Conspiracy?

If one were to indulge in conspiracy theories surrounding the current coronavirus pandemic, one would have to wander into the mind of Xi Jinping. There one might find his realization that President Trump is playing for keeps .... and has managed in just a few short years to slow the juggernaught that was his China. And this needs to be reversed before China’s quest for world domination is sidetracked.

Now the Chinese are used to thinking in terms of big ideas and centuries, not years ... and so the Wuhan virus might fit such long-term thinking very neatly.

For what asset does China have that neither the U.s. nor Russia can duplicate? People. And, other than a thermonuclear war, how could China best utilize this resource to deplete its adversaries of their human resources ... even at the cost of big chunks out of its own population?

You got it pilgrim ...

Headlines

Trump offers Mexico help waging war on drug cartels after murder of U.S. citizens

House Dems asks Trump chief of staff Mick Mulvaney to testify in impeachment inquiry

Scientists call for population control

Trump slams Gavin Newsom for [California] fires, poor forest management

Sanders outpaces other 2020 Dems in Latino fundraising support

Job openings hit lowest level in 18 months but are still well ahead of total vacancies

Leaked recording from ABCNews reveals network killed story implicating Epstein ...

Julian Castro laying off staff in New Hampshire, South Carolina

How Kamala Harris went from ‘female Obama’ to fifth place

Snowden ‘did more damage to the private sector’ than government, says departed intelligent lead

WASH POST: [Trump] Pure, brazen contempt of Congress on full display ...

NARCOTERROR: [Mexican] Cartel gunmen murder 9 U.S. women and children

Population

Fractured definition: Huzzas for your dad after he has blown out all the candles.

China vs. U.S.

As I have previously mentioned (see: here and here), China and the United States are locked in an economic battle that has enormous consequences for world leadership, national security and economic pride. This face-off may be the ultimate test of  the American way. Will China achieve its goal to become the largest world economy by 2025? Or will they overextend key elements of their economy and falter in this race?

Clearly, with three times the population of America, with authortative central planning,  with a very large balance of payments and resultant sovereign wealth, with am industrious and intelligent workforce, with the ability to manipulate its currency ... and with a willingness to cut ethical corners; China mas some clear natural advantages. But is this enough?

But the U.S. also has some advantages -- with a superior (but deteriorating) higher education system, with more natural resources (particularly energy), with a stronger military, with a natural geographic advantage (spanning two oceans), with superior  technical innovation, with a governance based on checks and balances ... and with a larger set of historic allies (such as they are). But is THIS enough?

It seems that the two critical advantages that the U.S. has are the geographic and governance edges ... the former, China cannot change ... and the latter, it can change but is unlikely too. Why is central planned capitalism inferior to America's when many pundits (Tom Freedman, Paul Krugman) advocate just the opposite?

Yes, strong centralized capitalistic planning (as in China) can do better in some situations ... in trade wars for instance ... but, without the push and pull of free-market capitalism (as in the U.S.) mistakes can be made that are bigger and not self-correcting. This us likely the most critical difference between China and America ... and the one most likely to spell the winning margin in this battle of the Titans.

It also would be nice to have Russia on our side in this joust!

Employment Leadership

Picture from the Powerline Blog

I just heard Obama brag that his administration has created 4.5 million jobs in the last 29 months and 1.5 million jobs since the beginning of the year.  Balderdash!

As it turns out the U.S. economy has created only 3.2 million net jobs (not 4.5 million) since January of 2010 (a little over 29 months ago) while, at the same time, our population  has grown by 5.5 million ... and 4.4 million people have stopped looking for jobs (left the labor force). 

Year-to-date, these numbers show job growth of 583 thousand (not 1.5 million) while our population has grown by 1.1 milliom and 466 thousand people have left the labor force. 

And just in the last month, these statistics show that the U.S. economy has lost 195 thousand net jobs (NOT growth of 163,000 as widely reported ... quite disturbing) while, at the same time, our population has grown by 199 thousand ... and 348 thousand people have stopped looking for jobs.  And this drop in the number of those seeking jobs is the only way that our current unemployment rate isnot higher than 8.3%.

But even more damning are the numbers since Obama took office (January, 2009).  Since then, the U.S. economy has created only 2.3 million net jobs while, at the same time, our population  has grown by 7.6 million people ... and 6.7 million people have left the labor force.  If the U.S. labor force participation rate was the same today as it was in January, 2009 (65.4%), then our unemployment rate would be a more revealing 10.6%!

As always, I get this data from the CPS Tables and by clicking on the HTML version of the A-1 table under Monthly Household Data.  (If you question the veracity of my above assessments, please go to this site and see for yourself.)

Enter the Dragon

I am very far from being an expert on China. This usually doesn’t stop me from leaping in with my thoughts though. So, I will here offer a few naive views on this country … mainly because the rhetoric is beginning to climb elsewhere. Many believe that, because of its geographic size, massive population, exploding economy, high repository of native intelligence augmented by a good educational system, and apparent national energy, China is destined to dominate the world (economically) in a matter of only ten to twenty years (see the CNBC article ). This may be so but, according to many pundits in the 1980’s, wasn’t Japan also going to dominate things … remember "Japan Inc." Like Japan, China may also suffer a few hiccups on its way to world domination.

Let’s look at a few statistics. China’s land area is 3,696,100 square miles versus 1,656,425 for the United States. China’s population is over 1.6 billion people versus the U.S.’s only around 309 million. However, the U.S.’s GNP is close to $13.8 trillion, currently growing at about 1% per annum. China’s somewhat suspicious GNP numbers are $4.2 trillion, growing at around 10% per year. More interestingly the GNP per capita in China is about $870 whereas, in the U.S. it is over $33 thousand … quite a gap. But just imagine what China’s GNP would be if the per capita number was even $10,000.

There are a number of things that worry me about this Dragon of the East. They are:

1 - The possibility of another Cold War. China has, for a number of years been building up it military capabilities (see the Guardian article) including the recent boast that it will be able to take out (U.S.) aircraft carriers. It will not be too long before U.S. military strategists will need to respond to these threats with significantly increased defense spending on our part … probably post-Obama. This Cold War will (does) include China’s causing mischief with surrogate states like North Korea, Iran and Venezuela,

2 - At some point in the not too distant future, I would expect China to annex some additional territory (as they once did with Tibet) like parts of Mongolia or even Taiwan. I’m not sure that the United States (or Russia) knows exactly what we (it) will do when this circumstance presents itself.

3 - China’s one-baby-per-couple policy has caused the birth rate in China to be reduced. However, the ratio of male to female babies is now about 6 to 4. This presents a dangerous demographic situation when all these males reach maturity. Certainly domestic crime rates or even military adventures seem far more likely under such a situation (see my tongue-in-the-cheek blog on this subject, Another Modest Proposal).

4 - Walmart has greatly helped China keep its economy and employment growing. However, it won’t be too long before we in the United States stop stuffing our house with goods made in China. Here, I am not criticizing the quality of Chinese products. I am more criticizing the penchant of the American consumer to purchase things that they truly don’t need. I kid my wife that the next time she returns from the Christmas Tree Store with a bunch of discretionary stuff, our house is going to explode. When this U.S. consumer buying mania abates, China will have more difficulty (unless it has its own explosion of consumerism) keeping its population employed. This is a situation that will auger (poorly) for increased citizen unrest.

5 - To me, China’s fatal flaw is its lack of democracy and political freedom. I know that we, in this country, feel superior to China because of this national defect on its part. However, what will happen if they decide to shuck these chains? I would both feel good but then know that the days of U.S.’s world dominance are surely numbered.

And when was the last time you saw a bald eagle flying off with a dragon in its talons?