In my last post I pointed out that we are likely to win the current trade war with China because their consumer economy is hurting which makes them more dependent on trade with the U.S.
But the Chinese economy is growing much faster than ours and their population is four times as large. How do we protect ourselves from China’s looming world economic dominance?
One of our best weapons is a circumstance that is not widely understood and appreciated: The world is quietly getting better! In fact, half of the entire world’s 7.6 billion people are now either wealthy or middle class (see chart). A detailed discussion of the enormous human progress steadily taking place around the world is given by Steven Pinker in his recent work, Enlightenment Now.
The struggle for supremacy between the United States and China is a struggle between freedom and tyranny. Even though freedom has taken a few setbacks in recent years, there are still far more free countries than not-free countries around the world. (see second chart) Democracies seldom go to war with each other; rather they work out their problems peacefully. Even when China does surpass the U.S. economically, because the U.S. is a democracy, it will continue to have far more allies than China.
Furthermore, as prosperity continues to grow and spread more widely around the world, as it most likely will, freedom and democracy will also continue to flourish and spread more widely. This means that the U.S. should gain even more allies in the years ahead.
The U.S. cannot stop China from growing economically nor should it try to. After all, the wealthier China becomes the better off its people will be, and a more prosperous population will insist on more personal freedom.
But regardless, as a democracy, the U.S. has inherent strengths which should enable it to continue to lead the free world more many years to come.
“There cannot be two suns in the sky, nor two emperors on the earth,” Confucius, 551-479 BC
Our current trade war with China will probably be resolved soon because the Chinese economy is slowing down (see chart) and the current $250 billion in tariffs on Chinese exports to the U.S. are a major contributor to this. There is a good chance of achieving our two main goals of obtaining greater access to Chinese markets and ending intellectual property theft.
Chinese Economic Growth
But the Chinese economy is growing much faster than ours and China’s population is four times as large. China does have some very serious long term economic problems but it would be shortsighted for the U.S. to expect the Chines economy to collapse any time soon. In other words, the U.S. needs to prepare for the likelihood that the size of the Chinese economy will greatly exceed ours in the near future.
Anyone who is concerned about this should read the book, “The Hundred-Year Marathon: China’s secret strategy to replace America as the global superpower,” by Michael Pillsbury, a longtime U.S. China expert who speaks fluent mandarin.
The People’s Republic of China was founded by Mao Zedong in 1949. No later than 2049 China will almost surely be strong enough to challenge the U.S. dominated economic and geopolitical world order founded at the end of WWII.
The hundred year marathon strategy suggests that China should, for example:
Induce complacency to avoid alerting the opponent
Be patient – for decades or longer – to achieve victory
Steal the opponent’s ideas and technology for strategic purposes
Recognize that the hegemon will take extreme action to retain its dominant position
Always be vigilant to avoid being encircled or deceived by others
Mr. Pillsbury has performed a great service by spelling out in detail the immense challenge the U.S. will have in containing China’s growing power and influence around the world. How should the U.S. deal with this huge threat to its current world dominance? Stay tuned!
I describe myself as a non-ideological fiscal conservative and social moderate. I try to discuss political issues in an objective, rational manner and avoid personalities as much as possible. But it is hard to avoid expressing opinions about the most important political actor of all, the President of the United States.
Mr. Trump is a highly polarizing figure. Most people either strongly approve of how he is handling the office or else loathe him. I am in the middle. I recognize that he is crude, mentally clumsy and divisive but I also think that he is handling several difficult issues quite adroitly. For example:
The economy. Economic growth is much improved since Mr. Trump became President, hitting 3% in 2018 and likely to continue strong for at least another year or two. Faster growth means lower unemployment which, in turn, means more jobs and better paying jobs. This is a big boost especially for hourly workers. The economy was already picking up steam (because of deregulation) before the December 2017 tax cuts which were a big mistake because they badly increase the national debt.
Trade imbalance with China. Trump is tightening the screws on China’s unfair trade practices which is likely to lead soon to major improvements in how China interacts economically with the free world.
Our Current Wall on the Mexican Border
Immigration policy and the Wall. With roughly 12 million foreigners illegally residing in the U.S., current immigration policy is a big mess. Whether or not more wall is needed (see map), border security needs to be greatly enhanced. Mr. Trump rightly insists on getting this done.
Foreign policy. Trump is not an isolationist. How to handle the Middle East is our biggest foreign policy challenge. Withdrawing 2000 troops from the Kurdish area of Syria represents a possible shift away from Saudi Arabia and towards Turkey. Pulling Turkey away from the Russia-Iran axis could be a smart move.
Global warming. The evidence for man-made global warming is overwhelming. Carbon emissions are declining in the U.S. (because coal is being replaced by less expensive and cleaner natural gas) but still continuing to increase worldwide, in spite of the 2015 Paris Accords, because of massive increases in the use of coal by developing countries such as China and India. Trump is not doing anything to address this problem, but neither is he making it worse (as he is often accused of doing).
The above are a few of the areas where the Trump Administration is moving in the right direction, or at least avoiding the wrong direction, on difficult issues. Credit should be given where credit is due.
In my last post I stated that the U.S. has several big problems which must be successfully addressed in order to avoid national decline. They are:
Slow Economic Growth
Trade Imbalance with China
But which of these problems is the biggest threat? I now argue that some of these problems are less serious than others.
First of all, I am optimistic that global warming, as serious as it is, will be successfully kept under control by all nations working together to reduce carbon emissions. Already 60% of Americans, for example, agree that global warming exists and is man-made. As its’ effects, such as rising sea levels and more intense hurricanes, become more and more evident, the general public will strongly insist that effective action be taken to combat it and our elected representatives will respond accordingly. Further, as Chinese air becomes more and more polluted by the burning of coal, the Chinese government will also decide that strong measures must be taken. This will eventually lead to American-Chinese cooperation to set up worldwide standards to drastically shrink carbon emissions from fossil fuels and perhaps even to remove carbon from the atmosphere.
I am also optimistic that our trade imbalance with China will be successfully addressed in the near future. There is strong bipartisan support in Congress to deal with Chinese theft of intellectual property and excessive restrictions on American exports to China. It is a top priority of the Trump Administration to resolve this problem. Significant progress is therefore likely to occur.
Again, addressing slow economic growth is a major focus of the Trump Administration. Faster growth mean less unemployment, which in turn means more jobs and better paying jobs for American workers. Faster economic growth will likely remain a top priority for both political parties.
I am thus reasonably optimistic that three of our four biggest problems are politically solvable at least in the sense that significant progress can and will be made. How about the debt problem? This is much more difficult. Stay tuned!
I started this blog, It Does Not Add Up, in November 2012, right after the national elections, because I was so concerned about our exploding national debt. Of course, in the meantime it has been getting worse and worse.
A year ago I decided to put my money where my mouth is, so to speak, and enter the May 2018 Nebraska Republican Primary for the U.S. Senate seat held by Deb Fischer who had just voted for the 2017 tax bill which will raise our debt by a trillion dollars over a decade, even after allowing for increased economic growth. Fischer went on to win the Primary and then to win reelection to a second six year term last month.
I was so discouraged by my ineffectiveness on the debt issue that I stopped writing new entries for the blog after the May 2018 Primary.
But now I am back and we’ll see what happens. My intention is to continue dealing with the debt problem but in a wider context. I will be discussing other urgent problems as well. Mostly I will be focused on the following issues:
The National Debt now stands at 78% (for the public part on which we pay interest) of GDP and our huge annual deficits are continuously making it worse. As interest rates rise, interest payments on our huge debt will increase precipitously. This will lead to a new fiscal crisis if stern measures to fix the debt problem are not taken soon.
Slow Economic Growth. Faster GDP growth means a lower unemployment rate which, in turn, means more jobs and better paying jobs. This is exactly what is needed to give a boost to the middle- and lower-income workers who are suffering from economic insecurity.
Trade Imbalance with China. China has four times as many people as the U.S. and its economy is growing faster than ours. Soon the size of the Chinese economy will exceed ours. We can’t stop Chinese growth but we can insist that China play fair and stop stealing our intellectual property.
Global Warming. The evidence for man-made global warming is overwhelming. Carbon emissions in the U.S. are steadily decreasing because natural gas is less expensive and cleaner than coal. But this is not good enough because carbon emissions are increasing worldwide, especially in China and India. Working together, the U.S. and China have the clout to implement a plan to drastically reduce carbon emissions worldwide.
The Consequences of American Decline. These are the biggest problems our country faces because together they threaten our prosperity as well as our status as the world’s leading superpower. A multi-polar world replacing the U.S. dominated uni-polar world is likely to endanger the relative peace and stability we have enjoyed for so long.
Our debt is growing so fast that we will soon be bankrupt if we don’t change what we are doing. We have simply got to figure out how to fix the debt. I am Jack Heidel, a retired UNO math professor and not looking for a new career. I am confident that I can make a difference in one six year term in the U.S. Senate. Please vote for me on May 15 in the Republican Primary.
This is the text of a TV commercial which begins running this weekend in the Omaha and Lincoln areas. It attempts to summarize in one short statement what I have been saying for a long time:
Our debt (the public part on which we pay interest) is now 78% of GDP and predicted by the Congressional Budget Office to reach almost 100% in the next ten years. Annual deficits are growing rapidly and will be back to almost $1 trillion by next year.
The incumbent Deb Fischer is totally ignoring the debt and has actually voted twice recently to make it worse than it already is. The new tax law, for all of its good individual features, will increase the debt by $1 trillion over ten years, even after new growth is taken into account. The new two year budget, also voted for by Fischer, increases the debt by another $1 trillion.
Fixing the debt doesn’t mean paying it off but rather shrinking annual deficits way down so that they are less than the rate of growth of GDP. Then the debt will begin to shrink as a percentage of GDP just as it did after WWII.
Entitlement reform and, in particular, the high cost of American healthcare, is the only practical way to deal with the debt problem. All of us, as healthcare consumers, must have more personal responsibility for holding down the cost of our own healthcare.
Conclusion. I am so alarmed by our enormous and out-of-control debt that I am challenging an incumbent U.S. Senator in a primary election. If you live in Nebraska I would appreciate your support!
I am a candidate for the U.S. Senate in the May 15 Republican Primary against the incumbent Deb Fischer because she is ignoring our enormous and out-of-control national debt. In fact she has voted twice recently to make our debt even worse than it already is. I am referring to both the new tax law which, in spite of its good individual features, raises our debt by $1 trillion over the next decade and also the 2018 budget agreement which increases the debt by a similar amount.
The nonpartisan Congressional Budget Office estimates that this year’s budget deficit will be over $800 billion and next year’s at $981 billion, almost back to the trillion dollar level seen for four years after the Great Recession.
The likewise nonpartisan think tank, the Committee for a Responsible Federal Budget, concludes that over half of next year’s huge deficit is the direct result of legislation passed since 2015 and signed by President’s Obama and Trump, as shown in the chart.
In more detail:
The largest contribution to next year’s deficit, $230 billion, is from the December 2017 tax bill.
The next largest contribution is $190 billion from the 2018 Bipartisan Budget Act.
But the 2015 doc fix and tax extender bills also add $100 billion to the 2019 deficit.
As CRFB says, “It is no longer enough for Congress to ‘do no harm’ in the near term and ensure solvency of entitlement programs over the long term. Fixing our debt will now require reversing the harm which has already been done with tax cuts and spending increases.”
Conclusion. Historically the Republicans have been the party of fiscal responsibility. But now the GOP is completely in charge and annual deficits are increasing rapidly. Is it not very clear that big changes are needed in who represents us in Washington?