We were asked if we’re slipping into a new cold war. Our answer is you haven’t been paying attention, it’s already started. It probably started even longer ago, but when Xi was named President for life, it was inevitable. Anytime you have a president for life or anything close to it, the situation already is off the rails. You just don’t get liberalization with the rule of law when you can’t change the people at the top. What you get increasing repression. As we’ve pointed out in our “More” series, top-down one-party states are inherently inefficient as the elite substitute their judgment for that of free markets and the choices of free people. As they fall further behind, the people become restive, and the rulers have to make a choice between ceding power or crushing dissent. Too often, the latter wins out. So it appears with China.
Given the actual state of things, what should we be doing? Decouple as soon and as thoroughly as we can without upending our and the world’s economy. That was the beauty of the Trans-Pacific Partnership (TPP). While increasing free trade among the members and protecting intellectual property rights, it makes it more expensive to make or buy in China. Unless China changed its ways, it would become increasingly isolated. This would’ve given everyone time to adjust without sudden dislocation. Unfortunately, the Trump administration dumped TPP and instead levied stiff tariffs. This is causing pain on both sides without isolating China. Evidently, the Trump administration thinks we can continue to have linked economies with just some adjustments. That wouldn’t have worked with the old Soviet Union, and it won’t work with China.
You only have to look at two of the recent happenings to two of our prominent business institutions, the NBA and Disney. Each fearing a loss of Chinese profits has bent their American Principles into a pretzel. Given our ideals, is there any reason not to know where Americans should come down on freedom. Houston Rockets general manager knew Daryl Morey and twitted his support for the people of Hong Kong. China had an immediate meltdown and used full force to bend the NBA to its will. Disney under similar pressure made changes to content to please China. In both cases, these entities initially chose profits over integrity. In doing so, they have lost any moral authority to speak out on anything at home or abroad. Unless you’re willing to pay the price of speaking up against injustice everywhere, you can’t really speak out anywhere. Nobody needs to listen to hypocrites.Continue reading