Newsnotes 2019 06

Notes On The News

by Gwydion M Williams

Crouching Huawei, Falling Apple
‘Please Copy the USA’s Failure’
Xi: Unity is Strength
The End of Britain’s Iron Age?
China Now, India Next?
Free Only If Faceless?
Snippets

Crouching Huawei, Falling Apple

Samsung of South Korea has long been the top company for Mobile Phones. But recently, the USA’s flagship corporation Apple has been losing market share.

Huawei has been rising, even as Apple falls.[A]

I said last month that the US decline is helped by a vicious ideological hatred of socialism. That Huawei’s main crime was to be a highly visible example of Chinese success. Success based on a more socialist and state-dominated version of the New Deal or Mixed Economy system, which most of the liberal-left also dislike. [B]

China producing cheap products fitted a vision of Eternal Western Dominance. China displacing the West and its satellites for top-end products causes fear.

This includes the prospect of China putting the first woman on the moon. Western politicians pretend they defend a continuous tradition: yet they excluded women from space till the 1980s. Sadly, the Soviet Union was also losing faith in the radicalism that had made it strong. They sent up one woman in 1963, but then sent no more until the USA changed its mind.[C]

China is certain to include women in its plans for fresh human landings on the moon, for which there is no fixed date. Trump may have thought of this in his sudden drive to get the US back on the moon by 2024. But just now the Democrats will not give NASA the necessary funds to do it both fast and safely.

As for Huawei, it has long been known that the USA insisted that its own IT and communication corporations make life easy for US spies. That’s the real complaint: not that Huawei might let China spy, but that might make it hard for the USA to do so.

More important is that Huawei phones are a visible symbol that a completely different approach to life can flourish in the modern world.

South Korea’s Samsung and Finland’s Nokia might also give this message. Both countries favour state intervention and tax-based equality. South Korea’s Ha-Joon Chang has repeatedly said this,[D] but isn’t known to most of the public, and largely ignored by the left in Europe and the USA. Finland is part of Scandinavia’s successful Social-Democracy, but somehow this awkward detail gets evaded. But China is too big and too different to be ignored.

‘Please Copy the USA’s Failure’

“History is never far from China’s mind in its trade dispute with America. A few months ago, when negotiations looked on track, staunch nationalists warned of echoes with the ‘unequal treaties’ that foreign powers had forced upon China in the 19th century… But the analogy that haunts Chinese economists does not involve China itself. They fear a replay of the Plaza accord of 1985, when Japan, under American pressure, tried to resolve trade tensions by pushing the yen higher. That calmed the tensions but, most Chinese economists think, at an intolerable price: stagnant Japanese growth for two-plus decades.”[E]

That’s from The Economist. And naturally the article argues that it is a complete coincidence that Japan floundered when it abandoned Mixed-Economy methods. A certainty that they are right even when the raw facts point otherwise is the same spirit that led them to demand British inaction in the 1840s Irish potato famine.[F] But they do at least mention facts that most of the Western media never mention, and perhaps don’t know.

I was already definite that the USA had blighted Japan, which was also unready to take on the USA when they were briefly seen as a rival following the Soviet collapse. But despite taking a strong interest and trawling many news sources, I had not previously come across specific matter of the Plaza Accord. Not known how it was being seen today.[G] Chinese sources frequently mention it,[H] but I had missed that.

Being able now to google for it, I found some interesting US comments from CNN:

“The US won a trade war against Japan. But China is a whole new ball game…

“In the 1980s, Japan was the big bad. Its economy was booming — the second largest in the world — and many in the United States feared they were about to be overtaken.

“Articles were published warning of the ‘Japanning of America’ or an ‘economic Pearl Harbor,’ as Japanese businesses bought US companies and landmarks. Lawmakers and commentators warned of a growing trade deficit between the two countries, and complained of Japanese firms stealing US intellectual property and taking advantage of unfair trade deals.

“In an interview with the ‘Morton Downey Jr. Show’ in 1989, Trump himself complained that Japan had ‘systematically sucked the blood out of America — sucked the blood out!’

“‘It’s a huge problem, and it’s a problem that’s going to get worse,’ Trump said of the US-Japan trade balance. ‘And they’re laughing at us.’

“By then, however, change was already happening. And far from overtaking the United States, Japan was about to fall far behind…

“Yet the Plaza Accord wasn’t the end of US action against Japan. In 1987, Washington imposed 100% tariffs on $300 million worth of Japanese imports, effectively blocking them from the American market.

“Things quickly turned sour for Tokyo. As the yen increased in value, Japanese products became more and more expensive, and countries turned away from the one-time export powerhouse. Efforts by the country’s central bank to keep the yen’s value low sparked a stock price bubble, the collapse of which helped push the country into recession and a ‘lost decade.’”[I]

Most of the USA’s political class still believe that the USA has a right and a duty to dominate the rest of the world. US liberals worry that it is failing: they seldom say that it was inherently wrong.

Huawei’s cheap connections were helping impoverished rural areas in the USA,[J] but when has the ruling elite ever really cared about those people? They will vote Republican, regardless of how often they get kicked, so why bother giving them anything? That is typical of the competitive politics that the West wants to impose on everyone else.

Xi: Unity is Strength

Most of what Trump is now doing is aimed at winning re-election in 2020. Or at least with avoiding a Republican rout and the possibility of a President who would reverse the errors made from the 1980s.

President Xi does not face re-election till 2022. Until the rules were changed, he would have been obliged to step down then. Would have lost power in the run-up to 2022, with everyone speculating about whether the new leader would have different intentions. Or whether a new leader would have the strength to carry on with the same policies.

I never saw the removal of the two-term limit as being for Xi’s personal benefit.[K] In my view, China’s leaders foresaw that they faced a critical period. That it was no longer possible to avoid confronting the USA. So they chose to raise up one of their number to the greatest personal authority since Mao.

Contrary to most Western views or hopes, the leadership is in very little danger of being overthrown. For one thing, young people are a smaller proportion of the total population than they were in 1989, or than they were in the West in the rebellious 1960s. But anyway popular sentiment is nationalist, and the authorities have so far been trying to cool it.[L] But Xi is also ready to accept short-term pain for long-term gain. He calls on the people to back this:

“Xi Jinping Warns of New ‘Long March’ as Trade War Intensifies…

“While Mr. Xi did not mention the trade war in his comments, they are the strongest signal yet that Beijing has abandoned hopes of a deal with the United States on the issue in the near term. Prospects of a deal faded earlier this month when talks broke down between negotiators for the two sides and President Trump accused China of breaking terms that had already been settled.”[M]

Sometimes it is better to fight and lose, than not to fight at all. Fight very hard for those things your enemy might concede without disaster. Finland showed that in World War Two: the Soviets twice had to fight hard for limited gains, and so made no fresh demands.[N]

Finland also avoided becoming a front-line state in the Cold War, and ‘Finlandization’ became an insult among people a very long way from any Soviet forces. But in the end, Finland got most of what they wanted.

If China gives too much to Trump this year, more demands will follow. Follow even if a left-wing Democrat gets elected in 2020:

“Sens. Bernie Sanders and Elizabeth Warren, are every bit as hawkish on China as Trump. So they’ve been left with a tricky bit of triangulation: They agree with cracking down on China, they even agree with some of the president’s more aggressive tactics like tariffs, but they don’t think Trump is executing his plan effectively.”[O]

And China is in a much stronger position than Japan was in the 1980s. Japan lost World War Two, but was restored by US power and money during the Cold War. From the 1980s, the New Right decided that the Cold War would soon be won, in part by the enormously expensive ‘Star Wars’ program that might have made a nuclear war winnable by whichever power struck first. They started getting much less generous, and not just about Japan.

No doubt the New Right believed their own story about the Western economy being burdened by state controls and about to boom under their superior policies. This never happened: Britain and the USA never recovered the relatively fast growth of the 1950s and 1960s. By some measures, they did worse than even the chaotic 1970s. But from the viewpoint of the rich, things were going OK, because they gained a much bigger slice of a very average ‘cake’. And the USA was pleased to see the non-Anglo West slowed down to Anglo levels of growth.

China’s continuing success threatens to undermine this optimum for the rich. Hence the Trade War: and its outcome is critical for the future of the world.

The End of Britain’s Iron Age?

“When Mr Bessemer died the global annual production of Bessemer steel ran to £11bn in today’s money. Yet inventors who create and build from scratch have become rare. Instead such talent has given way to bankers who make money through financial rather than industrial engineering. The skill here is not to take the long view; it is about being adept at manipulating financial structures to extract wealth. The private equity firm Greybull Capital that bought British Steel charged £20m a year in fees and interest from the company. Greybull had a record of failure; its anti-Midas touch saw an airline, an electrical chain, convenience stores and a snooker hall business all go bust when it was in charge.”[P]

Britain moved from Bronze to Iron in 800 BC, probably due to immigrants from Continental Europe shaking up a stagnant society.

For archaeologists, Britain’s Iron Age ended with the Roman invasion. But in practice, iron and steel remain dominant.

Britain’s Industrial Revolution was iron-based, and gave Britain a global Empire. The first significant iron-and-steam warship was East India Company’s Nemesis, launched in 1839 and vital for winning the First Opium War.[Q] And an historic embarrassment, a fighter for drugs pushers, so British historians have been happy for it to have been forgotten. Happy to see the credit grabbed by the USA for the unimportant iron warships of their 1860s Civil War.

Britain’s industrial decline came in part because other countries learned the same tricks. But also because most of the ruling class disliked industry and let it wither. Thatcher’s defeat of the Coal Miners confirmed long-term plans to abandon coal-mining completely: it is all now imported. But they are keen to encourage Fracking.

The former British Steel was taken over by Tata Group, which began as successful industrialists in British India. Tata matched Marx’s expectation that Britain building railways in India would change India for ever: but I doubt he’d have imagined native Indians taking over iron and steel in Britain.

Tata later split their British business in two. The English half, centred on Scunthorpe, is the ‘British Steel’ that now seems doomed. They keep Port Talbot Steelworks in Wales, though it too may not last.

China Now, India Next?

Does Mr Modi realise that if the USA defeated China, India would be next on the list to be ‘regulated’?

His re-election did not surprise me. The New Right put enormous effort into discrediting the successful semi-socialist globalisation that India’s Congress Party was a part of. And were helped by many leftists who bitched about imperfections of rival socialists and let the positives be forgotten.[R] But given the cultural emptiness of New Right values, what else was likely to happen?

Humans live with a mix of idealism and selfishness. Pure selfishness is no way to live. And the New Right have anyway been mediocre in terms of overall growth.

Mr Modi has so far ridden the tiger of Hindu Extremists with some success. And has served the interests of rich people in India, rather than abasing himself before Global-Anglo values.

“A bit more Thatcherism would serve India well”, says the New York Times.[S] Forgetting how badly it served Britain.

Free Only If Faceless?

For most of human history, people lived in villages or tribes. They had neighbours who knew exactly who they were. And sometimes mistreated each other: but more often there was mutual care.

But could be preyed on by raiders or bandits, which is why the state was developed.

Cities released people from both care and concern. Which is why the state expanded.

You could also seem anonymous, if you were out of your area and had nothing very distinctive about you.

But this was always limited. You could always be found, if someone cared enough. Or found unless powerful and corrupt people protected you, as with top gangsters.

When the victims were poor or powerless, mostly no one did care. And in bad areas, this danger would extend on up to the working mainstream.

Now we have better methods – CCTV and now Face Recognition. Life could be made safer for the poor or powerless, if they had the sense to act in their own interests.

You can also be tracked in remarkable detail through your Mobile Phone. Oddly, no one much worries about this. Most do not bother to put masking tape across the spy-camera included with most laptop computers.

Sadly, dogmatic liberals have made the running. Had an hysteric reaction to Face Recognition, now banned in San Francisco.[T]

Will they now pass another law saying “Human beings shall be forbidden from recognising each other in public places, without the prior written permission of the person being recognised”?

Yes, Face Recognition is imperfect. But I’d assume the police know that. If not, have a simple training session showing how often it can fail. And it probably fails less than the human sort.

Snippets

Populism – ‘Scorn the People’ fails

Looking after minorities is excellent. But far too often, the left forgets about the working mainstream.

They say too little about economic inequality, which has hurt the mainstream.

Labour needs to make clear its concern for the Core English – people not part of any minority, including the rich.

If they felt overlooked, they were right.

We just saw this in Australia. The right unexpectedly won in Australia, contrary to what polls predicted. But selfish feelings normally do bloom in the privacy of a voting booth.

Left-wing parties need to make it clear to their core populations that they matter. And that the Centre-Right has never in fact looked after their interests.

***

Come fly with me and die with me?

“Boeing is facing compensation claims from the three biggest airlines in China, which have grounded dozens of 737 Max jetliners since the deadly crash of an Ethiopian Airlines flight in March.”[U]

They are having trouble explaining away the decisions that led to unsafe aircraft being sold.[V]

And trouble convincing the authorities to let those aircraft fly again without expensive changes.

***

What Next Without May?

Labour calling for a quick General Election is excellent, but very unlikely to succeed.

Ideally, one would like the leading Tories to put on sack-cloth and ashes and repent their many sins against the British people. But the one is almost as unlikely as the other.

The Tories and DUP know that either Labour or the Liberal Democrats would gain – probably both. Perhaps also Greens Maybe also some right-wing alternatives, though Farage is useless at positive politics and party-building.

I’d expect them to hang on to the legal limit: June 2022.

Even if the Tories split, the fragments could share government together. This is normal in most of Europe.

And a No-Deal Brexit now seems the most likely outcome. Terrible for Britain, but likely to be good for the rest of the European Union.

[Actual events went otherwise, see Brexit If It’s Cheap – the Disappointed Middle Ground, https://www.quora.com/q/pwgwxusqvnzzrlzm/Brexit-If-It-s-Cheap-the-Disappointed-Middle-Ground. ]

***

More Government Needed

“Rising knife crime linked to council cuts, study suggests…

“‘Every time I speak to young people they say the same thing: they need more positive activities, safe spaces to spend time with friends and programmes to help them grow and develop.’

“The APPG’s research found the average council cut spending on youth services – such as youth clubs – from 1.9m in 2014/15 to 1.2m in 2017/18. In real terms, this marked a decrease of 40%, it said.”[W]

***

Executive Drug-Pushers

“Executives at a major opioid company, Insys Therapeutics, were found guilty by a federal jury on Thursday for, among other misdeeds, bribing doctors to prescribe their fentanyl-based painkiller — in another sign that the federal government and the public are increasingly ready to hold individuals and companies responsible for their role in the nationwide opioid epidemic.”[X]

Knowing the USA, I’d be surprised if the conviction stuck. Yet it is a start.

They pushed pain-killers that were more dangerous than heroin. Have often replaced heroin, which some older addicts now have trouble finding.[Y]

***

Websites

Previous Newsnotes at the Labour Affairs website, http://labouraffairsmagazine.com/past-issues/. Also https://longrevolution.wordpress.com/newsnotes-historic/. I blog every month or so at https://gwydionmw.quora.com/, and tweet at @GwydionMW.

[A] Huawei beats Apple to become second-largest smartphone maker, https://www.theguardian.com/technology/2018/aug/01/huawei-beats-apple-smartphone-manufacturer-samsung-iphone

[B] https://gwydionwilliams.com/99-problems-magazine/the-mixed-economy-worked-quite-well/

[C] https://en.wikipedia.org/wiki/List_of_female_spacefarers

[D] https://gwydionwilliams.com/48-economics/ha-joon-changs-23-things-they-dont-tell-you-about-capitalism/

[E] https://www.economist.com/finance-and-economics/2019/05/23/as-the-trade-war-heats-up-china-looks-to-japans-past-for-lessons

[F] https://gwydionwilliams.com/50-new-right-ideas/430-2/

[G] https://en.wikipedia.org/wiki/Plaza_Accord