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May 9, 2023Liked by Noah Smith

Such well written and explanatory words that are common sense solutions worthy of exploring. Time is of the essence.

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Cold War Two is about the battle between democracy and autocracy. If we ever let our guard down long enough for the autocrats to get the upper hand the future of the world is already visible in Russia and China and it will stay that way because they will use artificial intelligence and the politics of greed fear and hatred to create surveillance states and fall to fighting each other, like Hitler going after Russia and all the rest of us being cannon fodder because those people do not care about anything but their own selfish interests.

On the other hand, if Ukraine helps us win this battle, the war will still never be over as Noah pointed out in his old blog repost: there will always be a Tamerlane ready to exploit that and ready to grab his share of the fruits of democracy without bringing anything to the table but a knife and fork and the bodies of his miserable subjects.

North Korea or Denmark. This will be our last chance to choose, if we don't choose the right course now. And maintain our vigilance the rest of the way out.

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May 9, 2023Liked by Noah Smith

Interesting, so Altasia won't even need to be allied, as long as it's there, it's not in China

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Yep.

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Unless those countries decide to ally with China.

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As a Pearl Harbor baby I am up well past my bedtime, but it was worth it because I got a like from Noah!

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May 9, 2023Liked by Noah Smith

Good analysis. Just want to reinforce the point that Russia is more like North Korea - a rogue dependency of China, dangerous mainly because it has nukes - than an important power in its own right.

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China is very good at supporting crazy proxies in order to keep potential rivals pinned down and isolated from each other.

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They are achieving this with India, which is a pretty dubious inclusion in the friendly camp, at least as long as Modi is in power. A rival to China, but a friend to Putin and enemy of democracy.

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"They are achieving this with India" <-- No, this is ridiculous on its face. India is one of China's rivals, so China tried to use Pakistan to keep India pinned down and occupied. But Pakistan's leadership changes are too frequent and unpredictable for that to be offensive; Imran Khan, who was friendly to China, was deposed.

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Indias's situation is not China's doing, of course.

But the US could easily reproduce with India today the mistake it made with China in the 90s, and create yet another illiberal rival, one which enriches Russia too.

The Indians are going to be a major power in a couple decades, regardless of US actions. The US needs to ask itself: "What kind of Indian great power is better for us? And what can we do to make that outcome more likely?" Policy must get a lot more savvy than 'Altasia'.

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I'd like to add that if the West can coordinate its action so that India is successfully nudged to become a liberal great power, then humanity wins the planet.

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deletedMay 9, 2023Liked by Noah Smith
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Tu quoque

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founding
May 9, 2023Liked by Noah Smith

This is one of your best columns ever Noah. The Administration should hire you.

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Well, it was written by guest posters who are already talking to the administration! :-)

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This piece is missing the low-hanging fruit: near-shoring to North America.

Mexico is such an obvious complement to the US, in terms of labour structure and demographic structure, I'm not going to elaborate. Yes, it's more expensive than Altasia, but it's also closer, and in a safer neighbourhood. Enriching Mexico also pays enormous domestic dividends for the US.

But the real low-hanging fruit is Canada, which operates as an extension of the US's domestic market, increasing it's size by slightly under 10%. That 10% matters more as China's economic size approaches parity with the US. But current America First policies putting Mexico and Canada on the outside are doing enormous damage to North American relations and reversing the continent's economic integration, decreasing growth potential. The Biden administration's beggar-thy-neighbor policies have forced Canada to match US subsidies, which (a) it cannot afford to do, and (b) effectively outsources much of its foreign policy to the US, which is not what any sovereign nation does without building resentment.

The US largely takes its allies and economic partners for granted, has treated its allies very poorly the last decade, sometimes more poorly than its enemies. For US allies, Biden's policies are not an improvement over Trump's. Noah's strategies, and Jake Sullivan's 'Biden Doctrine', pay lip service to this. They underestimate the damage being done, and the enmity being engendered among allies by these industrial policies.

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I agree, near-shoring to North America probably should've been mentioned!

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I would love to see a discussion between you and Peter Zeihan.

Peter seems to see the world breaking into blocks that sound a lot like what you're talking about, not just for the United States but for everybody. He also sees China as well on his way to collapse and he's not particularly optimistic about Germany's future.

The basis for his opinions seem to be the demographic issue of productive Generations aging out in some countries and just coming on stream in others and also geography.

I am just an economics fanboy but you and Paul Krugman make a lot of sense to me.

I have only been following Peter Z for a few months, but I have tried to catch every new video as it comes out and catch up on old ones, but I really don't have the expertise to tell if his reasoning is found.

But I'm sure that you do.

How many "Cronkites" you give him and other people who are free with their opinions in this area

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Zeihan's on better ground on demographics than geographic determinism.

His blind spot is assuming that rising isolationism goes in a straight line, that the next and near-term Washington consensus will be to retreat from playing any hegemonic role in the Eastern Hemisphere.

That's unlikely, because that would entail letting China largely set the international system to its own design. American voters are rather used to calling the tune, will react when badly when China tries to boss them as it bosses everybody else, and will demand their politicians put a stop to it. Zeihan doesn't believe that China will be able to assert itself, that it is about to collapse, but most voters and those in Washington don't believe that of China - and it's not Zeihan that will be setting US policy.

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"His blind spot is assuming that rising isolationism goes in a straight line"

Good point! That's why there is that old saying about not following a trend out a window. That is especially true in human affairs and maybe more so in a democracy.

As was proven in 2016

"emotions Trump logic "everyday.

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Zeihan's thesis' other weakness is giving non-US actors almost no agency to react to changes in US policy.

The most obvious example, which Zeihan discounts, is that the UK and France will get serious about policing Suez-Gulf as the US withdraws. They've already committed carriers part time, and more is likely to follow.

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I was not through editing that but my errant thumb told the chatbot otherwise.

But all of this is why I want to see Noah and Peter Z discuss the issue and give thoughtful people like you a chance to comment.

Democracy made it possible for me to have a very great life in spite of my poor choices and I just want my Grands and all the other children to have the same opportunities.

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I have Vision issues following a stroke so my proofreading is always suspect.

Also I'm doing this in a talk to text mode and the AI behind it has a tendency to arbitrarily make changes to what I said, after I have already moved on.

For instance I said he sees China as well on its way to it's collapse. And then at the near the end it turned "sound' reasoning into "found" reasoning.

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And sometimes I can't blame the AI I just blow it when I try to edit as in "at the near the end"

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Very good.

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Thanks for this post. Living in the UK, I think we should be aiming to share much of the same agenda. One thing I feel is missing is the critical importance of India. Your Altasia point is fine but India is much more than that. It is somewhat democratic and the largest population in the world with some of the same growth dynamics as China. And its right next door. A long term strategy that goes beyond trade and seeks to secure and enhance Indian democracy and turn the country into a full partner in the English speaking, EU and Japan alliance is vital. This might take 20 yeasr to come to fruition.

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Great point and I agree on the importance of India.

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This Cold War 2 case is very important stuff, Noah. I don't see this view anywhere else, especially not with the case and the strategy fleshed out as you have done in your Feb 4th post and these last two. Have I missed it? Has anyone else been willing to make this case?

Because you need to take it on the road!

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Beyond the Core Developed West, I just don't see "democracy" or so-called "shared values" are viable standards behind which all these countries are going to line up behind the U.S. as obedient followers in a struggle which is basically a US-China peer competition for power and influence. I don't see even "security" is a viable criteria, except for perhaps a few countries near China.

It's best to call it what it is and simply go head-to-head with China on a purely transactional basis that says "we can do more for you than China can, while increasing your internal well-being and security, as well as your standing in your region, with us, and with the world."

By nominal GDP the countries that have to see the advantage are: India, Brazil, Mexico, Indonesia, S. Arabia, Turkey, Thailand, Argentina, Nigeria, S. Africa, Bangladesh, the UAE, Egypt.

It's a question of whether the US, the EU, and possibly the UK can jointly listen very carefully to how these countries express their national interests, how they critique the West, and take steps to meet them in mutually beneficial ways that surpass anything China might have to offer.

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"On today's episode... Liza, Warren, Brady, and Connor work together to drive a stake through the still beating heart of David Ricardo."

Wow, Noah, I had no idea you had such reactionary friends. I like them. :-)

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😂😂😂

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Agree strongly with the first section of your comment there; Ricardo, or any trade economist worth their salt, would be cringing at all of this. To the extent that much of this vaguely worded corporatese could be construed to represent coherent positions on economic concepts, it fails the basic undergraduate test.

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If your world is wine and wool, it doesn't really matter which one you make and which you import. But your world isn't wine and wool anymore. It's ironic that industrialization was invalidating some of Ricardo's assumptions even while he was writing his theories.

While the Austrians certainly have a permanent shrine to Ricardo, your claim that "any trade economist worth their sale would be cringing" is an overstatement. The best reconsideration of Ricardo I've ever seen is a book called Global Trade and Conflicting National Interests. It altered my thinking when I read it 10 years ago, specifically in providing the theoretical foundation for how and why industrial policy might make sense. Looking back, that book had a significant hand in diminishing my libertarian streak. Serious academic arguments against Ricardo are there, you just need to seek them out.

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I've encountered plenty of nonserious arguments, but perhaps not enough internally consistent academic ones, so I'll take your recommendation and check it out. Thanks.

In terms of the article locally -- I think it should be noted that most of the language used is vague to the point of being unhelpful. The lack of detail is raising red flags for me. For instance: the section that states, roughly speaking, that "onshoring jobs is [ceteris paribus] best, but friendshoring them is almost as good" could use a more rigorous explanation. I think the popular valence of American jobs is enough to power that section through most readers' minds, but I'm concerned about the implication that "friendshoring" ought to be hierarchically placed below onshoring, even accepting the national security / supply chain stability argument that we should source production inputs from outside of China. You can accept that and still be skeptical of pro-onshoring arguments that don't mention the basic Ricardian(/H-O) precepts of comparative advantage / gains from trade.

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Maxwell, I just finished a short book called Concrete Economics. It essentially claims that the "America was built by free trade and libertarianism" is historically inaccurate. The authors are UCB professors, so they're serious, but they're not economists. And it shows in a few places. It's a good book though and as I was reading it yesterday, I found myself thinking about our conversation here, so I thought I would pass it on.

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Interesting discussion. I think it raises a broader point -- I don't think the economics discipline has provided satisfactory explanations and solutions to key questions of our day, like how to balance economic productivity and national security (i.e. in deciding whether to subsidize domestic production of semiconductors, or impose export controls that reduce US firms' ability to sell dual-use tech to foreign adversaries, etc.) or how to balance the benefits of local production (process innovation, learning by doing, domestic jobs) vs. globally dispersed production (lower prices). I'm a former policymaker, not a PhD-trained economist, so I certainly don't have all the answers, but I think real solutions are needed. I attempted to take some of these questions on to a small, partial degree here. https://tnsr.org/2022/12/chinas-brute-force-economics-waking-up-from-the-dream-of-a-level-playing-field/

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Liza, good article. I like your term "brute force economics".

I strongly suggest you read the book I just suggested to Maxwell above: Concrete Economics. It's short and gives historical examples of how America has done many of the same things China does today. And we have; that's how every country, including us, has gotten rich. You don't get rich by remaining someone else's natural resource exporter. Britain would have loved it if we'd done that.

A lot of your questions aren't really well tailored to economics though. I teach HS civics/econ and Western philosophy. One of the first things we talk about in econ is tunnel vision. Economists are really good at positive questions ("what will happen to solar panel production if we implement this subsidy?") They're not particularly good at normative questions ("should we implement this solar panel subsidy?") And they're terrible at philosophical questions ("is this policy good?").

Most of your questions fall into the normative group. They're not about efficiency or incentives, the two things econ is really good at -- and I mean REALLY good, we're superb at predicting behavior. You're asking what considerations beyond efficiency should be factored into our decision making as a country: subsidizing domestic production is inefficient but national security may require it; when should tariffs be implemented even though they do hurt consumers; should be have an industrial policy? These questions have economic consequences, but they're all normative or even philosophical, and as such are very ill suited to economic (efficiency & incentives) decision making.

Just my 2 cents from a recovering libertarian economist. "Hi, I'm Brian, and it's been 12 years since I last extolled the virtues of free trade." :-)

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Thank you for the book recommendation! I tried to acknowledge in the article that China's mercantilist practices that, one by one, are not unique; lots of countries have done similar things (including the US, as you point out), but I tried to make the case for why China poses a unique challenge that we dismiss at our peril. Completely agree that there are normative and philosophical questions embedded in this issue that economics on its own can't address; in policy, we had to grapple with all these issues as well as whatever messy domestic political issues were occurring at the time. Thanks for the discussion!

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Free trade for free people would lead to greater prosperity and be cheaper than this Rube Goldberg cross border regulation subsidy machine.

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A well thought out approach that totally ignores the fact that our next President is likely to be authoritarian who despises our allies, identifies with the strongmen around the world, and sees amassing riches and power for himself and his family as the whole point of the Presidency. Take care of this problem first and then we’ll pay attention to plans for dealing with China.

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Great piece, constructive.

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As an American, I also would chose option A but only because I know the U.S. economy and what to avoid. If I was Chinese, I would most likely choose option B sticking with what I know. The average Chinese citizen is much more economically savvy than the average U.S. citizen and has more savings and investments. China’s current economy is only a few decades old and is revolutionary in concept. As they say in the art world, “It’s a work in progress.”

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