It has been discouraging to see that the lessons learned in the first half of the 20th century have now been forgotten, as nationalism is on the rise in many regions. And now we are seeing a repeat of the McCarthyism of the early 1950s. Here’s Foreign Policy:
Not so long ago, consultancies and other information brokers could work easily with different clients in different countries. Just as they talked to competing firms, they advised competing governments. In 2015, when senior McKinsey partner Lola Woetzel hoped the think tank’s book “provides useful input for the planning and development of China’s technology enterprises and government institutions,” she likely didn’t think she was making a controversial statement.
But what may have seemed banal then may now be depicted as smoking gun evidence that companies are helping the enemy.
Senators Marco Rubio and Josh Hawley have suggested that McKinsey has been aiding America’s enemies and should be barred from receiving federal contracts. This is from Marco Rubio’s website:
While the report was written in the staid language of management consulting, ultimately it was an attempt to help the Chinese Communist Party (CCP) dominate the United States and other countries in cutting-edge fields, including cloud computing, the internet of things, big data, mobile internet, robotics, 3D printing, advanced materials, self-driving vehicles, artificial intelligence, nonconventional oil and gas, electric vehicles, energy storage, renewable energy, and human genomic technology. The implications go beyond economic competition. The report notes that technologies such as these “will have a great impact on future wars and the development of the national defense industry.”
The logic of globalization is that international trade and investment is a win-win process—both sides benefit. But when globalization is replaced with nationalism, economics becomes a zero sum game. Any improvement in the Chinese economy is seen as a negative for the US, as our relative position declines in international power rankings. Thus any company trading with “the enemy” is in danger of being viewed as treasonous.
Ironically, Foreign Policy reports that the most inflammatory accusations against McKinsey relate to language suggesting that China would benefit by moving in a more communist direction:
The Financial Times reported that their China branch had boasted in 2019 of its economic advice to the Chinese central government, while a McKinsey-led think tank prepared a book which advised China to “deepen cooperation between business and the military and push foreign companies out of sensitive industries.”
In fact, China’s rise as a great power began when it abandoned Maoist era communism. After 1978, China began allowing more foreign participation in its economy, and privatized many businesses. If you are an American nationalist, you should welcome China moving back to a state directed model cut off from foreign investment.
But the bigger problem with this new McCarthyism is that it inevitably leads to an increased risk of war, as states stop viewing each other as mutually benefiting from economic growth. Back in the 2000s, Chinese growth was viewed as good news for the US economy, and American businesses rapidly expanded sales in that fast growing economy. Today, many people in America view Chinese economic growth as a threat, and anyone aiding China’s economy then becomes seen as a traitor to the US.
I don’t accept the nationalist framing of international affairs. But if the senators really believe their theory, then they might consider awarding the Congressional Medal of Honor to McKinsey executives, for encouraging China to move in a more statist direction. Instead, they should focus their ire on people like me, who have given talks in China encouraging things like free market reforms, fiscal austerity and nominal GDP targeting. These ideas actually would make China’s economy stronger. If trying to improve the economy of a nation of 1.4 billion people makes one a traitor, then I’m guilty of treason.
READER COMMENTS
Robert Benkeser
May 27 2024 at 1:41am
China has rapidly built up their defense industrial base and now dwarfs the size and scale of our military. Is it reasonable for them to expect us or any other country to attack them? Now, we’re playing catch up…half-heartedly. China is also Sabre rattling over Taiwan (Volksdeutsche/Русский мир, anyone?). Which country has a nationalism problem again?
Scott Sumner
May 27 2024 at 10:17am
I completely reject the premise of your question. China’s military spending is far lower than that of the US, even as a share of GDP. Yes, they have a large industrial base, but that’s primarily used for other purposes, such as exports.
“Which country has a nationalism problem again?”
Both. And Russia is far worse than either the US or China.
Mactoul
May 28 2024 at 4:26am
America welcomes millions of foreigners each year including plenty of Chinese. And how many does China welcome? And America is as bad nationalistic as China?
How much consideration does Chinese people give to Tibetans whose lands and culture they have devastated ? China currently has border dispute with little Bhutan too.
Scott Sumner
May 28 2024 at 1:49pm
“And America is as bad nationalistic as China?”
Obviously not. (I’d encourage you to read posts more carefully.)
TGGP
May 30 2024 at 10:48pm
I think Noah Smith has had a disappointing trajectory since he went from professional economist to pundit, but he does have some data arguing that Chinese defense spending is nearly at US levels.
Jon Murphy
May 27 2024 at 10:53am
This is a trend I have noticed among nationalists: they tend to wildly overestimate the military capacity of rival nations while dramatically underestimating national capacities. The reality is that the US dwarfs Chinese defense industrial base; the US’s defense industrial base is roughly 3x that of China’s. China does have a larger active military than the US, but as the Gulf War showed, size doesn’t matter when your opponent can outrange you (the Iraqui army outnumbered the Allies by roughly 2-to-1, depending on the measure you want to use, but Iraqi casulties were 2,224% higher than Allied. Allied casulties: ~13,000. Iraqi casulties: ~300,000).
Ahmed Fares
May 29 2024 at 7:47pm
source: The Kill Chain – Defending America in the Future of High-Tech Warfare by Christian Brose (Former Staff Director Of The Armed Service Committee And Senior Policy Advisor To Senator John McCain)
Ahmed Fares
May 29 2024 at 7:53pm
Further to my comment,
There’s a good chart in the source below:
Setting the Record Straight on Beijing’s Actual Military Spending
Jose Pablo
May 27 2024 at 1:13pm
The annual analysis by the Stockholm International Peace Research Institute (SIPRI), which estimates the full range of military spending by country beyond official figures, puts China’s military spending at $292 billion in 2022, compared to U.S. spending of $877 billion in the same year
That’s a very strange definition of “dwarfing the size and scale of our military“. It seems to me that socialism and nationalism share the Hayekian “end of truth”.
Jose Pablo
May 27 2024 at 1:14pm
That was a one minute fact check by the way.
steve
May 27 2024 at 6:19pm
If you take more than a minute and follow the issue on a long term basis then you know there is a lot fo disagreement about how you should measure spending for the US vs Russia, China and others. Link goes to one of many. Note that Russia and China maintain personnel numbers exalt to or larger than ours while also spending, at least for Russia, a much higher percentage of its expenditure on weapons and their development. At the very least it’s clear that we spend proportionately much more on our troops.
Anyway, that aside, totally agree with Scott about McKinsey. If we could get our enemies to use their services and follow their advice they will be self-defeating.
https://warontherocks.com/2019/12/why-russian-military-expenditure-is-much-higher-than-commonly-understood-as-is-chinas/
Steve
Scott Sumner
May 27 2024 at 11:07pm
I’d add that Russia is basically fighting Ukraine to a draw, at least so far. That’s surprisingly ineffective for a great power. The US has occasionally struggled against smaller foes in guerrilla warfare (Vietnam, etc.), but Ukraine is a conventional power fighting a conventional war.
The big potential threat from Russia (and China) is nuclear. But by that criterion, even France and the UK are major powers.
Jose Pablo
May 28 2024 at 10:21am
a much higher percentage of its expenditure on weapons and their development
I can expend 100% of my expenditure on weapons and would still have a crap of an army.
The only army in the world that can project power well beyond its borders is the American army. Russia or China invading Chile (the equivalent of the US invading Iraq or Afghanistan) is just unthinkable. Countries bordering Russia or China have, maybe, reasons to be worried about the Chinese or Russian armies but every single country in the world, no matter where, has reasons to be worried about the American army. In fact, all the countries that don’t share the American culture and values are worried, and arm themselves accordingly to this, very real, threat to their sovereignty in managing what they perceive as their internal affairs (like, for instance, Taiwan).
The size and power of the American army is the main reason behind the rest of the world’s arms race and yet nationalists are capable of getting the whole thing upside down feeling unfounded fears and citing fake facts.
The distortions to the reality that nationalistic minds are capable of just defies the imagination.
Jim Glass
May 29 2024 at 4:18am
How is Russia a “great power”? It ranks 11th in the GDP table, below Canada and Italy (sixth by PPP). How many “great powers” are there? Are we handing out participation trophies in the “great powers” game?
Seriously, separating from reality like this causes people to totally stupidly screw up their own whole dang lives. And when these people are running a country…
Jim Glass
May 29 2024 at 4:37am
[Juan Pablo wrote:]
[] World military spending in 1960 was 6.4% of world GDP, and has fallen to 2.3% today. So that “arms race” has produced a decline of 64%.
[] US military spending was 8.3% of GDP in 1960, is down to 2.9% in 2024, and projected to decline further. That’s down 65%, so far.
A good policeman reduces the demand for vigilantism — which in turn, over time, reduces demand for the policeman. So you are correct in a way, the size and power of the US military caused it, as long as by “world’s arms race” you mean “world’s decline in military spending”.
Sure. But it’s not just the nationalists. Here’s an amusing exchange I heard recently…
Person A: “The obscene military-industrial complex obscenely controls the US govt and runs foreign policy [blah, blah, same old]”
Person B: “There is no military industrial complex, it doesn’t exist.”
Person A: “What!!?? Eisenhower himself, who knew…”
Person B: “That was when military spending was 9% of GDP, now it’s 3%. With US govt spending on Medicare 3.5% and on Medicaid another 3%. That’s more than *double* today’s defense spending. And total US spending on health care now is more than 17% of GDP — almost *six times* defense spending, and twice Eisenhower’s military industrial complex at it’s peak. Our health care industrial complex, *this* is an industrial complex as never seen before, to run a government.”
And Social Security is another 5% of GDP, with health spending that’s over 22%. Compared to 2.9% for the military. What’s the old joke?…
“The US government is a retirement-health care plan, with a military on the side.”
Jose Pablo
May 29 2024 at 10:51am
World military expenditure increased for the ninth consecutive year in2023, reaching a total of $2443 billion. The 6.8 per cent increase in 2023was the steepest year-on-year rise since 2009 and pushed global spendingto the highest level SIPRI has ever recorded
As it is pretty obvious looking at the news.
And the “optimal” amount of resources globally employed in the military is precisely zero (compared with cancer, poetry, or antiaging research, to name but a few). And yes, we are lucky that this testosterone-laden relic of the past is so cheap. Totally wasteful but cheap.
Nicolas
May 28 2024 at 6:33pm
The US is spending thrice what China spends per year on its military budget. In the past the US enjoyed a much bigger spending disparity. So, how is it that China “now dwarfs the size and scale of our military”?
I have an elderly friend who almost instantly buys into any right-wing conspiracy theory. She called me a couple of years back to breathlessly confide to me that the Chinese were going to invade the US within the week. She should be writing for Foreign Policy.
Richard W Fulmer
May 27 2024 at 6:00pm
To provide some background, the Urban China Initiative (UCI) is a collaborative effort launched in 2010 by China’s Tsinghua University, McKinsey & Company, and Columbia University. The initiative’s purpose is (or was) to examine how technological advancements and industrial changes in things like digital technologies, automation, and AI are shaping the global landscape, particularly focusing on their implications for China’s urban development. In 2018, the UIC issued a report on its findings, titled “The Trend and Impact of World Technological Revolution and Industrial Transformation.”
The report, according to a letter sent from Senators Marco Rubio and Josh Hawley to Bob Sternfels, McKinsey Global Management Partner:
The senators note that McKinsey maintains that the UCI is separate from McKinsey and that the UCI did not perform work on the company’s behalf. In addition, they note that Sternfels “stated, under oath, that ‘we do no work, and to the best of my knowledge never have, for the Chinese Communist Party or for the central government in China.’” The letter provides evidence that Rubio and Hawley believe refutes both claims.
The senators conclude by stating that they will “continue to work to ensure McKinsey does not receive another dollar from the U.S. government until such time as the company owns up to its work on behalf of the Chinese government, severs all ties to the PRC.”
Richard W Fulmer
May 28 2024 at 11:22am
To be fair to Rubio and Hawley (something I never thought I would say), their letter did not use either the word “treason” or the word “traitor.” The only hit I got from an Internet search on “treason” and “McKinsey” was this article.
The senators’ letter notes that “some passages” of UCI’s report “detail examples in the United States which appear to mirror previous McKinsey reports.” Perhaps the senators are concerned that information that McKinsey gathers while under contract to the federal government could wind up in a report that the company, or UCI, provides to China. If so, then their pledge to work to keep McKinsey from working for the government may just be prudence rather than a rebirth of McCarthyism.
Mactoul
May 28 2024 at 4:21am
So should trade with foreign countries, howsoever unfriendly to us or our friends, never restricted?
So, it was wrong to impose embargo on Japan as it sought to expand into Indo-china?
Trade with Nazi Germany, even after September 39, was good too with no restrictions on what Germany might import from America?
Scott Sumner
May 28 2024 at 1:52pm
“So should trade with foreign countries, howsoever unfriendly to us or our friends, never restricted?”
I’ve advocated trade sanctions on Russia in response to their invasion of Ukraine.
Jose Pablo
May 28 2024 at 3:48pm
I’ve advocated trade sanctions on Russia in response to their invasion of Ukraine.
And yet, the truth is, you can not sanction Russia, without sanctioning America (or Europe).
If there was a voluntary exchange between individuals or corporations based in Russia and the USA and the American government forbid this exchange, both individuals, the Russian one and the American one, would be worse off after the sanctions.
Which individual would be worse off to a greater extent is anybody’s guess (it could, very easily, be even impossible to know) and to what extent the worsening off of these particular individuals means that Russia or America are worse off as “entities” is an impossible discussion.
You can cut off rogue nations from the international community and this could even make political sense. But what you can not pretend (and many people do pretend) is that doing so will make the countries imposing the sanctions better off. If this was the case they would have avoided the exchanges you are now forbidden long ago.
Richard W Fulmer
May 28 2024 at 4:25pm
Before World War II, General Motors and the Ford Motor Company produced military vehicles for the Nazi war machine. Had the United States government imposed sanctions and prevented this activity, shareholders in each company would probably have been harmed. However, belief that such a prohibition would have made Americans as a whole better off is hardly an exercise in pretense.
Jose Pablo
May 29 2024 at 12:16pm
shareholders in each company would probably have been harmed.
Shareholders of each company got, very likely, around 4% of the German payments. The biggest part of the German payments (around 30-35%) went to the American Government (corporate taxes, income taxes, payroll taxes) which bought with these proceeds more and better weapons. Another 5-10% was reinvested in the companies (capital, R&D, etc..) which greatly benefited the American war machine (much more so than the German one).
[A further 30% went to these companies’ employees who, very likely, employed part of that in buying goods produced in Germany and the rest to these company providers]
belief that such a prohibition would have made Americans as a whole better off is hardly an exercise in pretense.
The belief that such a prohibition would have made Americans “as a whole” (whatever this inanity means) better off is an exercise in pretense based on a very poor understanding of what a P&L really is
Richard W Fulmer
May 29 2024 at 12:50pm
104,800 American soldiers were killed in the European Theater of Operations during WWII, and another 447,000 were wounded. The impact on them and their families back home is incalculable. Materially, about 40% of the U.S. GDP went to defense spending during 1945, the last year of the war. What was the opportunity cost of that? Is it inane to ask what could have been done with the resources that were used to kill Germans, Italians, and Japanese and to destroy their cities and factories?
We can’t know how many fewer Americans would have been killed or wounded and how much less destruction would have been necessary had American and British companies not helped to build Hitler’s war machine, but surely the answer isn’t zero.
Jose Pablo
May 30 2024 at 9:31am
And your thesis is that all these casualties were caused by the selling of jeeps to the Germans by GM and Ford. Yeah!, that makes sense! Without those sellings no WWII would have happened. I fully agree.
Richard W Fulmer
May 30 2024 at 11:32am
Here’s what I wrote:
And here is your interpretation:
How do you translate “the impact was probably non-zero” to “the impact was 100%”? When you have to put words in other people’s mouths to make your argument, perhaps it’s a sign that your argument is not very strong.
Jose Pablo
May 28 2024 at 4:39pm
So, it was wrong to impose embargo on Japan as it sought to expand into Indo-china?
Historical counterfactuals are always tricky, but you can argue that this embargo was the main cause behind the Japanese attack on Pearl Harbour and the entrance of the US in WWII (which could not have happened in the absence of this attack. Americans were back there, very much as they are now with Ukraine, against risking the lives of American soldiers fighting Hitler).
If the embargo was a contributing factor to the killing of more than 100,000 American soldiers in the Pacific and to the development and use of nuclear weapons for the first (and last) time (a defendable hypothesis) you can certainly argue that the embargo was “wrong” (meaning it was not the most sensible course of action available to the US at the time)
Trade with Nazi Germany, even after September 39, was good too with no restrictions on what Germany might import from America?
The sanctions imposed on Germany after WWI were one of the main reasons behind the rise of the Nazi party. So, you can certainly entertain the idea that we would have been better off without those sanctions.
And there is a very interesting idea in Nicholas Mulder’s, “The Economic Weapon: The Rise of Sanctions as a Tool of Modern War,” regarding this. The idea is that the League of Nations’ authority rested mostly in its ability and willingness to impose economic and financial sanctions and that the credibility of these sanctions helped provoke Germany’s and Japan’s territorial ambitions.
When it comes to governments, unintended consequences are, frequently, the most relevant consequences.
Richard W Fulmer
May 29 2024 at 12:52pm
Clearly, the sanctions were not very effective given the extent to which American and British companies collaborated with post-war Germany.
Nicolas
May 28 2024 at 7:12pm
Produce a declaration of war and let’s talk about it. Otherwise my right to peaceful and consensual trade are not the business of the US government.
Mactoul
May 28 2024 at 8:21pm
Hitler declared war on America on 7 December 1941. So it was right to sell anything a private person might sell till that date?
Even though America was quite openly supporting one side in the conflict and it was only a matter of time that America would be directly involved in the war?
Jose Pablo
May 28 2024 at 9:18pm
Following your reasoning (which I imagine doesn’t apply only to sanctions imposed by the US) the German government would have been “right” preventing, German individuals to sell to Americans anything Americans might wanted back in 1939.
But this “Germany imposing sanctions on trade with Americans”, designed by the Germans to damage the US, would have had in practice very similar effects to “America imposing sanctions on trade with Germans”.
So, restrictions on trade with very similar practical effects (preventing individuals of both nations from trading among them), would have damaged Germany if imposed by the US but would have damaged the US if imposed by the Germans?
That’s a (very) curious way of reasoning.
Jim Glass
May 29 2024 at 2:21am
Nah. Your rather myopic obsession with “preventing individuals of both nations from trading” blinds you to the point — there are third parties being affected. That breaks the symmetry. As Sergei Guriev, the highest-level Russian economist with personal knowledge of Putin to flee west in recent years (“quickly, ahead of the FSB”) explained when asked whether sanctions work…
When you write of a Russian individual and an American individual being affected by voluntary trade or lack of it, you completely neglect all the Ukrainians — they’re individuals too!
Now as to US firms through the end of 1941, many continued business as usual with Germany even after the 1938 Anschluss and Kristallnacht, through the invasion of Poland, Battle of France and Battle of Britain, right up until December 7. (It was legal. No sanctions.) Some beyond! Books have been written and lawsuits filed. Several provided serious war materials and equipment to the Germans. IBM, famously … Ford (Adolph rewarded Henry with the Grand Cross of the German Eagle, the Nazi regime’s highest civilian award, in 1938 — post-Anschluss) … General Motors (Speer was quoted post-war saying the Nazis couldn’t have invaded Poland without GM) … IT&T … let’s consider Eastman-Kodak:
In 1941, after Kristallnacht, the Fall of France and the rest, the owners of E-K might have decided “we don’t want any more part of this” and closed down their German operations, especially with US entry into the war obviously coming soon. But they decided instead to protect their German business by placing it in the control of two trustees, answering to the US owners, for the duration. Then during the duration E-K operations expanded greatly from just producing film to also making bomb fuses, triggers and detonators, using slave labor. All *very* profitable (slave labor is cheap!) with the profits collected by the mother company after the war (some during the war, via Switzerland).
Yea! Voluntary exchange between American and German individuals protected. Win-win. Free trade preserved!
But *who* were the people that those German bombs with E-K fuses, triggers, and detonators landed upon? Were they OUR people? And about those slaves, hmmm … These third parties all were an essential part of the transaction too — and how “voluntary” was their participation?
Would it have been better if sanctions had simply forced E-K to end its German operations by 1941– and prevent American capital from being used to employ slave labor to build bombs to drop on Americans and our Allies, in defense of the Third Reich? You decide.
Jose Pablo
May 29 2024 at 11:06am
Would it have been better if sanctions had simply forced E-K to end its German operations by 1941– and prevent American capital from being used to employ slave labor to build bombs to drop on Americans and our Allies, in defense of the Third Reich? You decide.
Your inability to see “individuals”, only artificial organic non-existing entities prevents you from understanding trading (which happens at an individual level)
Consider that the payment for all this was, for instance, allowing Oppenheimer to attend Gottingen and learn from Born. And sure, third parties were affected by this German “payment”.
Of course, the world would be a much better place if you were allowed to dictate who should be doing what with whom. Nobody has doubts about that.
Jose Pablo
May 28 2024 at 10:02pm
it was only a matter of time that America would be directly involved in the war
What’s the historical evidence supporting this?
America before Pearl Harbor’s attack was formally neutral and the American public held a strong isolationist sentiment. In 1939, even after Hitler annexed Czechoslovakia, Roosevelt suffered a humiliating defeat when the democratic-controlled Congress, refused to renew the “cash and carry” clause of the Neutrality Act of 1937, mostly designed to favor Great Britain and France, the only countries with the hard currency and ships to take advantage of the clause.
Significant parts of the American public were “sympathetic” to the Nazi regime (at least to what it seemed to be before 1941). Particularly so among Republicans. Remember that America was a pretty racist and antisemitic country back then ( (the KKK claimed 11 governors, 16 senators, and as many as 75 congressmen in 1930).
It was also seriously affected by the Great Depression and the associated desire for “strong” leaders (like FDR himself). Significant parts of the public were far more worried about Communism than Nazism in Europe. As proof of that, the limited support for the “Communists” fighting Nazism in the 1936-39 Spanish Civil War.
Richard W Fulmer
May 29 2024 at 5:38pm
Prior to WWII, both FDR and Mussolini expressed admiration of each other and each other’s policies. Most of the governors, senators, and congressmen who were or who had been members of the KKK were Democrats.
Jose Pablo
May 30 2024 at 9:37am
That is true. The difficult passing of the Neutrality Acts of the 30s occurred in a Congress controlled by a Democratic supermajority and with a Democratic President.
Richard W Fulmer
May 31 2024 at 10:46am
And the Neutrality Acts were violated by the same Democratic President who had signed them into law.
Jim Glass
Jun 1 2024 at 1:44am
Well, in 1939 Congress repealed the neutrality laws barring cash-and-carry arms exports (1937 being the distant past). In 1940, the election year (!) Congress passed the Two Ocean Navy Act, doubling the tonnage of the Navy … sent the British those 50 destroyers … and enacted the Selective Service Act, creating the first peace-time military draft ever! Plus FDR proclaimed the USA the “Arsenal of Democracy” proposing Lend-Lease, earning 68% public approval per Gallup. That was enacted in early 1941, and FDR met with Churchill at sea off Newfoundland to coordinate militaries.
Also, the USN was already in a shooting war with German U-boats, with the USS Kearny and USS Reuben James being torpedoed (the latter sunk). And Germany’s acting Ambassador in Washington reported to the Fuhrer that FDR could get a declaration of war against Germany any time he wanted, but was just waiting for a sufficiently inciting event to fully unify public opinion (which he got).
You didn’t know any of these things? With combat already started in the Atlantic, war sure seemed upon us. After all, Eastman Kodak didn’t put its German operations in trusteeship for no reason!
BTW, have you realized yet that today’s Ukrainians, the slave laborers employed by E-K Germany to make bombs, and the people under those bombs when they landed, all meet the definition of being “individuals”?
In democracies “significant” parts of the public are always “sympathetic” to all kinds of notions: homeopathy, Marxism-Leninism, the moon landing being faked, Elon Musk getting us to Mars by 2024…
Jim Glass
May 30 2024 at 12:56am
Well, “the McCarthyism of the early 1950s” as a matter of historical reality shouldn’t in any way be conflated with economic protectionism, wise or unwise. The USA and our allies had already by then imposed the COCOM comprehensive export and trade controls on the Soviet Union and its vassals, starting right after WWII when Stalin began playing his post-war hand (see “US Compound Containment of the Soviet Union, 1947–1950” about the start.)
The 1950s Red Scare, with Senator Joe waving around his empty envelope full of the names of commies who had infiltrated the government (not that there weren’t any, see the Venona Cables), was domestic politics.
As to the merits of the COCOM trade controls (which lasted to the end of the USSR in 1991), in all my years since I was a young visiting student exulting in the workers’ paradise of the Brezhnev era, I have never once heard a historian say: “You know, while Joe was swallowing Eastern Europe and launching the Korean War, and Nikki was pounding his shoe at the U.N. declaring ‘We will bury you!’, we really would have done better by selling them our high tech so they could improve their weapons and nuke delivery systems.” COCOM is considered pretty much a success at what it set out to do.
BTW, echoing Mr Fulmer, has anyone recently actually said “treason” or called someone a “traitor”? A couple politicians sending a letter like this to a business is really weak tea compared to the hundreds if not thousands of innocent people purged from their jobs and careers in the 1950s via HUAAC, Hollywood Blacklists, etc.
Jim Glass
May 31 2024 at 3:54am
Various people opined…
As the marginal impact of war is HUGELY greater than the marginal impact of trade, let’s try to be at least as intelligent about military stats as econ stats. In rising order of importance…
[] As TGGP noted (linking to authority) considering purchasing power and China’s “off the books” spending, its real military budget is *much* larger than the dollar numbers given above, and may be comparable to the USA’s.As one example…
One of our big edges in WWII was we pumped out ships daily off the assembly line. We can’t do that now — China can. In a prolonged war along the First Island Chain that will matter a lot.
[] Total resources matter little. What matters is resources in the region of conflict. I mean, obviously, right? It didn’t occur to any of you? In 2021 Russia’s military budget was 10x Ukraine’s. What a mismatch! But Russia’s spending on nuclear submarines, ICBMs, the Arctic Fleet, etc., didn’t help it. While all of Ukraine’s spending was in Ukraine. China’s 370 warships are near all right around China. The USA’s 291 ships patrol the entire world.
For a measure of actual combat strength in the region of conflict, check the war games I’ve linked to. It’s close.
[] What’s your point? If the USA’s military is much stronger than China’s, nothing bad can happen? So don’t worry about it? Are you kidding? Adolf had a mini army compared to his targets. France alone had nearly twice as much artillery, 1,500 more tanks, etc., than did Germany. Plus there was the British Empire. Plus other democratic allies, and material support from the USA even with us not in the war. “Aw, he doesn’t have the resources to win a big war. He’s no problem.” He *didn’t* have the resources. But he was a problem, eh? Japan was even tinier. Its War Cabinet was advised that in case of war the USA economy could outproduce them in war materials 72 times over. (Not a typo, 72x) So they attacked us, of course. So we did (though most of the production went to Europe.)
What matters is *not* the size of the side’s military, but the thinking of the of other side’s regime. What bizarre thoughts ran through Adolf’s and Tojo’s and Putin’s heads. And are running in Xi’s. If China starts a shooting war with the USA it will be a disaster, period. So what’s your point in claiming “it has a smaller military budget”? So what?
Jim Glass
May 31 2024 at 2:04am
The big potential threat from Russia (and China) is nuclear.
Last week China’s PLA ran a blockade & invasion of Taiwan rehearsal, including mock strikes by sea and air. State media stated the drills are to practice “seizing power” and gave this official expert analysis…
If they follow through on this as they are promising, there will be either war or no war.
[] The “war” option has been iteratively war gamed and produces the biggest military conflict since WWII. The Chinese have to strike Japan, which brings in them, South Korea, Australia. Huge casualties.
[] The no-war option of Ukraine-like support for Taiwan and sanctions against China, as per Bloomberg, causes a 5% drop in world GDP in the first year. (The 2008 drop was 4%.) The sales of TSMC alone are more than Ukraine’s total pre-war exports. And its chips are indispensable to the world economy, like 1970s oil, not like Ukraine’s wheat.
Both these options are a *whole lot worse* than what’s happening in Ukraine. The war gaming suggests nuclear risk is worse too, because “use nukes” is a save-the-regime action. Putin’s regime is safe, as the Ukrainian army will never enter Moscow. But if an assault on Taiwan goes poorly, the CCP could risk toppling … *boom*.
Xi and the CCP know full well these trillion-dollar costs they’d impose on themselves and the world, so WHY are they bragging about their war plans to turn Taiwan into a “dead island”?
The logic of globalization is that international trade and investment is a win-win process—both sides benefit.
Well, yes. But … Li Shenming:
What if the other side actually tells you that it is absolutely impossible to resolve your conflicts with it win-win? What do you do then?
the bigger problem with this new McCarthyism is that it inevitably leads to an increased risk of war, as states stop viewing each other as mutually benefiting from economic growth.
Really? Even when it the other regime takes itself autarkic — intentionally kneecapping its own growth — to prepare for a lose-lose war it has declared it will fight? Does that make sense at all?
Let’s look at real history. Adolf, autarkic 1930s, said who was going to fight, and fought … Putin went autarkic post-2014, “Fortress Russia”, said he’d take the rest of Ukraine, is fighting now … the CCP is kneecapping its economy right now in autarkic preparation for a fight, says it is going to fight, is telling its people now to prepare “to gain happiness through struggle”, not prosperity.
Perhaps we should learn to listen to these people? What is win-win about Putin’s wars in Syria, Georgia, Chechnya, Crimea, Ukraine? Do you see any clue that he cares at all about win-win?
But — the free marketer asks — why would a country seek brutal lose-lose war instead of happy, ever more prosperous win-win? Answer: Countries don’t want anything, the regimes that run them make the decisions. Regimes want what’s good for them. If the regime prospers by driving its population into the ground, that’s what it will do. (Say: North Korea). If the regime maintains its power via aggressive nationalist ideology, revanchism and fueling national grievance, what will it do? See Adolf, Tojo, Putin.
As to Xi — in addition to aggressive nationalist ideology, revanchism and fueling national grievance — Li Shenming (follow above link), his trusted minion, is leading the rehabilitation of Stalin, resurgence of dedicated Leninism, and condemnation of Khrushchev for betraying Stalin(!). Yes, in our 21St Century, Xi’s model is Stalin. What was Stalin’s foreign policy?
After 30 years of peace, the Cold War forgotten, it seems the best people now for understanding the economics part of “war geopolitics” are not economists, alas, but military historians/analysts: How Much Will China Risk for Taiwan? – Sarah Paine (Naval War College)
So don’t be too tough on the 1950s and all its anti-Leninism-Stalinism. The Red Scare – Hollywood Blacklist things were awful. But Truman and Eisenhower got it pretty much right as to big thing — dealing with aggressive Leninist regimes. You don’t want war. You don’t want to throw liberal democracies to the Leninist wolves. They developed the third option: be very strong and build alliances to deter aggression … obstruct the other side from obtaining key military technological-strategic assets … in other areas engage, trade, welcome visitors (how I became a teen in the USSR) … always talk … wait as long as it takes until their self-kneecapped economy fails them. It worked. We should remember.
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