Arthur Kroeber: belief

Transcript context

…There is this interesting volatility in how people think China is doing. Some piece of news will come out about electric vehicles and people will be like, “China will obviously dominate us”. Then maybe some economic data will come out and they say, “China is collapsing.” People in their own countries have this sense that a lot of things are happening. Some things are going well, some things are not going well. But in 20 years, America's not going to collapse and it's also not going to have destroyed every other country. There's a long-run trend. Whether China has 1% higher growth rate or 1% lower, it's just going to be a powerful nation at the technological frontier. There's no sort of very immediate implication of what exact growth trajectory they are on, with respect to the most important questions about how we should engage with them and so forth. That is a really important point. I want to just dwell on that a little bit. The attraction that people have towards extreme narratives about China—total domination or total collapse or so forth—is very strong in my view… Again, it's a product of ignorance. The less you know about the realities of place, the more you can construct these fictional stories which take some truth and then absolutize it. The more you know about reality, it's more messy than that. It’s neither that nor this. That I think is just another argument for why you have to have much more deep engagement so people are engaging with realities rather than fantasies. You can see this again in very mundane ways. If you just look at the way that the Trump administration has conducted its trade negotiations with China, it was premised on the notion that China's economy was so weak that you hit them with tariffs and they will immediately capitulate. That was a ridiculous idea. It's taken them a couple of rounds to figure out, maybe that wasn't quite right and we have to take this more seriously. Getting away from the extreme narratives is important in general. I think also on the US side, also to some extent in China as well, is that a lot of the things in the US political context are blamed on the rise of China. We have this problem or that problem because of China. They are predominantly exercises in scapegoating. We were talking at the beginning of the conversation about the change in the industrial sector, hollowing out of US manufacturing employment and so forth. If you look at the trend of US manufacturing employment as a share of total employment, it’s a straight line from 1946 to today that looks like this. You cannot find the Cold War, you cannot find the rise of Japan, you cannot find NAFTA, you cannot find China. You cannot find anything. What you find basically is the march of technological progress. That's basically what that line tells you. So all of these stories about China did this or China did that… There was some impact. But mainly what the United States failed to do as the world was transforming in the late 90s and early 2000s, was to take seriously our responsibility to change our systems of redistribution, helping people out. We failed on the social contract domestically. There were failures of domestic policy which were then blamed on China. I think similarly, if you look at scary stories about how China's going to take over the world… BYD is a very good company. Huawei is a very good company. CATL is a very good company. You look at the totality of the corporate universe in the world, it's still pretty big. US companies are incredibly powerful and adept across many technological sectors. They are very good at what they do. In many cases, they still have very strong positions in China because they're so much better at what they do than the Chinese competitors. We're dealing with the rise of a new entrant on the global stage. any cases, they still have very strong positions in China because they're so much better at what they do than the Chinese competitors. We're dealing with the rise of a new entrant on the global stage. That's uncomfortable and there's some jostling there. But we should also not overstate the degree to which, even on a sort of a commercial industrial side, that we are sort of existentially threatened by this. There's some real challenges there, but a lot of this notion is that we will not have an auto industry in five years because of BYD… Let's get a grip, folks. We could end up there, but if we end up there it's because we will have made a bunch of really bad policy decisions that got us there, not because this competitive threat exists. Mostly it's on us to figure out how to get things right on our own terms, within our own system. Then I think basically we'll be fine. But right now that isn't where the conversation is particularly.…

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