Gongol.com Archives: August 2022

Brian Gongol

August 28, 2022

Business and Finance Phone home

Talk is cheap, but supply chains are to be taken seriously. A thousand opinions have been written about "decoupling" the economies of the United States and our allies from that of China -- particularly citing perceptions that it has become unlikely that the Chinese government will choose a path towards liberalization anytime soon. ■ But talk should be taken a great deal less seriously than action. Thus, it is worthy of note that Apple is shifting production of iPhones and iPads to countries like India, rather than continuing to depend almost single-mindedly on China. ■ Really, it's unfortunate for the world that conditions have come to this. In general, it would be ideal if nations could be counted upon to trade freely and squarely with one another, taking advantage of their own particular comparative advantages in order to become more sophisticated and more efficient at those industries in which they have reasons to be the best. ■ The more efficiently industries use the world's resources -- both natural ones and human ones -- the better we can achieve the kind of prosperity that rescues people from extreme poverty and moves them into the middle class or better. We should scorn waste, both in terms of tangible inputs like power and raw materials, and in terms of human potential. Great progress has been made in that regard, and humankind should celebrate the achievement. ■ But it is an unfortunate concession to the deadweight of bad politics that Apple and other companies are making choices about broadening their manufacturing operations not solely because of intrinsic advantages elsewhere, but because the Chinese government continues to behave in a reactionary and frequently hostile way. It does this while ruling over more than one out of every six lives on Earth. So many things would be better in the long run if China at large were to become more like Hong Kong has historically been, rather than choosing the opposite path. ■ It has been a widespread hope that economic growth would underwrite a political liberalization, such that the Communist Party would sense a degree of security in being able to point to what it had delivered for its people as a reason it should freely be granted the consent of the governed, rather than imposing its will by enforcing the rule of a one-party state. ■ But having chosen anything but a glasnost with Chinese characteristics, the only thing that may really get the Politburo's attention could be the quick erosion of its manufacturing advantages and a resulting loss of economic status.

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