's going to happen. With China what is important is what the party thinks and more importantly what president for life (Emperor Xi) and his coterie want. Here actions speak louder than words and China's actions are aggressive and expantionist.
It really comes down to several factors. The party is repressive and brooks no opposition but realised that out and out repression isn't going to work in an environment like China. Chinese history (and party functionaries are very aware of this) is replete with examples of repressive governments failing. So there is a kind of bargain with the population - accept our rule and your lives will get better. This has worked up until now but the inherent inefficiency of the command and control/communist system means that the bargain is under a lot of strain particularly, as you note, in the hinterland. The Communist Party can't allow more freedom as this would result in an existential threat to itself and possibly the breakup of China. Thus it falls back on nationalism and expansionism. The classic imperial behaviour as it were.
The Chinese fishing fleet is a case in point. It is both a quest for more resources and a naked power projection into other countries territory. Illegal fishing isn't happening without the Chinese authorities approval and direction. It's such a threat that the Indonesians have sunk Chinese fishing boats.
Rightly or wrongly the US is perceived by China as fading. This creates the opportunity for expansion. It assauges the nationalist urges the party has encouraged and nutured. The inefficiency and corruption of the party can be covered up by expanding (providing a bigger pot for everyone) at the expense of weaker nations and by succeeding in this expansion providing an impression of competence. If you succeed in the international sphere you are judged successful at home. I very much see your point about being China critical but one wants to avoid missing the point. None of China's actions are intended to benefit anyone but China and particularly the party itself.
Great comment. One of the unfortunate things about the Chinese system of government is that it lacks the internal tension of a democratic system- in democracies, ruling parties can always point to the other side as say 'well, we might be bad, but just look at those other guys- they're crazy!'. In these circumstances, tension within the population can accumulate in two- either it is focused towards the party or it is directed externally.
My fear with animosity over trade and the reduction in living standards it might be bring, is that it might force Chinese authorities to focus growing internal discontent towards anger at the West. When populations get mad at each other, governments are forced to align their policy inline with the populations sentiments- it's the only way to survive politically, even in authoritarian systems.
And the CCP is paranoid about its population. It's why the survey their population on matters as banal as happiness with the local garbage collection service. The movement to improve air quality sprang almost from nowhere and they are deeply worried that the same might happen again.
One of the problems which the Chinese government has to contend with is changing attitudes by generation. The older generation were rightly terrified of instability and the misery is could bring. The younger generation has no such qualms, many are 'lying flat' on the job, because working hard at education hasn't produced the panacea they were promised. In many ways it's an Asian version of Peter Turchin's elite overproduction.
The authorities are misdiagnosing the problem. What they really want to do is recruit higher IQ female students from poorer countries across Asia, with the promise of training them to become nurses and care workers. It could be a part-private form of self-supporting social care. But the key wouldn't be to create senior citizen activity centres and respite homes for those unable to physically support themselves anymore- instead it's all about providing potential partners for a generation in which many find themselves priced out of the dating game (one needs property to marry as a male in China, and repayments are x46 average earnings).
The malaise amongst the young might be somewhat to do with disappointment over employment opportunities, but the far more decisive factor is a lack of the ability to date for many. The need to import bright girls in significant numbers- and elderly Chinese women probably wouldn't mind giving tips to foreign girls for doing shopping or a little cleaning, if it gave them the chance to introduce the girl to their grandsons...
The failure of government is the inability to look at the underlying humanistic issues beneath the surface.
It's already started especially in respect to Japan. Every so often there would be a surge of anti-Japanese nationalism with a boycott of Japanese business and attacks on the Japanese embassy. This was normally linked to a stupid statement by a right wing Japanese politician concerning the war or the Nanjing massacre. The government (and by this I mean the bureaucracy - the real rulers in Japan) really didn't want to have to deal with this and so shut these people up. The important thing is that the Chinese government had to work hard to shut these outbreaks down. The forces released were very potent. This is part of the reason for the expansionism; to direct passions away from the internal environment. Directing it towards the West is not an issue and this used to happen during the Cultural Revolution. An external enemy or threat is always a useful diversion especially for authoritarian governments.
What you say about dating is interesting. Mainland Chinese girls have a long checklist of characteristics a potential mate should have. These include physical characteristics (interestingly wearing glasses is fine it indicates brains), job, background etc. Whilst there is some room for romance in Chinese society it is limited and dating and marriage is rather a cold business. Chinese men used to prefer poorly educated submissive peasant women. The intelligent independent minded city woman was a bit too much for them to handle. However, with status becoming a more important factor (previously it was enough if you were a party member) there is a need to adjust. This is proving difficult for some.
I presume you have considered all of this carefully and aren’t operating under some anti Chinese bias, but you are using terms for some well understood economic and political concepts in a very unusual way.
“China is a budding empire aiming to seize as many resources and as much power as it can.” Unless you are talking exclusively about some hypothetical future China then the first part is false and the second point is perfectly normal. China purchases resources on international markets, which is not the same thing at all as seizing them. And as power in it’s various forms is required to do literally anything at all and as China has many things it not only needs but morally must do then it needs to gain that power and is morally right in doing so. How can any entity legitimately claim the right to limit the power of another without claiming the right for the other to do likewise ?
I believe it was Lu Xun who said (in the 1930s) that what China needs is first to feed and clothe itself and then to advance. Now that China has the power to feed and clothe itself it needs and will continue to need the power to advance. It is morally wrong for any other nation to stop such an advance, especially if the motivation for stopping this advance is not a threat to that nations own safety by a threat to it’s relative position in the global hierarchy.
“It also goes against the Chinese goal which is domination.”
For centuries, perhaps as long as from the bronze age to the 1800s, China was the largest, richest and most powerful nation in the world. Was this global pre-eminence the same as global domination ? And if so does that apply to other nations in the world or just to China ?
I remember reading in a recent Curtis Yarvin piece that if you want to watch Washington foreign policy analyst’s head spin ask him to explain the difference between The American led global order and American global domination. What are the rules here ? Can we switch around the nations, take out the euphemisms and still make domination sound reasonable ?
“This what other countries have found with the belt and road initiative. The help and the loans don't turn out to be generous.”
And also here;
“None of China's actions are intended to benefit anyone but China and particularly the party itself.”
Are business deals and finance arrangements required to be generous and intended to help the other party ? You maybe aware of this famous Adam Smith quote;
“It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest”
We don’t expect the IMF or the City of London to authorize loans based on benevolence or generosity but on laws and established rational business practices. We should expect Beijing to do the same. Their morality and utility should be assessed rationally on tangible results not abstract ideas of intent. The overall tangible effect of the rise of China not only for it domestically but also internationally has been enormously positive.
Take the case of Australian iron ore exports to China for example. China’s building boom and steel mills have made Australia more powerful, both in the liquid power from the 39 billion dollars it earned last year and in hard power from the Chinese steel that it imported. Without China that power would all still just be red dust in the desert. What nation has the right to restrict Australia’s rights and power to advance ?
I’m well aware of the fallacies of “what aboutism” and false equivalency but what are the rules supposed to be and are they applied equally ?
I’ll finish with one more quote, Immanuel Kant’s categorical imperative
"Act only according to that maxim whereby you can, at the same time, will that it should become a universal law."
So, sit down and negotiate as if you don’t know which team you’re on and which slice of cake will be yours, then you will know it’s a fair deal or a just law.
I may be wrong but what seems to be advocated here is Social Darwinist approach to resources and international relations. This was characteristic of imperial states and frequently led to wars of conquest, exploitation and gross inefficiency. There is nothing wrong with China trying to advance but it should not be at the expense of other smaller nations. China also exists in an international environment with other nations and a limited resource pool. If China were competing fairly this would be of no issue but evidence indicates this is not so. What is your opinion on the illegal 9 dash line encompassing the Spratley Islands or the murder of non-Chinese fishermen in the same region? Are these to be considered acceptable acts?
If I read your initial paragraphs correctly this is exactly what you are advocating. Furthermore, I get the impression that you also seem to advocate that no other power has the right to resist China ('It is morally wrong for any other nation to stop such an advance'). This is very much an imperialist perspective. All nations have different levels of power and leverage but all also have duties and responsibilities as well as rights. The imperial power ignores its duties and responsibilities which is what China is currently doing.
It might be instructive to read T. H. White's 'The Once and Future King'. It's probably one of the best expositions on power and its consequences.
I do advocate for a Darwinist approach in social and international relations, it’s nothing personal about Darwin of course, it’s just that he articulated certain facts of reality that people need to be aware of in order to work with them. I don’t think humans should work against nature anymore that a beetle or a dog should.
I rather like the old stoic metaphor that said the relationship of people to nature (or God) is like a dog tied behind a cart. It can run with the cart or get dragged behind it and suffer in the process.
Natural selection isn’t the brutal fight of all against all as some might have you believe, mutually beneficial cooperation is everywhere. Bees aren’t stealing pollen from flowers, they are engaged in a mutually beneficially symbiotic relationship with them. I think the iron ore trade between Australia and China is analogous, they both get something out of it that they wouldn’t have otherwise.
If you are aware of a smaller nation that has suffered from it’s relationship with China then I would like to hear of it because I’m not aware of any. Certainly the relationships could be more beneficial but that’s considering a hypothetical, the answer to which would be more trade and cooperation not less.
As for the maritime border disputes in the South China seas, there are many parties that dispute that have borders conflicts with each other, China is only one. Possession of those islands has never been settled and an important part of that dispute and why it has become “hot” now is the fact that we now have the technology to exactly define maritime borders to a degree that just wasn’t possible in the past.
These disputes can be settled and I believe will be settled by mutually agreed laws, perfectly in alignment with natural selection.
It’s also very brazen for a nation that is not party to the dispute to weigh in and make judgments on it especially when that nation (such as the United States) does not agree to be bound by the rules (The United Nations Law of the Sea) they expect others to follow.
As for fishermen being “murdered” that’s an odd and provocative word. I’m aware of fishermen being killed (or at least of reports of it) here is one regarding a Vietnamese fisherman killed by Malaysian forces;
https://www.bangkokpost.com/world/1969755/malaysia-coast-guard-kill-vietnamese-fisherman-in-s-china-sea-clash
Was he murdered ? I can’t say. Murder has a very specific meaning, it’s a homicide contrary to the law. I don’t know enough about the specific circumstances to say if it’s murder or not and I doubt you do either.
As for Imperial power or Chinese power, it is wrong to oppose Chinese power simply because it’s Chinese power (or Imperial). It has to be judged on the particulars of the situation. A power isn’t wrong because it’s imperial (or imperial because it’s wrong) it’s just a system of organization that may or may not work. It could be the case (in fact probably is the case) that any organization of power will over reach and collapse as it reaches the hard limits of what it can achieve, but that’s social Darwinism at work again. But we have to reach above and beyond or particular partisan or parochial concerns and align ourselves with greater powers.
I note the illegality of the 9 dash line was rather glossed over. A general comment about other disputes also won't really wash. No other nation has arbitrarily created such a zone. No other nation has built an artificial island as a power projection platform. It is within this zone that Chinese ships have rammed and sunk various nations fishing boats leaving the surviving crew members to die. This kind of behaviour is not that of a nation willing to respect laws. The 9 dash line was declared illegal by the PCA in 2016. China rejected that judgement but you refer to mutually agreed laws. The last time I checked China was a member of UNCLOS. The case was brought by The Phillippines by the way.
The issue with empires is that they take. They use force to take and the force is not exercised in nice ways. Empires expand, they are inherently inefficient and need a constant source of raw materials and commodities to survive. Other nations are perfectly justified in resisting them and even banding together to resist. China could of course try to cooperate and compete on the open market. This would be a perfectly legitimate behaviour in the situation. Instead it shows that internationally it is still immature and mired in the past by acting in an imperial manner.
Good point about the 'murder'. We are brothers. We have been evolving towards prosocial behaviour. Not fast, enough it appears. I am not a great fan of the great filter, but it might at least explain some small part of the Great Filter. I have recently been investigating theory of rape- you wouldn't believe the cruel truths I've discovered.
54% of women are raped before their 18th birthday 50% of paedophiles are under 25 and of above average appearance- young love is occasionally a problem, but most theses guys are serial.
Thank you for your insightful comment. Knowing nothing about keiretsu myself, it’s helpful to have the balance of your knowledge about it with Geary’s.
I agree with your overall comment and you bring up the elephant in the room with your second point. China is acting aggressively, whether it’s Taiwan, the India border, Senkaku etc. Hard to see how they would be placated with their own sphere of influence.
Taiwan is a leverage point meant to make America fold on trade- which they have, despite the rhetoric- those 549 specific tariff exemption were the goal, at least until 2025.
I think you have done some excellent work here, with the basic “Keiretsu” concept providing a skeletal frame work for solving some much larger social problems.
The Thucydides trap and re-developing manufacturing may not even be the most pressing problem it can help solve, or at least it’s a higher order problem and as the keiretsu model of both vertical and horizontal integration could scale right down to the neighborhood or street level, it could also solve pressing social problems there.
I'm “just spitballing here” but how do these ideas strike you ?
Churches, volunteer associations and schools keiretsu integrated with city services such as fire, police and city works for environmental, quality of life and law enforcement problems. Labor and local knowledge go up the chain, expertise, accreditation(legal authority) finance (or at least banking services) go down the chain to local nodes or modules that could also expand horizontally to fill gaps in adjacent areas.
I have been watching clips of “The Wire” recently and this piece got me thinking. I realize it’s not a peer reviewed academic journal but it’s pretty damned good and anyway that’s the way I get a lot of my information.
https://www.youtube.com/watch?v=YPwxfhL06AE
In this clip a large amount of forensic evidence in a crucial multiple homicide case has been ruined after the city cut the lab’s budget and a temp worker lacked some literacy skills. This got me thinking, how much does it really take to run a crime lab and could it be done on the local level ? Sure, a part of it would require advanced scientific training but only a part. I have difficulty in believing that the majority of their work can’t be done by technicians with the intelligence and talents of a decent plumber or HVAC worker.
The difficulty would be in the training, support, accreditation and certification. This could be provided vertically, from higher up in the chain along with part time support from experts for the particularly tricky jobs.
Nodes or modules in the network that are over worked in their area would be supported by other horizontal nodes with spare capacity. Each node could have a contract with their local political authority but not an exclusive contract so they would be at least partially independent. Office space and utilities are provided locally, specialized hardware and consumables are provided by another node in the network.
It’s just one example of course, but I think the basic model is sound and could fit a myriad of situations.
So what do you think ?
'This got me thinking, how much does it really take to run a crime lab and could it be done on the local level ? Sure, a part of it would require advanced scientific training but only a part.'- we really benefit here from universities- they've been at the forefront of several high profile criminal cases. It's also a bizarre benefit of the fact that the UK, whilst great at innovation, is terrible at monetisation. There is never a lack of companies willing to help fund our forensics in public/private partnerships, with a view to monetising it for the rest of the world. Ironically, one of the reasons for the cut-backs you mentioned, is the growth of Police Departments holding huge amounts of BodyCam footage with cloud services.
Funny, you should mention devolved and localised services, one of the things I've been thinking about recently is larger construction companies running a type of small firm franchise model, where the local firm gets to use their supply chain and business infrastructure for a fee.
I had one guy feel me out about becoming a doctor. Apparently our local university, the UEA was working in co-operation with university hospital resources to churn out doctors from 40 year old plumbers, and anyone who has the intelligence. I'm sure the same thing could be done with forensics, and in general our universities need to become more technically orientated.
Good comment. On the subject of churches and community centres, we should scrap welfare as it currently exists and convert the main three welfare types into an income supplement for the poor. For the average eligible recipient these three benefits work out at $7K per year. Instead of welfare stopping with the first dollar earned, it should be scaled out as people earn, at a rate of between 25c and 33c per dollar.
More people would work, because we would be removing the disincentive. There public labour could be diverted to more useful things, like manning 24-7 mental health lines (which otherwise costs a lot in police and EMT resources). Having been unemployed for a short while and having volunteered to work with the unemployed as part of a short stint volunteering with a charity, I can say that although there are some who are lazy, for the most part it is a matter of chronic demoralisation- many believe they have nothing of value to offer.
This is where the churches and community centres would come in- they could host weekly 12 steps style group sessions aimed at getting people back into work, with the help of voluntary mentors. A conservative I know told me that since welfare came in, employment in the bottom quintile has dropped from 70% to 36%. Of course, some of this is deindustrialisation, but I can't see why, by removing the main disincentive to work, we wouldn't see this figure rise to around 60%.
I used to be a big Andrew Yang fan- I now accept that his UBI plan is unworkable because it costs too much, but my far more modest scheme would be cost neutral, help people back into work and raise income levels for the poorest. Besides, we already know these types of things are incredibly popular- when Gordon Brown removed the 10% tax band, he only cost the average low income worker around £300, but he was despised for it- people in all parts of the economics spectrum thought tit was needlessly callous. People like the idea of helping people less fortunate than them, provided the money doesn't contribute to bureaucracy and provided it goes to people who are trying to work.
“To understand the Chinese ethos and philosophy, particularly in relation to their perceptions of the West, we need to understand a few basic factors. First, irrespective of the issue of Hong Kong, there are two China’s one comprising of the 300 million or so living in coastal areas, largely cosmopolitan and very much an advanced economy- the other poorer and more ideologically orientated towards Communist doctrine at the party level, despite various ongoing economic development projects managed by a meritocratic class of party technocrats and very able managers.”
I don’t know Ilia. There’s different ways to interpret this paragraph. The main one for me was ideology differences between the west and China. I personally get the feeling that China tries more toward understanding our ideology than we do toward understand theirs. There’s obviously a major power shift going on yet the US current administration may not be let’s say the best at recognising a need for more nuanced and diplomatic co-operations. Other than the weakest Presidency anybody can remember we have seen Kamakazi Kamala go over to Vietnam and insult them so much they’re ambassadors immediately contacted the Chinese to show allegiance to them. But the best example I can think of to outline a lack of character in understanding the shift in global dominance is Victoria Nuland’s current diplomatic trip to Russia.
Nuland is detested in Russia who hold her responsible for the Mahjong coup in Ukraine. She’s married to Robert Kagan and is a neocon high priestess. The US had to take various Russians off their sanctions list in order for Moscow to even accept her there, such is she despised. The Russian deputy foreign meeting described the meeting they had earlier today in terms of Nuland making all kinds of strong demands and not listening when they outlined reasons why they would not agree. She lectured them (she speaks Russian fluently) and made insistent demands. The talks went so bad that the Russians are talking about a degradation in relations with the US that are so bad that they may cut diplomatic ties entirely. Complete relations breakdown situation.
Anyways this is a prime example of what not to do. The US could of chosen no worse a diplomat and one must on that note ask the question why her? But my initial point was that great diplomacy at this level by great diplomats is there as a go between of statesmanlike gentlemen that are the best of representatives of ones nation and the larger the need for sensitivity the higher calibre required of such a diplomat; people that understand a lot of the nuance and complexities of another nations concerns and who can tactfully find that all important middle ground.
What the US has done has sent a neocon Royal ideologue to a peace-making opportunity. So what message does that send? With Russia and China’s romance getting cosier and militarily and financially as strong as the US which is weakening by the day, is it not of supreme importance that these people lose the attitude and recognise the importance of what the implications of their positions are and make some effort to understand what China and Russia is and are. I’m sure they understand us quite well by now.
Great point on Nuland, America’s foreign policy seems to be a bust all around really, doesn’t it? Mind you, nobody could be worse than Boris!
"Most advanced economies now wish to grow their mid to high value manufacturing" this is not true. The ones in EU do not. They have succumbed to the green, red, trans and covid lunacy whereas already one of these plagues on its own could bring us down. Covid mandates just made very very apparent that the West is not what it thinks it is. The freedoms that helped us to achieve the wealth we enjoyed are gone. That makes efficient work difficult and open discussions almost impossible. Then there is the energy policy in most of EU but specifically in Germany. This has a potential to bring the whole EU crashing down and there is no sign of Germans slowing down on that. They openly want to dismantle industry - from policies known to me from recent history it is only equal to NK original sins and to Pol Pot's one. The commies from the past learned after few years and few millions deaths (in China these were few dozens millions) what they should in any case avoid. German greens are not there yet.
Plus industrial and economic policy is not the only thing to be taken into account. Biden making impression that the only coherent act he is capable of is shitting his pants is a perfect for a moment of truth. Aggressive Chinese military exercises may be a sign that US either gets its act together or will have to see if its military and economy can cope with fall of Taiwan.
I agree with on Germany's energy policy- only the French and the Swedish are rational in Europe with their impressive, cheap and safe nuclear sector.
I concur with most of your viewpoints, especially the intrinsic value of having a job. How do you see the impact of AI and the possible job redundancies this could entail?
I've thought long and hard about this one, and share your concern over automation. I think one of things we will have to do is engage in a form of business archaeology. Basically, every time a new innovation is introduced it wipes out most of the existing market suppliers- primarily because of price, but also because the older product is seen as staid and unfashionable. To think that there was a generation which ripped up old red quarry tiles (which are worth quite a bit) in order to replace them with lino.
But here's the thing, over time these defunct businesses might otherwise find there was a market for their goods. Our Western societies could do yesteryear surveys to see which types of products people might begin to buy again. To an extent this already exists- you can buy some pretty nice handmade wood furniture online- but I would imagine that there might be an even larger market for it, if people were more cognisant of the options.
How to attract the seed money for it, though? Maybe give large estates an inheritance tax exemption for high labour investments, or make high labour goods made since the incept date inheritance tax exempt, as heirlooms. If anything, we need to speed up the rate of global labour creation- the main cause of deforestation is poverty, although thankfully this has slowed in the past decade: https://www.humanprogress.org/what-do-the-numbers-show-about-global-deforestation/
Yes but I was thinking specifically of its effect on economic growth not directly but indirectly. As you put it;
"Otherwise, how do we explain the Chinese economic miracle, when most of their manufacturing barely scrapped a 6% profit margin- only just enough to cover tax, risk and inflation? This answer lies in the multiplier effect of the labour, acting as the seed for all manner of local consumer orientated goods and services."
I believe this is a very important point which western companies don't often fully understand. This lack of seeding would be the immediate effect of AI on an economy and in my opinion one that is often overlooked. I am not anti AI by any means, it is part of our development but I do see some downsides if it is not thought through. Specifically as western companies chase profit at all costs and would likely use this technology as a way to increase said profits to the detriment of the economy as a whole. Additionally China is far more advanced with this technology than the west is, what possible threat does that hold for us?
Thanks for an interesting chat.
Hmm. Well, I think that first technology eats labour then it eats capital. It's Eric Weinstein's thought, but a good one I think. The only exception seems to be with branded goods, where the brand owner gets to keep an impressive level of profit margin. The problem is as labour shrinks, so will its market. This is one area where Western and Chinese customers tend to differ- younger Chinese will stint on basics for the prestige the brands bring, Western customers wont.
With respect to who owns the best AI it depends upon how it's used and how wise the user is- the game theory would suggest that the world needs a degree of inequality (income differentials create labour, both in an intra- and inter- sense), but broadly speaking we also need stable advanced consumer economies in both the East and the West.
Clearly you’ve given some thought to the issues involved here and have come up with a novel idea about what to do, however I have some questions and potentially some pushback.
First, I’d like to say that one factor in averting or bringing on the next world war is what happens with Taiwan.
Setting that aside, you seem to be suggesting essentially that large corporations form vertically integrated supply chains similar to Carnegie back in the day, localized and regionalized, creating their own spheres of influence. Within each sphere, a conglomeration would essentially be a monopoly, is that correct? And conglomeration would essentially agree amongst themselves to divide the world into spheres of influence and not to compete with one another? Meaning that everybody gets a piece of the pie and nobody takes a bite of someone else’s piece?
If that’s your suggestion, I can see some problems arising.
I also have to ask what role governments play? Do they create and maintain the spheres? Do they align with the conglomerations to rule each sphere with some kind of corporatism?
There wouldn't be monopolies, but many companies might conglomerate to achieve regional scale and resource sharing. But the market is heading that way anyway- just look at Amazon.
Makes sense. I think it’s a good idea for companies to invest in this kind of thing.
And yes, some companies have already done what I am suggesting, especially in high value branded sportswear.
It's more of a decentralised cell type structure I'm thinking of, with specific cells located within the region they are trading into. Basically, having localised fabrications facilities and innovation centres, allows for all manner of productivity and design innovations, although on the design front it would be highly likely that design would likely become externalised and bought-in for many companies.
Perhaps I wasn't clear- I was talking about a more horizontal model, where companies diversified their assembly and parts function into specific trading zones, rather than locating them in one central hub, and trading into other zones.
That makes more sense.