Posts Tagged ‘U.S.’
“False confidence often leads to disaster”*…
In 1957, in the depths of the Cold War, Russia launched Sputnik 1, the first artificial Earth satellite– a success that surprised the U.S., which had rested comfortably on an assumption of technical superiority. Shaken, the nation responded with the Space Program and a broad array of flanking initiatives aimed at reinviograting education and innovation in the U.S.
Now it’s 2025, and America’s rivalry is with China. But in sharp contrast to the U.S. response to “the Sputnik moment,” America seems to be intent on a belligerent nationalism, rooted in a self-satisfied sense of superiority, that is only too happy to sacrifice the very things that could keep us in the global game– e.g., education and science domestically; the soft power that accrues to a good neighbor globally.
Kaiser Kuo, an astute observer of the situation, weighs in with a provocative warning…
The world feels unsettled, as if history itself were changing tempo. The familiar landmarks of the modern age are blurring, slipping away, and the stories we once told ourselves about progress and power no longer map cleanly onto the terrain before us. What we are living through seems, with each new day, less like a passing rearrangement of power, less like a momentary realignment of nations. We sense something deeper and more enduring: a transformation whose outlines we are only beginning to discern. History no longer feels like something unfolding behind us but something rushing toward us, urgent and impossible to ignore.
The economic historian Adam Tooze, reflecting on his recent, intense engagement with China, put it to me in July with characteristic directness: “China isn’t just an analytical problem,” he said. It is “the master key to understanding modernity.” Tooze called China “the biggest laboratory of organized modernizations there has ever been or ever will be at this level [of] organization.” It is a place where the industrial histories of the West now read like prefaces to something larger.
His observation cuts to the heart of what makes this moment so difficult to process. We have witnessed not merely the rise of another great power, but a fundamental challenge to assumptions long embedded in Western thought—about development, political systems, and civilizational achievement itself. We simply haven’t yet found the intellectual courage to face it.
This reckoning touches all of humanity, but it falls especially hard on the developed world and hardest on the United States, where assumptions about exceptionalism and hierarchy are most exposed and most fiercely denied. The familiar framing of China as “rising” or “catching up” no longer holds. China is now shaping the trajectory of development, setting the pace economically, technologically, and institutionally. For Americans especially, the deeper psychic shock lies in the recognition that modernity is no longer something they authored and others merely inherit. That story has outlived its usefulness.
The denial, the deflection, and the anxious overreaction so often seen in Western discourse are symptoms of that dislocation. Yet the reluctance to acknowledge this shift extends beyond governments, media narratives, or expert consensus. It includes people who’ve spent years thinking about these issues. I have been as susceptible as anyone—tempering big claims, second-guessing implications, staying in safer territory even when the evidence has been pointing in this direction for some time. There’s always a “but” when it comes to recognizing China’s accomplishments, a reflex to tick off the costs and enumerate the failings, to pull back just when the scale of transformation becomes clear.
The greater risk, I now believe, lies in saying too little.
This essay doesn’t rehearse the familiar bill of particulars on China—constraints on political pluralism and independent media; expansive security powers and preemptive detention; pressure on religious and ethnic expression; and episodes of extraterritorial coercion—not because those concerns are trivial, but because the task here is different. We’ve all learned to recite that litany, as a way of protecting ourselves from what real comparison might imply. The aim here is to confront, with intellectual honesty, what China’s achievements oblige us to reconsider about modernity, state capacity, forms of political legitimacy, and our own complacencies. Recognizing real costs can coexist with taking the magnitude of transformation seriously. This argument asks us to face squarely what has been accomplished and then measure ourselves against it.
And let me be clear: This reckoning is not a surrender. It is not an argument for abandoning liberal values, declaring authoritarian systems superior, or slavishly imitating features of China’s governance. It is instead a call for the kind of frank, sober assessment that genuine confidence requires—the willingness to acknowledge challenges directly, to learn from others’ successes even when they unsettle our assumptions, and to strengthen our own institutions through clear-eyed recognition of their shortcomings rather than defensive denial of their failures. Liberal democracy is indeed undergoing a profound crisis, but that crisis need not be terminal. The question is whether we will meet it with the rigorous self-examination that has historically enabled democratic renewal, or retreat once more into the comforting myths that have blinded us to both our weaknesses and our rivals’ strengths…
What the West should learn from China: “The Great Reckoning,” @kaiserkuo.bsky.social in The Ideas Letter. Eminently worth reading in full.
Pair with: “China Has Overtaken America,” @pkrugman.bsky.social and “China has copied America’s grab for semiconductor power.,” from @himself.bsky.social.
* Aesop
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As we rethink, we might send birthday greetings to a character in a cautionary tale from history, Zhu Yuanzhang, the founding emperor (The Hongwu Emperor) of the Ming dynasty, who reigned from 1368 to 1398. Under Zhu, China was the world’s largest economy and had it’s leading navy, projecting power and enabling trade beyond Asia.
But in the mid 15th century, all of this changed:
… shifting political priorities, and rising Confucian skepticism toward maritime commerce, the Ming government ordered an end to all foreign voyages. Shipbuilding for large vessels was banned, and Chinese citizens were forbidden from traveling overseas. This self-imposed isolation would have profound consequences. While Europe was entering its Age of Exploration, building colonies and global trade networks, China had turned inward, forfeiting its naval advantage and potential leadership in global affairs… – source (more, here)
“Government is an art, not a science, and an adventure, not a planned itinerary”*…
And sometimes, suggests Brian Potter, that adventure is more adventurous than others…
I spend a lot of time reading about manufacturing and its evolution, which means I end up repeatedly reading about the times and places where radical changes in manufacturing were taking place: Britain in the late 18th century, the US in the late 19th and early 20th centuries, Japan in the second half of the 20th century, and (to a lesser extent) China today. I’ve been struck by how many parallels there are between modern China (roughly the period from the late 1970s till today) and the Gilded Age/Progressive era U.S. (roughly the period from the late 1860s to the 1920s).
During these periods, unprecedented levels of economic growth combined with large populations were making both the U.S. and China wealthy and powerful. Both countries were urbanizing, building enormous amounts of infrastructure, and becoming by far the largest manufacturers in the world, with industrial operations of unprecedented size. Both were undergoing wrenching social and cultural change as old institutions were replaced by new ones, and the countries began to become “modern.” Both were nations of ambitious strivers, where it seemed like anyone with talent could make themselves into a success by catching the tide of rising opportunity. Despite the many differences between the two countries, the forces of development pulled them along very similar paths…
[Potter reviews the histories of development in the U.S. and in China…]
… Yuen Yuen Ang [here] likewise notes the similarities between modern China and the Gilded Age U.S., stating that “both countries underwent a wrenching structural conversion from rural to urban and closed to global markets, producing once-in-a-generation opportunities for the politically connected and enterprising…to acquire fabulous wealth.”
The most interesting thing about these parallels, to me, is that the U.S. and China in many ways were starting from very different places. Prior to its opening up, China’s economy was entirely state-owned and state-planned, and its economic expansion was coupled with unwinding much of the state enterprise machinery, letting small businesses form and markets bloom.
The U.S., on the other hand, was on the other end of the spectrum. Prior to its economic expansion it had an incredibly weak state, and economy driven by very small enterprises. Its development was accompanied by the creation of large, powerful companies and institutions, and moving away from the “invisible hand” of the market and towards the “visible hand” of exchanges of goods and services mediated within very large organizations.
China’s success came from finding ways to mobilize its huge number of people and hasn’t necessarily been focused on operating at the frontier of efficiency. The U.S., on the other hand, despite its comparatively large population, had a chronic shortage of labor, and much of its development was focused on developing less labor-intensive manufacturing technologies like the American System. China built its success on the back of inexpensive labor, and it remains a middle-income country. In the U.S., labor has never been cheap; the U.S. had nearly the GDP per capita of Britain as early as the 1820s, and it had the highest GDP per capita in the world by the 1880s. But despite these differences, the logic of development pulled the U.S. and China along very similar paths. Both countries could exploit very large markets (both at home and abroad) and operated their industries at very large scales in order to do so. In both countries, this required a novel set of institutions that was radically different from what came before, and the transformation that created those institutions spawned cultures with many similarities…
“How China Is Like the 19th Century U.S.,” from @_brianpotter (via @ByrneHobart).
One notes that any solution brings its own crop of new problems… another way in which China’s recent history recalls the Gilded Age– and its aftermath.
See also: “The 2024 Nobel Laureates Are Not Only Wrong About China, But Also About the West” from Yuen Yuen Ang, cited above.
Apposite: “The Surprising Resilience of Globalization: An Examination of Claims of Economic Fragmentation” by Brad Setser.
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As we ponder parallels (lest we wonder if progress accrues during these developmental periods), we might recall that it was on this date in 1904 that Harvey Hubbell received a patent for an invention that changed life in the U.S. and beyond.
In 1888, at the age of 31, Hubbell had quit his job as a manager of a manufacturing company and founded Hubbell Incorporated in Bridgeport, Connecticut, a company which is still in business today, still headquartered near Bridgeport. Hubbell began manufacturing consumer products and, by necessity, inventing manufacturing equipment for his factory. Some of the equipment he designed included automatic tapping machines and progressive dies for blanking and stamping. One of his most important industrial inventions, still in use today, is the thread rolling machine. He quickly began selling his newly devised manufacturing equipment alongside his commercial products.
Hubbell received at least 45 patents, most of which were for electric products. For example, he patented the pull-chain electrical light socket in 1896. But his most famous– and impactful patent was the one he received on this date: the U.S. electrical power plug, which allowed the adoption in the U.S. of convenient, portable electrical devices (which Great Britain had enjoyed since the early 1880s). In 1916, Hubbell was also granted a patent for a three-bladed power plug, including a ground prong.
“Americans consider the United States an exceptional nation; so do the Chinese people think of their Middle Kingdom”*…
Each of the last five years, Dan Wang, a Canadian-raised, U.S.- (college) educated technology analyst living in Shanghai, has written a year-end letter. This year’s missive recounts a long bicycle trip through China, explains why Cosi Fan Tutte is (he argues) Mozart’s best opera, and shares the best books he read in 2021 (including one of your correspondent’s all-time faves, Vernor Vinge’s A Fire Upon the Deep). But mostly, he ruminates on China and on its relationship with the U.S…
Internet platforms aren’t the only industries under suspicion. Beijing is also falling out of love with finance. It looks unwilling to let the vagaries of the financial markets dictate the pace of technological investment, which in the US has favored the internet over chips. Beijing has regularly denounced the “disorderly expansion of capital,” and sometimes its “barbaric growth.” The attitude of business-school types is to arbitrage everything that can be arbitraged no matter whether it serves social goals. That was directly Chen Yun’s fear that opportunists care only about money. High profits therefore are not the right metric to assess online education, because the industry is preying on anxious parents while immiserating their children.
Beijing’s attitude marks a difference with capitalism as it’s practiced in the US. Over the last two decades, the major American growth stories have been Silicon Valley (consumer internet and software) on one coast and Wall Street (financialization) on the other. For good measure, I’ll throw in a rejection of capitalism as it is practiced in the UK as well. My line last year triggered so many Brits that I’ll use it again: “With its emphasis on manufacturing, (China) cannot be like the UK, which is so successful in the sounding-clever industries—television, journalism, finance, and universities—while seeing a falling share of R&D intensity and a global loss of standing among its largest firms.”
The Chinese leadership looks more longingly at Germany, with its high level of manufacturing backed by industry-leading Mittelstand firms. Thus Beijing prefers that the best talent in the country work in manufacturing sectors rather than consumer internet and finance. Personally, I think it has been a tragedy for the US that so many physics PhDs have gone to work in hedge funds and Silicon Valley. The problem is not that these opportunities pay so well, rather it is because manufacturing has offered dismal career prospects. I see the Chinese leadership as being relatively unconcerned with talent flow into consumer internet and finance; instead it is trying to fashion an economy in which the physics PhD can do physics, the marine biology student can do marine biology, and so on.
…
An important factor in China’s reform program includes not only a willingness to reshape the strategic landscape—like promoting manufacturing over the internet—but also a discernment of which foreign trends to resist. These include excessive globalization and financialization. Beijing diagnosed the problems with financialization earlier than the US, where the problem is now endemic. The leadership is targeting a high level of manufacturing output, rejecting the notion of comparative advantage. That static model constructed by economists with the aim of seducing undergrads has leaked out of the lecture hall and morphed into a political justification for only watching as American communities of engineering practice dissolved. And Beijing today looks prescient for having kept out the US social media companies that continuously infuriate their home government.
A willingness to assess foreign imports as well as a commitment to the physical world combine to make me suspect that Beijing will not be friendly towards the Metaverse. Already state media has expressed suspicion of the concept. If the Metaverse will exist in China, I expect it will be an extremely lame creation heavily policed by the Propaganda Department. Xi’s speech on common prosperity in October noted that: “The rich and the poor in certain countries have become polarized with the collapse of the middle class. That has led to social disintegration, political polarization, and rampant populism.” The Metaverse, which represents yet another escape of American elites from the physical world, can only exacerbate social differences. It is too much of a fun game—like cryptocurrencies—played by a small segment of the population, while the middle class dwells on more material concerns like paying for energy bills. It might make sense for San Franciscans to retreat even further into a digital phantasm, given how grim it is to go outside there. But Xi will want Chinese to live in the physical world to make babies, make steel, and make semiconductors.
The Chinese state has long placed greater value on resilience over efficiency, which has dragged down its performance on metrics that economists care about, like return on equity. In my view, that is as often an indictment of the economic profession. The US focus on efficiency has revealed the brittleness of its economy, which has neither the manufacturing capability to scale up domestic production of goods nor the logistics capacity to handle greater imports. Decades of American deindustrialization as well as an aversion against idle capacity has eroded domestic manufacturing….
Since the US government is incapable of structural reform, companies now employ algorithm geniuses to help people navigate the healthcare system. This sort of seventh-best solution is typical of a vetocracy. I don’t see that the US government is trying hard to reform institutions; its response is usually to make things more complex (like its healthcare legislation) or throw money at the problem. The proposed bill to increase domestic competitiveness against China, for example, doesn’t substantially fix the science funding agencies that are more concerned with style guides than science; and the infrastructure bill doesn’t seem to address root causes that make American infrastructure the most costly in the world. Congress is sending more money through bad channels. That’s better than nothing, but the government should attempt to make some bureaucratic tune-ups.
The US is ahead of China on the sort of mathematical economics that win Nobel Prizes. But China is ahead of the US on the actual practice of political economy. One study I enjoyed this year noted that the Chinese government sends more jobs through state-owned enterprises to counties with greater labor unrest. I wonder how different the US would look today if the government did more to help workers. The US critique that “China stole the jobs” looks instead like a critique of its own economic system. China’s main activity was to invest in domestic competitiveness, thus becoming attractive to American firms, which relocated operations there. Meanwhile, the federal government did little to help disaffected workers at home. If there was a problem with this arrangement, fault should be on the US government for failing to restrain its firms or retrain its workers…
There’s so much more– including an acute look at (at least some of) the risks that China faces and the weaknesses (many self-inflicted) with which they have to cope: “2021 Letter,” from @danwwang. Eminently worth reading in full.
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As we take stock, we might recall that it was on this date in 1941, in the midst of the China resistance to the Japanese invasion during World War II, that Chiang Kai-shek ordered Mao Tse Tung’s Communist Party New Fourth Army disbanded on January 17, and sent it’s commander Ye Ting to a military tribunal. It was the end of any real cooperation between the Nationalists and Communists.
Mao quickly reorganized the force under a new commander and continued to fight the Japanese– though as guerillas, independent of Chiang Kai-shek’s command. When Japanese surrendered and withdrew, the Nationalists and Communists turned on each other.
“Is it just a coincidence that as the portion of our income spent on food has declined, spending on health care has soared?”*…
It seems a country’s spending reflects its national stereotypes, according to household expenditure data compiled by Eurostat: Russians splash 8% of their money on booze and cigarettes—far more than most rich countries—while fun-loving Australians spend a tenth of theirs on recreation, and bookish South Koreans splurge more than most on education. Some of the differences are accounted for by economics. Richer places like America and Australia, where household expenditure is around $30,000 per person, will tend to spend a smaller share of their costs on food than Mexico and Russia, where average spending is around $6,000. And politics plays a part too. Predominantly private healthcare programs like Consumer Directed Personal Assistance Program (CDPAP) in America eats up over a fifth of each household’s budget, whereas the European Union, where public healthcare is common, only spends 4% on it. In Russia, government-subsidized housing and heating make living cheaper, and this means money is left over for the finer things in life.
Via The Economist‘s How Countries Spend Their Money (where oner can find a larger version of the chart above)
* “Is it just a coincidence that as the portion of our income spent on food has declined, spending on health care has soared? In 1960 Americans spent 17.5 percent of their income on food and 5.2 percent of national income on health care. Since then, those numbers have flipped: Spending on food has fallen to 9.9 percent, while spending on heath care has climbed to 16 percent [now, almost 21%] of national income. I have to think that by spending a little more on healthier food we could reduce the amount we have to spend on heath care.”
― Michael Pollan, In Defense of Food: An Eater’s Manifesto
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As we brood over our budgets, we might recall that it was on this date in 1920 that the biggest incidence of domestic terrorism in U.S. history to that date occurred: the Wall Street bombing. At noon, a horse-drawn wagon passed by lunchtime crowds on Wall Street and stopped across the street from the headquarters of the J.P. Morgan bank at 23 Wall Street, on the Financial District’s busiest corner. Inside the wagon, 100 pounds of dynamite with 500 pounds of heavy, cast-iron sash weights exploded in a timer-set detonation, sending the weights tearing through the air. 30 people were killed immediately, and another eight died later of wounds sustained in the blast. There were 143 seriously injured; the total number of injured was in the hundreds.
Though investigators and historians believe the bombing was carried out by Galleanists (an anarchist group responsible for a series of bombings the previous year), the attack– which was a part of postwar social unrest, labor struggles and anti-capitalist agitation in the U. S.– was never officially solved.
The aftermath of the explosion
“The world is a perpetual caricature of itself”*…
Lilian Lancaster was 15 when she drew a collection of 12 anthropomorphic maps of European countries to amuse her ailing younger brother. They were published in 1868 as Geographical Fun, with notes and an introduction by “Aleph” (the pseudonym of William Harvey, a City Press journalist, antiquarian, and family friend).
Take the Grand Tour with Lilian in the Library of Congress’ collection; read her fascinating story (she became an actress, and continued her cartography) at Barron Maps.
* George Santayana
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As we peruse personifications, we might note that, while folks in the U.S. are celebrating the signing, on this date in 1776, of the Declaration of Independence of the U.S. from Great Britain, it is also a day to spare a memorial thought for two of the drafters and signers of that document, John Adams and Thomas Jefferson (respectively also, of course, the second and third Presidents of the United States); both died on this date 1826.
Adams and Jefferson
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