The beginning of a new year is a good time to assess one’s overall business strategy. My “business” (as a retired math professor!) is discussing major policy issues facing the United States. In my last post I discussed the U.S. economy which is on the verge of a rapid recovery as vaccines for Covid-19 become widely available in the next few months.
Today I summarize my overall world view:
- U.S. standing in the world. The U.S. is by far the strongest country in the world, both economically and militarily. This overwhelming strength has provided unipolar status to the U.S. in world affairs since the end of WWII. It has been the main contributor to overall world peace and stability since 1945.
- The Cold War ended in November 1989 with the falling of the Berlin Wall. The Soviet Union collapsed in 1991 because of the unworkability of its communist/socialist economy. Free enterprise (capitalism) has reigned supreme in the world ever since. The Russian economy, now ranked 11th in the world in GDP, is mired in corruption. Russia is now only a disrupter in world affairs.
- The rise of China. China decided in the 1970s to combine capitalism with communist authoritarianism and now has the second-largest economy in the world. It may soon surpass the U.S. in economic strength. In other words, the world is rapidly becoming bipolar with China as the major challenger to U.S. dominance. The west has many strengths in the competition of democracy vs totalitarianism, see here and here.
- The outlook for U.S./Chinese trade relations. The two economies are heavily linked with hundreds of billions of dollars in annual trade. Various trade issues, such as increasing U.S. access to Chinese markets and intellectual property theft by China, can be solved peaceably.
- Will the U.S. defend Taiwan? China feels strongly that Taiwan, with 24 million people, should be returned to the mainland. But Taiwan wants to remain free and independent. It is a symbol that Chinese people desire personal and political freedom, even though the Chinese Communist Party dictatorship is now in control of the mainland. The U.S. will lose much credibility if it fails to defend Taiwan’s independence.
- Global warming is a serious problem worldwide. Much of the world, including the U.S. and Western Europe, is making progress in reducing carbon emissions. But Chinese emissions are still rapidly increasing (see chart). The world needs Chinese participation to mitigate global warming. What if China offers to get serious about global warming if Taiwan is forced to unite with the mainland? Will the U.S. go along with such a deal?
Conclusion. The U.S. is still dominant because of its economic and military strength. But the Chinese economy is growing fast and China has already become a major challenger. The U.S. and its democratic allies have many advantages in the competition between two very different systems. But continued support for Taiwan against Chinese encroachment is crucial.