August 2, 2022

JOEL KOTKIN: Free Trade for China, Not for the Deplorables.

The pandemic demonstrated in the starkest possible way the vulnerabilities brought about by the de-industrialization praised by Ivy League geniuses. As noted by Tom Mahoney, a principal figure at Mforesight, a firm that studies and advocates for manufacturing innovation, the usual first answer to how to boost profits is to shift production abroad. The belief that “a manufacturing firm (can) maintain itself long-term without controlling its own production” is virtually a dogma. To this end, Mahoney contends, firms like McKinsey are “the great evil empire along with anyone with an MBA.”

In accordance with this trend, U.S. medical equipment producers have left en masse for abroad, notably to China. As a result, Chinese dominance of the medical supply chain undermined our initial pandemic response, exposing us to the reality that we’re unable even to produce masks for our own people. Instead, we were forced to genuflect to Beijing, while they refused to share critical information on the pandemic. As observed by Richard Haass, President of the Council on Foreign Relations, “China’s decision to block exports of these goods led to widespread shortages.” Moving forward, “there is also the concern that an increasingly assertive China might seek to exploit the world’s dependence on it for political purposes.”

China’s ambitions go beyond the role of cheap labor supplier. It now seeks control of key tech industries, in part so they can impose their own standards for telecommunications, artificial intelligence, and other sectors. The movement of tech to China, widely boosted by U.S. firms, has made us dependent on our biggest global adversary, even, remarkably, for defense components.

That’s the kind of policy that can only be endorsed by morons who pay no price for getting things wrong — which is to say, our current governing class.

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