Future 101: Tom Friedman on China and the Trade War

[honorentheos]

https://youtu.be/UqBa0hBAQBA?si=UcrOnEF3abXKliP8

My colleague Tom Friedman thinks we’re screwed.

That’s the first thing he told me when recounting his recent trip to China. It’s not just because of the trade war that President Trump is escalating right now. Friedman believes the whole Washington consensus on China — that the country is a hostile adversary — is dangerous and based on an outdated understanding of what China now is. He saw how China’s manufacturing and technology have advanced so far that in many ways it now surpasses the United States’.

In this conversation, Friedman walks me through the advancements he saw in some of the most critical fields of the coming decades — including A.I., E.V.s and clean energy. We discuss why he sees the current consensus as dangerous, what a different path might look like and what the United States should do to develop its domestic manufacturing so that we don’t “get steamrolled.”

[Chap]

Certainly. America is a big country, and many people in it find it difficult to form other than vague and inaccurate ideas about other places. But it would be beneficial to the peace and prosperity of the USA if its leaders (at least) made themselves aware that China is not longer a poverty-stricken disaster zone populated by peasants.

[Gunnar]

https://youtu.be/UqBa0hBAQBA?si=UcrOnEF3abXKliP8

My colleague Tom Friedman thinks we’re screwed.

That’s the first thing he told me when recounting his recent trip to China. It’s not just because of the trade war that President Trump is escalating right now. Friedman believes the whole Washington consensus on China — that the country is a hostile adversary — is dangerous and based on an outdated understanding of what China now is. He saw how China’s manufacturing and technology have advanced so far that in many ways it now surpasses the United States’.

In this conversation, Friedman walks me through the advancements he saw in some of the most critical fields of the coming decades — including A.I., E.V.s and clean energy. We discuss why he sees the current consensus as dangerous, what a different path might look like and what the United States should do to develop its domestic manufacturing so that we don’t “get steamrolled.”

Long before I saw this excellent video presentation, it was already becoming increasingly clear to me what Tom Friedman is trying to tell us. If we don't try to compete with China in developing green energy technologies and EVs, etc., whatever economic advantages we think we still have over China will drastically disappear and so will any remaining technological and scientific leadership that we still have. We will become an impoverished economic and technological backwater that the rest of the world will laugh at and pity. Even for this reason alone, it will become increasingly imperative that we somehow get rid of the Trump Administration and their extremely shortsighted and stupid policies!

I don't think Trump really cares, though. I don't think he is capable or willing to see beyond his passion for immediately maximizing his own wealth and power, no matter how much he impoverishes everyone else in the process.

[Gunnar]

https://youtu.be/UqBa0hBAQBA?si=UcrOnEF3abXKliP8

Certainly. America is a big country, and many people in it find it difficult to form other than vague and inaccurate ideas about other places. But it would be beneficial to the peace and prosperity of the USA if its leaders (at least) made themselves aware that China is not longer a poverty-stricken disaster zone populated by peasants.

I don't think Trump cares, as long as he can continue to keep and augment his own wealth and power for what remains of his life.

[Jersey Girl]

Certainly. America is a big country, and many people in it find it difficult to form other than vague and inaccurate ideas about other places. But it would be beneficial to the peace and prosperity of the USA if its leaders (at least) made themselves aware that China is not longer a poverty-stricken disaster zone populated by peasants.

I don't think Trump cares, as long as he can continue to keep and augment his own wealth and power for what remains of his life.

He's on a mission to get a steady drip of narcissistic supply for the rest of his miserable life but I ask you, how in the hell much money does one person need? Like he's going to benefit from it when he's toes up?

For the love of money is the root of all evil...never forget that!

[Gadianton]

I watched the video last night. There are a lot of theories on China. I don't know who is right. I unfortunately think the current administration envies China a great deal and sees it as a model for the US going forward.

[Molok]

At this point I'm actively cheering for China.

[honorentheos]

I watched the video last night. There are a lot of theories on China. I don't know who is right. I unfortunately think the current administration envies China a great deal and sees it as a model for the US going forward.

You probably are aware of Peter Zeihan's view that China faces a population crash that will affect their ability to project globally. The idea they may have replaced population issues with robot and A.I. while already accepting a paradigm not based on domestic consumption suggests he has it wrong for starters.

[Gadianton]

Yeah, that's one thing. More to the point of the trade war, there is a huge cult among the investment community, I'm finding, regarding US dollar dominance, and the absolute power it gives the US over other countries. On the one hand, there are theories such as in the video that China's manufacturing has surpassed the US to the point that we're screwed. Well, there are plenty of economists who don't seem to be worried about trade imbalances and the fact that China is so good at manufacturing. Is Krugman freaking out about China's superiority? But, specifically, in terms of who will win a trade war, there is the dollar dominance crowd who believes all these countries standing up to the US is bluster, and they know they are toast.

This is the foundation of Stephan's Miran's whitepaper that landed him a cabinet position.

And it's not always in a straightforwardly good way, as a strong dollar has its drawbacks beyond a barrier to exporting. Some investors believe a strong dollar will ultimately end the world economy. But, there is definitely the belief in the mean time, that the US can beat the entire world to its knees with the dollar.

Now, is this American groupthink going off the rails? Maybe. But interestingly, there is an alternative theory to the 2008 crisis, given by the People's Bank of China based explicitly on the Triffin dilemma, and it sounds quite a bit like Miran's ideas, acknowledging China's desperation to escape the yoke of the dollar. The fact that the demolition crane was handed over to a six-year-old doesn't change the fact that it's a demolition crane.

After I watched you vid, this was recommended to me:

https://www.youtube.com/watch?v=NA9pTqZ3NYU&t=202s

Does Gao strike your as a man sitting back smiling because he believes China holds all the cards?

Remember that joke from our days in elementary school -- a guy from China, Ireland, Germany, and then an American all walk into a bar?

[honorentheos]

There's a saying that the US isn't strong because the dollar is the reserve currency; the dollar is the global reserve currency because the US is strong. Nations peg the value of their currency and keep dollars in reserve to back them because we are reliable.

Guess what damages that and makes other countries eye alternatives to use as a reserve?

I agree with Friedman that the US was fine as long as we are winning at being the best at finance. But we have been the best at finance in no small part because we were both the most reliable and interested in global economic stability; and strong enough plus willing to enforce and defend our global worldview and allies.

Friedman also touches on something I first read about around a decade ago in a book called The Fourth Revolution by a couple of folks at The Economist. Friedman calls it the fitness gym, but it is China's novel way of using internal hyper competition to take advantage of a strength of markets we associate with capitalism at an accelerated pace.