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  • The Dangling Grand Bargain

    Posted by Joseph Fouche on January 14th, 2011 (All posts by )

    The thirst for a magic bullet is profoundly American. In war, the magic bullet manifests itself in the antiseptic wonder weapons that promise to transform conflict into a harmless, contact-free sporting event. In politics, the magic bullet manifests itself as something like a 2,000+ page health care reform law. In finance, it manifests itself as the AAA rated senior tranche in a collateralized debt obligation (CDO).

    In diplomacy, the manifestation of magic bulletry is the “grand bargain”. Every diplomat’s secret desire is making the agreement to end all agreements and conducting the negotiation to end all negotiations. As a magic bullet, the grand bargain would kill all diplomatic disputes for all time, Unfortunately, over every aspiring 1648 or 1815 hangs the long shadow of 1919. Versailles was intended to be the magic bullet to end all magic bullets. Instead, it became the magic bullet that wasn’t. Inasmuch as it possessed magic, it was the magic to ricochet off its intended target and right back at its originators.

    In today’s West, dominated by those high on the heady drug of global meliorism, the mere act of talking has somehow become an end unto itself. Whether it’s a “peace process”, “six-party talks”, “quartet”, “agreed framework”, “security council resolution”, or some other high-falutin’ hogwash, Western diplomacy resembles is more the decrepit liturgy of a dying baroque cult than the hard-nosed power brokering beloved by naïve realists. Like a general who puts the desperate lunge for a tactically decisive battle above stodgy strategic logic, a diplomat who puts talking, negotiating, and agreements first puts the tactical cart before the strategic horse.

    Strategy seeks to convert power into control to achieve purpose. The ideal was outlined by Alexander Hamilton in Federalist 31:

    In disquisitions of every kind there are certain primary truths or first principles upon which all subsequent reasonings must depend. These contain an internal evidence, which antecedent to all reflection or combination commands the assent of the mind. Where it produces not this effect, it must proceed either from some defect or disorder in the organs of perception, or from the influence of some strong interest, or passion, or prejudice…Of the same nature are these other maxims in ethics and politics, that there cannot be an effect without a cause; that the means ought to be proportioned to the end; that every power ought to be commensurate with its object; that there ought to be no limitation of a power destined to effect a purpose, which is itself incapable of limitation.

    The trinity that dominates strategy is the tacit, the contingent, and the explicit. The tacit evolves while the explicit is designed. The tacit is usually more robust because it has been incidentally buffeted by contingencies that the explicit may have missed. The explicit relies on things that are actively perceived, making it more fragile.

    The diplomatic grand bargain is an explicit attempt to acquire some selected degree of control over other political communities for some purpose. It is inherently fragile. It violates the Hayekian ideal of adaptions to the future bubbling up from below, emerging from the autonomous choices of individuals. The grand bargain is just as effective as central planning, just as prone to breakdown, and just as pernicious in its effects.

    See this grand bargain between the United States and the “People’s Republic” of China (PRC):

    • The U.S. and China will hold regular joint naval exercises in Asian waters, with invitations to other regional navies; have permanent officer-exchange programs and create a joint peacekeeping force and command; and establish a joint commission collaborating constantly on U.S. and PRC technology sharing and budget expenditures.
    • There will be a reduction of China’s strike forces arrayed against Taiwan, a U.S. moratorium on arms transfers to Taiwan, and a reduction of U.S. strike forces arrayed against China. – China and the U.S. will support a reunification of North and South Korea. The U.S. will eschew its regime change goals for North Korea, which will terminate its nuclear weapons program, and China will assist North Korea’s economic reforms.
    • The U.S. and its allies will not attack or seek regime change and will eliminate trade restrictions against Iran and China will encourage Iran to suspend development of nuclear weapons.
    • China will create and invest in a South China Sea Regional Joint Development Corporation with other shareholders that have conflicting sovereignty claims and negotiate the eventual resolution of sovereignty disputes on the basis of the 2002 Declaration of the Conduct of Parties in the South China Sea.
    • The U.S. and China will harmonize and coordinate their roles in Asian Economic and Regional Security and relations.

    This “executive agreement” has the purpose of:

    • Chinese companies will invest up to 1 trillion U.S. dollars at the request of the U.S. President,
    • The U.S. will lift export bans on high technology,
    • China will purchase sufficient U.S. goods and services to balance their bilateral trade each year,
    • The Strategic and Economic Dialogues will become a permanently sitting commission for constant senior-level collaboration,
    • U.S. companies’ access to the Chinese market will be equal to the access that Chinese companies have in the U.S. market,
    • The U.S. and China will encourage global joint ventures between U.S. and Chinese companies.

    The advantages for the PRC are obvious. The benefits for the U.S. are more sketchy. Like attempts at détente between the Soviet Union and the U.S. during the Disco Age, it ignores the elephant in the room: the United States is disproportionately more powerful than the PRC. Based merely on the calculus of raw power, the PRC may propose but only America can dispose. The PRC has little to offer besides cheap labor, a (for now) compliant workforce, and lax environmental regulation. Angelo Codevilla remarked in Advice to War Presidents: A Remedial Course in Statecraft:

    Diplomacy worthy of the name refers to indubitable realities. When it evokes consequences that affect a foreign government’s actions, the consequences must follow naturally from the natural relationship between those actions and the realities of which that government is aware. For you do not have to go out of your way to make these things happen, that you would not wish to prevent them, or perhaps that you cannot prevent them. Such diplomatic representations are warnings. Like yellow road signs that indicate curves, they command respect irrespective of any arbitrary speed limits or threats that might accompany them…
     
    By contrast, threats are more akin to white speed-limit signs. Since there are no natural consequences of going sixty-five instead of fifty-five, and the highway patrol imposes fines sporadically, drivers naturally take the signs’ threats with grains of salt. Perhaps the quintessential example of a threat was the United States’ “declaratory policy” during the Cold War to destroy the Soviet Union, but in a manner that would not have mitigated damage to the United States. Few took this threat seriously because carrying it out would have done America no good and caused America’s own destruction. Almost by definition, threats are at least partially empty. That is why the very notion of “declaratory policy” (perforce different from the real thing) advertises unseriousness.

    Codevilla defines diplomacy as “the verbal representation of a persuasive reality”: “competent diplomats do not threaten. They warn”. True diplomacy focuses on “frankness and truth”, not lies, flowery words, or vague language that keeps options open. Real diplomacy is based on Dr. Fred Ikle’s “threefold choice” between agreement, disengagement, and “diplomacy for side-effects” (from How Nations Negotiate, a neglected and out of print classic of diplomacy).

    Agreement is based on knowing what you want, what you’re willing to give for it, discovering if the other side is inclined to give it, and what they might be willing to take in exchange for it. If there is a basis for a mutually acceptable agreement, then you come to an agreement. If not, you walk away, what Ikle called “disengagement”. The third choice is “negotiating for side-effects”:

    [I]f either or both sides realize that the two sets of demands and prices are incompatible, that neither can get what it wants without the other accepting what it refuses to accept, and if nevertheless both sides continue diplomatic contact, then you had better realize that although the contacts may look like diplomacy, they are really something else: instruments among others (likely including violent ones) of coercion…

    The success of any side using diplomacy as an instrument of conflict depends substantially on the other side mistaking the situation, and abiding by the rules for accommodating interests with a partner, while the first regards the other as an adversary to be maneuvered into ever weaker positions. In short, a big advantage goes to the side with the fewest illusions about the other and about diplomacy.

    Warren Buffet warns that, if you don’t know who the patsy in a poker game is after five minutes, you’re the patsy. Similarly, if you don’t know who the patsy in a diplomatic negotiation is after five minutes, you’re American. Here’s the hard fact: America has no reason to make a grand bargain with the PRC. It can chose to selectively disengage because we are the America that can say no:

    • The prospect of PRC investment or joint-ventures with PRC companies is unappealing. Americans long ago acquired the secret Chinese technology that generates PRC investment dollars: paper and the printing press. The U.S. can print money just as well as the PRC or, following a more traditional route, outsource the job to our banks just like the PRC is doing. Given the excess liquidity sloshing around the world in search of yield, modifications of U.S. capital structures would generate substantially more investment dollars than the tiny investment squirt gun the PRC has at its disposal.
    • If the word “joint-venture” was translated correctly from Chinese into English, the translated word would be “theft”. Any American company that shared technology with a PRC company is an American company marked for death and replacement by a PRC company. “Intellectual property theft” has a long record of success in fueling many a nation’s climb through the ranks of nations. It’s one of the fundamental building blocks of this nation’s prosperity.
    • Giving high-technology to the PRC and its corporate creatures is a ridiculous idea. The PRC is seeking to convert the high technology into real power and real control. First mover advantage is a myth. The creator of high technology is not guaranteed to win the race. It’s the exploiter of high technology, he who gets there first with the most, that wins the race. Due to its acquisition something the U.S. lacks (an industrial base), the PRC may be better positioned to be the decisive exploiter of American technology than the U.S. Technology transfers on such terms is loading the gun that shoots you in the base of the neck.
    • Regular joint naval exercises have some utility as long as their purpose is clearly understood: providing an opportunity for the U.S. and the PRC to spy on each others naval forces.
    • Some military to military contact can be useful. However, sometimes familiarity breeds contempt. Mystery is the spice of international relations.
    • Diplomatic concessions concerning North Korea, the Iranians, the South China Sea, and other areas is a mass exercise in linkage, seeking to tie the untieable for the sake of tying. There is little reason to yoke these issues together in one giant Gordian knot. The U.S. should make choices in each of those areas as need based on its purposes, not those of the PRC. The PRC is only one, perhaps unimportant, factor to consider. The PRC’s relationship with U.S. foreign policy will vary according to its own purposes. They may overlap. They may clash. The U.S. may not be able to tell. The PRC’s influence over foreign policy issues that concern this nation are immeasurable at best and tenuous at worst.

    Dr. Thomas P.M. Barnett, a major contributor to this particular proposal, has proposed a U.S. national strategy based on the central strategic concept of connectivity, especially economic connectivity. In a variant of an ideal that Norman Angell and others popularized at the beginning of the 20th century, a strategy of connectivity is based on the proposition that the ties of commerce, if cultivated, will bind the nations of the Earth together so tightly that any war between them would increasingly resemble a suicide pact. The ties of commerce, wound into an intricate web of connectivity, would ultimately grow so dense and so pervasive that it would reach into every corner of the globe, making even those parts of the world whose only exported product is chaos mesmerized by the possibilities of reaping the profits of peace. The “Gap” would be closed and the “Core” would encompass the Earth. Implicit in this ideal is the notion that, wherever the tendrils of commerce reach, democracy and democratic peace will follow.

    Alexander Hamilton observed in Federalist #6:

    [N]otwithstanding the concurring testimony of experience, in this particular, there are still to be found visionary or designing men, who stand ready to advocate the paradox of perpetual peace between the States, though dismembered and alienated from each other. The genius of republics (say they) is pacific; the spirit of commerce has a tendency to soften the manners of men, and to extinguish those inflammable humors which have so often kindled into wars. Commercial republics, like ours, will never be disposed to waste themselves in ruinous contentions with each other. They will be governed by mutual interest, and will cultivate a spirit of mutual amity and concord.
     
    Is it not (we may ask these projectors in politics) the true interest of all nations to cultivate the same benevolent and philosophic spirit? If this be their true interest, have they in fact pursued it? Has it not, on the contrary, invariably been found that momentary passions, and immediate interest, have a more active and imperious control over human conduct than general or remote considerations of policy, utility or justice? Have republics in practice been less addicted to war than monarchies? Are not the former administered by men as well as the latter? Are there not aversions, predilections, rivalships, and desires of unjust acquisitions, that affect nations as well as kings? Are not popular assemblies frequently subject to the impulses of rage, resentment, jealousy, avarice, and of other irregular and violent propensities? Is it not well known that their determinations are often governed by a few individuals in whom they place confidence, and are, of course, liable to be tinctured by the passions and views of those individuals? Has commerce hitherto done anything more than change the objects of war? Is not the love of wealth as domineering and enterprising a passion as that of power or glory? Have there not been as many wars founded upon commercial motives since that has become the prevailing system of nations, as were before occasioned by the cupidity of territory or dominion? Has not the spirit of commerce, in many instances, administered new incentives to the appetite, both for the one and for the other? Let experience, the least fallible guide of human opinions, be appealed to for an answer to these inquiries.
     
    Sparta, Athens, Rome, and Carthage were all republics; two of them, Athens and Carthage, of the commercial kind. Yet were they as often engaged in wars, offensive and defensive, as the neighboring monarchies of the same times. Sparta was little better than a well-regulated camp; and Rome was never sated of carnage and conquest.
     
    Carthage, though a commercial republic, was the aggressor in the very war that ended in her destruction. Hannibal had carried her arms into the heart of Italy and to the gates of Rome, before Scipio, in turn, gave him an overthrow in the territories of Carthage, and made a conquest of the commonwealth.
     
    Venice, in later times, figured more than once in wars of ambition, till, becoming an object to the other Italian states, Pope Julius II. found means to accomplish that formidable league, which gave a deadly blow to the power and pride of this haughty republic.
     
    The provinces of Holland, till they were overwhelmed in debts and taxes, took a leading and conspicuous part in the wars of Europe. They had furious contests with England for the dominion of the sea, and were among the most persevering and most implacable of the opponents of Louis XIV.
     
    In the government of Britain the representatives of the people compose one branch of the national legislature. Commerce has been for ages the predominant pursuit of that country. Few nations, nevertheless, have been more frequently engaged in war; and the wars in which that kingdom has been engaged have, in numerous instances, proceeded from the people.
     
    There have been, if I may so express it, almost as many popular as royal wars. The cries of the nation and the importunities of their representatives have, upon various occasions, dragged their monarchs into war, or continued them in it, contrary to their inclinations, and sometimes contrary to the real interests of the State. In that memorable struggle for superiority between the rival houses of Austria and Bourbon, which so long kept Europe in a flame, it is well known that the antipathies of the English against the French, seconding the ambition, or rather the avarice, of a favorite leader,10 protracted the war beyond the limits marked out by sound policy, and for a considerable time in opposition to the views of the court.
     
    The wars of these two last-mentioned nations have in a great measure grown out of commercial considerations, — the desire of supplanting and the fear of being supplanted, either in particular branches of traffic or in the general advantages of trade and navigation, and sometimes even the more culpable desire of sharing in the commerce of other nations without their consent.

    Bonds of connectivity, of whatever kind, can provide benefits. However, the ties that connect may not be any stronger than the Lilliputian cords that bound Lemuel Gulliver. They were easily burst when the captured Leviathan’s mood shifted. Even if the ties that connect do hold, they may not turn out to be a blessing. Captain Ahab was bound by strong ties to the Great White Whale and found himself plunged into the depths of the sea as a consequence. If Ahab had managed to carve an epitaph into the flesh of Moby Dick before he drowned, it might have been this:

    DIED OF CONNECTIVITY

    A similar epitaph is being written on the tombstone of the global economy. Lehman Brothers sneezed and set off a cascade of sneezes that is still causing capital markets all over the world to catch a cold made more sinister and more protracted by the light of perverted financial engineering. Given the reverse domino effect of this infection, instead of a line of falling dominoes leading inexorably to wealth and self-determination, connectivity may lead inexorably to poverty and tyranny. It might even be prudent to pursue a policy of global disconnectivity.

    Events of the last thirty years have only proved one truism: capitalism provides better material incentives to spur individual initiative than central planning. The other supposed truism of the age, that the advance of liberal democracy is inevitable, has not been conclusively demonstrated. The people of many nations overwhelmingly support some version of capitalism but shy away from democracy. The governing elites of many more nations, including many within the ranks of this nation’s elite, would agree.

    The hot new thing, whether you call it state capitalism, the China Model, corporatism, or (more accurately) Fascism, is sweeping the globe. It turns out that, given Bruce Bueno De Mesquita’s choice of being Leopold II, constitutional monarch of the Belgians, or Leopold II, sole proprietor of the Congo Free State, most aspiring oligarchs overwhelmingly choose to be Leopold II, sole proprietor of the Congo Free State. They choose the capitalism but discard the democracy.

    The nations of the Earth now have a choice, even if it is faint: why bow to the erratic dictates and hypocrisies of Washington when you can have a more profitable and less threatening relationship with a non-judgemental Moscow or Peiping? It works even better when the changing of the colors from Red to Brown is highlighted with a strategically placed touch of Green. When Thomas Loren Friedman and others useful idiots return from the mainland breathless about the PRC’s wind power, solar power, and other “green industries”, they’re two breaths away from saying, “I have seen the future and it works.” As Isegoria observed, “Brown with a touch of green is the new black.”

    Rather than reaching out and touching our contemporary brownshirts with a grand bargain, a better approach to the PRC would be massive de-linkage. Ideally, there would be a common American purpose. The many denizens of our government and society would cumulatively converge on that purpose through a series of disconnected engagements with the people of China. This was the case with past Sino-American relations. Americans in the nineteenth century dreamed of a China that was one vast market for American goods, one vast field for American missionaries, and a little brother that could be civilized by the shining example of American civilization. Many Americans still suffer from the lingering after effects of this particular fever dream. This dream has unintentionally wreaked great havoc in China. From the moment America first encountered the Chinese people, its most disproportionately consequential efforts have been anarchic, uncoordinated, and disconnected:

    • Issachar Jacox Roberts, an American Baptist missionary, unintentionally set off the Taiping Rebellion by contributing to a peculiar synthesis of American Protestantism and Chinese folk religion
    • During its reckless initial ascent to world power and first bout of interventions in the period from the Tyler Administration to the election of Lincoln, young America unintentionally unleashed the Japanese on China by “opening Japan” while wheedling their way into the China trade through the inspired diplomacy Caleb Cushing. That’s what a grand bargain looks like when it favors American interests.
    • Aided and abetted by such Americans as the mysterious Coloradan hunchback strategist Homer Lea and Johns Hopkins University president Frank Johnson Goodnow, China attempted its a revolution in 1911. Through its encouragement of Dr. Sun Yat-sen (who learned of the 1911 Chinese Revolution while walking the streets of Denver, Colorado) and other Chinese revolutionaries, such Americans plunged China into 40 years of war and the ultimate Red Chinese victory.
    • The mysterious sentimentality of Franklin Delano Roosevelt towards China, based in part on his connection with China through his opium dealing grandfather Warren Delano II, led the U.S. to play a less than constructive role in China between 1933 and 1949.

    The Chinese revolutionaries of 1911 even wrote a constitution based on the general arrangement of the American Constitution. Well wrote the one-legged man who wrote the United States Constitution while observing his second revolution in 1789:

    Before I enter, however, into the detail of occurrences here, I will, in reply to one of your questions, inform you, that I have steadily combatted the violence and excess of those persons, who, either inspired with an enthusiastic love of freedom, or prompted by sinister designs, are disposed to drive everything to extremity. Our American example has done them good; but like all novelties, liberty runs away with their discretion, if they have any. They want an American Constitution, with the exception of a King instead of a President, without reflecting, that they have not American citizens to support that constitution. Mankind see distant things in a false point of light, and judge more or less favorably than they ought; this is an old observation; another, perhaps as old, but which all are not in the position to feel, is that we try everything by the standard of pre-conceived notions; so that there is an impossibility almost of knowing by description a distant people or country. Whoever, therefore, desires to apply, in the practical science of government, those rules and forms which prevail and succeed in a foreign country, must fall into the same pedantry with our young scholars, just fresh from the university, who would fain bring everything to the Roman standard.
     
    Different constitutions of government are necessary to the different societies on the face of this planet. Their difference of position is, in itself, a powerful cause, as also their manners their habits. The scientific tailor, who should cut after Grecian or Chinese models, would not have many customers, either in London or Paris; and those who look to America for their political forms are not unlike those tailors in the island of Laputa, who, as Gulliver tells us, always take measure with a quadrant. He tells us, indeed, what we should naturally expect from such a process, that the people are seldom fitted.

    The U.S. grand strategy towards the PRC should be to have no grand strategy towards the PRC. Grand strategies lead to grand bargains and grand bargains lead to the ruin of the gullible. The PRC will play the Americans and their Chamberlainian attempts at grand bargains like pros, following the grand tradition of the same PRC pros who spun Nixon, Kissinger, and every American diplomatic functionary since.

    American diplomats should first resolve to not send children abroad in search of monsters to be destroyed by. Successful American maneuvering works well when enacted far from the Washington chatterati. Americans lust after grand gestures but they have no innate genius for political theater that endures. If the purpose of any American strategy is to draw on power that can realistically be converted into the control necessary to fulfill that purpose, it must be done by a thousand emergent paper cuts of death by the American people themselves.

    Instead of seeking strategic paralysis through one great sequential, dramatic, decisive grand bargain performed under the unblinking 24/7 eye of a childish global media, the approach taken should be cumulative and emergent moral attrition outside the public eye. Multitudes of bureaucrats and civilians, each within their individual cubbyholes, will gnaw away at the PRC, advancing here and retreating there. There should be no single point of failure based on a single massive grand bargain or grand strategy. The PRC should be held in place until America’s trademark heady moralism and high-level corruption infects the mainland as thoroughly as it has infected the Chinese diaspora. American power has waned with the decline of media from analog broadcasting to digital narrowcasting. However, our media-industrial complex should push forward until the Chinese are as enraptured by stories with clear-cut, unambiguous, and happy endings as Americans.

    The biggest stumbling block in American relations with China is America. America has great raw power, adequate potential power, and minuscule elective power. Remedying that would solve the China problem and bring this particular China Incident to an end.

    Unfortunately, that’s easier said than done. American purpose is divided against itself. It pulls in divergent directions. It may be that America has to strike a grand bargain with itself first.

     

    8 Responses to “The Dangling Grand Bargain”

    1. Mike Cunningham Says:

      In the context of ‘conflict resolution’, all it takes to realise that this is yet another dream in the distance is to learn that the ‘quartet’ contact person designated to mediate between the ‘Palestinians’ (whoever they purport to be) and the Israelis is none other that Tony Blair himself. When that particular fact is recalled, then one might realise that the solution is worse than the problem, especially if the silver-tongued traitor has anything to do with the process!

    2. renminbi Says:

      Why are our rulers so feckless?

    3. Dennis Says:

      Excellent article. The hapless diplomats in American employ more and more remond me of Chamberlain (as you infer) and the really sad thing about that is that, owing to the abysmal history education in this country, few people even recognize the the comparison.

      I am reminded of a quote by British Viscount Palmerston intoned in the British House of Commons in 1848: “We have no eternal allies and we have no perpetual enemies. Our interests are eternal and perpetual, and these interests, it is our duty to follow.”

      This, in my estimation, is the mark of a mature political understanding of geopolitics (though, of course, from the same tradition that 90 years later would produce a Neville Chamberlain)

    4. Michael Kennedy Says:

      In 1914, Germany’s largest trading partner was France. The theory of economic webs preventing war should have ended then.

    5. Anonymous Says:

      American diplomacy is unique in all of human history because ours is the first nation that conquers other nations and, after it wins, gives them money rather than exact tribute, taxes and slaves.

      North Korea’s war aim is to start a war with the US, lose and get lots of foreign aid. Severals times they have done this and each time we’ve given them money and infrastructure. We try very hard to protect the self-esteem of losers by pretending they did not lose.

      There are people who claim that America has built an empire and the proof is that there is a McDonalds in every country we’ve conquered. But these people have never eaten at a foreign McDonalds. If they had they would note the menu is different, the employees are locals, and the owners are not Americans – not even at the national level.

      American diplomacy is designed to provide world peace. But we will not force peace down some one’s throat. We will defeat anyone who attacks us but we provide free medical care to those who lose. Most importantly, we insist on fighting all wars in the other guy’s country.

      We sould be proud that where ever we travel, some one speaks English. This is not true for Russians, Chinese, Germans, or Japanese.

      In the 1960’s China was totally hostile. But last year, an episode of Survivor was held in China. Next year American Idol will look for undisovered talent in China. These are the fruits of a successful foreign policy.

    6. Robert Schwartz Says:

      “Bruce Bueno De Mesquita’s choice of being Leopold II, constitutional monarch of the Belgians, or Leopold II, sole proprietor of the Congo Free State”

      The question is explained by Mr. De Mesquita in this pod cast of an interview with Russ Roberst of GMU. Very interesting and enjoyable.

      http://www.econtalk.org/archives/2006/08/the_political_e.html

      “When Thomas Loren Friedman and others useful idiots return from the mainland breathless about the PRC’s wind power, solar power, and other “green industries”, they’re two breaths away from saying, “I have seen the future and it works.”

      I think Friedman has sufficiently beclowned himself:

      “One-party autocracy certainly has its drawbacks. But when it is led by a reasonably enlightened group of people, as China is today, it can also have great advantages.”

      http://www.nytimes.com/2009/09/09/opinion/09friedman.html

    7. TM Lutas Says:

      The PRC is more than just “cheap labor, a (for now) compliant workforce, and lax environmental regulation”. The PRC has been climbing up the product chain for quite some time and are producing an increasing number of their own bonafide (as opposed to stolen) IP. As any other IP producers in the PRC, locals are getting pirated too which is why you’ve seen a shift in the PRC attitude towards piracy. Now it’s a beast that also bites the brightest of the locals and not just the foreign suckers. This is a trend that will only grow.

      The PRC has tried, several times in fact, to exercise its supposed power and influence in the high technology field. Each time it has been turned back. For all its population and its essential position in the production chain, the PRC has not been able to impose extensions on international standards. With the increasing popularity of “China plus one” sourcing, it is likely that the time of maximum influence that the PRC has is already in the past. They have the ability to strut around and threaten but as soon as they start to exercise their threats, the world immediately starts shifting production of the threatened good out of the PRC.

      Due to the one child policy, the PRC is going to peak out in about 20 years as the work force shrinks and the ranks of the retired grow. They graying of rich countries is something that has been seen many times before but the PRC will not be rich before it gets old. The PRC’s demographic crash is going to be unprecedentedly hard. The question is what will the successor states (several of which might well be nuclear powers) relationship be with the West. Will they view us as disconnectors who played a key role in destabilizing and pulling down the old regime as ugly as possible or will they view us as providing the connectivity that gave them the softest possible landing given the CCP’s mistakes. I view that question as the true strategic challenge for our foreign policy. The CCP is dead man walking. It is a skin that must eventually be shed. How can we position ourselves so that the next regime(s), one(s) with popular support, will be favorable to us. A wise policy of connectivity is better than a disconnect strategically.

      As a historical note, in what sense was the Congo Free State capitalist and not an imposed, despotic monarchy, a second kingdom for Leopold II, one without all that troublesome modern trappings of checks on his power he suffered in Belgium?

      The genius of capitalism is its ability to create emergent knowledge that directs economic activity towards higher uses and away from lower ones. I cannot see this process at work in the CFS at all.

    8. Michael Kennedy Says:

      Due to the one child policy, the PRC is going to peak out in about 20 years as the work force shrinks and the ranks of the retired grow. They graying of rich countries is something that has been seen many times before but the PRC will not be rich before it gets old.

      This is the single most important fact about China. It is not understood by the vast majority of Americans.

      One of my medical students was a girl from China. She taught me a lot. She told me that she came to America for medical school so that she could take care of her parents. She had no confidence in the future of China. Her mother was a professor at Beijing University. Her father, although trained as a physicist, worked as a mechanic because he is Christian. Her mother was advised not to marry him as his religion might impede her career. She has a brother and, when I asked her about it, she said “They are not very smart,”referring to the one-child policy. Her grandfather had taught her English, which she spoke without an accent.

      She is now in a surgical residency, planning to be breast surgeon. She was an excellent student. I hear from her every so often. She also showed another trend that is interesting. She is married to South American man, Chile, I think. Chinese girls are pretty dismissive of Chinese men, possibly a reaction to the selection abortion and abandonment of girls. Millions of Chinese men will never find Chinese wives and the girls are marrying foreigners. This is a sharp change from tradition.